Gavin Teoh was drawn to financial planning after the untimely demise of his father. He started as an insurance agent and is today one of the most sought-after financial planners in Malaysia. He was the first runner-up at the PlanPlus Global Financial Planning Awards 2013 (Asia Region). Read on to find out more about his inspiring journey.
What inspired you to take up
the financial advisory profession?
I knew the importance of financial planning from my own family’s experience. The lack of estate planning led to a tussle over my grandfather’s inheritance, while the lack of insurance planning led to financial hardship on the premature death of my father.
There was a burning desire in my heart to venture into my own business in search of better income and life. I had embraced the importance of financial planning and knew there was a way of starting a professional business in the industry.
Being a Physics graduate, I started as an employee in the engineering industry. But after eleven months in employment, I was not satisfied. I came out of employment to start my own business as an insurance agent. My high ambition for my own business career and my belief in financial planning pushed me to participate in a financial planning program organized by AIA Insurance Company. Financial Needs Analysis was emphasized deeply by its training partners, Arthur Anderson and Vernon Publishing of USA. I became a strong believer in needs-based practice, which I applied across all new service engagements. The needs-based approach allowed me to obtain clients’ financial data easily for analysis, whereas many insurance practitioners struggled to get personal data from clients using the traditional product-centric approach.
Tell us about your business model and what kind of services do you provide?
Needs-based practice is my focus It was during my attachment to a special financial planning practice division of a local unit trust company, CIMB Wealth Advisors Financial Care Centre, in 2005 that I gained the knowledge on a systematic way to conduct my advisory practice with support from PlanPlus, a Canadian financial planning software company.
When financial adviser (FA) practice was promoted by Malaysian regulators about six years ago, I took the opportunity to convert from tied agency practice to IFA practice in 2009. I associated with the largest local financial adviser company, StandardFA, as a licensed representative. I managed my practice office with support staff and associates (the planners).
I prefer a boutique practice model with the direction to grow into a larger ensemble with support of para-planners, client services administrator, officer manager and qualified financial planners. In our practice, we would only elevate the need of holistic and comprehensive financial planning to clients after understanding their complications and requirements.
This is akin to the medical practice where a doctor should not ask all his patients to do full medical check-up or go for operation for better profit if it is just a simple and normal sickness; I believe this concept shall apply to financial planning practice as well.
We are fee-based financial planners. For a straight forward situation, we may just earn our income from the commission on implementation of financial products. For more complicated cases requiring advisory, we would factor in time cost and wrap fee on investment assets.
Most financial advisors in India don't follow any client segmentation. They onboard all types of clients. How does one go about deciding which client segment to focus on? What are the benefits of catering to a niche?
I am very impressed with financial planners in US;, many of them have become specialists in certain specific target segments such as financial planning for divorce cases. But we have to be pragmatic here knowing the industry is still at its infancy stage. However I believe in focusing on a core market in our prospecting; this is what every financial planner should do. I believe with the specialisation on specific profession of clients, our advisers would have a better understanding of the industry or profession, way of life and concerns of the clients. Naturally, we will become more like their family member if we know their business and personal lives deeply rather than just being an adviser.
Personally, I like to focus on SME businesspersons, because they have full discretion in making fast decisions. In fact, they have flexibility of time compared to employees and most of the meetings are conducted during office hours and weekdays, compared to weekends and night time for the employee market. But the main challenge is breaking the trust barrier. Plus, they have vast exposure in dealing with financial practitioners and they know the market. So, I have to be equipped with good knowledge and skill in dealing with them.
One of my associates prefers physicians and corporate executives as his clients. There is no right or wrong here, it is just like what type of tea we prefer.
We have chosen to focus in industries like information technology (IT), security and surveillance, tooling fabrication, industry trading, printing, engineering, manufacturing, construction and medical practice. In our practice, we contribute regular articles on a bi-weekly basis to business owners from various industries through Malaysia SME magazine.
One of the major problems in India is that clients don't pay for financial advice. How can advisors convince people to pay fee?
