IFPAS STAR Team: A Legacy of Advocacy in Singapore’s Financial Advisory Industry

Behind many of the policies that have shaped Singapore’s financial advisory industry is a group of professionals dedicated to representing the interests of practitioners while supporting the development of higher industry standards.

Established in 2012, the Strategic & Technical Advisory Response (STAR) Team has played a significant role in engaging regulators, reviewing proposed reforms, and advocating for balanced policies that support both consumer protection and industry sustainability. Through years of constructive dialogue and policy engagement, the STAR Team has become an important voice within Singapore’s financial advisory landscape.

This article explores the origins, milestones, and lasting impact of the STAR Team, highlighting how its efforts have contributed to the growth, professionalism, and resilience of the financial advisory profession.

Origins of the STAR Team

The Strategic & Technical Advisory Response (STAR) Team stands as a pivotal force within Singapore’s financial advisory landscape. Established in July 2012, this dedicated think tank has consistently championed the interests of financial practitioners across the industry.

The STAR Team was formed in response to the unexpected launch of The Financial Advisory Industry Review (FAIR) by Mr. Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), during the 50th Anniversary dinner of the Life Insurance Association (LIA) Singapore. Representing an alliance of IFPAS, FSMA, and the guilds of various insurance companies, the STAR Team was entrusted with engaging government agencies on policies that could significantly impact the financial advisory industry’s operations and earnings.

At its core, the STAR Team serves as a vital intermediary between financial practitioners and regulatory bodies. Its mission is to work collaboratively with government agencies to refine proposed regulations, ensuring that necessary reforms are implemented while carefully considering and mitigating the impact on financial practitioners.

These dedicated professionals have tirelessly engaged with regulatory bodies, providing invaluable insights and proposing alternatives that balance industry needs with regulatory objectives.

Their efforts have been instrumental in shaping policies that affect every financial advisor in Singapore, from remuneration structures to disclosure requirements. Upon examining the STAR Team’s journey and achievements, it becomes evident that their work has been the transformative force behind the financial advisory industry in Singapore.

Timeline & Milestones

2010: Span of Control

In 2010, the Monetary Authority of Singapore (MAS) introduced the Span of Control directive, which limited each manager to 15 direct agents and group managers to 10 managers. This measure was seen as being contrary to the principles of free enterprise. Following the engagement by the STAR Team, Mr. Lee Chuan Teck, Assistant Managing Director of the Capital Markets Group at MAS, agreed to review this matter upon the finalisation of the Balanced Scorecard (BSC). After the BSC was finalised, the MAS eased the Span of Control requirement, with discretion left to the respective company CEOs.

2012: Formation of STAR TEAM

The STAR Team, representing the alliance of IFPAS, FSMA, and the guilds of various insurance companies, was established, as stated above, in response to the sudden launch of The Financial Advisory Industry Review (FAIR) by Mr. Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), during the 50th Anniversary dinner of the Life Insurance Association (LIA) Singapore.

The FAIR initiative aims to enhance the standards and professionalism of the financial advisory industry and to improve efficiency in the distribution of life insurance and investment products in Singapore. The FAIR Panel focused on five key objectives:

(1) Raising the competence of financial advisory representatives;
(2) Raising the quality of financial advisory firms;
(3) Making financial advising a dedicated service;
(4) Lowering distribution costs; and
(5) Promoting a culture of fair dealing.

Over the subsequent years, the STAR Team engaged MAS and other stakeholders tirelessly to address and mitigate the identified challenges.

2013: Industry Remuneration Structure (FAIR Thrust 4)

Following numerous meetings, the Monetary Authority of Singapore (MAS) agreed to retain the commission remuneration structure and the three-tier structure instead of implementing the proposed fee-based remuneration structure and two-tier system. In accordance with the commission remuneration structure, MAS proposed a deferred payment system. However, the STAR Team identified that this would result in a reduction of total compensation. Thus, the STAR Team counter-proposed to maintain the existing maximum First Year Commission (FYC) of 50%, to which MAS responded with an adjustment to 55%.

2013: Balanced Scorecard (BSC) Framework

The purpose of the Balanced Scorecard (BSC) is to promote good behaviour and encourage financial advisory (FA) representatives to provide quality advice and suitable recommendations. The four Key Performance Indicators (KPIs) in this framework are:

(1) Understanding customers’ needs;
(2) Suitability of recommendations;
(3) Adequacy of information disclosure; and
(4) Standards of professionalism and ethical conduct.

The individuals found with infractions will be penalised financially. The STAR Team achieved a triumph by convincing the Monetary Authority of Singapore (MAS) to adopt the practice of clawing back commissions instead of withholding them. The STAR Team upheld the principle that everyone is “innocent until proven guilty.”

