The Story of Providend
The Day the World Changed
September 11, 2001 was the day terrorism changed the world we lived in. But for Providend, it held another significance: it was also the day we signed our office lease – the beginning of our story.
The new Financial Advisers Act was to be implemented that year, but was unfortunately delayed till October 2002. It was only in May 2003 that our application for the license to give advice was approved and the company ready for operation. In the interim 2 years without the license, our hands were tied, and our staff of just over 10 people and their families suffered as they took home no or very little income.
Daring to Be Different
The financial advisory industry, often plagued with issues of misselling, churning, product pushing and the like, was gradually losing consumers’ faith in entrusting advisers with their financial affairs. When we finally opened our doors for business on 20 May 2003, we wanted to be a catalyst for change, even if that meant being different from everyone else.
Providend became the first financial advisory company in Singapore to operate on a commissions-free basis. We firmly believed then and still do, that taking commissions when giving advice creates a conflict of interest and is the root of all ethical problems.
When we announced our decision to go on a fee-only or commissions-free approach, industry watchers and competitors scoffed at the idea, defending the commissions model that they believed posed no conflict of interest. They all felt that Singaporeans would never pay a fee for advice and that the market was not sophisticated enough for such a practice. Cynics predicted that Providend would not survive beyond 6 months, doubting that the compensation from fees would ever be enough to sustain the company.
Persevering for Our Convictions
Giving up the lucrative commissions proved to be a path fraught with difficulties, seemingly shrouded in perpetual darkness with no light in sight. Over the next 3 years, our people and their families struggled as they survived on meagre salaries. Many were dealt with a harsh hand of life’s crises, which they faced stoically. While they were prepared to compromise their personal lifestyles, they were often burdened by the fact that they could not contribute financially to their families when it was much needed.
Undeterred, we pursued our passion for giving the most honest, independent and competent advice to our clients. No matter how difficult it was, we never caved in to the lucrative commissions and refused any soft commissions and incentives that were offered to us. We also aired our frank views on financial matters through our contributions to the media and professional publications.
Not surprisingly, we stuck out like a sore thumb and became the target of negative comments from the industry. Some of our competitors even asked product manufacturers to terminate their distribution agreements with us. It was a tough period for the people at Providend, as we continued to suffer financially and exist in an industry that shunned us.
Vindication…Recognition
It seemed that our naysayers were right…but only partially. Our resoluteness demonstrated our commitment to providing truly independent advice, which slowly but surely came to be recognized by the public.
In 2004, the Central Provident Fund Board (CPF) appointed Providend as the external consultant to develop the CPF Retirement Planner, a national financial planning tool. Professional publishers approached us to author books, such as the first Singapore Master Financial Planning Guide published by CCH Asia Pte Ltd. We also authored Estate Planning Made Easy, now into its 2nd edition.
In 2005, Asia Financial Planning Journal awarded Providend (represented by our CEO, Christopher Tan) Top prize for the Financial Adviser Representative for that year. Providend also became a winner of the Singapore Prestige Brand Award for Promising Brand in 2008. This award, presented jointly by the Association of Small and Medium Enterprises and LianHe ZaoBao, was testament to the success of our brand. Further affirmation came in 2009, when Christopher received the prestigious Most Promising Entrepreneur Award at the Asia Pacific Entrepreneurship Awards 2009.
Ahead of the Curve
Our dedication to provide only the best to our clients also spurred us to take on initiatives new in the industry. We realized that there were more cost-efficient and better performing instruments – such as Exchange Traded Funds (ETFs) – in offshore markets, but many of them were unavailable in Singapore at that time. In 2008 we launched the Providend Global Portfolios to make these global investment options available to our clients who are accredited investors. However, with determination we were finally able to do the same for the rest of our clients via the Pi Global Portfolios in partnership with Phillip Capital Management, launched in 2010.
Put to the Test Once Again
After long months of hard work and grit, our efforts were finally paying off. Little did we expect adversity to strike again. In late 2008, the bursting of the US housing bubble and subsequent fall of major financial institution Lehman Brothers triggered what was arguably the worst financial crisis since the Great Depression. Our investment portfolios were hit by great volatility and our clients became fearful. Many of them withdrew their assets and left us, which badly affected our revenue.
Thankfully, most of our clients stayed on. In return we devoted our time to allaying their fears and revised their financial plans to ensure that they would still be able to realize their goals post-crisis. It took a lot of courage to bear the brunt of their frustration, but it was imperative for our commitment to their interests. When we emerged from the crisis, we were armed with experience that would help us make better decisions in future. It became even clearer to us that we must remain steadfast in our beliefs, especially for those clients who have continued to place their trust in us.
Reflection
Many times in our journey, we thought that Providend was not going to survive. After all, we had embarked on a mission that seemed impossible to achieve. In retrospect, we are glad that we have upheld our values of always wanting the best for our clients and that we will never do anything that will put our clients at a disadvantage. These values not only helped us to survive in the early years, but also to thrive in the later years.
We have made it this far because every single person at Providend shared the same belief and passion for the business. We continue to grow today because of our clients who have placed their trust in us. We have not only grown together on this journey but together, we have taken a stand in Singapore, proving that honest, independent and competent advice will work.