Dear Mr. Tan,
Under the Financial Adviser Act, financial advisers are required to collect information about a client's financial objective, risk tolerance, employment status and financial situation, among othe things, before they can make a recommendation on an investment product.
In my case, I bought the Minibond product in Feb 07. My intention was to open a fixed deposit account. After recommendation and confirmation to buy the product, the relationship manager then collected the infomations as stated in the Act.
Please let the others victims who also bought from the financial institution, especially aunties and uncles, know whether they were in the same scenerio as me.
That is why you have a case against the RMs. This is a common practice among RMs in the banks and insurance agents in the sale of whole life products.
ReplyDeleteThere is no way to sell this kind of expensive and high commission products if they were to conduct need analysis first.So they fabricate the fact findings to fit the sale and is done after the sale.
This is breaching Section 27 of the FAA.
Don't worry. You can nail the RMs or the salespeople with the evidence in the fact finding form.
Same here. I wanted to place my funds in FD. However the bank officer advised me to puy minibond 5. According to her, it gives better returns and as long as I do not redeem it early, it is as safe as a FD. Afterwhich, I was asked to fill up a form which she said is for admin purpose.
ReplyDeleteNow I am filled with regrets and depression!
I used to be an RM. From my past experience, bank's management specifically instruct sales people to target people with Fixed Deposits or large amounts of cash in their savings accounts to sell them such products.
ReplyDeleteRMs and sales staff face immense amount of pressure to "convert" these cash deposits into lucrative high income earning products. The sales pressure is particularly skewed towards products with high commission payouts and these note usually have at least 5% commission on them.
RMs are given a monthly sales revenue targets so to hit it faster, they would naturally sell high comm products.
In my experience, the Investor's Risk Profile is always done after I have paid for a product. The bank officer merely "goes through the motion" because it is required by law!
ReplyDeleteOften, they would "help" me fill in the Profile survey, similar to putting words in my mouth! I always end up being angry with myself for being manipulated and rushed by them.
- Chew
These are the evidences the banks and their agents are doing and for whose interest? It is definitely not the cleints'.
ReplyDeleteAnyway there are enough evidences to warrant a change in the ways financial products are sold.
Hope MAS is not sitting on its butts
and pretend nothing has happened. There more issues to it and unless these 'kinks' are ironed out there will be more malpractices by the insurance companies , the banks and the sales consultants and RMs.
Dear Mr Tan
ReplyDeleteIn Dec 2007, my husband and I wanted to open a fixed deposit account with a finance company. However, 2 of the staff strongly advised us to buy the 'minibond series 7' as they claimed it offers a slightly higher interest and is safer than putting in the fixed deposit. Their reason being that if the finance company collapses, our capital will be completely gone, whereas this minibond is shared by 6 companies. They also claimed that we will only lose our capital unless all 6 companies collapsed at the same time and the chance of all 6 companies going bankrupt at the same time is lower than the chance of the finance company going bankrupt. That was all we were told and thus thought the product was extremely low risk because the impression they gave us was that the risk of losing our capital was divided amongst 6 companies. We thought she sounded logical and besides, we have been putting our money in the fixed deposit with this finance company for many years and have trusted them. We have never bought any bonds before.
After handing over the cheque, the staff gave us the "wealth management planner data taker" forms to sign. We were asked to sign on 3 pages with the date left blank. I now realise that there is a page on "financial objectives of data taker" which was ticked by the staff and not us. The page was never shown to us by the staff. It reflects that we have low priority level for income protection, health protection, savings for chldren's education, etc which are contrary to our needs. This page does not require our signature and therefore we were not aware of it on the spot.
It was only three months later that they sent us some documents regarding the specific details of the 'minibond series 7 and 8'.
I wonder if there are any buyers out there who were told the same thing by the staff.
Mr Tan, what do you think we should do now?
Thanks a million for your time.
Regards
Judy Tan
Judy Tan's case (and many others) is clearly a case of mis-representation. I also remembered a comment in Lion Investor Forum about this investor purchasing Minibonds from a bank. He did saw the fine print that Lehman Brothers is the arranger of the whole deal and asked what would happen if Lehman goes under. The RM simply told him nothing will happen. He even use an illustration: When you buy a house and the property agent company that sold you the house goes bust, nothing will happen to your house. The explaination seems logical and thus he invested into Minibonds.
ReplyDeleteFor these 2 cases, it's either clear mis-representation or the RMs not knowing the products they sold.
May I suggest something to curb this
problem in future?
Whenever you call into a bank, they have this message: "....Your call may be recorded for coaching purposes....". It means that calls into the banks are recorded. I believe it is also technologically possible for the banks to install such voice recordings facilities on their RMs desks' as well. Whenever they are selling a product, the conversation needs to be recorded. In this way, the RMs will not dare to mis-represent as they can be easily traced, and consumers can benefit.
However, this will means extra costs for the banks. Unless it is enforced by MAS, this remains only a slight possibility.