ILP is a bad deal, exposing FA/FC
Recently I seen a lot of FAs/FCs promoting investing in Lemon8 and also a lot of friends and family been upselling ILP and ask me to help them review their product, which I would say is a bad deal, here what i found out after digging into multiple fund houses and insurance investment on how the market works and how ETF is drafted based on the composites, I have attended fund house talks and FA pitches to undercover what they are selling, and even intern a few agency to see what up with them so I like to share my finding.
Most FAs/FCs pitches it similar to accredited investors, which can promote mis-selling. Say that the funds are actively managed and your money is safe.
Fund house management expense ratio cost about 1-2.5%, with asset composites mirroring SP500 or SP500 industrial sectors or even other ETFs like global world fund/china/india.
ILP have a reduce drawdown of 0.5-1+% compare to index, it cause of currency hedges and spread/eod price, so they brought some protection for usdsgd holding, normally hedge at a fixed rate for a year be4 rolling, however that limits up side of 1-2% when it peaking. also pricing usdsgd based on their own exchange rate usually 50-80pips charge to the client. (similar to most brokers practice) which make you incur about 0.6% fee when u buy directly.
Bid Ask and end of day pricing also distaught how the portfolio is being price, portfolio price is only recorded at the end of the day, etf have a ask n tight bid spread, however unit trust/ILP do not have as good of a spread often divert around 0.1% difference as it not as liquid.
Even tho downside is capped, often upside is even capped with inclusive fees of 1.5% MER compare to index etf of 0.03-0.09%, investors will bleed in fees, often lose out about 23.7-24.5% gains in 15 years. Fund composite mirror similarly SP500 with only rebalance during SP500 rebalancing exercise.
Now they promote ILP with 20% welcome bonus, do not be fooled since it just financial engineering on fees to buy client trust. This 20% are just skim from the gains that you will lose out from the next 15-25years so that you feel much more euphoric about the sudden 20% gains, which make you want to buy more with them DCA every month.
🚩Here what the FAs does not want to tell you.
Commission of ILP is about 30-50% of the client deposit which force lock up based on the agreed tenor, the longer the tenor the higher the commission.
Surrendering your plans would incur huge losses of 30-60%, since fees and commission have be paid out, if the money inside is quite little I would recommend to just pull out and invest by yourself.
Most FAs do not understand and know what is going on with the market, often they only know after the market has moved or when news publication has said, by then it already too late. They do not have bloomberg terminal or do research/data digging.
FAs/FCs rely on peer pressure and short time horizon to push deals, if you are easily guilt trip or hard to say no, do not meet them.
If you accidentally buy, there is a cancellation plan are 14 days, contact them to cancel the plan immediately, make sure everything in in text and screenshot so they do not delete, sometimes they will try to stall you by slow replies and hard to contact, cancel the plan yourself by going to the fund provider and request cancellation.
If you need to lodge a complain, go complain directly to MAS financial advisor complains instead of their agency/insurance broker as they will process faster and have harsher punishment, make sure you have evidence and everything is on text. However it unlikely that you can cover back your losses, best case to hire a lawyer and sue for mis-selling if you want compensation.
There no ethnical FAs/FCs when the incentive structure force them to earn at the expense of their clients, they tend to target NSF, students and even the elderly to get as much out of them.
Your better off buying your own ETF rather than getting managed by FAs who only want to get MDRT and flex their expensive materials.
#investments #financialplanning #insuranceagent #RealTalk #Lemon8SG
Many investors aren't fully aware of the flexible refund and cancellation policies for ILPs promoted by financial advisors (FAs). Often, the contracts lock clients into long terms with high surrender penalties, making it extremely expensive to exit early—sometimes losing 30-60% of your invested amount. Based on my experience, if you are uncertain, it’s better to cancel within the 14-day cooling-off period immediately and keep all communication in writing to avoid stalling by agents. I also noticed that while FAs push ILPs as secure and actively managed investments, the reality is their performance often mirrors broad indices like the S&P 500 but with high management expenses—1.5% or more compared to 0.03-0.09% for ETFs. This discrepancy means over the long term, investors could lose out on roughly 23-24% of gains due to fees alone. Many advisors lack real market research and rely on peer pressure or short-term incentives to close sales, which can be especially risky for vulnerable groups such as students or the elderly. For those considering HSBC ILP funds or similar products, be cautious of seemingly attractive welcome bonuses; these usually come at the expense of future returns. If you want more control and transparency, buying low-cost ETFs directly can be a better route. It’s also wise to check with regulatory bodies like MAS if you suspect mis-selling or poor advice and prepare solid evidence for any complaints. Lastly, remember the importance of understanding what financial advisors truly gain from these deals—they often receive large commissions upfront that may not align with your investment interests. Self-education and skepticism go a long way in protecting your money from costly pitfalls often hidden in ILP promotions.
