Saturday, July 24, 2010

Direct communcation

This article shows an example of the problem that a consumer can face, when they buy insurance from a financial advisory firm. It is usually better to deal directly with the insurance company, to avoid any breakdown in communication.

1 comment:

zhummmeng said...

Referring to AXA, the problem is product pushing. Product pushing avoids the need to check the financial health of the customers . The sole purpose is to push products with high commission and avoid the need to justify the recommendation on reasonable basis. Gifts , vouchers, rebates or steep discount are thrown in to induce or sweeten the product and to influence or distort the buying decision.
I have a few recent encounters at NTUC roadshows where they offer vouchers to induce you to buy their new dubious limited payment endwoment product called the REACH. The salesman even pitched the gift voucher as the whole term's interest paid upfront.This is misleading and misrepresents the product.
Anyway, ntuc salesmen disguised as senior or executive financial consultants are actually product peddling salesmen.
MAS must put a stop to gifts and rebates as inducement to buy usually rotten products. Commonsense will tell you that good products don't need inducement.
MAS must ban product pushing or option 3 and enforce the need based advisory approach as the standard and not only that , all recommendations MUST meet the reasonable basis test to comply with section 27 of the FAA.
As long option 3 or product pushing is allowed unethical practices will continue to rise. To put the last nail to the coffin of product pushing or option 3 also ban the commission from all products. This will not only sieve the competent from incompetent but will also eliminate the dishonest salesmen or conmen and women.
If only MAS follows UK and Australia and now Hong Kong to revamp the FAA. I am sure MAS is aware that the insurers pay only lip service to the fair dealing outcome guidlelines. Leaving them to implement on their own it is like asking them to bash their heads against the walls. Product pushing has been a more lucrative and faster way of bringing in sales
than the need based.Why do you think ntuc agents are called the sales champions or the super dupers? The agents are so good at it pushing and peddling products. Give them any product and they will cook up strategies to 'market' it.
MAS, the financial doctor approach will remain an illusion if you persist in letting the insurers to self regulate. They cannot be trusted. They are good at 'looking compliant' only for anticipated audit only..
Another safeguard for consumers whether they have been treated fairly and correctly is to check on all option 3 cases by calling the customers up and also to check the production of the MDRT, COT and TOT agents. The revelation will be very interesting and if it is not enough to convince the regulator then something is really amiss.

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