Financial advisers should act according to the spirit of rules governing them - not just meet the minimum requirements.
That was the message yesterday from the financial industry regulator, which also pointed to changes in corporate culture as one way to influence staff behaviour from within a firm.
Culture was one of "three Cs" highlighted by the Monetary Authority of Singapore (MAS) as fundamental principles that underpin success in the industry.
The other two are competency and customer-centricity, said Ms Merlyn Ee, MAS' executive director. She was guest of honour at the 14th Congress of the Association of Financial Advisers (Singapore) (Afas) with the theme "Mission Possible".
A firm's board and senior management play a pivotal role in setting the right culture of fair dealing, she said. And it should go beyond coming up with company policies and procedures.
Ms Ee cited an example of a financial advisory firm which has a comprehensive set of policies and procedures to demonstrate how fair dealing is central to its corporate culture.
But in reality, she added, this firm's management also set unreasonably high sales targets for its representatives.
Not surprisingly, the firm drew complaints from customers and MAS has taken it to task.
"While each of you may have your own business strategies, the key to having a sustainable business boils down to trust," she said.
"Gaining the trust of customers essentially means that financial advisers have to look beyond short-term gains and act in their customers' best interests."
Last year, the financial advisory industry in Singapore - which has about 3,000 representatives - saw its market share of new business rise to 18 per cent from 16 per cent.
The other two main distribution channels are tied agents and banks - and there is potential for more growth. After all, Singapore's ageing population and rising affluence augur well for the financial advisory industry.
By 2030, the number of citizens aged 65 and above will double to 900,000, while the number of working-age citizens to each person aged 65 and above will fall to 2.1 from the current level of 4.9. This points to more demand for financial planning so people can build a nest egg for their golden years and healthcare needs.
Singaporeans are also becoming more affluent, with household financial assets having grown on an aggregate basis, at an average rate of 7.8 per cent annually in the past five years to $967 billion in the first quarter of this year. Firms able to offer advice on multiple asset classes to these retail investors would have an advantage.
Ms Ee urged financial advisers to "move up the value chain" for customers. To stay ahead of the curve, the industry needs to respond to developments such as the proliferation of lower-cost
financial products like exchange-traded funds, higher financial literacy particularly among the Internet-savvy, and the use of technology.
At the conference, Afas president Vincent Ee called for MAS to come up with guidelines to enhance the transparency surrounding the disclosure and understanding of commission rebates which some advisers give to consumers.
The sector is gearing up for the implementation of regulatory changes pertaining to the Financial Advisory Industry Review recommendations such as the balanced score card remuneration framework which takes in non-sales factors in determining the compensation of representatives and their supervisors, as well as the banning of product-related incentives.