http://www.straitstimes.com/ST%2BForum/Online%2BStory/STIStory_284367.html
POSTED IN STRAITS TIMES ONLINE FORUM
I REFER to the current market situation of Lehman Brothers' bankruptcy which led to the DBS High Notes burst recently. I am a personal financial consultant in a local bank. There are some factors I feel must be revealed to protect consumers' rights.
First, banks usually state that there is seldom or no misrepresentation of products sold, and products are usually recommended based on consumers' needs. A financial needs analysis and fact find are usually done to ensure consumers have sufficient funds and a real need for the product. The fact is that we often face pressure to sell certain products so as to hit our sales target.
Take me, for instance. I am a fresh graduate from the National University of Singapore. I have a nine-month contract with a local bank, but I was told, if I did not pass probation in six months (hitting sales target), I would be asked to leave and pay the $3,000 bond.
So far, I have sold $500,000 in insurance based on consumers' needs, so why is my sales record so poor? This is due to product discrimination. We have to sell mainly investment-linked insurance products. To sell 10 of these is equivalent to 60 products I have sold. Thus a fresh graduate like me who can't afford to pay the $3,000 bond faces a real dilemma.
Therefore, consumers should understand the immense pressure we are facing. Most of the time, we are trained to promote that particular product and try to think of ways it benefits consumers. Welcome to the real commercial world.
Geraldine Teng (Ms)
Tuesday, September 30, 2008
Fixed deposit with Singapore banks
Hi Mr Tan
With the recent spats of numerous closures and bankrupts, how safe is it to put cash money in Fixed Deposits with local banks? I have retired 10 years ago, and most of my cash have been in fixed deposit.
REPLY
I think that it should be quite safe. You can break up with savings into several banks. There is an insurance scheme that guarantees deposits of up to $20,000 in each bank. It covers full licence banks in Singapore, whether local or foreign owned.
http://www.sdic.org.sg/faq.html#a5
With the recent spats of numerous closures and bankrupts, how safe is it to put cash money in Fixed Deposits with local banks? I have retired 10 years ago, and most of my cash have been in fixed deposit.
REPLY
I think that it should be quite safe. You can break up with savings into several banks. There is an insurance scheme that guarantees deposits of up to $20,000 in each bank. It covers full licence banks in Singapore, whether local or foreign owned.
http://www.sdic.org.sg/faq.html#a5
Saved by sound advice
Dear Mr. Tan,
My friends and I enjoy reading your blog. Just to say thank you for your sound opinions on Financial planning and products.
With your sound opinion in Pinnacle note, I put my money in FD instead of "mislead" by the RM of the bank last year. I save my retirement amount because of a kind hearted person like you.
Thank you.
Mr and Mrs Goh
My friends and I enjoy reading your blog. Just to say thank you for your sound opinions on Financial planning and products.
With your sound opinion in Pinnacle note, I put my money in FD instead of "mislead" by the RM of the bank last year. I save my retirement amount because of a kind hearted person like you.
Thank you.
Mr and Mrs Goh
Pinnacle Series 11
Hi Mr Tan,
Thank you for helping the uncles and aunties in the above matter.
I was so foolish to be attracted by Citibank's fixed deposit offer and went to their branch at Ang Mo Kio. The relationship manager X told me people who invested in Pinnacle made much more in interests and that's why it can run series after series. (He knew I had $70,000 for the FD.)
So he introduced me to Pinnacle Series 11. He showed me the colourful one sheet flyer. I did see the "Important Information" that you must read the prospectus. So I asked for it. The RM went out of his room to look for it and came back saying it has run out of stock. He promised to post to me. He kept repeating "Don't worry." I asked him how can I be sure that I will get back my money. He pointed to the Name of Note "4Y SGD Pinnacle Series 11 Principal Protected Equity Linked Notes" given on the subscription form. He said, here, it says so clearly "Principal Protected." I felt stupid. It was like a redundant question I asked.
Now X is not at Ang Mo Kio Branch anymore. The Branch won't even tell me whether he is still at Citibank. The value of the Note I paid for with $70,000 of family savings has dropped to $50K+ (last month). Another relationship manager at the Branch told me recently if I hold to maturity I will get back $70,000. But I could not understand how they come to the present value of $50K+. If I understand this second relationship manager's explanation correctly, it has to do with the share market.
