Many people had bought a bad financial product from an agent or adviser whom they know and trusted. They learned later that this was a bad decision.
The adviser might have acted honestly but gave the wrong advice, due to being naive. The advisers desperately needed a job, e.g. they have just graduated. They were taught about the positive aspects of the financial product (e.g. life insurance policy or structured product) but did not know about the negative aspects (i.e. the high charges and high risk). They honestly sold the financial product to their friends and family members thinking that they are giving good advice.
When they learned later about the negative aspects, they felt quite bad about letting down the people who trusted them and left the business quietly.
Their agency managers knew the full picture, but exploited the ignorance of the newcomers. Some advisers or agents, who later learned the tricks, decided to continue the game and make a lot of money for themselves.
I do not wish to imply that all agency managers or experienced advisers are dishonest. I know of a few who are honest and acted in the best interest of their customers. But there are dishonest or naive advisers as well, so consumers should be wary.
The adviser might have acted honestly but gave the wrong advice, due to being naive. The advisers desperately needed a job, e.g. they have just graduated. They were taught about the positive aspects of the financial product (e.g. life insurance policy or structured product) but did not know about the negative aspects (i.e. the high charges and high risk). They honestly sold the financial product to their friends and family members thinking that they are giving good advice.
When they learned later about the negative aspects, they felt quite bad about letting down the people who trusted them and left the business quietly.
Their agency managers knew the full picture, but exploited the ignorance of the newcomers. Some advisers or agents, who later learned the tricks, decided to continue the game and make a lot of money for themselves.
I do not wish to imply that all agency managers or experienced advisers are dishonest. I know of a few who are honest and acted in the best interest of their customers. But there are dishonest or naive advisers as well, so consumers should be wary.
16 comments:
Mr. Tan,
What would you propose to help advisers who wants to do an honesty living giving good advice for their clients? As you know, good advice often comes with low or no commissions.
Wilfred Ling
Buyer of finanancial products around this time must be very careful. Very likely distressed financial products from Europe are bundled with the new products.
In 2007, minibond, HN5 and many other financial products which were pushed to customers contained paper of subprime loans or banks which exposed heavily to those loans.
I am with one local insurance company and I found that the agents are only salesmen and not qualified to give proper advice although they are seemingly honest. On the other hand if they are honest and know that they are not qualified and inadequate to give advice but not doing anyhting about it but continue to 'give' advice then it is dishonest. Many in other companies are like them. The tikam tikam exams by college of insurance are not enough. They prepare you to become salesmen at the best.
If customers trust the unqualified salesmen based on only honesty it is very dangerous because the damage can be disastrous and extensive . I witnessed many already. Conmen also get trust of the victims by appearing honest, right?
I know of a few undergraduates who were recruited to sell insurance to their classmates, even when they were still studying. The agents needed some money to meet the education expenses, so were willing to sell life insurance. They were quite inexperienced in financial matters and were not aware about the negative aspects of these products. When I explained the features to them, they had a look of surprise and uncertainty.
A Financial Planner is a guy who says to his client:
I've reviewed your financial picture, and if we manage your money properly, there should be plenty for the both of us.
Most important lesson to learn is to get financially educated and be interested in our own financial planning.
If too lazy or not too sure, perhaps it is wise to seek help of one's relatives or friends whom one can trust before paying for any insurance, courses or worse, make any investments.
If your insurance agent says he or she wants to review your insurance he or she means that they want to sell you a product or a new product because they already knew you have a shortfall. The short fall was created in the first sale and continues to be unplugged in the subsequent 'reviews'. This is a strategy to ensure your insurance agent will continue to have business with you.
How?
Each time or review you don't have enough budget to buy enough limited whole life to plug the gap, right?
That is what they mean by review.
Hi Mr Tan,
Thanks for being fair, balanced and a lot more sensitive in this posting.
Hi Mr Tan,
I am a financial services broker and do agree with your philosophy low cost insurance as well as helping clients to achieve higher yields on their policies. The problem we often face is that 90% of singaporeans are not financially savvy and may thus be misled easily.
Many Singaporeans are also unaware if a recommendation is sound or unsound until many years later, which might be too late.
If one sets out to do an ethnical job, how can one earn a decent living if volume is not guaranteed?
Gary Tay
Dear Gary
And what you just said is the entire problem.
Whole Life and Endowment insurance are financially toxic products that can only be successfully sold to unsuspecting consumers by unsuspecting financial advisors who are paid high commissions so that they don't think too much about how toxic these insurance products are.
There should only be term insurance products. For insurance only. No savings or investment component.
If this happens;
There would be a drastic reduction in the number of insurance sales people.
As well as a dramatic decrease in profits for the insurance companies.
Unemployment figures will go up.
And politicians will have to work harder to find alternate jobs for all the displaced insurance sales people.
There is no way you can ethically sell a financially toxic product.
This is a problem nobody wants to face.
So everybody just continues to bury their heads in the sand and pretend that it's business as usual.
The displaced insurance agents can be deployed to other industries to lessen our reliance on FTs. So it is not an issue of agents being 'retrenched' , after all many of them were former retrenched secretaries, clerks, receptionists, factory workers, bus drivers , door to door salesmen and salesgirls etc. They can be retrained to man toilets, kitchen washers, construction workers, front office concierge , engineers, IT developers etc
MAS should do something to stop the unethical practices that are so rampant today. More toxic products are being rolled out, eg. like the early payout critical illness products which are con products for the insurance agents to make a living out of the fear of people.
@ ANON 9:47am
Insurance agents
Financial advisors
taxi drivers
real estate agents
For many people, these are jobs of last resort. When they get retrenched. And when the economy is bad.
For politicians, these "jobs" keep the unemployment figure low.
So there is no political pressure from daft Singaporeans to institute "populist" measures to make life better for Singaporeans.
It's all one big con job.
In your days as ceo you hardly used ads to market insurance products because the cost of advertising would increase the cost of the products. Today, it is so common as if money grows on tree and not only that it is using gory pictures to sell their products. Is it a scare tactic? Public complained about the pictures but the company came out to justify it like cigarette advertising. But cigarette advertising is warning , so isn't the pictures also warning to the buying public to scare them to buy the new early payout critical illness products?
I remember in your days the products sold by themselves without the use of the agents. People bought because of the company but now it needs heavy advertising to persuade and ti has to use morbid pictures to frighten the customers. GOOD AND VALUE FOR MONEY PRODUCTS DON'T NEED ADVERTISING.The conclusion is these products are definitely no good and that is why this company needs to frighten people to buy and also an army of greedy agents to push these toxic products.
Today, Sept 28th 2011, is the maturity of DBS Honey Account, anyone,including this daft commentator, wishes they did not buy into this product. Out of 6 years, only the first two years interest payout was given, after that not a single cent. There is a consolation prize, we got back our principal.
Also got drawn into by the bank's financial advisor six years ago.
Lesson learnt? Never allow their Advisor or your own RM to talk investment products to you. Invest yourself.
Is $110K enough to cover treatment cost and replacement of 5 years of income? I wonder where they plucked this figure.In the 'lung cancer' advert ntuc income says it is enough and warns the readers to ensure they have adequate coverage.
It is just an ad, right? It can say anyhting. I am very sure they know NOT many can afford $110K let alone enough. Just talk and the agents don't plan but push.
I laugh when the ad says to consult their adviser to plan for you. Don't be fooled. How on earth can salesmen plan? You sure kenna conned into buying this dubious product.
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