Tan Kin Lian's Blog: Be careful of your relationship manager

Monday, October 20, 2008

Be careful of your relationship manager

Here are a few frightening stories ....

1. A customer deposited $800,000 into a fixed deposit. He was not aware that the relationship manager placed it in a leverage account which caused a loss of $400,000. The customer was asked to top up the account. The customer is making a Police report. Details are also given to a journalist.

2. Two weeks ago, someone sent an e-mail to me. Her mother lost the entire sum of $500,000 in a dual currency investment. She does not know how it happened. I asked her to get the bank to send a statement to her. I have not heard from her yet. My guess is that the money went into a leveraged account. It is probably leveraged 3 times or more. A 30% drop in the currency, with this type of leverage, could wipe out the entire deposit.

3. A neighbour's relative saw me last night. He was advised by the relationship manager to invest SGD $250,000 in Lehman Brother bonds in April 2008 to earn 4.2%. The bonds are now worthless. Previously, the same RM advised him to invest in a bond, which turned out to be a hedge fund. He has liquidated the investment at a big loss.

I wish to send this message to warn bank customers about the relationship managers. It seems that they have to meet high sales quota and are recommeding risky financial products to their customers, without giving proper advice. As there are so many cases of dishonest acts, we now have to worry about the integrity of the financial institutions and the relationship managers.

If you are a victim, you must lodge a Police report for dishonesty and also a complaint against the relationship manager. We have to act to clean up these dishonesty.

21 comments:

Anonymous said...: I think it's about time people stop trusting relationship managers and financial advisors so much.

They are well trained to say the 'right' things, be it to scare you or to show that they care and give you some sad stories to make you believe them.

Please, if anything, this crisis should teach us to be responsible for our own money and start to be more educated in finance. We may not all be finance graduates but there are tips we can pick up here and there. A good place to start is Mr Tan's blog. I learnt a lot from here.

If you need to invest, go through the online portal. Stop giving commission to blood sucking (yet appear innocent) RMs and FAs.

I have not been a direct victim of this crisis but some of my relatives are. It breaks my heart to hear their stories and whenever I read the Straits Times because be it, $10K or $400K, these are all hard earned money. There are really old people who cry openly when they tell their stories.; October 20, 2008 7:12 AM
Betsybug said...: Oh my! Is it worse than even I thought? How can banks allow their employees to play fast and loose with their customers' money (probably hard-earned too)?

It makes you wonder if this sort of thing has been happening for some time, but only now become uncovered in the glare of the recent financial expose. What other dark things lie hidden in the dim recesses of our banks? *shudder*

All these must surely point to SYSTEMIC failure within the banking industry and/or with the regulatory regime now in place.

As I remarked to some DBS HN5 investors on Saturday, I've come to learn the true meaning of Priority Banking - not to denote a fast-track for service, but rather we are the PRIORITY group for the bank to target all sorts of sub-prime products.; October 20, 2008 7:26 AM
Anonymous said...: these are criminal offences. To some extent, it could be considered as Criminal Breach of Trust.

these rms should be locked-up; October 20, 2008 8:21 AM
Everlearning said...: A brand name such as Priority, Private, Premier, or Privilege Banking comes with a high price to pay!

Not only the high net worth individuals are targeted but even a saver like me was lured to take up a Capital Protected Fund with 10K, just because I had a little more than this amount in my savings account in 2004.

The usual tactics played by the bank: the teller to introduce you to the financial advisor and then the contract signed.; October 20, 2008 8:27 AM
Anonymous said...: Financial advisers are MASTERS in the art of ' Missing In Action' whenever you need them

they have an uncanny ability to either be on long overseas holiday , not feeling well, car broke down , their pets committed suicide and a whole lots of reasons whenever you need advice or want to withdraw your money

but when you want to invest or put money in ...they will appear out of nowhere and even in thin air !; October 20, 2008 9:11 AM
Anonymous said...: It's true.They (financial advisers)sell you the product and then they vanish! They are no longer around for you to accuse them.; October 20, 2008 10:01 AM
Anonymous said...: All these cases are showing evident that RMs were mis-selling their structured products to all their customers. Both vulnerable retirees and educated preference customer.

Can MAS look into it?; October 20, 2008 10:02 AM
Anonymous said...: It is time for MAS to review the roles of these people dispensing financial products to consumers whether they are from the banks, insurance companies or financial advisory firms.
Currently these people are nothing more than salesmen and women .They push products to suck out as much commission out of the customers.
Are these people regulated by Financial Advisory Act? If they are , they don't seem to be advising but trafficking and peddling toxic products to the detriment of the financial health of the consumers.
What is MAS doing about it?
These people are definitely NOT qualified, NOT honest, NOT competent. They only know how to push insurance products, structured product, ILPs, UTs and whole life but none knows how to advise on any of them.
Worse they breach the FAA in every sale they make.; October 20, 2008 10:08 AM
Anonymous said...: Really scary. My sister refused to have internet banking as the banks wanted her to sign all sorts of waiver and disclaimer. She rather be inconvenienced.; October 20, 2008 10:36 AM
Anonymous said...: What makes you think that educated people with post graduate degree can understand financial products let alone structured products.
I find it amusing some comments that question why the investors didn't do this didn't do that. Why they didn't read the prospectus or brochure before buying? If the onus of doing all that falls on the investor why do we need RMs to "advise" us whether the products are suitable or appropriate for us?
The fact is these RMs are supposed to be financially trained and experts to give advice the onus should be on them to give us the best advice and failing which they should be held accountable.
Alas, the truth is these people are not fit to advise. That is why you find them pushing for commission and the old folks who are rich are easy meat and victims.
The educated ones sometimes try to be smart that they get outsmarted by high pressure selling and not by better financial skills.
To prevent this , MAS must redefine
"the fit and proper" requirement of the FAA especailly the competence component. Currently this is lacking and standard is below like shit. A taxi or bus driver or toilet cleaner who can pass the tikam tikam exams can be licensed to sell these financial products and to the post graduate degree consumers. This is so ridiculous.
You can see the magic stone scam works on everybody and is no respector of your status; October 20, 2008 12:06 PM
Anonymous said...: This is unscrupulus and unethical. The RM should be charged under the criminal law!
One has to be more wary of these RMs. Perhaps we shld all stop investing thru' these RMs and let the Bank runs as a Bank!; October 20, 2008 12:19 PM
Anonymous said...: The investment "experts" who thought MiniBonds is a bona fide bond have turned around have blamed old, retired investors for not reading the prospectus.