Now the share market has gone even lower, I don't know whether there is still $50K+ now. What shall I do? This is all the family's saving. And my aged husband and I have to look after a severely ill adult son with this money. I know I was greedy for more interest when I agreed to take X's product. But for the last nine months, I didn't even get a single cent of interest.
I have resigned to accept the punishment for my greed. But I was encouraged when I was introduced to you blog. So I learn how to get to read it and have been updating myself with the info on your blog. I am grateful that your care.
Should I hold the Note to the maturity and hope to get back $70,000 or take out whatever amount of money that's left now. Should I accept that they can use my savings without interest to me for more than nine months and even lose some of it?
Thank you. Wishing you much blessings!
Aunty Esther
REPLY
I am not familiar with Pinnacle Series 11. If I can find some information, I shall tell you later. So sorry, I cannot advise you at this time.
Thank you for helping the uncles and aunties in the above matter.
I was so foolish to be attracted by Citibank's fixed deposit offer and went to their branch at Ang Mo Kio. The relationship manager X told me people who invested in Pinnacle made much more in interests and that's why it can run series after series. (He knew I had $70,000 for the FD.)
So he introduced me to Pinnacle Series 11. He showed me the colourful one sheet flyer. I did see the "Important Information" that you must read the prospectus. So I asked for it. The RM went out of his room to look for it and came back saying it has run out of stock. He promised to post to me. He kept repeating "Don't worry." I asked him how can I be sure that I will get back my money. He pointed to the Name of Note "4Y SGD Pinnacle Series 11 Principal Protected Equity Linked Notes" given on the subscription form. He said, here, it says so clearly "Principal Protected." I felt stupid. It was like a redundant question I asked.
Now X is not at Ang Mo Kio Branch anymore. The Branch won't even tell me whether he is still at Citibank. The value of the Note I paid for with $70,000 of family savings has dropped to $50K+ (last month). Another relationship manager at the Branch told me recently if I hold to maturity I will get back $70,000. But I could not understand how they come to the present value of $50K+. If I understand this second relationship manager's explanation correctly, it has to do with the share market.
Now the share market has gone even lower, I don't know whether there is still $50K+ now. What shall I do? This is all the family's saving. And my aged husband and I have to look after a severely ill adult son with this money. I know I was greedy for more interest when I agreed to take X's product. But for the last nine months, I didn't even get a single cent of interest.
I have resigned to accept the punishment for my greed. But I was encouraged when I was introduced to you blog. So I learn how to get to read it and have been updating myself with the info on your blog. I am grateful that your care.
Should I hold the Note to the maturity and hope to get back $70,000 or take out whatever amount of money that's left now. Should I accept that they can use my savings without interest to me for more than nine months and even lose some of it?
Thank you. Wishing you much blessings!
Aunty Esther
REPLY
I am not familiar with Pinnacle Series 11. If I can find some information, I shall tell you later. So sorry, I cannot advise you at this time.
Tribute to Mr. J B Jeyaretnam
Someone sent an e-mail to me, giving this tribute to Mr. J B Jeyaretnam. I only know Mr. Jeyaretnam briefly - but enough for me to admire what he has done for Singapore.
TRIBUTE
As a kid who hungrily devoured all that the flat media supplied at the time, and ignorant of their propagandistic nature, I thought JBJ had dishonourable intentions - a fool who was always exposed by his powerful nemesis. It took several years before I realised that I was the fool.
By then, I was rooting for his entry into parliament and it was with great joy that I read the headlines "JBJ takes Anson". It was a historic breakthrough not appropriately celebrated by the media. JBJ had achieved the unthinkable!
Once whilst walking down the stairs of the Subordinate Courts to the taxi stand, I noticed that the drivers in the waiting taxis had suddenly almost in synchrony gotten out of their vehicles, shouting and waving greetings towards my direction. I turned my head to see none other than JBJ waving back at them with a big warm smile pasted on his face.
