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The Root Of Evil Sales

>> Monday, January 31, 2011

After looking through some popular blogs by Mr Tan Kin Lian and Mr Wilfred Ling, they often share stories about insurance agents lying and selling toxic products. I was inspired to take a look at the issue from a different angle.

Sales people deliberately cheating and lying is definitely wrong. However, they do not need to lie to make a sale if the product they are selling is inherently good. Of course, cheating to sell an unnecessary product is unethical but since most Singaporeans are under insured, buying more insurance, if they can afford it, will not be "unnecessary".

And since MAS has reviewed and approved the insurance product, can it still be considered toxic? Many bloggers consider Investment Linked Plans (ILPs) to be generally toxic. The commission from the product is high and hence many insurance agents are advocating it.

So, back to the source of the problem. MAS has allowed for the sale of the product, if there is nothing good about the product, why is it even still made available? To have a good clean up of the industry would be to weed out all the unnecessary and harmful products so that even if agents lie and cheat, they would still be selling an inherently good product. For example, if you imagine, all that is available on the market are affordable shield and term insurance, how badly can one mis-sell those plans?

I believe in the goodness of some agents, they are new to financial planning and learn from managers who mentor them to sell toxic products unknowingly. It is not of choice that they lie or cheat but through innocently following their successful coaches.

I guess it is not fair to shift all the blame onto the regulator but I feel that they could play a bigger role and cleaning up the image of the industry by addressing the root of the problem. Rather than burdening sincere people from financial planning with unnecessary additional paperwork.

So, unlike my fellow bloggers, instead of lamenting on agents selling toxic products to customers, focus should be on why these toxic products are available. Similar to the food industry, if unscrupulous sales people try to sell virus infected meat or tainted milk, AVA is our gate keeper to disallow even the import of the product to be made available for sale.

2 comments:

Anonymous February 2, 2011 at 9:39 PM  

You analogy of "toxic" ILP vs tainted food is flawed. If I bought an ILP, I would not drop dead tomorrow.

Financial regulators are not obliged to ensure fair return of investments. Else, they would even have to regulate the stock market to ensure all equities will always rise, no?

OTOH, food regulations have to ensure all food are safe to eat.

But a better analogy would be food regulator do not ensure all food are tasty. You can sell bad tasting food all you want.

Lau February 4, 2011 at 10:30 AM  

Well no analogy is perfect if u go into the details.

More importantly, point is brought across. Perhaps your take could be more apt.

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