How a RM mis-sell endowment
Written By: Tiang Chuan on September 30, 2008
No Comment
My client ask me about a mid term savings plan that gives a impressive return (considering the current low interest bear market). She was introduced to the plan by a bank Relationship Manager (RM) when she wanted a fixed deposit. This is how the RM illustrated the plans to her:
- Interest in saving account – 0.2+% p.a
- Interest in 1 mth FD – 0.3+% p.a.
- Interest in 12 mths FD – 0.8+% p.a.
- $20K in Company A plan, 3+% p.a. In 6 years, Total amount: $C (The RM drew a horizontal line with 6 short vertical lines and wrote the interest below the short vertical lines)
- $10K in Company X plan, 2+% p.a. In 5 years, Total amount: $Y (The Rm drew similar things as above)
The returns looks good right? The RM only talked about the ‘high’ returns. Nothing was mentioned about whether they are guaranteed. The returns are non-guaranteed and all the amounts are projection values.
Such sales tactics are very common. Mesmerised by all the figures, unknowing consumers can fall prey easily. Luckily my client was not among the ‘victims’. But who knows how many have already fallen into such traps?
Related Posts
Tags: Mis-selling
