Confession of a Personal Consultant

The following is a letter to The Straits Times Online Forum  on 1st October.

Consumers should understand the immense pressure we are facing

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)

There are quite a few replies to this letter, including one from an anonymous ‘ethical’ banker.

It is a fact that the Personal Consultants (PC) or Relationship Managers (RM) have sales targets to meet. In business, revenues have to cover costs. In this case, the salary is a cost. To justify your pay, what you produce must cover your cost and produce a profit margin, if not, why does the organisation want to employ you? So, sales targets become a yardstick to ensure minimum ‘profitablility’ to your company.

Sales targets is a double-edge sword. On the positive side, it provides a target for the employee to aim at instead of a aimless pursue and can motivate them to work hard. On the flip side, product pushing and mis-selling can result due to the pressure of hitting sales targets.

Advisers without sales targets to meet can work in a less pressurising environment. However, this arrangement may not necessary be good for their pockets as there might be less ‘motivation’ to work that hard. This does not mean that ALL advisers without sales targets are ethical as there might be other ‘motivations’ like greed or family pressures. The reverse is also true for advisers with sales targets.

Every organization has their own expectations. To seek employment there means being judged and measured based on their expectations and yardsticks. If you prefer to live by your own expectations and not others’, work for yourself. You then only answer to yourself, your love ones and your chosen religion, not to some superiors or bosses.

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Tags: Mis-selling