Raising standards on financial advice, ST Editorial News & Top Stories

The results of the latest mystery shopping exercise on financial advisers (FAs) released on Tuesday by the Monetary Authority of Singapore (MAS) show encouraging improvements in performance compared with the previous exercise conducted in 2011. The percentage of suitable product recommendations made by FAs improved from 70 per cent to 88 per cent. Most FAs helped shoppers make accurate disclosures of their medical conditions, and also properly explained the investment returns illustrated in insurance policies. However, the exercise also highlighted areas for improvement. Notably, it found that compared with sales from customer referrals, the deals closed at roadshows had more than double the proportion of unsuitable products that were recommended and had more cases of the inappropriate influence of shoppers’ purchase decisions through offers of gifts and incentives.

There was some slippage in the protocols that FAs need to follow when pitching sales to “vulnerable” clients, namely those who meet two of three criteria: They are aged 62 or more, not proficient in written or spoken English, and lacking in primary education. About 75 per cent of FAs did not request a trusted individual to accompany such vulnerable clients. Although this did not seem to affect the quality of products sold – 98 per cent of products recommended were suitable for vulnerable clients – it did prompt MAS to enhance safeguards for such clients, who will grow in number as the population ages.

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