Request from an investor
This is to invite the just and upright relationship managers from financial institions who were involved in the sales of Minibonds, High Notes, Pinnacle Notes, Jubilee Notes and similar products.
I believe you have heard/witness the number of people, some of those are old and financially blind, affected by the above product. To date the investigation is still on and what is mentioned/demanded by the financial institutions are proof of misrepresentation, which many of the victims will not be able to produce because most of the these are communicated verbally.
Can you share how the RM in your financial institution are trained to position he product and who are the targetted customers?
Please send your reply to kinlian@gmail.com. It will be treated in confidence.
Hi Mr Tan, i am an RM from a bank. I have read your blog with much interest. First and foremost, i want to clarify that there are RMs with a heart, who have real desire to help customers make money. With the structured products that you have mentioned, i believe in all honesty, most of us dont know how toxic or the fundamental it is been structured. On my part, i always highlight that the product is not a fixed deposit and has an issuer risk and make it known to the customer. I believe many do the same. We are also in a predicament. Sigh its been an extremely tough time for us too, not that i want to downplay those who have personally invested in those products.sigh..
ReplyDelete6.04pm
ReplyDeletedid you fully understand what was in the notes/bonds?..
have you heard of credit default swaps AND understand the risk of the CDS?..
dont you think your bank should help investors (eg get back money from the issuer banks?)
Have you complied with section 27 of FAA requirement of the necessary steps to take before recommending the product. We know ,like the insurance agents, many RMs went straight into pushing the product. This is wrong and the result is expected an disgruntled consumer.
ReplyDeleteDid any RM mention verbally to client that they could lose their entire investment? Did the RM themselves even know of this possibility even at that time it may seem unlikely? This is key because I do not believe risk averse retirees would risk their entire savings for a mere 5% return....
ReplyDeleteBlame not the Relationship Managers for they are not paid well. In fact, I understand that they do not have a salary but is paid on commission. They are given a title of manager but have to foot all bills and get paid only when they manage to sell. If they do not meet the quota, they even have to compensate to the banks before getting fired. The real culprits are the management of the financial institutions, many of whom are foreign talents.
ReplyDeleteI'm sorry but Relationship Managers ARE paid well. They have a salary and on top of that, they are paid commissions depending on their sales figure.
ReplyDeletePlease do not be naive enough to believe that RMs are paid peanuts, because they are not.
Psst: The top RM in my bank drives a Maesarati. The top rms' mthly comm? about 30k/mth...
ReplyDeleteIt's time for the Authority to appoint an independent party to conduct all financial trainings and accredit the certificates after the candidates passed all stringent tests. The CMFAS is not sufficient enough to ensure those RMs, insurance agents and IFA have SOUND financial knowledges. If you look at the FAA Notice N07, http://www.mas.gov.sg/resource/legislation_guidelines/fin_advisers/fin_advisers_act/notices/FAA_N07_Amdmt_Notice_31Dec07.pdf the minimum education level to qualify is only 4 GCE O Level pass. I am not here to discriminate lower educated persons, but the fact is, you are supposed to advice and provide sound financial products recommendation. Shouldnt the Authoirty restrict the number of licences granted to CMFAS holders and ensure sufficient trainings are conducted prior allowing them to represent FIs. A general degree took 3 years to obtain and a CMFAS licence requires only a few weeks to obtain. Please comment!
ReplyDeleteI have stated many times the licensing exams are too low even to sell peanuts. The minimum qualification should be at least a diploma in finance as a step on for entry into this business. From life insurance to ILPs the skills gained from these exams are not enough to give advice.
ReplyDeleteMAS has an exam mill to conduct these courses to feed the needs of the FIs. HOw would an agent or RM have enough skills and knowledge of insurance to investment to structured products in just a few weeks to give advice on personal finance? It is a joke and a costly one too.
