In the bustling city-state of Singapore, pursuing financial freedom has become an important goal for many. However, navigating the complex landscape of personal finance can be daunting, meaning that the expertise of a financial advisor can prove invaluable in guiding Singaporeans towards achieving their financial freedom.
Financial freedom is a deeply personal and multifaceted concept. It encompasses meeting financial obligations, pursuing desired lifestyle choices, and planning for a secure future. In Singapore, where the cost of living is among the highest in the world, the threshold for feeling financially free can vary significantly among individuals.
Financial freedom is often defined as having sufficient wealth or income to live a lifestyle of one's choosing without being constrained by financial obligations. This includes the ability to cover essential expenses, save for the future, and have the flexibility to make discretionary spending decisions without undue stress or worry.
In Singapore, the Five Cs used to be an idealistic and materialistic checklist to gauge whether you were financially successful. The list included cash, car, credit card, condominium, and country club.
Though materialism has not disappeared from Singapore, today’s young people take a different and more holistic view of financial success. A poll commissioned by Prudential Singapore found that 76% of Gen Z and Millennials believe financial success means enjoying the financial freedom to pursue their desired lifestyle and being free from financial concerns. Singaporeans increasingly value the sense of purpose, with a fulfilling career offering many opportunities and challenges from which to grow.
According to the Singlife Financial Freedom Index 2023, the median amount that Singaporeans feel they need to achieve financial freedom is S$566,640. However, this figure can vary depending on an individual's income level and self-assessment of their economic status.
Unsurprisingly, the majority of Singaporeans have not reached financial freedom status. The Singlife Financial Freedom Index 2023 also states that 71% of Singaporeans do not feel that they are financially free and highlights that people of both low and high incomes are not achieving financial freedom, suggesting a certain level of homogeneity in Singaporeans' financial aspirations.
Financial advisors play a crucial role in helping Singaporeans achieve their goals by navigating the path to financial freedom. This article outlines how a financial advisor can develop a tailored plan that addresses specific challenges and opportunities by providing personalised guidance and understanding an individual's financial situation, and how you can use MoneyFitt to find the perfect financial advisor for you.
Engaging the services of a financial advisor can offer numerous benefits for Singaporeans seeking financial freedom:
A financial advisor can work with clients to develop a comprehensive financial plan considering their current financial standing, goals, and risk tolerance. This plan can encompass various aspects, such as budgeting, saving, debt management, insurance coverage, and investment strategies.
One key area where a financial advisor can add value is investment management. With their extensive knowledge of financial markets, investment products, and portfolio diversification strategies, they can help clients create a well-balanced investment portfolio that aligns with their risk profile and long-term financial objectives.
OCBC’s Financial Wellness Index 2023 finds that Singaporeans who seek expert guidance from financial institutions achieve better investment results than those who prefer self-help channels such as social media, YouTube, and online forums. 46% of those who seek expert guidance are on track with their investments, compared to 35% of those who use self-help sources. In addition, the study found that, on average, individuals who sought expert financial advice had an overall investment return rate 3.3 times higher than the national average.
Financial advisors can help clients select appropriate investment vehicles, such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs), and manage their portfolios to maximise returns while mitigating risks. This can be particularly beneficial in a volatile market environment, where professional guidance can help individuals make informed decisions and avoid common investment pitfalls.
Achieving financial freedom requires not only building wealth but also protecting it from unforeseen circumstances. A financial advisor can help clients identify and address potential risks, such as unexpected medical expenses, job loss, or disability, by recommending appropriate insurance coverage and other risk management strategies.
One critical component of financial freedom is the ability to retire comfortably. A financial advisor can work with clients to develop a comprehensive retirement plan that considers factors such as desired lifestyle, anticipated expenses, and sources of income, including government schemes like CPF.
By projecting future cash flows, evaluating investment options, and optimising tax strategies, a financial advisor can help clients ensure they have sufficient resources to maintain their desired standard of living during their golden years.
