Independent Financial Advisers?

I read in the Straits Times the letter to the forum by Larry Haverkamp titled : "Onus on insurers to boost transparency".

In it, he referred to another recent article which mentioned that financial advisers should not call themselves "independent" if an insurance company pays them a bonus for hitting sales targets. Mr Haverkamp goes on to suggest that dropping the term "independent" is a good idea but might not be a big deal as advisers will still continue to push the products that pay them the most.

MAS actually has guidelines on whether a financial adviser is "independent". And at times, it can be pretty grey as certain product providers do provide incentives that might make them bias in favour of a particular investment product.

Haverkamp is also correct to point out that playing with the word "independent" is actually just a small step forward. The ideal reform would be to empower consumers and let them make decisions based on a complete knowledge of the various products namely:

1. DIY method (Buy Term Invest the Rest)

2. ILP

3. Endowment

4. Whole Life Plans

Sing Dollar Rises with Record GDP Growth Forecast

With Singapore's GDP expected to grow at a record 13 to 15 percent in 2010, the Sing Dollar is also expected to rise to curb inflation. MAS has declared that it will maintain a modest and gradual appreciation stance for the currency at the next policy meeting.

I have always been quite interested in economics. Unfortunately, I have never been trained in this subject. The closest I got was to study Economics 101 in university and that was pretty much about supply and demand lines. We hardly talked about currency appreciation and inflation.

This is my version or laymen's language of what is going on:

1. Singapore's output in terms of products and services have been pretty high over the past 2 quarters. As such, the expected GDP figures are going to be between 13 to 15 percent. GDP stands for Gross Domestic Product and is basically a measure of the country's economic output. For the long term, a healthy GDP growth is around 3 to 5 percent.

2. When GDP rises, inflation is also expected to increase. This is because firms require more workers and start bidding against one another to attract workers so as to produce a higher output. This leads to an increase in the prices of goods and services and thus leads to inflation. When GDP grows rapidly, inflation is also expected to rise rapidly. Most economists try to keep a low steady inflation rate of 2 to 6 percent. That basically means that there will ALWAYS be inflation in Singapore as it is judged that low rate of inflation is good for the economy. So do take note that inflation is not some airy fairy thing that only takes place once in a blue moon. Most countries try to keep a positive inflation as they view that deflation is bad for the economy. In that sense, we can expect inflation to be always with us.

3. By appreciating the Singapore currency, inflation will be kept in check to the low rate. MAS is not trying to abolish inflation. Rather, it is trying to achieve the targeted inflation rate of 2 to 6 percent which is deemed healthy.

I am not an economist and I am also not from MAS. But I guess this is the linkage between GDP, inflation and currency appreciation. At least, this is the way I understand it to work =)