MAS should be blamed for all that is happening.
i was recommended by the bank representative to buy the pinnacles note 1 year ago when i withdraw my fixed deposit from the bank. There is a Wealth management planner who asked me to fill up a form. It was clearly communicated and indicated in the form that i am a conservative, low risk taker. Most important is to ensure that the capital is preserved. Financial Objectives as indicated in the form:-
ReplyDelete1. Capital preservation (high priority)
2. Capital Growth (low priority)
For a low risk, conservative taker and a constant fixed deposit customer, isn’t it very clear that risky produces are not suitable to us? I remember very cleary that i was told that so long as BOA, Citigroup, DBS, Singtel, OCBC, UOB does not go into bankruptcy, we will get back the capital. What are the chances of these companies goes into bankruptcy? So, I was assured that it is safe to put the money there instead of fix deposit. Apparently, it is not as what I was told. I would consider myself as a highly a educated person, yet I was misled by the bank rep as we have too much trust in them. I really wonder how many people are also misled by them. To be honest, who will read all those tiny little clauses when the bank that you trust told you that so long as BOA, Citigroup, DBS, Singtel, OCBC, UOB does not go into bankruptcy, the capital is safe.
Let's put things into perspective. We cannot pin point exactly whose fault is it, but definitely there is a flaw in Retail Wealth Management system.
ReplyDeleteWhy?
1) Job Scope and Measurables of RM are based on Revenue generated FOR THE BANK and from there thet are paid a commission but a mere fraction compared to the bank
2) About the insolvency of banks today, no one knows exactly for sure if any company is in financially and solvently sound whether in good times or bad times. Bankruptcy is usually announced on a "too late" manner. What I can say is that, products linked to or arranged by Lehman Brothers with previously a better credit rating than all of our banks in Singapore.
3) On the risk of individual products, it must be understood that products are designed by certain instituitions, and distributed by the bank; where the bank will assess the relaibility and risk of these assets. Think about it this way, no banks are designed to con or cheat people. There is more negatives and cost more to manage the current crises than the profits earned from these investments that were affected. No one wants this to happen. But it is right to say that the bank should monitor on an on-going basis. Update clients with information and leave the decision to the investors on whether to cut loss (earlier) or risk huge possible losses (later).
3) Product Pushing - Like any companies, every bank I am certain is greying this line of product pushing or recommendation. BUt please note that, there is a MINIMUM TARGET for a certain investments to take off especially in the area of launching a Structured Notes. Whether this is product pushing, I leave it to you.
4) Many RMs I know, even got themselves and their family members directly involved in investments in the products believed to be good, and this included one like Lehman Brothers. So I DO NOT think MOST RMs are out to cheat/con.
5) Risk Classifications - You can check with your bank on th Risk Classification of these products that was first structured and distributed. If the Risk classification of this product is "HIGH", and yet investors (less the illiterate) continue in these investments despite this mismatch in the portfolio recommendation to your profile, you might not have a case. However, if you are literate, and if you have agreed to take on this product, investors have to take this responsibility.
5) Performance Measurement and Career Jeopardy - RMs are measured on money brought to the bank. Top performers are worship in the Hall of Fames. Bottom Performers are degraded in the valleys of Shame. And if you do not perform well enough, you might just lose your job sometimes being too cautious-thinking for cstomers interest. I believed that if Retail Wealth Managers are measured on other aspects like:- 1) Perfomance of Customer's portfolio, 2) Customer Service Quality, 3) Growth of Account Size, 4) Depth of involvement of investors to different asset etc... the story today might have been very different
6) Personal INtegrity and Management Integrity - There are definitely some RMs who are out to simply earn a quick buck (not all, many are really sincere and get depressed over client's losses than their own). However, sometimes, when RMs talk about fiduciary duty / resposibility, managers who are lack of integrity still continue to push their RMs to do certain products against information that could have possible doubt that this investment have a high probability of failing.
I am an RM, and I have treated my clients interest above mine; and at all times. However, sometimes, this is not how a bank works despite showing otherwise to the public.