I witnessed how when he reached the taxi stand, all the drivers rushed to shake his hand, many thanking him for his work. It was a genuine and uncontrived demonstration of true admiration and warm respect; quite unlike - in fact in contrast to - the kind shown by members of certain residents' committees towards their elected leaders. I knew then that I was in the presence of a true people's leader.
The first-time when I had the privilege of witnessing first-hand in open court the mesmerising tone of his voice and the fearless manner he fought, it left me in no doubt that standing before me was an extraordinary man of upright constitution. If you had also noticed his poorly-pressed suit and unpolished worn-out brown leather shoes, you would have fathomed the real depth of this man who must have found preening himself just to look good an utterly waste of bloody time!
JBJ was the man amongst men.
Nothing I have said and can say would do justice to the real quality of this man. Today is a very sad day for his family and friends. But, as a country, it was already a very sad day when we allowed him to be mistreated and tormented by his nemesis. We stood by and did nothing.
Knowing JBJ, he has forgiven us. But can we forgive ourselves?
acitizen7
TRIBUTE
As a kid who hungrily devoured all that the flat media supplied at the time, and ignorant of their propagandistic nature, I thought JBJ had dishonourable intentions - a fool who was always exposed by his powerful nemesis. It took several years before I realised that I was the fool.
By then, I was rooting for his entry into parliament and it was with great joy that I read the headlines "JBJ takes Anson". It was a historic breakthrough not appropriately celebrated by the media. JBJ had achieved the unthinkable!
Once whilst walking down the stairs of the Subordinate Courts to the taxi stand, I noticed that the drivers in the waiting taxis had suddenly almost in synchrony gotten out of their vehicles, shouting and waving greetings towards my direction. I turned my head to see none other than JBJ waving back at them with a big warm smile pasted on his face.
I witnessed how when he reached the taxi stand, all the drivers rushed to shake his hand, many thanking him for his work. It was a genuine and uncontrived demonstration of true admiration and warm respect; quite unlike - in fact in contrast to - the kind shown by members of certain residents' committees towards their elected leaders. I knew then that I was in the presence of a true people's leader.
The first-time when I had the privilege of witnessing first-hand in open court the mesmerising tone of his voice and the fearless manner he fought, it left me in no doubt that standing before me was an extraordinary man of upright constitution. If you had also noticed his poorly-pressed suit and unpolished worn-out brown leather shoes, you would have fathomed the real depth of this man who must have found preening himself just to look good an utterly waste of bloody time!
JBJ was the man amongst men.
Nothing I have said and can say would do justice to the real quality of this man. Today is a very sad day for his family and friends. But, as a country, it was already a very sad day when we allowed him to be mistreated and tormented by his nemesis. We stood by and did nothing.
Knowing JBJ, he has forgiven us. But can we forgive ourselves?
acitizen7
Minibond Series 5
PUBLISHED IN STRAITS TIMES ONLINE FORUM
Dear Sir/Madam,
My wife and I are joint account holders of Maybank Singapore. We purchased S$100K of Minibonds Series 5 from Maybank's investment banker around Aug'07. We were under the impression then that these were supposedly very safe bonds. Every few months, I'll even call up Maybank to inquire the well-being of our Minibonds and whether I should still hold on to them. Each time, I was informed that these bonds were still sound, and there wasn't any need to bail out.
Now that Lehman is bankrupt, and the public disclosure that our Minibonds has in fact, nothing at all to do with bonds, but are instead CDO-related derivatives, we are extremely disappointed, distressed and upset with Maybank's lack of professionalism and very poor-product knowledge. The investment advisers are more interested in closing the deal and going through the motion during the investors' risk-analysis.
We believe there are many more thousands of retail investors in Singapore whom are similarly short-changed by the high profile advertisements, aggressive marketing, and misleading sounding products such as "Minibonds", "High notes", etc, which gives a false impression of highly rated bonds or notes. This is compounded by the lack of explanation and product knowledge by the private-bankers/investment advisors. Obviously, no one of sound mind will be willing to accept a 5% return for taking on the risk of CDO-related derivatives!
We fully understand the concept of buyers beware. However in this situation, how is the layman supposed to beware of what they're being sold when the 60-odd pages of prospectus is filled with legalese and technical jargon that even the sellers themselves do not fully comprehend!
