Retirement - Will We Ever Be Ready?

Interview by Anton D. Javier
Photography by Chino Sardea
12 Jul 2018

Mr. Dickson Tan, a former senior officer at the Central Narcotics Bureau turned wealth manager, sheds light on an issue everyone thinks of, but doesn't really talk about

Are we ever really ready to retire? This is something we often find ourselves asking, perhaps curious as to how our lives will pan out in the next few decades. We think we're earning, spending, and saving enough, but at the end of the day, a shift in mindset, habits, and investment decisions is what's really needed. To help answer some of these pressing questions is Mr. Dickson Tan, wealth manager and partner at St. James's Place. 

Tell us a little more about yourself and explain your decision to move to financial planning after being a senior officer at the Central Narcotics Bureau. What was the allure?
As a child, I always enjoyed ‘playing detective’, and my three years with the Central Narcotics Bureau (CNB) enabled me to fulfill that childhood dream. It was fun while it lasted, but at the end of three years, I was looking for a place that I can build a meaningful, long-term career that was aligned with my personal values and aspirations. I studied Finance in university, and it seemed like something that enabled me to apply what I learned in school. In addition, I have always enjoyed interacting with people, and wanted a career where I could make a difference in people’s lives.

With almost two decades of experience in wealth management, what are some of the highlights of your career?
Throughout my career in wealth management, I have seen three major market cycles over the last 19 years.

When I joined in 1999, we were just recovering from the Asian Financial Crisis. The tech bubble was fast rising and just about to burst, and this led to the US entered a recession in 2001. In the same year, we saw the unprecedented terrorist attack on American soil on September 11.

This was followed by the 2008 we had the Global Financial Crisis of our life time. In 2007, we saw the China equity bubble, and that happened once again in 2014/15.

I always felt that the investment journey is like a roller coaster ride. Human beings tends to get sucked into the emotions of investing. In a rising market, all of us are adventurous investors, seeking the high octane performance. As Singaporeans, the kiasu mentality in us will get drawn into chasing after the bubbles offered by “the growth story of our life time”.

Then, when the markets start to turn, there will be a great “change in risk appetite”. These are also times when investors tend to make their worst mistakes in existing the markets altogether.

With the rapport and trust I have built with my clients, I am grateful for the opportunities to walk them through the ups and downs of the maker cycles and to be their wealth management coach. This helps them keep their focus on their long term goals, and put the market turbulence into perspectives in relation to their investment objectives.

We understand that retirement planning is a topic you are passionate about. Can you tell us why and is it something you wish Singaporeans would be more mindful of?
Singaporeans must be aware that society is changing, and therefore, so must our financial habits. For the generation in Singapore who saw the fast economic growth of the 1970’s and 1980’s, they could buy properties and live comfortably at a decimal of what they are worth today.

Today, we are in a mature economic cycle; while Singaporeans generally lead very comfortable lives, we are also more focused on finding our passions. We do have a tendency to take for granted the comforts we currently have, making financial commitments with the assumption that current income is guaranteed for life. Purchasing big ticket items, such as cars and properties are some examples of these.

Compared to previous generations, the average person change companies every three to five years or even have two to three different careers throughout their lifetime. This is different from the previous generation where everyone worked a single job for decades and had a steady stream of income. On the other hand, technology is also disrupting the workforce, replacing and automating certain job functions. While I’m not saying that we will be left high and dry without incomes, there are new factors putting pressure on salaries and the fact that we will always be employed.

This is not scare-mongering, however I think that a common oversight in financial planning is undervalue what you have today in relation to what you might not have in years to come. As such, it is crucial to remain prudent and think it through before making bigger financial decisions.

Whenever you bring up retirement planning with a client, is it usually met enthusiastically or with resistance?
The good news is that Singaporeans are becoming increasingly aware of the rising cost of living in this country and are taking not only the retirement planning of themselves, but also that of their family. The challenge is that they might not have the right information or guidance on how they can best approach this.

In my conversations with clients, allocating enough money to fund children’s education is often the top priority. We live in a society that places great emphasis on good education, and there is a strong need to guarantee the success of future generations.

I also notice that Singaporeans are overly conservative in their investment approach. They tend to put their savings in low-yielding, long-term investments rather than coming up with an effective game plan that ensures they will have enough when retirement comes. This leaves them vulnerable to one of the most common, and dangerous, financial planning risks - running out of money in retirement.

For people who are still part of the workforce who have a long way to go before retirement, how would you approach the topic of retirement planning without having them worry too much?
It begins with a transparent and honest conversation with a trusted financial adviser about where you are at and where you want to be. In light of recent complaints and the perception that many financial advisers do not have your best interests at heart, the conversation should always focus on your needs and aspirations, rather than being product-centric in nature. This is also a two-way street. Investors need to have regular conversations with their financial advisers around all aspects of financial planning, to find the sweet spot in maintaining current lifestyle, owning a dream home and setting aside for long term accumulation.

As financial advisers, we should spend enough time educating people to look at their finances holistically. People should see a good financial adviser is like a coach, instilling good habits and behavior when it comes to money management, cheering you on when you achieve milestones, and essentially navigating you on the right path through a relationship built on trust.