Independent financial advisers gain ground as demand for holistic service grows

[SINGAPORE] The life insurance market in Singapore has long been dominated by tied representatives from insurers and bank-affiliated advisers.

But in recent years, independent financial advisers (IFAs) have been steadily carving out a larger share of the industry, as consumer demand shifts towards more holistic financial advice.

Tied agency forces – representing single insurers – continue to make up a significant portion of the industry, while banks leverage their reach and brand to push packaged financial solutions. In contrast, IFAs position themselves as more client-centric and able to offer a wider range of products across different insurers.

The biggest difference between IFAs and tied advisers, said Financial Alliance co-founder and managing director Vincent Ee, is that tied agents are limited to products of a single insurer.

“This can be restricting for today’s increasingly clients, who often want comparison or specific products features,” he added.

Financial Alliance began as an independent financial advisory firm, and while it no longer uses that official designation after a restructuring, it still functions in line with that ethos. The firm now has over 450 consultants serving more than 180,000 individual and corporate clients.

According to the Life Insurance Association of Singapore, financial adviser representatives – many of whom operate within or alongside independent financial firms – accounted for 40.7 per cent of the industry’s new business growth in 2024, outpacing tied agents who stood at 33.3 per cent.

That marks a significant shift from 2017, when the former held just 19 per cent market share.

Total weighted new business premiums rose 19.7 per cent to S$5.87 billion, with investment-linked policies – commonly promoted by independent advisers – surging 41 per cent year on year to S$2.25 billion.

Allure of autonomy

The rising influence of IFAs suggests that their appeal is growing, and that is evident in Financial Alliance’s growth, said Ee.

He said the company’s growth is partly due to its autonomy.

“We are not owned by any insurer, so our advisers can recommend solutions based purely on what’s best for their clients,” he added.

When Ee and his brother Michael co-founded Financial Alliance in 2002 after successful careers in tied agencies, they envisioned a more progressive model – one that delivered “win-win outcomes for both clients and consultants”.

He also noted that many of their advisers left behind substantial recurring income from tied roles in order to offer clients a broader range of financial solutions.

That demand is also drawing a new generation into the industry – one that is more socially conscious and driven by purpose, said Bob Ng, OCBC head of personal and premier banking Singapore.

“Aside from remuneration, today’s graduates seek out purpose in their lives and prioritise work-life balance… Candidates are drawn to the financial advisory role because they are interested in the sector, and there are ways to contribute meaningfully by helping customers on their financial planning journey,” he added.

Christopher Tan, the founder and chief executive officer of Providend, a fee-only wealth advisory firm in Singapore, said the compensation structure in most IFA firms still revolves around commissions.

While tied agencies have their compensation split by the insurer among multiple layers, IFAs receive the full commission from the insurers, which is then distributed internally.

“Typically, for the advisers, their share is also based on how productive they are. As an example, for the top producing adviser, he may get up to 90 per cent of the total commissions while the least productive adviser will be paid up to 65 per cent of the total commissions,” said Tan.

But he challenged the idea that wider product access equals true independence: “As long as there are commissions involved in the sale of products, there will always be a potential conflict of interest.”

‘Underappreciated advantages’

While independence in IFAs might be framed as freedom – over schedules, product selection and business strategy – other industry players say that might not be true in practice.

“While there are a number of financial advisers who choose to explore the IFA route due to perceived flexibility, product variety and greater autonomy over how they structure their advisory services, it is important to recognise that the IFA may not be suitable for everyone,” said Jesslyn Tan, the CEO of Great Eastern Financial Advisers.

She noted that being tied to an agency offers “underappreciated advantages” such as strong institutional support, established branding and a robust ecosystem that helps advisers serve clients the best.

Rom Lee, chief agency officer at Prudential Singapore, echoed the same sentiments.

“(Tied advisers) have the freedom to define success on their own terms,” said Lee.

Prudential has seen a 50 and 24 per cent increase in Gen Z and millennial advisers, respectively, joining its agency between 2022 and 2024, along with a significant uptick in mid-career entrants.

“They are drawn by the potential of a more fulfilling and flexible career path that allows them to draw on their life experiences to build deeper customer relationships,” he added. “We are continuing to hire and grow our agency force, with Gen Z and millennials at the forefront of our recruitment strategy.”

From a structural standpoint, James Tan, Deloitte Singapore’s technology and transformation partner, argued that very few advisers in Singapore are truly independent.

“Most financial advisers are partially or indirectly supported by insurers. These financial advisers need the support of insurance firms as they tend not to have the economies of scale,” he said.

He also noted that remuneration models across the board tend to look similar, regardless of the channel.

That said, demand for financial advice – particularly retirement and legacy planning – continues to rise. And as tools like generative artificial intelligence make planning more efficient and personalised, the role of the adviser is evolving.

“There’s a growing awareness of the real impact advisers can have on people’s lives,” said Nelson Neo, the head of retail financial planning & advisory at DBS.

“Clients want to achieve peace of mind and financial security – and they’re looking for someone who can help them get there,” he said.