Avoid financial advisers

A foreigner, working in Singapore, approached me for advice. He bought a Vista plan from a financial planner two years ago, and was shocked to learn now about the high monthly charge of 5% of the premium that is deducted from the account. He never knew that he was buying a life insurance policy with a high upfront charge, which came into effect after 18 months. He was told that it is a regular saving investment product.

The financial adviser had assured him, a few times, that the charge was only 0.7% after 18 months. The adviser had told a deliberate lie to him, to get him to put in a large sum of savings, more than $3,000 a month. I asked him to check about the surrender charge, which I suspect will take away most of the accumulated premiums - if the policy is terminated now.

It is bad for an insurance company to design such a policy that is confusing to the consumer, and for the financial adviser to tell a deliberate lie to get the consumer to put in a large part of his savings. This amounts to cheating,  but how can the consumer prove it? He must have signed the forms without proper understanding.

I advised him to write to the newspaper but he is worried that his colleagues and employer will get to know of his predicament.

My advice to consumers - avoid all financial advisers and insurance agents. Do not buy any investment or life insurance product from a person who approaches you. You will never know if you can become the next victim of this type of financial product.

My message to MAS - is this the kind of financial hub that you wish to build for Singapore? Do you wish to sit back and allow these types of practices to continue?

Tan Kin Lian