Tan Kin Lian's Blog: Consumer banking sells the structured products

Monday, October 06, 2008

Consumer banking sells the structured products

Comment posted in my blog

I come from the banking industry and I am really ashamed about how these people from the consumer banking side conduct themselves.

It is the banking industry's secret that the lower calibre people in the bank are always chuffed into the consumer banking side. Managers from the consumer banking side also doesn't care about qualifications or training of the people they recruit as RMs or Investment Consultants. These unqualified people who join the consumer bank for the vain reason of being able to boast/ pose that they are "bankers" or "investment experts", even when they don't really have the substance or depth.

However, the conduct of the consumer banking divisions over the CLS scandal is downright unethical and heartless. It shows they don't care about the common folk, they just want to retain their undeserved titles.

We don't see such short-term-oriented and unscrupulous conduct occuring in the bank's Treasury dept/ Institution dept/ Corporate Bkg dept. Even in Private Bkg, I heard that Private Bkg RMs (those who serve customers with more than S$5m cash) refused to promote the structured investments to their customers cos they are afraid to lose their customers' long term business. In fact the Private Bkg RMs cannot see any reason why they should lock their customers' money into a 7-year, illiquid, fishy, structured investment.

13 comments:

Anonymous said...: The rich ones have the pte bankers to advise them.
The smart & powerful ones have the best brains to advise them.

The poor and the weak like uncles, aunties and the retirees become the easy pray.
They are also caught by "buyer beware" even when they don't understand, and were given poor advice!
The world is so unfair!! And no one (except Mr. Tan) is helping.; October 06, 2008 7:50 AM
zhummmeng said...: Giving best advice and helping customers to meet their financial needs is NEVER the objective of the banks and the insurance companies. Making and squeezing as much money out of the customers IS.
Qualifications, competence and honesty are not important. Ability and courage to con, lie, misrepresent and to make the customers buy what ever toxic products are MUST qualifications.
In life insurance , you don't need a formal qualification in finance/ insurance or financial planning at diploma level. You need only 4 O level and to pass tikam tikam multiple choice exams, so low, that they are just a formality to get a license to rob consumers.
In the company training they are taught to con the customers in the shortest and fastest ways.How sales is done is not important so long it is a sale.No wasting time to find the needs of the customers. If there is any fact finding it is to satisfy compliance and nothing more.
Therefore , insurance agents with 20 years 'experience' is as good as a newbie because it is 20 years of same experience repeated yearly.All insurance agents talk in the same manner, same sales pitch and so good at presentation of whole life and endowment products.They specialise them because they only sell them and because these products give the best commission.
The agents sell them like koyok or snake oil that can cure and meet all financial needs.They sell like the only products all families need.
It is not surprising that consumers have no other polices other WL.
The recent aia saga is a representative of what the industry has all these years been 'serving' the community to be under insured and poorer.It is a wonder the baby boomers can ever retire. Their CPF accounts have been plundered and till today are still reeling from losses. Their hard earned saving lost by the RMs and so called investment experts from the insurance companies.
The financial industry is a preservator of status quo.At the best the poor remain poor and the rich remain rich.But alas, the poor get poorer and the rich get even richer.And who are the intermedairies in this wealth distribution?
Unless the authority remedy and correct the situations by nipping the source of the problems in the bud, the consumers will continue to recieve poor advice and get fleeced from these robbers.
Someone who has the power to change , please change it.; October 06, 2008 9:33 AM
ym said...: on the contrary, the problem started with the high-calibre ppl :
- central-banker's who artificially lower interest rates and print money out of thin air, behaving like anti-robinhood

- financial-engineers who naively expected markets to behave according to their mathematical models

- fund-managers relied blindly on AAA gradings from credit-raters who had no common-sense

Dont see uncrupulous conduct in investment/corp/treasury banking?
- where do you think these toxic minibonds/highnotes were created?
- what do you call the USA 700bil bailout?; October 06, 2008 10:03 AM
Anonymous said...: these complex instruments should be left to institutional investors.; October 06, 2008 10:05 AM
Anonymous said...: That's a true comment. I am working in a treasury section of the bank and when relationship managers are asked to promote products for the bank, they will take a second look and assess whether it is good because it is a long term relationship with the corporates.

