Sunday Times 9 Nov 2008
Under the Financial Advisers Act (FAA), financial institutions and their representatives or financial advisers (FAs) are required to have a reasonable basis for recommending investment products to their customers.
The Act states that an FA must collect and document from the client information such as his financial objectives; risk tolerance; employment status; financial situation including assets, liabilities, cash flow and income; and current investment portfolio.
However, clients may choose not to provide the above information or choose to opt out from receiving advice. In such cases, the FA has to highlight to the client that it is the latter's responsibility to ensure that the product selected is suitable.
The FA may then proceed with his request for the transaction.
The Monetary Authority of Singapore (MAS) has encouraged the industry to improve the quality of advice and extent of fact-find.
It also expects FAs to have additional safeguards when dealing with clients with limited knowledge of investment products and who may find it difficult to understand the features of complex investment products.
Whether there is a breach of the FAA would depend on the facts and circumstances of a particular case.
Breaches of the FAA are punishable by a range of actions, including fines and imprisonment.
In particular, Section 27 of the Act provides that an FA is liable to pay damages to an investor who suffers loss or damage arising from advice that was not supported by a reasonable basis for recommending a certain product.
In addition, MAS may also take other regulatory actions such as issuing a prohibition order to bar the contravening person from providing financial advisory service for a fixed period.
Again, there is NO issue with the quality of the advice givers
ReplyDeleteThe issue here and all along is with the quality of the advice LISTENERS
Think hard. Pls. For once.
Strange. Recalling my case, I didn't get any risk accessment from OCBC Securities. Does it means that securities are not OCBC Securities is not covered under Section 27 of the Act.
ReplyDeleteAny kind advice?
Regards
JC
Chan J C,
ReplyDeleteOCBC Securities has already claimed that they are just following orders.
Very often it is NOT the customers who choose product advice it is the adviser or the insurance agent or the RM who PREFERS product advice to AVOID fact finding.
ReplyDeleteThere are few reasons why advisers and insurance agents prefer product advice.
1.they are unqualified
2.they want to push a high commission product
3.they may not able to justify the product they prefer to sell if they do fact find.
4.they don't want be liable for the recommendation
5.fact find is longer process than product selling.Product selling cut short their time.
If the customers choose 'product advice' they will be disadvantaged.
1.They still pay the same commission for product advice.NO discount.
2. the product may NOT be suitable for the client. It is DIY. Caveat Emptor may be applied on the cleint.
3.agents may manipulate the information, tell half truth mixed with lies; non disclosure.
Agents may put undue pressure and influence on clients.
4. mis-selling and misrepresentation bound to happen
If consumers choose Fact finding or need analysis approach the out come is likely to be of reasonable basis.
1.your needs are identified from a big picture angle.
2.you will see how all your needs are related
3.there is prioritization ; the most urgent needs addressed first
so you won't end up having a cart infront of the horse
4.your needs are adeqautely addressed; fully insured with the correct products; efficeintly at the lowest cost.
5.you won't be worth more dead than alive
6.you won't be asset rich cash poor
7.You will truly have peace of mind
8.you know you have a an honest and competent adviser and NOT a product seller who is only interested in his or her own needs of high commission.
It is understandable that customers do not like to reveal their "secrets" because they feel that agents are NOT qualified, cannot keep confidential, do not like to reveal how rich they are or how poor they are or they have too many 'skeletons in their cupboard", and feel inferior or they think they know or they pretend they know, ignorant, scared, trying to be smart.
To avoid the above get a good, honest and competent adviser to be your financial life coach.
Remember section 27 of the FAA is to protect you and NOT to cause inconvenience to you. The next time insist on having your financial needs diagnosed first before prescription of the products . This is your right to responsible and competent financial advice.
Last advice::: avoid product sellers and pushers and insurance agents who are not interested or pretend to be interested to put your interest first. The telltale signs of product pusher or phoney agents are their name card or body language. If you see some logos like MDRT, COT or TOT it is best to avoid them , these are signs of product peddlers and traffickers.
You don't have to beleive me experience one your self by looking out for all these signs.
"To avoid the above get a good, honest and competent adviser to be your financial life coach."
ReplyDeleteMy point precisely.
There is NO honest and competent adviser.
He or She can only be either at any one time. Ask any boss.
ONLY the Listener him/herself can be both.
Hence my point again.
there is NO issue with the quality of the advice givers
The issue here and all along is with the quality of the advice LISTENERS
"avoid product sellers and pushers and insurance agents who are not interested or pretend to be interested to put your interest first."
ReplyDeleteAgain, Wrong.
Product sellers and pushers and insurance agents are not interested or pretend to be interested to put your interest first ALWAYS.
Its a fact. no dispute.
Theres a lot of misconception in your assumptions, literally handing me YOUR ammo belt.
