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03 October 2008

Following Up On A Friday

I signed off yesterday's entry with a sense of incompleteness and was wondering why.

I have to admit, that was one of my slower entries as it took me 3 days to get it up. (The original title was Thoughts On A Tuesday which I conveniently changed to Thursday).

That was only when I read Tan Kin Lian's entry, People To Be Blamed that I realised that my earlier entry was incomplete.

I think my brain battery juice went dead right about that time.

So anyway, to carry on from where I left off, and perhaps to piggyback on Tan Kin Lian's entry, I was thinking that people are up in arms crying with pitchforks and torches at these financial institutions for crafting these complex products that is obscenely profitable for them and doesn't really benefit the investors at all. To further aggravate the situation, these so-called financial advisors are are hard selling the uncles and aunties into buying them.



Uncles and aunties are not as well educated as the present generation. Uncles and aunties have to work harder to earn the same sum of money as today's better educated generation. All uncles and aunties want is to have a stable livelihood when they are old and no longer able to work. That and perhaps some money for their children. However, at the paltry interest rates that the banks have been offering for many years, it is understandable that uncles and aunties wants a better deal when it comes to making money work harder for them.

Then one day, a handsome/pretty "financial advisor" showed up all professional looking and dressed "nice nice".

"Uncle/Auntie 要不要买 Minibond? 这个礼拜,我们有 Promotion. 有 Free Gift 送的!" 

The financial advisor then proceeded to do a song-and-dance routine throwing technical jargon freely and painting the best case scenario how their hard earned money can work for them if they entrust it to the advisor.

Uncles and Aunties were convinced that the financial advisor is selling them something good. After all, 这些年轻人 are better educated and knows what's best for Uncles and Aunties.

Sounds like the good old "Magic Stone" con of the 80s to me.



Here's the thing. It's not just uncles and aunties affected here. A whole shit load of people are affected. Critics say that these folks are now paying penance for their greed but I disagree.

I mean who doesn't want a better deal for our money? We all want the same thing. To build up a decent sized nest egg with enough excess to provide for our loved ones.

Tan Kin Lian's entry, as I have mentioned above, is a list of people to blamed for these folks to lose their money, ranging from agents to banks and even the Monetary Authority of Singapore.

Question. What about the person who signed to dotted line? Why isn't he/she in the list as well. Well, while I disagree that they are being punished for greed but surely there is a price to pay for ignorance? Saying "I didn't know" won't get you off the hook because you simply don't sign what you don't know what you are signing for. 

Trust me, you don't need to be a rocket scientist to understand that logic.

In the comments, Mr Tan Kin Lian said "If you buy a sports car and after purchasing it, the manufacturer secretly swap the engine out, can you blame the buyer? NO!!!!!!". Well, yes and no. We can't blame the buyer for the secret swap on the part of the manufacturer but surely you should check under the hood before you drive it out of the showroom. No?

Yes, there is wrong doing on the part of the financial advisors who don't know what they are selling or worse, mis-selling; their respective employers for pressuring their agents to chalk up these profitable sales and knowing full well it may not necessarily be just as profitable for the investor; the people who created these complex products that don't do what is promised to the investors; and the Gahmen for failure to perform the role of a watchdog to safeguard the interest of the investor public.

My point is this. When you point finger at everybody, just remember to point at yourself too.

Once that is done, let all put our heads together and figure out a way to clean up the mess, so that everyone can move on with their lives.

Note: Mr Tan Kin Lian will be speaking at the Speaker's Corner (Hong Lim Green) addressing this issue and perhaps take questions from the public. The date is tentatively set on 11 Oct 2008 between 5pm to 7pm. Do check back his blog for confirmed date and venue.

Images Credit: http://www.uwe.ac.uk
- Voxeros

1. mettakaruna left...
Friday, 3 October 2008 8:32 pm
If someone goes to a govt-linked Pharmacy store and tell them that he is an illiterate and intend to buy a tin of milk powder which is safe for consumption. That person places his trust on the pharmacist and the govt-linked Pharmacy store because he has already qualified that he doesn't understand what is stated on the tin or pamphlets. However, the pharmacist on-duty sold him a brand of milkpowder containing melamine because she has to meet the quota required otherwise she may lose her job and $3k bond. Are you implying that the poor victim has to blame himself for being illiterate and placing too much trust on the pharmacist and govt-linked pharmacy store????


2. akk left...
Saturday, 4 October 2008 11:21 am
wah...i actually agree with metta. but i guess the analogy with the car wasnt a good one. secretly swapping the engine is not something ppl expect, it's criminal. the person buys something and expects the product that he sees and was introduced to. that's why we have financial advisors, yes? they take courses and know their products. its their job. but if they unethically sell to ppl, then obviously you cant blame the ppl who have possibly been lied to or given misinformation to buy. if i have the knowledge, i can save myself from the bad advisers. if i don't, its like going to a doctor. you trust him to give you the best and u'll never know if he sold u bad medication. like so how? must i get a medical degree so i can truly understand and gauge if he's any good? or at least a chemistry cert so i know what pills he's giving me?

no way, right? and if the pills are indeed bad, am i in anyway to be blamed? most of these ppl probably dun understand the jargon and tried their best to find out as much as they can, afterall its a lot of money. so if the advisor decides to omit information or in simplifying what he told the customers he missed out information, it is not the fault of the customer who thought that by asking all that he could think of, he has covered all the grounds.

eg. if the uncle is signing about 10 pages of the policy and suddenly ask, 'ey, can u just explain to me what that tiny print says on every page?'. the advisor sayd, 'oh, that one? dun worry lah, its there in all our policies, just normal disclaimer.'

in any case, i think the uncles and aunties are already blaming themselves and regretting their decision, although not for the reason u think.


3. JayWalk left...
Saturday, 4 October 2008 4:37 pm :: 
mettakaruna & akk: Thank you for your inputs. I went ahead and read thru Section 27 of the Financial Advisers Act (Chapter 110). You guys are right in the sense that the financial advisors is liable for damages if the product that he sold has gone wrong. The financial advisor, based on his knowledge of the product and his client from which he made a match recommendation, must be held accountable if he had advised erroneously.

Still, I cannot understand the logic where one buys a car and yet does not know how to drive one.


4. Gary left...
Saturday, 4 October 2008 7:54 pm
by the way, you make a lousy salesman. no one will buy your product.


5. JayWalk left...
Sunday, 5 October 2008 12:47 am :: 
Gary: You make a lousy customer. I won't sell you anything anyway. :P
 

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