Many of them mentioned that they are pissed when some of their supervisors ask them to promote certain deals which are not benefical for the customer. That is because they will have to always keep in contact the customer and it will be very "no face" for them to continue the relationship should the customer lose money from that product.

The treasury market is highly competitive out there and since it is a small world, people will actually know who are the ones to avoid. Unlike consumer banking where there are a million and one RMs around.; October 06, 2008 10:11 AM
Anonymous said...: Seems like the Treasury frontline ppl are more clever/ ethical than their supervisors. At least they dared defy their supervisors' pressure to promote these toxic structured products, in order to do the right thing.; October 06, 2008 12:42 PM
Wealth Journey said...: True. I am thankful that my pte bankers have been nice to me so far by advising me against structured products that locked you in for long term or products that are short-term but is not advisable in certain market conditions.

I believe they have more to gain by keeping your account than churning it for their own benefit.; October 06, 2008 4:00 PM
Anonymous said...: First of all, don't point finger at all bankers. Definitely there are some black sheep hiding around. However, i believe there are more bankers that are helpful and considerate and do not wish to "lie" about the products they are selling. Look from another different angle, is the training provided sufficient and detail enough for the bankers to fully understand the products they are selling? Did the product owner does enough to highlight those risks involved? The way i look at this saga is, weakness in the training procedures and insufficient management supervision over the sale force. Maybe, this is the time whereby the Authority can review the FAA legistration.; October 06, 2008 4:05 PM
Anonymous said...: Insurance agents don't evaluate the product before selling and pushing to their clients. Why evaluate? They don't care whether they are good or not. They don't do need analysis.
Their intention is to make money out of it. Training usually focuses on the 'selling' features which are often dubious.
MAS must enforce section 27 of the FAA strictly.; October 06, 2008 10:22 PM
Anonymous said...: Given that so many frontline staff from the Bank's Treasury and Corporate Bkg depts gave such negative feedback about Structured Investments to their supervisors, how come the bank's management didn't take a second look to re-evaluate such Structured Investment schemes?

How come Consumer Bkg have no qualms about flogging off such products to illiterate uncles and aunties?

I recall my friend (a Private Bkg RM) once attended a talk/launch by a Product Structuring team about a Structured Investment Scheme. She said there were many vague areas in the fact sheet. But everytime she asked a question, the Product Structurer tried to evade the question or give an unrelated answer. She feedback to her supervisor, but the supervisor took no action. So she dared not recommend to her customers.; October 06, 2008 11:15 PM
Anonymous said...: time and time again, history keep on repeating itself. relationship managers, financial advisers, or whatever you call them, whether it is from the banks or insurance companies, they are only out to sell them products, only packeting it with their "fake" sincerity and courtesy , with the only aim to convince you to part with your money willingly. I have army pals who went into insurance sales, and they are one of the fakest people i have encountered in my life!; October 07, 2008 7:45 AM
Anonymous said...: Look how much relationship managers earn:

She is only 27 years old but she has thousands of dollars in savings.

http://tnp.sg/news/story/0,4136,179423,00.html?

I think most of them are hardly qualified to advise on financial matters. They merely go out to push whatever product is launched. I have lost lots of money because of these RMs. My advice is never listen to them if you do not wish to be parted from your money.; October 09, 2008 12:52 PM
Anonymous said...: like wat ym has mentioned, toxic waste is generatlly cooked up from investment banking/treasury dept etc.

the point is sophisticated products are for sophisticated investors. nobody creates nonsense that noone wants to buy.

the problem is that when it is marketed to retail customers, retail consumer bankers are not really sure how it works... (contrary to investment/treasury/corporate bankers who work more closely with the financial engineers)

so some products may be suitable for individual sophisticated institutions or sophisticated corporate clients but not retail consumers.

of course there are ethical and intelligent retail bankers out there. howerver banks have been very aggressive in hiring anyone with sales experience. you can take a look at the jobs section and see their requirements. if you are working in a treasury/investment banking section, you must know how the product work in order to market it out. but for retail bankers, it is not a requirement because retail investors are not as educated and are unfortunately not as protected.; October 11, 2008 2:51 AM