Karen Tang, CFP®: Certified Financial Planner in Singapore
FAQs
Karen’s Financial Services
Karen Tang is a CERTIFIED FINANCIAL PLANNER™ and an Associate Estate Planning Practitioner AEPP®.
The CERTIFIED FINANCIAL PLANNER™ certification has been the standard of excellence for financial planners. CFP professionals have met extensive training and experience requirements, and commit to CFP Board’s ethical standards that require them to put their clients’ interests first. CFP® professionals take a holistic, personalized approach to bring all the pieces of your financial life together.
The CERTIFIED FINANCIAL PLANNER™ and CFP® are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. Financial Planning Association of Singapore is the marks licensing authority for the CFP marks in Singapore, through agreement with FPSB.
The Associate Estate Planning Practitioner (AEPP®) designation is awarded by the Society of Will Writers (SWW) of the UK and the Estate Planning Practitioners Limited (EPPL).
Click here to learn more about Karen.
1. Holistic financial planning
With holistic financial planning, Karen looks at all aspects of your personal and financial life, before creating a plan for your money. She will take into account your aspirations, concerns, goals and then create a plan to help you get there.
You benefit from having this expertise all under one roof:
- Tabulating cash flow and balance sheet statements
- Credit management
- Risk Management
- Investment Planning
- Children’s Tertiary Education Planning
- Tax Planning
- Retirement Planning
- Estate Planning (offered only to non-Muslims)
- General Insurance Services
2. Big picture view of your financial plan
You gain a clearer picture of how the individual plans in your financial program fit and work together to meet your life goals.
3. Needs-based advice
Your needs drive your solutions and not the other way round. With access to some of the best solution providers in the market, Karen is able to source for the most appropriate products for you.
4. Comparison & selection of solutions
You have access to the very best financial solutions from across the market and not only from one product provider.
Karen’s role as your comprehensive financial planner is to provide clarity and guide you to the most ideal solutions that best fit your needs. Karen specializes in comparing and selecting insurance options; not only does she study the fine print (terms and conditions), she also ensures that her clients get the most cost-effective option.
5. Continuous tracking
Your needs and goals may evolve over time. Through an ongoing relationship, Karen will help you to review your plan or strategy on a periodic basis, and make any necessary adjustments to help you stay on track.
- Professional women between age 30 to 50
- Fresh graduates and young working adults are welcomed (minimum 21 years old)
- Singapore citizens or Permanent Residents. For PRs, they should not be tax residents of the United States of America.
- Karen prefers to work with clients who speak and understand verbal and written English.
- She generally does not accept one-time transactions such as generating quotations and selling an insurance product or writing a will without any opportunity for a long-term professional relationship.
- Clients should generally be familiar with commonly used techniques such as email, Whatsapp, and internet banking. For non-face-to-face virtual meetings, clients are expected to know how to operate Zoom or similar software for video conferencing.
- Karen cannot advise on any tax consequences for investments. You have to source your own tax consultant. If you are a US taxpayer, Karen cannot accept your case regardless of your nationality and residency status.
To achieve accurate calculations and analysis, Karen would require the following:
- Annual income including monthly pay, annual bonus and any other sources.
- Details of your curent life insurance plans and investments:
– policy documents
– cash value statements from the respective insurers
– latest investment statements (e.g. shares, unit trusts, SRS). - CPF balance and 12 months contribution history (print statement from www.cpf.gov.sg).
- Mortgage details of your home: latest statement. If you have an investment property, please provide the same.
- Car loan outstanding and/or other personal loan details: latest statements.
- Latest income tax statement.
- Average monthly expenses.
- Estate planning done so far, for example, a will.
The first exploratory meeting is free of cost, for you and Karen to get to know each other. This meeting duration will be 45 minutes to 1 hour.
For Karen’s professional work, thereafter, a nominal fee of planning work applies. This includes time spent in:
1. Face to face and video conference meetings
2. Answering your questions on the phone
3. Guiding and coaching you
4. Collecting & organizing your relevant data (fact finding, know your client)
Note: Karen will help you to systematically note down your key financial numbers and relevant non-financial information. You must give Karen the entire work scope i.e. all data, scenarios, preferences, assumptions within 10 calendar days (8 business days) BEFORE Karen starts the process of planning i.e. number crunching and report generation (including a prioritised action plan).
