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A bad experience in a local bank.

Wednesday, March 27, 2013

One would think that after the Lehman Brothers Mini-bonds incident, things would have changed on the banking floors here. However, if my sister's experience yesterday at a reputable local bank was anything to go by, not much has changed on the ground.

I see dark clouds again.

She went to the bank to deposit my niece's savings in a fixed deposit but was approached by a male banker who tried to convince her to put the money in a "bond" which would supposedly give her a 5% return instead.

He told her that there was no lock in period and that the 5% return was better than the 1% which the one year fixed deposit would pay in interest...

Waiting for more information? You would be disappointed. Now, how many aunties and uncles would have taken up the offer right there and then?

Well, my sister asked questions! Good on her!

Bonds? Who am I lending money to?
Answer: XXX (name of the bank she was at) lah.

Is this some kind of unit trust?
Answer: No, no. You are lending money to XXX.

What is the catch?
Answer: The catch is you get 5% per annum lor.

There are no fees?
Answer: You can sell anytime. There are no fees when you sell.

What about fees when I buy?
Answer: There is a 3% fee.

So, before I make any money, I would have lost 3%?
Answer: But you will get 5% per annum.

XXXX offered me a product too. Capital is guaranteed. What about this?
Answer: This won't lose money one. See? I show you the chart. The value keeps going up.

So, nothing is guaranteed?
Answer: The projected returns is very good. See the chart?

HOCUS POCUS! POOF!

If I had been there, the "banker" would have been blasted by me big time! I would have asked to see his branch manager. I would have suggested that this person be sent for corrective training. Indeed, how are these "bankers" trained?

Misrepresentations aplenty!

I get very agitated when I hear of such incidents. Why do people resort to such trickery to close deals? Why can't they be honest?

Related posts:
1. Know what is good for us.
2. Inflation adjusted retirement income plan.

32 comments:

Matt said...

Ak,

Reminds me of two incidences, both local banks.

In the first incident at the lobby of the local bank's ATMs, I was accosted by this SYT who went on to try to convince me to buy a product that pays more than 10% p.a. I told her if it is true, she would not need to even try to sell the product because there will be a long queue of customers wanting to buy the product.

At another local bank, while opening a bank account, the CSO also tried to sell me some products which she claims pays a more reasonable 2 to 3%. I told her I would rather buy shares in the bank she works for and get more than that and capital appreciation too.

AK71 said...

Hi Matt,

I don't mind people offering me products in the banks. After all, there could be genuinely good deals.

What I cannot accept are those who misrepresent by giving wrong information or by leaving out vital information. These "bankers" only care about their sales target and not the customers' interests.

Matt said...

AK,

If you are accosted that way, you will already think twice about buying those products.

The first incident is dodgy just by the percentage returns. I did not give her a chance to explain as I thought it was too good to be true and I am sure there will be plenty of caveats.

But what I hate most is that they don't even know what is my risk profile and whether I understand what they are offering in the first place before trying to sell me any financial product that comes with pages of legal jargon.

AK71 said...

Hi Matt,

Oh, yes, I agree with you about how they don't even take the trouble to understand their prospective clients. No different from cold callers! Terrible!

:(

la papillion said...

Hi guys,

If I'm bored I'll just act stupid and let them guide me through before blasting him/her with tonnes of questions.

If I'm busy, I'll just say I'm not interested.

If I'm nice, I'll just say I won't buy from you, better not waste your precious time trying to convince me.

Most of the time I'm just busy ;)

AK71 said...

Hi LP,

I would see what they had to say in case there was a genuinely good deal but, you are right, if I were busy, I would brush them off. ;p

Vincent said...

Good product do not need to be peddled by salesman, people will flock to it as it sells by itself. Usually such products also sucks in term of commission paid so salesmen will tend shun them as well.

Vincent

Zi Rong said...

You should report the banker to MAS! He deserves to be reprimanded!

INVS 2.0 said...

Hi Ak71,

When you mentioned the mini-bond incident, I straight away know which bank it is. Haha.

Banks are simply legalised loan sharks and an entity completely built on money.

Even if you meet the branch manager, nothing will change as this is the direction of the bank.

AK71 said...

Hi Vincent,

You are right, of course.

Once upon a time, there was a product from UOB Life called Guaranteed Rewards which paid 4% p.a.

Sadly, both UOB Life and the product are no longer around. :(

AK71 said...

Hi Zi Rong,

Terrible, right? Grrrr....

AK71 said...

Hi INVS 2.0,

Somehow, I don't think the bank would condone what this person did Of course, I am giving the bank the benefit of the doubt.

There are two local banks in Singapore which could fit the description of XXX. Which one do you have in mind? ;p

Singapore Man of Leisure said...

AK,

LOL! If you asked for the branch manager, he/she will act surprised and thank you profusely for bringing this "black sheep" to his/her attention.

In reality, the branch manager was the one who trained them that way: "If you don't hit your monthly quotas, you see that door?"

It's a living; but it all boils down to our personal conscience as salespeople.

Thank goodness I can sleep well when I was in sales.

Musicwhiz said...

I think I am too nice. I just say "I'm not interested". I even add a "Thank You"!

JCK said...

