What 2015 taught us about investing

Stay focused amid the volatility to achieve long-term goals

Mr Ee, president of the Association of Financial Advisers Singapore, says the association will continue to be a springboard to reflect licensed financial advisers' interests and concerns. The organisation will also pursue more professional standards
Mr Ee, president of the Association of Financial Advisers Singapore, says the association will continue to be a springboard to reflect licensed financial advisers' interests and concerns. The organisation will also pursue more professional standards of compliance and governance.ST PHOTO: AZIZ HUSSIN

VINCENT EE

President of Association of Financial Advisers Singapore (AFAS)

Q What were the best and worst things that happened to you (financially) this year?

A Financially, the best thing for me in 2015 was stability. Nothing spectacular but those who understand personal finance would know that this is the cornerstone for financial success.

Q How has 2015 been for your industry?

A The financial services industry in general experienced slow growth in 2015. Not bad, given that it was a year when there was negative growth in many sectors.

In the case of the financial planning industry, the results vary, depending on how firms and representatives are coping with the new regulatory changes.

I've heard of financial planning groups expecting a 20 per cent decline in new business this year. The implementation of the Financial Advisory Industry Review (Fair), particularly the Balanced Score Card (BSC) framework, did have a negative impact on their sales.

Firms are devoting more resources to implementing the new regulatory requirements, and the representatives are slowing down their sales and advisory process in order to stay compliant with the BSC standards. These are common reasons cited for the decline in new business in 2015.

Nevertheless, the new regulatory changes are generally positive in the long run for both consumers and the industry. Firms that are more ready are still experiencing growth in their business despite all the changes.

Q How do you see 2016 panning out?

A Moving on to 2016, there are still challenges for the industry regulations-wise, given that almost all the Fair changes will be implemented from Jan 1. Firms are now better prepared but there is still no solution to the increasing cost of regulations and compliance.

The industry has to move forward decisively with a well-balanced approach in managing the business. AFAS will continue to be a springboard to reflect licensed financial advisers' interests and concerns as well as pursue more professional standards of compliance and governance. We must accept, adapt and achieve a higher level of success in due course. Ultimately, any increase in costs has to be covered by an increase in productivity.

Q What is one piece of financial advice you would give to retail investors, looking ahead in 2016?

A Stay focused in the long run.

The volatility and uncertainties that plagued markets in 2015 will likely spill over into 2016. This has caused some investors to lose their nerve and move out of the market. However, this is disruptive to achieving an investor's long-term goals. Overall, a well-diversified portfolio held over a period of time should help to address both market and business risks.

A version of this article appeared in the print edition of The Sunday Times on December 27, 2015, with the headline 'Stay focused amid the volatility to achieve long-term goals'. Print Edition | Subscribe