Just check out some of the old sgfunds.com threads where some of them thought it was a safe bond. Double-faced?; October 20, 2008 12:53 PM
Anonymous said...: Be extremely careful next time somebody tries to sell you an investment product. Do not be tempted by the advertisement. Especially when it comes with a free gift.

Never sign on the dotted line on the same day. Find out more yourself before committing.

Nothing comes free in this world.; October 20, 2008 1:01 PM
Anonymous said...: Mas will tell you to talk to that RM because their chairman is too busy teaching China and India how to be a financial hub to give healthy competition to Singapore and HK.; October 20, 2008 1:12 PM
Anonymous said...: u are right about caution to the relationship manager

however i feel once that caution is thrown to the wind, theres not very much u can do, UNLESS theres hard evidence AND theres someone of Power willing to take that evidence into consideration, even before any action might be (EVEN BE) taken.

i liken this to the case of the foul milk, knowing it to be foul and not drinking it is smart (or lucky whatever), not knowing it is foul and having drank it doesnt really mean u now proclaim to have the right to kill the cow and or the blessing to get away without a stomachache(or worse).

complaining about it to the milk maid will make u look silly (to her).

this is where i feel, Caveat Emptor applies well. a lot of the rest is just plain Naivety.

think about it.; October 20, 2008 2:37 PM
Betsybug said...: Anonymous 2.37pm
Your logic is flawed, and deeply so too.

Nobody is killing the cow. We are going after the farmer who fouled the milk intentionally. The milkmaid was aware of the situation; so is she blameless? Not complaining to anyone is, in fact the silliest thing you can do. Are you normally so complacent?; October 20, 2008 4:45 PM
Anonymous said...: Hi 4:45 PM, agreed with u that the guy's logic is flawed.
One can't proclaimed Caveat Emptor is what is to be relied on and the rest is just plain Naivety as it will come to an emergence of a real 'MAS' - mada ada system and everyone will be naively be killed by the milk.; October 20, 2008 5:38 PM
Anonymous said...: You mean China and India add up 2.4billion population cannot match 1 brain? Plse lah, don;t be a joke, other countries are laughing. Mind your own business, a fire had started at your backyard and all the high salary firemen MIA. It will soon burn down the house if the firemen still quickly don't come back. I want to throw away my tv set soon, waste electricity and time watching the news except when Tan Kin Lian speaks.; October 21, 2008 12:49 AM
Smile said...: Sounds like media terrorism to me.
Why are there only frightening stories to warn bank customers? Can you share with us frightening stories on insurance agencies and independent financial agencies as I had heard a few as well?

I agree with you on reporting on dishonesty. I have been especially careful recently in my dealings with financial service providers. I take their advice, thank them and do my homework before I revert. I understand that they are earning commission but who don't. Nokia? Borders? As long as you are not a non-profit organisation, I expect you to be commissioned in providing me with the service and products.

But do feedback if you find the service or products not up to par.; October 22, 2008 6:07 PM
Anonymous said...: The Spore Banking industry starting to change between 2001 to 2003 with the bank mergers - Keppel Bank/OCBC, POSB/DBS, OUB/UOB. A lot of old salaried staff were laid off to reduce overheads & post-merger redundancies. The banks became more profit oriented in their outlook. In their revamp, came the young, commssion-based sales people who were given quotas and targets to remain employed. They were very aggressive but not very knowledgeable about their products they were selling. Like insurance agents, they were very persistent, high-pressured sales people but unlike agents, they were not even competent in product knowledge. Some were even unscrupulous - targetting the ignorant, old and uneducated.
The banks are also to blame for this fiasco. Instead of building trust & integrity, they went for the profit motive. These days, relationship managers are no more than high pressured sales people who depend on their commission to survive. If anyone thinks they are there to help you to preserve or build your wealth, think again! They are able to access your account details if you have high cash deposits. Once they see that, many persistent phone calls are made for you to come down to the branch where they would pester you to convert your cash holding to structure products with a slightly higher payout than fixed deposits but without telling you of the risks.
The point I'm making is that unless the banks change the system, I'm afraid that the same is going to happen again in the future. As for me, I wouldn't trust any relationship manager put in front of me.; October 23, 2008 1:25 PM
Anonymous said...: Whether criminal offence of not, the relevant authorities usually do not choose to investigate and prosecute, but instead leave the victims to take take civil actions against the perpetuators of the wrongdoings. The exception being the IRAS, of course.

These authorities do not seem to know that they owe a duty to the society.

People in this country should be made aware of this and take good care of themselves, instead of relying on these authorities. More often than not, crooks usually get away with their misdeeds because these authorities do nothing, thus allowing so.; October 24, 2008 2:26 AM

Monday, October 20, 2008

Be careful of your relationship manager

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