5. Evaluating that data
6. Scenario analysis – what can be done in various possible situations in the future
7. Comprehensive planning
8. Gap analysis
9. Creating your unique action plan
10. Recommending suitable solutions for your needs
11. Generating your wealth report
An average case of planning will take between 10 to 15 hours. This includes all of the activities listed above.
What you get for the fee:
- Financial planning report: This presents your key facts and figures in an organized document. It includes your life goals, concerns, dependants, preferences, as well as your relevant numbers that matter most.
- Gap analysis findings: This shows your shortfall or surplus in all the vital areas – different kinds of wealth protection (risk management) and wealth accumulation (investments).
- A prioritized action plan: This focuses on fixing the most critical areas of shortfall first while reducing unnecessary expenses and wasteful cash outflows that you may have.
For those clients who want Karen to help them implement (buy) specific products or solutions that they have already selected, and where there is no professional planning work needed, no planning fee is charged.
Financial Planning
The cash flow statement and balance sheet form the backbone of a comprehensive financial plan.
The purpose of establishing the cash flow and balance sheet is to identify sources of income and expenditure.
Also, an emergency fund must be in place to meet minimum liquidity. The balance sheet will reveal whether there is sufficient liquidity. If there is a large positive cash flow but the balance sheet does not reflect the appropriate savings rate, we will have to find out where the surplus cash has been allocated to.
For negative equity assets, we may need to determine the actions to take to prevent further losses.
This is where we plan how to save for your children’s tertiary education. Tools include investments and education savings plans. Parents tend to de-prioritize their own retirement planning needs when their children are younger.
Here, we work with you to seek a balance in saving for your children’s education and your retirement.
Both education planning and retirement planning require some form of investment planning. The former is a medium-term goal while the latter is a longer-term goal.
We will take into account all of the client’s assets: cash deposits, fixed deposits, endowments, SRS balances, CPF Ordinary Account, Special Account, Medisave, unit trusts, stocks, investment properties.
We will then recommend an asset allocation to achieve the desired weighted average return. The investment portfolio is not static as rebalancing will be made to ensure that it stays aligned to the client’s risk profile.
We use the expense method to calculate the amount of retirement funding required for retirement planning. We project the expenditure at retirement age based on an assumed inflation rate. Based on the assumed life expectancy and investment rate, the lump sum retirement funding is determined. If the lump sum is unavailable currently, then we will recommend a monthly contribution to achieve that goal.
The primary purpose of estate planning is to ensure the client’s dependents receive the intended monies to take care of their ongoing living expenses.
The second purpose is to ensure liabilities are paid on the demise of a borrower.
Thirdly, the intention is to leave behind a legacy to the intended beneficiaries.
Fourthly and most importantly, it is to ensure that the appointed trusted Executors/Trustees take on the fiduciary duty to ensure the estate is managed and distributed in the best interest of the beneficiaries.
Insurance
For individuals with family and particularly sole breadwinners, their family depends on them to provide for their essential needs. Any unforeseen event e.g. a major illness, death, a disability could have huge financial implications on the family’s future well-being.
Such risk, fortunately, can be mitigated. In financial planning terms, managing risk is to transfer the risk to a third party. In this instance, it would mean transferring the risk to an insurer (via an insurance contract) who will take on the risk in return for a premium (cost).
It is not about which insurance product fits you. Rather, it is about what your requirements are and how a product can fulfill that need. Financial planning is dynamic, not static. As you go through different stages of life, different needs could arise and this has to be taken into consideration in your overall financial plan.
Disability Income insurance is not the same as insurance covering Total and Permanent Disability. Their definitions mean a world of difference when it comes to claims.
The definition of TPD states that one has to lose a pair of limbs (i.e. both arms, both legs or one arm, one leg, or both eyes) to be compensated by the insurer.
This is a stringent definition to fulfill. On the other hand, the definition of disability in a disability income plan is tied closely to one’s ability to perform the material duties of one’s occupation. You need not lose an arm or leg or eyes to be compensated.
As long as the disability resulting from an illness (including psychological problems) or accident renders you incapable of working to earn an income, you’ll be paid the disability benefit. Terms and conditions apply.
Here, we assume that the single person does not have any dependents and does not wish to be a financial burden to his or her family. He or she needs to consider and be financially prepared for the consequences of these scenarios:
- Loss of income due to disability
- Loss of income due to critical illness
- High cost of long term care in the event of severe disability
- Large medical bills due to hospitalization
Two situations that could cause parents to dig deep into their finances include:
- Large medical bills due to hospitalization
- High expenses incurred because of critical illnesses
It is important to note that many insurers exclude critical illness that originates from congenital diseases. Some have a waiting period of the first 7 years of the child’s life while others permanently exclude it completely.
