5 common complaints against financial advisers

What customers really want

By Lorna Tan, Finance Correspondent

In my nine years as a financial journalist, I have been approached by many frustrated bank customers and insurance policyholders who wished to complain about their advisers and the firms they represented. They hoped I could highlight their plight in my articles so that they could get redress.

This is not to say that I have not heard good things about advisers. I do know of advisers who provide comprehensive and professional financial advice.

They also have the habit of contacting their customers regularly, even when they don't have a product to promote. These are advisers who eventually become their customers' friends.

Perhaps it's the nature of my job, but the complaints I have received against advisers outnumber the compliments. Unfortunately, some customers had such a bad experience with their advisers that they vowed never to trust another.

This is a sad outcome because financial advisers play a very important role. Almost everyone has protection and investment needs, and I believe that advisers are the best people to provide the much-needed advice and service.

It was with this in mind that I decided to make the complaints I had received as the central message during a speech I gave at the Insurance & Financial Practitioners Association of Singapore's (Ifpas) 31st National Congress last month.

I took the opportunity to highlight five common complaints.

Lack of product knowledge

One customer who was sold a structured product told me: 'My experience is that the advisers don't have adequate product knowledge. I asked my adviser to work out the best- and worst-case scenarios, and he told me that he didn't know. I asked him to list all the factors that would have an impact on the indicative value, and he said he needed time to find out, but he never reverted.'

Many clients were also caught in a bind when their advisers failed to inform them of the consequences of putting their spouse and/or children as beneficiaries in a policy. Many thought they could change the beneficiaries as and when they liked, but it was too late when they found out that they couldn't.

Lack of product knowledge will result in poor advice. For instance, if an adviser markets a Shield hospitalisation and surgical plan, on what basis does he help his client decide which plan to choose?

If the client opts for a second-tier plan which covers a Class A ward in a restructured hospital, she may assume that she can have her own specialist who operates in a private hospital. Would the adviser caution the client that she can't? She would be able to have her own specialist only if she had opted for a higher- grade plan.

Not disclosing the downside
This is a very common complaint from customers. Everyone who buys a product wants to know the full picture. This means being informed on the advantages and disadvantages. For instance, people who buy regular premium investment-linked insurance products should be warned that the premiums would get higher as they get older because of the higher mortality charges.

From my experience, I have yet to come across friends who were sold term insurance. Almost everyone I know owns whole life insurance policies but not term, unless they are savvy investors. And yet, we know that what people need most is affordable protection, which only term insurance can provide. Only when this basic level of protection is achieved can we then talk about investments if there is surplus cash.

Here's what a customer told me: 'People don't like to lose money and look stupid, so advisers should point out where I could lose money. Tell me the possibility of both how much money I can make and how much I can lose. Give a potential loss scenario like 8 per cent to 10 per cent. There should be equal emphasis for both potential gain and loss.'

Not sincere

Customers have told me that some advisers seem interested only in a quick sale. In some cases, they were even rude. Customers can feel the sincerity of the advisers. It's not just in the way he recommends his products, but also in his tone of voice and body language.

Continuity problem

Many customers become 'orphans' when the advisers leave their firms and there is no follow-up.

Here's what a customer experienced: 'I called the new adviser. She was very busy and said she would call me back, but she never did.'

Claims handling

This is an area where advisers can offer much-needed help. Most customers are not familiar with the claims process and on what basis they can make their claims effective.

Rather than take all these complaints negatively, I hope that advisers would learn something from the feedback. Better still, turn them into opportunities to reach out to customers, particularly now that we are in an economic crisis.

This is a time for advisers to help their consumers take stock of where they are financially, their assets and investment goals.

On their part, consumers should equip themselves with the basic investment knowledge and learn to ask the right questions. For instance, buying financial products just for the free gifts, instead of ensuring that they suit your financial needs, can only spell disaster

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