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.