A financial advisor can help clients understand their tax obligations and explore legal strategies to minimise their tax burden, ultimately improving their overall financial position.
This may involve optimising deductions, managing capital gains and losses, and exploring tax-efficient investment vehicles, such as retirement accounts or insurance products. By minimising the impact of taxes, clients can retain a larger portion of their wealth, contributing to their path towards financial freedom.
With the extensive amount of digital resources available online, financial planning could certainly be done by yourself (see Alternatives section below). However, an inexperienced individual without the relevant knowledge, skills, and time will be at a severe disadvantage. Saving costs, whether through upfront fees or those embedded in the products recommended to you, is indeed a valid reason for not engaging a financial advisor. However, the cost of making major errors in your financial planning may be even more detrimental. For example, since many people don’t know what they don’t know, your planning may be incomplete, provide you with too little protection, be unsuitable for your stage in life, take on too little or too much risk or gather too much debt.
Selecting the right financial advisor is crucial to ensure the client-advisor relationship is built on trust and transparency. When choosing a financial advisor, consider the following factors:
Look for financial advisors with relevant qualifications, such as the Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA) designations. These credentials demonstrate a commitment to professional development and a deep understanding of financial planning principles.
Consider the financial advisor's experience working with clients with similar financial profiles and goals. Some advisors may specialise in areas like retirement planning, investment management, or wealth preservation, which can be particularly beneficial depending on the client's specific needs.
Understand the advisor's fee structure, as this can impact the overall cost and value of the services provided.
Effective communication and a positive rapport between the client and the financial advisor are essential for a successful long-term relationship. Clients should feel comfortable sharing their financial information and concerns, and the advisor should be responsive and proactive in addressing their needs.
MoneyFitt’s platform offers a seamless way to connect with trusted financial advisors who can guide you toward achieving financial freedom.
Onboard in minutes and be paired with a handful of matched professionals who best suit your financial needs and personal preferences. Once onboard, let our tech be your wingman; MoneyFitt guides users on what questions to ask, summarising conversations with multiple advisors, and helping address the knowledge gaps between users and advisors. Rest assured, your identity stays anonymous until you decide to share your contact details
MoneyFitt does not charge users for connecting with financial advisors, nor does it take any commission from products taken out, ensuring a transparent experience.
A well-informed and knowledgeable consumer is better equipped to make informed decisions both with and without requiring the assistance of a financial advisor.
Singapore offers a wealth of educational resources and workshops to improve financial literacy. Resources like MoneyFitt provide free financial education covering various topics, from budgeting tips to investment and retirement planning.
Many financial institutions and fintech companies offer online tools and calculators to help individuals assess their financial standing, set goals, and project future outcomes. These tools can serve as a starting point for discussions with a financial advisor or may be enough to replace the guidance you may require.
Robo-advisors, which are automated investment management platforms, can offer Singaporeans a cost-effective and convenient way to build and manage their investment portfolios. These services often incorporate sophisticated algorithms and diversification strategies to align with the client's risk tolerance and investment objectives.
Managing your own finances is advisable only if you have the necessary knowledge, expertise, and time. This task demands staying informed, updated, and continually educated, which can be quite time-consuming. Without professional guidance, you might overlook important areas or make incorrect decisions. These could include purchasing plans unsuitable for your life stage, obtaining insufficient insurance, taking on too little or too much risk in your investments, or accumulating excessive debt. Such mistakes could lead to financial losses that far exceed the cost of hiring a financial advisor.
Financial advisors can help Singaporeans navigate the complexities of personal finance and make informed decisions that align with their long-term goals by providing comprehensive financial planning, investment management, risk mitigation, and tax optimisation strategies.
As Singaporeans strive to build a secure financial future, leveraging the expertise of a qualified and trustworthy financial advisor can be a game-changer in their pursuit of financial freedom. By finding a financial advisor with MoneyFitt, you can develop a tailored plan, optimise your financial resources, and ultimately achieve your desired financial independence.
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