I would like to say this situation is not much different compared to what has happened in my country. I am sure if clients see the high value from the fee charged, through the consultation process and how the solutions can improve their lives, they are more than happy to pay us the fee at a justifiable cost.
Financial advisers should present proper write-up of documents to clients, describing the terms of service engagement, fee charged, scope of services and profile of adviser. This helps clients make informed decisions for the engagement.
How do you win the trust of your clients?
Clients wouldn’t give us the opportunity if they can’t see the benefit of the service. They won’t pay us if they don’t see how we can improve their lives or solve their problems, and certainly they won’t engage us if they don’t trust us. In reality, we are in a “people” business, therefore winning the trust from clients is vital to succeed in this profession.
I fully agree with Mick Cope, the author of the book The Seven Cs of Consulting. He says to build the trust we must have these ingredients:
· Truthful – Integrity, honesty and truthfulness
· Responsive – Openness, mental accessibility and willingness to share ideas and information freely
· Uniform – Consistency, reliability and predictability within the relationship
· Safe – Loyalty, benevolence and willingness to protect, support & encourage each other
· Trained – Competence, technical knowledge and capabilities
Referrals remains one of the main source of client generation tool for individual financial advisors. How can advisors increase their likelihood of getting referred? Is there a structured way of asking for referrals?
It would be good to start with happy clients and who can act as Centre of Influence (COI) to build a bridge for us to meet their good friends, business associates or clients. I would suggest advisers to be brave enough to ask clients how satisfied they are with our service. This not only helps to gather constructive feedback for improvement, but also increases the trust and helps us get referrals.
Make it easy for our clients to identify potential referrals from their circle of friends, business associates or clients by specifying the type of prospects we hope to work with. Otherwise, we may get referrals for non-quality clients which is not within our target segment.
Please share one of the most memorable moments in your financial planning journey…
I encountered an obstacle in dealing with a client in the early part of my career. I got to know him in my cold call activity and he was a friendly and supportive businessman. He granted me an opportunity to provide medical insurance to his staff and him. He was very upset when he got to know his application for his own medical plan will be offered with a premium loading due to a history of sub-standard term in his existing policy. He threatened to sue the insurer for investigating information on his existing insurance from a system shared by underwriters without his consent. I was very naive in handling such a tense situation at that stage and he decided to cancel all applications for staff insurance. I managed to appeal to the insurer to give full refund of premium to his company even though a few staff policies had been approved and had exceeded the free-look period, else it would have been my financial loss as he demanded a refund from me.
A year later a fire insurance claim was called. I gave prompt service to him and he was compensated accordingly two weeks after the incident. He was so happy with my service. By the time, he had already understood that the system shared by insurers for underwriting is a normal practice in the industry. We re-built our relationship and he continues to be one of my supportive clients.
What are the qualities of a good financial advisor?
Financial planning practice starts from our heart. It needs passion, belief and compassion to guide clients towards financial freedom by giving thoughtful, practical and meaningful financial advice. We should know how to balance between our earnings and the value that we provide to clients.
We should improve our skills on consulting and problem-solving, rather than solely catching up on products’ knowledge, albeit product knowledge is still important.
Advisers should know how to get to the real issues and address the root causes of client issues, and be aware that each client’s situation is unique. For the adviser, it offers a chance for creativity and learning, while for the client, the change must yield a positive and sustainable outcome.
What would be your advice to budding financial advisors?
The current trend emphasizes professional practice. The budding advisors must take the initiative to improve their knowledge and skills, to enable them to have the courage to charge advisory fees.
In any profession, there will always be two types of people – steward and proprietor. For the steward, after he has learnt the process and knowledge, he may have good ideas or skills to bring him to the next level, such as changing the practice to fee-based or full-fee based practice. But for the proprietor, he will receive the knowledge, but he may not know how to move his practice to a higher level. The latter may need a good mentor to help him move his practice, otherwise regulatory changes will eventually force them out of the industry. Meanwhile, the former should be ethical in their practice, and not just charge unreasonable fees without adding the required value to clients.
What are your future plans?
After several years in this profession, I realize the importance of understanding clients’ behavior from a psychological perspective when advising clients. I plan to pursue research in the area of behavioral finance or economics.