The state of our financial industry

An interesting clash is brewing between insurer AXA vs Finexis. A well written article is written here. As the writer mentioned, the outcome was pretty obvious to those in the industry. Its actually pretty mind boggling as to how AXA came up with such a scheme in the first place. Anyone else could see the potential pitfalls from miles away.

The financial industry, or to be more specific, the wealth management are, to be honest, is a very 'grey' industry. Majority if not all of the sales force, including myself, is really in it for the money. I dare say I never ever mis-sold or rather misrepresented a product in all this years, but I dare not say that every single product I have sold was based on customer's needs. Its a running joke in the industry that the term 'needs based selling' is actually based on the adviser's and/or the bank/insurance company's needs first, not the customer's.

In a bank, whenever the bosses presses for sales, for 'flavor of the month', as a sales staff, you simply have to deliver. I remember vividly, one of my early cases in the bank, I recommended the customer a capital protected single premium product that I believe was best for the customer which the customer bought. At the end of the day, I had the entire set of sales documents thrown in my face, because I wasn't answering to the 'corporate call' of selling the bank's structured deposit. The manager basically stressed that he only wants sales for the structured deposit and nothing else and we have to deliver it 'one way or another'. Re-toolings, telecalls till late into the night, roadshows, etc.. all without extra OT pay, just stressing you until u gave up and start selling what they want before you are let off. That was an eye opening.

After leaving the bank, I went into the insurance industry, thinking that I am in control of what I wanna recommend to customers. My thinking wasn't exactly wrong, but you soon realise that without a basic pay, but with financial commitments to handle, you tend to recommend customers products that gave you the highest revenue. A very simple test to see if your agent is doing the same, simply by looking at the tenor of the plan they are offering you. More often than not, irregardless of whether you are 20 or 30 or 40, its always a life plan or at least a 25 year plan as it pays them full commission. So although there isn't someone telling or pressing you what to sell, consciously or subconsciously, you always end up selling the product that gives you the highest revenue, and thereby achieving what the company is pushing for that particular month anyway.

I would applaud if there ever comes a day financial planning can be done on a fee based basis. However, I probably wouldn't see it in my lifetime. The idea is great, but getting people to pay for advice, especially Singaporeans, are almost guaranteed to fail. Regardless of whether in a bank or insurance company, I never fail to meet someone who would try to bargain for better rates or free gifts etc. How can you expect this same group of people to pay for advice?

Honestly, its getting tougher and tougher for me each day to motivate myself for work these days.

Agents vs Bankers

Just a little snippet of update, the tattooedbanker is once again moving back to banking. With the job market in an upswing, I really couldn't resist the opportunity to have a 40% pay increase and a move to one of the big names. So... here I am again...

I've been going through some training etc over the last month or so with my new employer, it was refreshing in certain ways, especially in terms of product offering, yet reeks of the bureaucratic bullshit that I hated of big organisations where every departments attitude was to cover their own ass and adopting a 'not my area' mindset. Its truly sickening...

I was in banking for about 3 years before I my last switch to an insurance company. Shocker number one, even though you are doing the same job, people tends to perceive insurance as more of a 'dirty' job while they look at banks with more prestige. You can actually hear the disdain in their voices when you mentioned that you are from an insurance company. Even customers whom you know that have high net worth will not place much funds with you as you are from an insurance company which they perceive as 'less stable' than a bank. The same customers that used to place hundreds of thousands worth of investments at a time suddenly reduced their figures to tens of thousands. Luckily they still gave me some 'face' though... I see the newbies to the industry really trying and struggling hard and I really pity them. Quite a few made it though, and once their confidence grows, they actually did very well. However, I do also observe that although they improve greatly in terms of rapport building, gaining customer's trust etc, they do not really gain much in terms of market knowledge or even current affairs. It may be somewhat of a generalization, but that is quite true from what I had seen so far, probably because their core focus are on long term insurance plans as it gives them maximum revenue, and their one and only retort to customer's objection on market conditions is that you don't have to worry about it as market will always sort itself out in the long run. Not wrong at all, but if I am a customer, I do enjoy or expect a little bit more depth from my advisor.

Banks on the other hand, have what I would describe as 'perceived legitimacy'. Everything that a bank does is being perceived as more 'aboveboard' and customers really trust them a lot, which may or may not be justified, I don't really wanna discuss that. Its up to the individual. The point is, newbies in banking have an added advantage of the bank's 'backing' and do not need to try so hard to gain the customer's trust, which, once again, can be good or bad, depending on which side of the fence you are on. However, banks do seemed to focus, or expect more of their staff in terms of general knowledge, especially if you are above the mass market segment. Even the tellers and non-sales staff can give a somewhat reasonable explanation on why the deposits rate are so low, currency risks or general market direction. I think this is something that  the bank does really well in educating their staff through email updates and almost daily morning meetings. If you really wanna be able to take on the banks, this is something that I would like very much to see in insurance agencies instead of only focusing on the daily sales numbers only.

Personally, I think my short stint did me a lot of good. It opened my eyes to what is happening on the other side.