The Monetary Authority of Singapore has said it will conduct a review of the financial advisory industry that could fundamentally change the way wealth management is conducted in the city-state.

Singapore's watchdog wants to enhance the professionalism and competence of financial advisors, and create a more competitive and efficient system for distribution of life insurance and investment products, said MAS managing director Ravi Menon at the Life Insurance Association 50th anniversary dinner, in a transcript published on the MAS website.

The review will look at a wide range of areas from the entry requirements of financial advisers to their compensation and distribution structure of products. 

The MAS will set up a review panel to look at five areas where it will propose changes. The whole process which will be known as Financial Advisory Industry Review, or FAIR, he said at the dinner in the Raffles City Convention Centre. The members of the review panel will be announced shortly. 

"We are far better at earning an income than investing it and protecting against risk," said Menon. 

"Many life insurance and investment products are often not easy to understand. Many people are not financially savvy. And many of those who are, do not have the time to review the range of insurance and investment products available, and understand what is best suited for their needs. This is where financial advisory service comes in.  Financial advisors can help people identify their insurance and financial planning needs and recommend suitable products."

Menon said that product knowledge of financial advisors must be improved through training and that the MAS would raise the entry requirements in the sector.

"We have introduced new examination modules to ensure that FA representatives have sufficient knowledge of the wide and complex range of investment and insurance products currently available in the market," he said.

"MAS will review the minimum level of qualifications that we expect of our FA representatives, to ensure they stay relevant to the needs and expectations of consumers,” said Menon.

He also outlined plans for lowering distribution costs and increasing transparency, pointing at the UK’s RDR and Australia’s FOFA regulations, as a model.