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Monday, January 31, 2011

Avoid financial advisers

A foreigner, working in Singapore, approached me for advice. He bought a Vista plan from a financial planner two years ago, and was shocked to learn now about the high monthly charge of 5% of the premium that is deducted from the account. He never knew that he was buying a life insurance policy with a high upfront charge, which came into effect after 18 months. He was told that it is a regular saving investment product.

The financial adviser had assured him, a few times, that the charge was only 0.7% after 18 months. The adviser had told a deliberate lie to him, to get him to put in a large sum of savings, more than $3,000 a month. I asked him to check about the surrender charge, which I suspect will take away most of the accumulated premiums - if the policy is terminated now.

It is bad for an insurance company to design such a policy that is confusing to the consumer, and for the financial adviser to tell a deliberate lie to get the consumer to put in a large part of his savings. This amounts to cheating,  but how can the consumer prove it? He must have signed the forms without proper understanding.

I advised him to write to the newspaper but he is worried that his colleagues and employer will get to know of his predicament.

My advice to consumers - avoid all financial advisers and insurance agents. Do not buy any investment or life insurance product from a person who approaches you. You will never know if you can become the next victim of this type of financial product.

My message to MAS - is this the kind of financial hub that you wish to build for Singapore? Do you wish to sit back and allow these types of practices to continue?

Tan Kin Lian



Posted by Tan Kin Lian at 7:49 AM

6 comments:

JasonX said...

Mas probably won't do anything until something similar to mini-bonds happens. The next best thing is for consumers to be educated. Sadly, that is almost impossible unless the media starts a campaign to educate the public.

January 31, 2011 9:19 AM
Temperament said...

Ya lol,
Papaya believes it's private matter as long as they don't have any benefit in the matter. Caveat Emptor is their "motto" first until the people really can't take it anymore.

January 31, 2011 12:24 PM
Lye Khuen Way said...

Let us just "wish" more non-Singaporeans get conned and tell the whole world how wonderful our regulatory authorities are ! Sad that I have to wish such things, but then, we are accustomed to our authorities waiting for significant statistics to act, don't we ?

January 31, 2011 9:55 PM
Anon said...

Singaporeans should engage financial planners, proper financial planners that is, who will give proper financial advice.

The salespeople and conmen who are masquerading as financial planners should be avoided.

Like how the term "specialist" is regulated by MOH, MAS should regulate terms like financial consultant, adviser, planner etc and only allow accredited professionals to carry such titles. Financial product pushers and conmen should be labelled as salespeople, which is already a very good term for them.

It's a small step to take, but at least consumers will be able to identify fake financial planners a bit easier.

January 31, 2011 10:32 PM
zhummmeng said...

Mr. Tan,
you forgot one title that is even more lethal and venomous ....Executive Financial Consultants . Beneath this facade lurks an evil conman far dangerous than the magic stone sales cheat. Why? to earn this title the holder must con alot of victims, poor victims, the ordinary folks, the vulnerable gullible easy meat and impoverished them.

January 31, 2011 11:45 PM
yujuan said...

Just name them salesgirls and salesmen, giving them bombastic names just to con people.

February 01, 2011 4:22 PM

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