ReplyDelete"This is your right to responsible and competent financial advice."
I learnt this overseas..
Rights without Enforcement = No Rights
I think the bokerages are negligent to be making quick sales without trying to explain or fact-find their customers. Unfortunately MAS and authorities are not willing to investigate these acts and take action. Investors can only depend on other ocuntries's authorities and courts to take the lead, then perhaps spore investors stand some chance. but we can forget about any direct assistance frm MAS of local authorities. I had been very disappointed to be a sporean after this case
ReplyDeleteCan you all remember the advertisements put up by NTUC INCOME in ST sometime ago to commend their 'achievers'?
ReplyDeleteThe first was pictures of men and women who achieved some kind of awards and they were touted as "super dupers' salesmen of the industry.
The second was names in the shape of a diamond and the ad touted that there were a lot of these diamonds in the ntuc.
I can't help but admire the audacity and honesty of NTUC to tell the world they have the best salesmen and women in the industry. Is it a wonder? No body doubts they are and that is why they are the achievers of mdrt or tot.BTW, honesty is the best policy for them, knowingly or unknowingly.More like washing dirty linens in public.
This is exactly the issue the industry is facing, a lot and a lot of these salesmen and women who
either willfully or incompetently short change the consumers by pushing unwanted products to consumers.The root cause is commission. This is the only interest of these dupers and it is at the heart of their selling and pushing process.
There are a lot of super dupers prowling the streets , the malls , mrt seeking to impoverish the unwary consumers using dubious modus operandi and it is no different from the RMs in the banks They dupe the consumers into buying those useless products with high commission . They commit mis-selling and misrepresentation
blatantly without their clients even knowing it. Isn't this super dupers' skill?
MAS seems to close theirs eyes to all these malpractices but is asking the consumers to open their eyes big big before investing. Something is wrong, isn't it?
Well, I advise consumers to avoid the super dupers , the salesmen and women, the product pushers if they want to sleep well.
Amazed Jay
ntuc wants to be known as the icon at home and abroad. Their iconic product pushers are well known, at home and abroad including Batam and Vietnam already after spending so much money there.
ReplyDeletethey will also be known in australia, gold coast next year. in 20 years time they will be known throughout the world. Indeed an icon at home and abroad provided they spend a lot of money in each place to make the natives of that country to remember them.
ReplyDeleteIf there is ever a contest for the best product pushers in the world
ReplyDeletentuc agents will win hands down.
also the greatest
ReplyDeletemis-sellers
misrepresenter
bullshitters
malpractitioners
traffickers
With a former hsbc great sales banker guiding the sales force how not to be the best product pushers like the RMs.
ReplyDeleteIf MAS is dead serious about protecting the consumers MAS must stop the advisers or insurance agents from product selling. Product selling is as good as mis selling and misrepresentation because of conflict of interest and not because the consumers are savvy.
ReplyDeleteIf MAS allows both then it is not fair to advisers who put in more advisory work for clients than
the product sellers who just read the brochures and fill the forms.
These are the areas to change for the better of the industry.
1.make CEOs responsible for everything, products and salespeople
2. check and control the products
3.check the advisers and the insurance agents for malpractice
4. remove the commission or reduce commission to very low to discourage product selling
5.introduce FEEs to encourage advisory as the main remuneration
6.MAS must enforce and punish wrong doers, the FIs and the insurance agents and advisers.
7.audit the insurance agents and advisers and the FIs often
If the above are in place I am sure they will stop another debacle from happening . The life insurance malpractices are bursting at the seam and explosion is anytime.
" Anonymous said...
ReplyDeleteIf MAS is dead serious about protecting the consumers MAS must stop the advisers or insurance agents from product selling. Product selling is as good as mis selling and misrepresentation because of conflict of interest and not because the consumers are savvy.
If MAS allows both then it is not fair to advisers who put in more advisory work for clients than
the product sellers who just read the brochures and fill the forms.
These are the areas to change for the better of the industry.
1.make CEOs responsible for everything, products and salespeople
2. check and control the products
3.check the advisers and the insurance agents for malpractice
4. remove the commission or reduce commission to very low to discourage product selling
5.introduce FEEs to encourage advisory as the main remuneration
6.MAS must enforce and punish wrong doers, the FIs and the insurance agents and advisers.
7.audit the insurance agents and advisers and the FIs often
If the above are in place I am sure they will stop another debacle from happening . The life insurance malpractices are bursting at the seam and explosion is anytime.
9:32 AM"
You just about got everything right.
SURELY you are working in the Authorities?
MAS is screwed up. Enacted the laws but never enforced them. Wonder what are the laws for? To pretend that they are doing some work? While the consuming public got mauled by the 3 tigers they watch with a video cam.
ReplyDelete