When the investor found out that the product made a big loss, there is nothing that they can do. The private banker will explain that the market has gone against them. But in reality, the products usually would not give a corresponding return when the market goes in their favour, as a large part of the profit would have been taken away by the financial institution.
The private banker may encourage the customer to invest in certain currencies, shares or other assets that are traded in the open market or exchanges. As the prices of these products move every second, it is not easy for the customer to know if they have been given the fair prices. It is possible for the prices to be inflated or deflated, to the detriment of the customer.
The customer has to rely on the honesty of the private banker or the financial institution in giving the correct price. But, in recent years, there is lack of honesty as financial institutions searched for higher profits.
When times are bad, and financial instituions make losses on their own portfolio, it is easy for them to find some way to push these losses to their unsuspecting customers. The customer does not know if the transactions are properly audited.
Many people have lost large sums of money by acting on the recommendations of the private bankers or wealth managers. They are not sure if the losses are just due to the market or to dishonest practices of these intermediaries.
Tan Kin Lian
6 comments:
Private bankers or secret bankers or personal bankers or RMs or whatever names they go by, they are ALL SALESMEN.
What can distinguish them is their dressing, some better dressed, some look smart like conmen or con artistes
Nowadays, the salesmen have misleading titles that misrepresent their scope of work and expertise.
MAS must stop it and control the use of these misleading titles. It is cheating and should be considered a crime. Insurance agents carry titles like financial consultants, or senior or executive financial consultants. They nowhere consult nor have knowledge of finance how could they misrepresent themselves and mislead consumers. It is cheating. At the best they look like salesmen, talk like salesmen, some even look like cleaning women or door to door saleswomen, some like bus drivers or plumbers or secretaries or receptionists and any except financial consultants.
MAS must do something about it lest consumers get connned.
A friend of mind, a privilege (not yet private) banking customer, was "specially invited" by his RM to make an investment in July last year before the Minibond crisis. And the minimum amount was S$200K for this investment, due to the "privilege" status.
My friend made the investment, thinking that it was safe and good like a FD because it offered only 3.5% return pa for 3 years, a bit better than FD. The RM explained that the worst was not getting any return, as it was principal protected! The RM also said that even FDs are not safe if the bank collapse.
Guess what, in September when Lehman went bust and Merrill sold to BOA, my friend panicked and cashed out, suffering a 30% loss of his min $200K investment in just 2 months!
The best remedy is still "Do It Yourself". Avoid all these people, whether private bankers, relationship managers, customers relation officers, etc, avoid them like a plague. These people make their living off the unsuspecting customers' hard earned savings. People must learn from the Minibond sage and not repeated the same mistake again. Minibond sage has shown that nobody except they themselves can help them if they are caught on the wrong foot with the financial insitutions. So customers beware. Also beware of the upcoming casinoes opening. Can vist the casinoes and the affiliated playgrounds, etc buy never even put one cent on the casinoes table and you will be the winner.
We can continue to stay tuned on that case when a famous businessman filed a case against a bank for his 1 bil forex loss.
On the otherhand, if he had made an extra 1 bil gain, would he generously reward the bankers?
Until MAS prosecutes the RMs, the FIs and the insurance agents it has lost its credibility. It has no moral rights to issue more guidelines or rules. MAS has proven that they are not serious about regulating and umpiring the industry.It is pulling wool over our eyes.
There are so many errant insurance agents, RMs, FIs and insurance companies which flouted the rules and yet none is prosecuted and jailed.
In whatever environment between bosses/subordinates, sales man/customers, the following advice rings true .. "疑人勿用，用人勿疑"
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