Making A Name Through Ethical Practices

This is an article published in The Business Times as a recognition for our ethical practices on financial planning and strict adherence to the fee-only model.

FEE-ONLY advisory firm Providend faced an uphill climb when it was set up in 2001.

Chief Executive Officer, Christopher Tan, was often told that Singaporeans would not pay a fee for advice.

But since then Providend’s assets have grown; it currently manages around S$283 million. And, its reputation for ethical practice and strict adherence to a fee-only model caught the eye of NTUC Enterprise Co-operative.

Today, Providend Holding is a 40 percent partner of MoneyOwl, with NTUC Enterprise holding the balance of 60 percent. Mr Tan is concurrently Executive Director of MoneyOwl. (Note: Divestment of shares in MoneyOwl – We would like to formally announce that as of 1 June 2022, Providend Holding Private Limited has divested 100% of our shares in MoneyOwl Private Limited.)

Its insurance portal DIYInsurance, set up in 2014, was an effort to expand its services to the retail public. DIYInsurance has been absorbed into MoneyOwl as the insurance module on the MoneyOwl site.

Mr Tan said: “Since Providend started we have championed conflict-free advice. However, our fee-only model is only suitable for the more affluent as their circumstances are more complex. At that time we were thinking of how we can reach out to the man-in-the-street to offer them conflict-free advice. The result was DIYInsur-ance.

“We weren’t sure people would buy via DIYInsurance. Some of our shareholders were also not convinced it would work.’’

DIYInsurance started with a 30 percent rebate of commissions. This was raised in 2016 to 50 percent. Clients browsed through the portal for suitable plans and may seek an opinion from human advisers. All advisers were salaried.

The amount of premiums collected grew from S$86,000 for the six months of 2014 to S$1.46 million in 2017. The site advocated term insurance for protection instead of expensive whole life plans. Until the partnership with MoneyOwl, DIYInsurance was a division of Providend, and was profitable.

“What we have done was but a drop in the ocean. But it was exponential growth for us since day one, and more importantly, we see a behavioural change in how consumers buy insurance. We believe this trend will only persist.’’

The average policy size sold by DIYInsurance was about S$2,000 in annual premium. This could buy a sum assured of about S$1.5 million for a 35-year-old, which was the average age of DIYInsurance clients.

This is an original article written by Genevieve Cua, Editor at Singapore Press Holding Limited. This version has been published in The Business Times, Banking and Finance Section, on 3rd November 2018.

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