2013/14: Direct Channel Sales or Direct Purchase Insurance (DPI) (FAIR Thrust 5)

The MAS FAIR panel proposed that consumers could purchase insurance products directly from insurance companies, without financial advice and commission charges (direct purchase products). The STAR Team advocated successfully for limiting these products to term life insurance with total permanent disability (TPD) coverage and traditional whole life insurance products with TPD coverage, with an option to include critical illness coverage.

2016/17: Bundled Product Disclosure (BPD) (FAIR Thrust 5)

The BPD offers consumers a more cost-effective alternative to whole life or endowment plans by requiring that insurers display the Direct Purchase Insurance (DPI) in business illustrations. Comparing products sold with advice to those purchased without advice, and requiring agents to display DPI for which they bear no responsibility, is deemed rather unfair and disputable. The inclusion of DPI came as a complete surprise to the STAR Team, and they strongly opposed it. The STAR Team held numerous meetings with MAS to advocate for the removal of DPI, but these efforts initially produced no results. Afterwards, the matter was escalated to Deputy Prime Minister Tharman Shanmugaratnam, who was persuaded on the matter, leading to the eventual removal of DPI.

2019: Income Tax (Amendment) Bill: Fixed Expense Deduction Ratio (FEDR) scheme

In May 2019, the STAR Team participated in the Public Consultation of the Income Tax (Amendment) Bill 2019, focusing on the proposed Fixed Expense Deduction Ratio (FEDR) scheme which aimed at assisting practitioners in
claiming business expenses. In brief, agents within this income bracket could choose to deduct a percentage of their income as expenses without the requirement of supporting documents. The initial proposal by IRAS was set at 15%, which was deemed insufficient by the STAR Team.

Impact & Importance

The STAR Team has played a vital and transformative role in shaping industry policies within Singapore’s financial advisory landscape. Established in July 2012 in response to The Financial Advisory Industry Review (FAIR), initiated by Mr. Ravi Menon of the Monetary Authority of Singapore (MAS), the STAR Team quickly became the key advocate for financial practitioners across the industry. Representing an alliance of IFPAS, FSMA, and guilds from various insurance companies, the STAR Team engaged rigorously with government agencies to influence policies that significantly impacted the operations and earnings within the financial advisory sector.

One of their most notable achievements includes influencing MAS to revise regulations concerning remuneration structures and managerial oversight through measures like the Span of Control directive.

Additionally, their efforts led to the development and implementation of the Balanced Scorecard (BSC) framework, promoting ethical standards and fair practices among financial practitioners. Their successful campaigns against initiatives such as the inclusion of Direct Purchase Insurance (DPI) and advocating for adjustments to be introduced to schemes like the Fixed Expense Deduction Ratio (FEDR) under the Income Tax (Amendment) Bill 2019 further highlight their commitment to enhancing the operational environment for financial practitioners.

Through strategic engagement and resolute advocacy, the STAR Team continues to shape and influence policies that not only protect the interests of financial practitioners but also help foster a more supportive and regulated environment conducive to the industry’s growth and professionalism in Singapore.

The ongoing importance of the STAR Team within Singapore’s financial advisory landscape remains central to the health of the industry overall. Since its establishment in 2012 to advocate for financial practitioners, the STAR Team continues to play a key role in shaping industry policies. Through their dynamic engagement with regulatory bodies like the Monetary Authority of Singapore (MAS), the STAR Team ensures that policies are balanced, reflecting both industry needs and regulatory obligations. Their influence spans critical areas such as, but not limited to; remuneration structures, ethical standards, and operational frameworks. This ensures a fair and favourable environment for financial practitioners to thrive and serve clients effectively.

Looking forward, the future outlook for the STAR Team is very promising. As financial advisory landscapes evolve globally and locally in Singapore, the STAR Team is ready to adapt and advocate effectively on behalf of all industry stakeholders. Their ongoing commitment to enhancing professionalism, refining regulatory frameworks, and addressing emerging challenges will be crucial. Their established track record of influencing policy changes that benefit the industry proves the STAR Team is well-positioned to continue shaping a dynamic and supportive environment for financial practitioners in Singapore. Considering their expertise and collaborative approach to issues, the STAR Team aims to further elevate standards and ensure sustainable growth within the financial advisory sector.

More than a decade after its formation, the STAR Team remains an important pillar within Singapore’s financial advisory profession. Its history demonstrates the value of constructive industry engagement, thoughtful advocacy, and a commitment to balancing the interests of practitioners, consumers, and regulators. As the industry continues to evolve, the STAR Team’s legacy serves as a reminder that meaningful progress is often achieved through collaboration, perseverance, and professional stewardship.

To learn more about IFPAS, visit the official IFPAS website.

This is a Moneyplayschool and IFPAS collaboration, and the write-up first appeared in the 55th Anniversary Yearbook of IFPAS.