THE remuneration financial advisers earn will no longer be tied just to the amount of sales they rack up if a recommendation from the Financial Advisory Industry Review panel is adopted.
The panel suggested that financial advisory firms move away from paying only sales commissions to a balanced scorecard remuneration framework for advisers.
This would factor in sales but other performance indicators as well, such as the quality of advice and the suitability of recommendations.
The suggestion has been received positively, but some financial advisers had reservations on how it could be implemented.
Ms Jeanette Lee, 32, who has been an insurance agent since 2008, likens the new scheme to staying in a hotel room.
"You pay for the room, but if you get bad service, you won't go back again," she said. "How I see it personally is that if you do a good job, you eventually get the same level of remuneration and you will also get referrals from your existing customers, which is another form of compensation."
Mr Tommy Wee, president of the Insurance and Financial Practitioners Association of Singapore (Ifpas), noted that having non-sales benchmarks would ensure a consistent level of service and discourage unethical practices.
"The implementation, however, is something that we need to examine carefully to ensure that the advisers will not be unfairly penalised," he added.
Similar sentiments were echoed by insurers such as NTUC Income and Manulife, which believe that the new proposal will improve the quality of advice by agents.
Mr Ken Ng, senior vice-president and general manager of distribution at NTUC Income, said: "How we assess key performance indicators and ensure level standards is something the industry will need to work through together to ensure that they are effective and fair."
Unlike the insurance industry, many banks, including DBS, OCBC and United Overseas Bank, already employ the balanced scorecard framework in deciding remuneration packages for sales staff.
OCBC, for example, factors in the quality of service and compliance, and accuracy in its framework, which was implemented in 2009.
Mr Dennis Tan, OCBC's head of consumer financial services and group premier banking, said: "You can do solid sales, but if you fail to pass the minimum in terms of compliance and service, you can potentially still get nothing."
The bank tracks customer satisfaction through post-sales phone surveys and has auditors to ensure that any advice given to customers is suitable and the documents accurate. Mr Tan said the initiative has been reflected in increasing customer satisfaction levels, which the bank tracks internally.