In terms of hospitalization insurance, some permanently exclude congenital diseases while others have a waiting period of 2 years before they are willing to provide coverage.
For a person with a family to support i.e. dependents, the loss of income can cause great financial hardship. Possible scenarios that can result in the loss of ability to work include:
- Loss of income due to disability
- Large medical bills due to hospitalization
- High expenses due to critical illnesses
- Loss of income due to death
Read Karen’s article for more information.
Investments
An equity investment is a money that is invested in a company by purchasing shares of that company in the stock market. These shares are typically traded on a stock exchange. Because shares are traded, fluctuations in the stock price are inevitable. Equity investors purchase shares with the expectation that they will increase in value in the form of capital gains, and/or generate capital dividends.
Equity investments are subject to the following types of risk:
- Market risk
- Liquidity risk
- Non-systematic risk
Fixed-income or bonds refer to the debt issue by a company. When a company wants to borrow money from the public, it will issue bonds. Investors or lenders buy these bonds. Bonds pay investors fixed interest or dividend payments until their maturity date.
At maturity, investors are repaid the principal amount (face value) they had invested. Government and corporate bonds are the most common types of fixed-income products.
The risks of fixed-income are:
1. Default risk
2. Interest rate risk
3. Credit risk
4. Foreign currency risk if the bond is denominated in foreign currency
5. Liquidity risk
6. Non-systematic risk
Waiting for the “best” time to invest in the stock market just means you are missing out on potential returns in the meantime. Experts say you should invest whatever amount you can, whenever you can. If you don’t have a lump sum to invest, a dollar-cost averaging strategy works too. But first, make sure you pay off high-interest debt and have enough emergency savings.
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.
The three main asset classes – equities, fixed-income, and cash and equivalents – have different levels of risk and return, so each will behave differently over time.
A greater proportion to equities increases the risk of the portfolio but provides a potentially higher return in the long term. On the other hand, a higher proportion of bonds decreases risk but also decreases potential return.
It is important that you are aware of the components of the bonds and equities you are investing in. If the bonds are of a non-investment grade nature, the risk of such bonds is high. On the other hand, if the equity investment consists of 100% defensive stocks, the long-term return of such an equity portfolio will be potentially low.
Estate Planning
When a person dies, all his assets are collectively called the “estate.” However, not all assets in the estate are distributed in the same manner.
For personal owned assets like saving accounts, fixed deposits, unit trusts, shares and properties, SRS balances, CPFIS investment, they are distributed according to the Intestate Succession Act, if there is no Will and the Wills Act if there is a Will.
For CPF balances, they are distributed according to your CPF Nominations or the Intestate Succession Act. Whether there is a Will or not has no material impact on its distribution.
For insurance nominations such as those nominated under Section 73 of CLPA, Co-operative Act, Section 49L / 49M of Insurance Act, these insurance policies are distributed according to the nominated beneficiaries regardless whether there was a Will or not.
Also, if there is no vesting for third-party policies, the policy will form part of the estate subject to the Intestate Succession Act or the Wills Act.
The tools used for estate planning include: Wills, Living Trusts, Testamentary Trusts, Lifetime Transfers, Buy-Sell Agreements and Lasting Power of Attorney.
No one can predict where life will take us the next moment, the next day or the next month. In other words, get it done while you are alive and of sound mind.
Absolutely not. In general, everyone needs estate planning. By doing so, you are being responsible for making your intentions clear to your beneficiaries and reducing potential conflicts and tedious, costly processes. Also, an immediate estate can be created easily using insurance.
If a person dies with a Will, it is known as dying testate. The Executor will have to apply for a Grant of Probate (GP). The process as follows:
1. Obtain a death certificate
2. Executor applies for Probate with a list of assets in court
3. Probate obtained within a few months
4. Executor pays all debts and distributes assets according to the Will
Sureties are required if there are beneficiaries who are minors and/or if the estate size exceeds S$250,000. For a young family with small children, this means that the surviving spouse must find two sureties with asset value equivalent to the gross estate.
This poses a huge burden on the surviving spouse as it is generally very difficult to find such sureties who have everything to lose and nothing to gain. For those who are older and whose children have grown up, the gross estate is definitely higher than S$250,000 due to property ownership.