Not a Cypriot bank, is it? ;)

bensonloo said...

sorry new to these product. aren't the bank supposed to seperate banking services from investment services ?

Elaine K said...

You are sounding more and more like Suzie Orman each day!! :-)

AK71 said...

Hi SMOL,

Sigh... You think so? I am so disillusioned...

MAS should send mystery shoppers to these banks! MAS should also implement fines for offenders!

If they don't hurt, they don't learn.

AK71 said...

Hi MW,

Forever the gentleman, you are. :D

AK71 said...

Hi JCK,

The day Singapore becomes another Cyprus, I hope I would be long gone. ;)

AK71 said...

Hi Benson,

Oh, the investment services personnel double up as door men in some bank branches these days. We cannot even walk around them. ;)

AK71 said...

Hi Elaine,

Suzie Orman... OK, found this from Wikipedia:

Susan Lynn "Suze" Orman (born June 5, 1951) is an American author, financial advisor, motivational speaker, and television host.

Wah! Sounds impressive. I am sure she is doing good work too.

I like. :)

PanzerGrenadier said...

Hi AK

These cases will re-surface. There will always be pressure on Financial Advisers embedded in bank branches to sell all sorts of products to their customers to meet their sales targets.

Unless one arms himself with basic financial literacy, one risks being conned. Look at how the mini-bonds turned out between HK and SG jurisdiction and the outcome for the same SG bank was quite different under HK MAS and SG MAS.

It's a shark infested world out there, one needs to be armed with shark repellant (i.e. financial literacy) to ask the right questions as your aunt.

AK71 said...

Hi Panzer,

Er... My sister, not aunt. Haha.. She wouldn't be amused. ;p

I guess I am still a boy scout in some ways and I expect people to have the common good of everyone at heart. Of course, I know there are selfish and unscrupulous people. Being a BDM, I see too many examples of these but I still feel upset each time I see such a case. :(

I certainly hope that we, as bloggers, could help to right the situation but, of course, there are bloggers who are active in selling financial products etc. as well. So, you are right about the importance of being educated and knowing the right questions to ask.

hyom hyom said...

Now and then, people need to be reminded of this sort of bad behavior that is happening in the banks. As long as bank staff are driven by bad incentives, they will behave in an evil manner.

A general rule I apply to financial products is that if they are aggressively sold to me, I reject it outright. I do not want to spend any more time to learn about it.

If someone aggressively promotes a financial product, he is usually getting paid handsome commission for it. This commission comes out of our pockets when we buy the product. A good deal for the seller is usually a bad deal for the buyer. Good financial deals never come looking for us. We have to actively seek them out ourselves. If somebody knows of a wonderful bargain, he is going to buy all that he can himself. The last thing he wants to do is to let the secret out. Every time I hear of a deal-you-can't-miss from a stranger, I just walk away as fast as possible before I get rude.

AK71 said...

Hi hyom hyom,

Hahaha... Yes, we should indeed be suspicious of anyone who aggressively promotes a financial product or any product for that matter. :)

However, I usually aggressively promote products which I believe represent good value for my clients. Indeed, I have the same philosophy as a blogger. I hope people do not mistake my good intentions. ;p

hyom hyom said...

Hi AK71,

Of course it does not apply to you:) You don't earn commission. I don't think you collected a single cent for recommending REITs last year.

If a financial sales promoter can prove that he himself has bought the financial product that he is selling in substantial amount, then I will at least not reject him outright. Just like you yourself bought REITs by the loads when you recommended REITs to your readers.

AK71 said...

Hi hyom hyom,

Yup, in fact, I probably should regret blogging about REITs so positively over the last three years. Hahaha... ;p

Well, I did recommend certain products in my blog and I made some pocket money. However, if I recommend something, it is usually because I believe it represents good value and that it does good in some ways.

I can only hope that I have done a good job so far. :)

seefei said...

I think the bank should stop selling and do more servicing. I have problem giving businesses to bank and they will only call after I have given the business to a competitng bank.

If the salesman at the door are more knowledgeable and helpful and mindful of my other financial needs, I don't mind buying some bond to service them back. But that is never the case.

AK71 said...

Hi seefei,

Oh, I agree. They should focus on improving customer satisfaction. :)

Incidents like the one my sister had with the "banker cum doorman" do not help. :(

Elaine K said...

Hi AK

Suzie Orman was a financiual planner who was upset with how the industry works against the less-aware.

She preaches about saving for a rainy day (BIG channlenge in the US), retirement planning, insurance (i learnt about term insurance from her)....

Her most famous segment of her show is "Can I afford it" where viewers send in details of the items they want to buy along with their financial situation - she will analysize and either "Approve" or "Deny"!

She has been a great inspiration to me.

Check out her website or catch the Suzie Orman show in CNBC:
http://www.suzeorman.com/resource-center/

AK71 said...

Hi Elaine,

I read up more about her since your last comment. Her last job was with Prudential. It takes a special kind of person to be able to say "no" to a job that pays well but is against personal principles. :)

She is also worth some US$10m today if Wikipedia is right. This proves that we can be comfortably wealthy doing the right things to help others too. No need to be filthy rich.

Shame on those who would resort to trickery to get rich!

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