How much do financial consultants make?

It is a question that is often asked and discussed during conversations among friends, colleagues, and without a doubt, one that is raised by job seekers and working adults looking to take the plunge into the world of financial consulting.

By: Liu Lian Feng

With the shift in the economic climate and Singaporeans’ realization that one has to take a different and more dynamic approach to jobs and careers, many have turned to the flexibility of working life in the insurance sector.

Elusive clients, strict and lofty sales targets, meager salaries. These may be some of the misconceptions plaguing the financial consulting industry, but Lee Meng Chieh, Financial Consultant, clarifies, “Many people think that insurance agents either earn a lot or very little, but after 5 years in the industry, I have to say that it’s a rewarding job that gives you great satisfaction as the effort you put in translates not only to your salary, but also allows you to help others.”

According to Tan Jiak Hiang, Head of Customer Acquisition Division, Great Eastern Life, “As life planners’ salaries are commission-based, their income depends on their sales production. Higher sales production translates into higher income.” He adds, “On average, a financial consultant’s salary can range from about $30,000 to more than $150,000 a year.”

Financial consultants are paid a basic commission which is based on the premiums of the insurance policies that are sold. Commission rates for the different products - life, health, investment-linked policies - vary, with agents receiving about 40 to 50 per cent of the insurance premium (for life policies) that clients pay for the first year. Lower commission rates of 20, 10 and 5 per cent will be implemented in the second, third and fourth year respectively. After stagnating at 5 per cent commission for the fifth and sixth year, the consultant will stop receiving commission from the policy after the sixth year.

While all financial consultants are required to meet minimum sales quota that range from approximately $6,000 for new agents to $20,000 for senior ones, consultants like Corene Toh has not had trouble with her yearly target so far, “Many people think that our sales targets are set very high and are unattainable, but it’s a reasonable figure that the majority of agents should be able to meet.”

Newcomers to the insurance field need not worry, as companies such as Great Eastern Life has implemented financing schemes to allow agents to apply for interest-free advance monthly payments of $1,000, $1,500 or $2,000 for either six to twelve months to help them tide through this initial period and build their portfolio of clients.

“New life planners will also be coached on a weekly basis by his immediate officer and the latter will accompany him for at least three successful sales presentations to show him the ropes,” assures Tan. Lee quips, “Having a mentor to guide me was definitely useful as learning from an experienced consultant sure beats reading the information from the textbook.”

Before starting their careers, financial consultants are also required to pass compulsory tests to prove their capabilities. The topics include “Rules and Regulations on Financial Advisory Services”, “Life Insurance and Investment-linked Policies” and “Health Insurance”. Agents at Great Eastern Life have to enroll in a programme designed to equip them with the necessary knowledge and skills within the first three months, and are expected to keep upgrading themselves. 40 hours of an agent’s first year are dedicated to professional development through upgrading courses with the requirement reduced to 30 hours for subsequent years.

Moving through the ranks is put in a different perspective in the insurance industry, as consultants who perform well and meet the quota for the next rank will be considered for a promotion. At Great Eastern Life, promotions are not only based on sales performance, but selected candidates will need to fulfil other criteria like the Customer-Centric Approach course and various product courses before he/she is considered for the promotion. Professional certification such as the Associated Financial Consultant, Associated Financial Planner and Certified Financial Planner of Chartered Financial Planner are available through the Financial Practitioners Association of Singapore. Consultants will require these certifications, as well as leadership and management programmes, to fulfil the requirement for promotion to a senior position.

Overseas trips to Australia, Prague and Vietnam are some of the incentives that insurance companies offer to their agents. Tan elaborates, “Consultants who meet certain criteria including sales production can qualify for membership in the Great Eastern Life Honours Club, with awards classified in the Platinum, Gold, Silver and Bronze categories. Our Platinum and Gold qualifiers won a trip to Spain this year while the silver and bronze qualifiers went to China.”

And the peak of a financial consultant’s career is definitely the Million Dollar Round Table (MDRT), an exclusive association that admits only the top six per cent of financial consultants worldwide. Established in 1927, the MDRT comprises 29,652 members from 76 nations and territories. Toh sums up every agent’s ambition, “The Million Dollar Round Table is the benchmark for success in the industry as it gives agents recognition for their work.”

Members of the MDRT are invited to conventions in the United States where approximately 7,000 speakers - including motivational speakers - will impart knowledge, sales ideas and motivate participants. Toh, who has been a member of the MDRT for the past two years, shares the experience, “The insurance industry is a self-motivating business and it can be tiring. Conventions like these are a great tool for me to recharge and remind me that what I do is important.”

Financial consultants will have to hit commission targets of $51,400 in order to qualify for the MDRT in 2006. Beyond the MDRT lie bigger prestige prizes, the Court Of the Table and Top Of the Table, with qualifying commission marks set at $154,200 and $308,400 respectively.

Our seasoned financial consultants have this advice for newcomers, “Believe in yourself and your passion for the business. The sky is the limit!”

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