You will be able to explain why buying from a friend or a helpful adviser can lead to choices you would not make otherwise.
Two years ago a friend from Darren's secondary school got in touch for the first time in ages. She'd become a financial adviser, and she offered him a free financial review over dinner, her treat. She was warm, prepared and genuinely helpful about his budget. At the end of the evening she showed him an investment-linked plan with a premium of S$250 a month. He signed that night. He'd have found it rude to ask for time after she'd bought dinner and spent two hours on his finances. He's never been sure the plan was right for him, and he's never felt able to raise it with her.
People feel obliged to return favours. The psychologist Robert Cialdini described this as reciprocity in his book Influence, and made it one of the main principles of persuasion in the book. A small gift, a free consultation, a meal, a sample or some useful advice creates a sense that you owe something back, and buying is the easiest way to pay.
The feeling works even when the favour is small compared with the purchase. A S$60 dinner can leave someone feeling they owe a yes to a commitment worth thousands of dollars over many years. It also works when you know it's happening, because ignoring the feeling makes you seem ungrateful, and most people would rather overpay than feel rude.
None of this means free advice is a trick. Many advisers offer a first meeting at no charge because it's the normal way the industry works, and plenty of people get useful help from one. The point is to notice the pull a favour creates, so you can decide on the product rather than on the dinner.
Buying from friends and relatives mixes two things that normally stay separate: the relationship and the decision. A good product from a friend is a fine thing. The difficulty is that the relationship changes how you decide.
You ask fewer questions, because tough questions feel like distrust. You compare less, because shopping around feels disloyal. You find it harder to say no, because no feels like rejecting the person rather than the product. And afterwards, if you have doubts, you find it harder to cancel, complain or switch, because that might damage the friendship. Darren has paid S$6,000 in premiums so far partly because stopping would mean an awkward conversation.
This applies well beyond insurance. A cousin who's a property agent, an uncle with a business opportunity, a colleague selling health products, a friend running a renovation company: in each case the same forces push you towards yes and away from checking.
You can usually tell a lot from how someone responds to a request for time. A good adviser, whether a friend or a stranger, expects questions and is comfortable with you taking documents home to read. They'd rather you bought something you understand and keep than something you cancel during the free-look period.
Pressure in response to a request for time is a signal worth noting. "This promotion ends this week", "your premium goes up after your birthday", or simply visible disappointment are all ways of making delay feel costly. Some of those statements will be true. Even so, a product that suits you today will usually still suit you in a week.
Insurance Decoded, lesson 7.1, How advisers are paid and what they must tell you, covers how advisers are paid, what they must disclose and how to check they're licensed. That's the factual side. This lesson is about the feelings that make those facts easy to skip.
One question takes the relationship out of the decision: would I buy this, at this price, from a stranger who gave me the same information?
If yes, buying from your friend is fine, and possibly better, because you trust their service. If no, the relationship is doing the selling. It helps to separate the two openly. You can thank someone sincerely for their time and advice, and pay them back with a meal of your own, without buying.
A short script makes this easier: "Thank you, this has been really helpful. I never sign anything on the day, so I'll read it through this week and let you know by Friday." Said early, before the product appears, it sets the rule without making it personal.
Darren has since asked his friend for a meeting to review the plan, framed as a check-up. He'll bring the stranger test with him.
Think of a product you've bought partly because of who was selling it, and whether you'd buy the same thing again from someone you'd never met.
Write one product you bought partly because of who was selling it and whether you would buy it again from a stranger.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).