August 28th 2013
Most people have financial plans of some sort, whether you want to buy your dream home, educate your kids, maintain your lifestyle in retirement or simply make your money work harder for you. But as stocks, shares and savings are minefields to many, where is the best place to seek advice for your financial future?
The first port of call for most Hong Kongers would be to talk to their bank. However, the South China Morning Post’s (SCMP) recent mystery shopper exercise, putting eight major banks in the frame, raised some serious questions about whether they are best placed to recommend the right options to suit their clients’ needs.
A reporter posing as a 37-year-old expat mother with HK$10,000 a month to invest into a pension visited Hang Seng Bank, Bank of China, Standard Chartered, HSBC, Citibank, DBS, Bank of East Asia and Wing Lung Bank. Among a litany of other issues, SCMP found that the banks seemed overly concerned with the cost pressures of their business and tended to recommend only high-profit products, such as insurance plans over investment products, and cut out the time-consuming steps of proper financial advice.
Understandably, banks are supposed to conduct proper research into their clients before selling them a product. However, the secret shopper sting revealed that none of the eight banks completed a financial needs analysis and less than half administered a risk-profile questionnaire. Advisers also typically failed to investigate basic issues like the shopper’s financial situation.
Although all the bank staff claimed they received no commission for pushing insurance sales as opposed to straight investments, they would not disclose whether the selling of high-profit products helps them meet targets and earn extra bonuses.
In the final installment of the SCMP mystery shopper articles, the reporter concluded: “The bottom line is that where financial advice is concerned, you get what you pay for, and if you want an in-depth solution, you are better off paying to see an independent financial adviser.”
Chief executive officer of Guardian Life Management, Simon Parfitt, agrees, adding that knowledge is king when it comes to investing in your future.