We seriously implore MAS and Maybank to investigate and not condone such unethical practices, lest Singapore's hope of becoming a leading fund-management and financial centre is tarnished.
Your faithfully,
Ngo Chee Keong (Mr)
Ng Wee Lay (Ms)
CC: Maybank, ST Forum, MAS, CASE, Mr. Tharman Shanmugaratnam - Minister for Finance, Mrs Lim Hwee Hua - Senior Minister of State for Finance
Dear Sir/Madam,
My wife and I are joint account holders of Maybank Singapore. We purchased S$100K of Minibonds Series 5 from Maybank's investment banker around Aug'07. We were under the impression then that these were supposedly very safe bonds. Every few months, I'll even call up Maybank to inquire the well-being of our Minibonds and whether I should still hold on to them. Each time, I was informed that these bonds were still sound, and there wasn't any need to bail out.
Now that Lehman is bankrupt, and the public disclosure that our Minibonds has in fact, nothing at all to do with bonds, but are instead CDO-related derivatives, we are extremely disappointed, distressed and upset with Maybank's lack of professionalism and very poor-product knowledge. The investment advisers are more interested in closing the deal and going through the motion during the investors' risk-analysis.
We believe there are many more thousands of retail investors in Singapore whom are similarly short-changed by the high profile advertisements, aggressive marketing, and misleading sounding products such as "Minibonds", "High notes", etc, which gives a false impression of highly rated bonds or notes. This is compounded by the lack of explanation and product knowledge by the private-bankers/investment advisors. Obviously, no one of sound mind will be willing to accept a 5% return for taking on the risk of CDO-related derivatives!
We fully understand the concept of buyers beware. However in this situation, how is the layman supposed to beware of what they're being sold when the 60-odd pages of prospectus is filled with legalese and technical jargon that even the sellers themselves do not fully comprehend!
We seriously implore MAS and Maybank to investigate and not condone such unethical practices, lest Singapore's hope of becoming a leading fund-management and financial centre is tarnished.
Your faithfully,
Ngo Chee Keong (Mr)
Ng Wee Lay (Ms)
CC: Maybank, ST Forum, MAS, CASE, Mr. Tharman Shanmugaratnam - Minister for Finance, Mrs Lim Hwee Hua - Senior Minister of State for Finance
Bank staff do not understand financial products
Hi Mr Tan,
I used to be an institutional dealer(equities,bonds & futures) for two local banks but quit many years back because I was very disillusioned with what I was seeing everyday.
Personally, I feel that the local banks (can't comment on the foreign ones) are not out to misrepresent and/or mis-sell their credit link products to retail investors. I think the bank sales people simply do not have the training & background/experience to understand their derivatives themselves.
Perhaps, some incidental encounters of mine would be illuminating.
I am a very conservative investor.
I've only invested in Singapore government bonds (SGS), local bank preference shares & a small portion of my portfolio in REITs.
I regularly purchase SGS through 2 local banks but every time I make a purchase, I have to "teach" the bank's sale staff how to calculate accrued interest (ie. buyer must compensate the seller daily interest earned), help them identify which is the correct SGS series and other matters related to filling up the purchase/sales forms!
It really makes me wonder, if they cannot handle something as simple & direct as Singapore government bonds, then what of more complex derivatives ?
I used to be an institutional dealer(equities,bonds & futures) for two local banks but quit many years back because I was very disillusioned with what I was seeing everyday.
Personally, I feel that the local banks (can't comment on the foreign ones) are not out to misrepresent and/or mis-sell their credit link products to retail investors. I think the bank sales people simply do not have the training & background/experience to understand their derivatives themselves.
Perhaps, some incidental encounters of mine would be illuminating.
I am a very conservative investor.
I've only invested in Singapore government bonds (SGS), local bank preference shares & a small portion of my portfolio in REITs.
I regularly purchase SGS through 2 local banks but every time I make a purchase, I have to "teach" the bank's sale staff how to calculate accrued interest (ie. buyer must compensate the seller daily interest earned), help them identify which is the correct SGS series and other matters related to filling up the purchase/sales forms!
It really makes me wonder, if they cannot handle something as simple & direct as Singapore government bonds, then what of more complex derivatives ?
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