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10/20/2008
The buck stops here! Blame the RM
All the fingers are pointing at the Relationship Managers for the fiasco of the minibond sales. They are the devils. Watch them, put them under the microscope, charge them, sue them. How convenient. And very familiar too.
Does anyone want to ask who designed the minibonds, who did the clearance and approved these bonds for sale, who worked out the strategies to target the retirees? When the product is a problem, why blame the salesmen? These salesmen were released into the market to make their sales pitch and conclude deals. The more successful they were, the more they will be rewarded.
Come on, this nonsense of going after the lowest rung in the pecking order must be stopped.
How are these relationship managers trained; do they go through the usual entry level syllabus or just get by with the bare minimal via crash courses, exemptions etc.
ReplyDeleteOn what criteria were they selected? Maturity, work experience? or just wet behind the ears rookies with next to zero investment experience.
The RM I know at merrill has 20 years of related experience and obvious prowess in both product/market knowledge. Very competent stuff.
you would need an MBA from a good US grad school to join these companies
ReplyDeletethe performance of RMs is judged by the sales he brings in. it takes a very righteous RM to resist products that are flaw.
ReplyDeletehow good or bad an RM is, is only one part of the equation.
at the point of selling the minibonds, it is important that the RMs clearly explained that the product depends on the continued viability of the basket of banks.
ReplyDeleteit is possible that at that point in time, no one would believe that such banks could fold up. it is like selling a dbs products with the buyer believing that dbs will not fold. but then it folded.
tough situation.
the mitigating point in favour of the ignorant retirees is that no one would expect them to buy high risk instruments and very likely they did not understand the risk involved.
and it didnt help that they were greedy too.
ReplyDeleteI think you may have got it wrong.
ReplyDeleteThe last thing you shud believe is when an old person tells you he is ignorant and doesnt understands the difference between 1% fixed deposits interest and 5% lottery returns on his investment.
The louder he cries his ignorance, the more you must be suspicious. Where money is concerned, the young ones and those with less experience to the ways of the world should be the ignorant and naive ones, not in reversed order..
"no one would expect them to buy high risk instruments"
ReplyDeleteHave you seen the furtive looking crowd coming out from a toto draw nite, crying "no reasons". And the old uncles & aunties at the viewing galleries watching market ticks, like more satisfied than watching world cup?
Have you seen the extroversive display of affections, those hot afternoon trysts between old baldies and seow meis at the neighborhood beer stalls?
They certainly dont look conservative or risk averse, if you ask me.
Have you heard of retirees who blew their cpf payouts just as soon as they got them, loading up on instant gratifications and other vices.
If these sounds familar, you could ponder the assumption you'd made. By asking, do people really take lesser risks as they aged?
not all went into the minibonds with their eyes closed for sure. there were many professionals who were in it as well.
ReplyDeletebut believe it, i went there to have a view of the victims. not everyone belongs to the toto or 4d types or the chasing mei mei type. some of the old couples were very respectable old folks who just want to grow old gracefully and live off their savings. not to lose their savings. this last phrase is the key to the minibond risk.
I tend to agree with Anon 11.17pm. When you are greedy, you have to live with the grief. If not for the fall of Lehman, would they cry foul or mis-selling by the RM. Not all less educated old folks are ignorant, sometimes they are more financially savy than some of us.
ReplyDeletepeople who placed their monies in FD hoping to earn interests are not greedy people. this fact should have sunk into the banks that they are risk adversed. when their FD expired, offering them the minibonds, if it is capital guaranteed like what govt bonds are, fair.
ReplyDeletethese minibonds are not bonds.
i don't think it is fair to say that these retirees are greedy people. they just want to sit on their life savings and earn some interests. they are not speculators or people who plays in the stock market or casinos.
Sounds oversimplistic.
ReplyDeleteWhether they are educated, knowledgeable or blur and totally have no idea, old, young, widowed or horny, the commonality among the minibonds holders must be plain GREED, how to get the biggest bang for their bucks. What else could have motivated a person to get involved in deals like that?
No one was forced to buy, and no one bought to please the salesmen. This is Singapore. In as much as you cant say you come from a kampong with no idea about how things click in the commercial world, in the absence of money back guarantees you cant demand your money back pleading ignorance and guile without unravelling contractual obligations and legal precedents. Besides, who would have believed you?
This is a compact highly strung place with 77,000 millionaires thriving in proximity of each other and 10,000 upstarts a year, where the rush to chase and sniff* out wealth from every conceivable angle are like no other places; it is a hard sell to claim that you are not striving for what you do with the only focus, to get more leverage, more mileage than your neighbors.
When the market turns and people get caught as they must, the natural defensive play progresses to crying foul. This is not unlike someone who has made a bad judgement, buying a counter before it gets suspended. He too wants out and the situation be reversed. A mixed sense of panic, grief and disbelief, the larger the loss the more heightened the emotions, and the more verbal and outspoken the thoughts, will followed a sense of surrealism, like he just lost his mind. Then paranoid, the feeling someone has led him into the trap, a conspiracy of sorts, finger pointing and the apportionment of blame to suit the circumstances.
Happens to people dealing with loss all the time, young and old.
For all their teeth are worth, I say fight for it. It must be the biggest battle of their life, their nests eggs afterall. But whatever fate wills, they must accept. Unfortunately the writing is perched high on the big walls, CAVEAT EMPTOR. So unless one happens to be blind, (or color blind?) they can no longer say, I dun know, no-no, I am blur, can they?
ReplyDeleteDun get me wrong, I am not saying what they shud or shud not do. Of course they are upset, I would too, given the same situation. But having gone thru the jungles of life and gaining a world of wisdom and perspectives, can one really say that they are ignorant becos they are old?
Until the sub prime crisis, the Lehman brand was as solid as the likes of Morgan Stanley for an example. It is only after the swift erosion of the Lehman brand preceding its fall that investors started to question about their involvement with the company. Had Lehman not collapsed, this same group of people would be laughing their way to the bank by now.
ReplyDeleteI dun buy that ignorant victimised story. Rather, I am in awe of the smart discerning aleks who can twist and bend during both good times and bad. To some extent the posts in this thread suggest that FDs and Bonds as opposed to minibonds are a safe assets class, I see redbean harping like FDs and Bonds are some sort of legit safe havens.
let's be clear here; the same elements of risks persist in fixed deposits, bonds and minibonds. For that matter, the folks that put their monies into FDs are taking on more risks than he would have locked them up in a safe instead.
Dun even make the mistake of telling people that corporate, even sovereign bonds are risks free either. In better times, the optimistic salesman must be thinking along that same lines when he argues for Lehman or AIG.
Putting monies into FDs or minibonds doesnt make an investor any safer, risk averse, gullible other than the calculated risks he takes. When his calculations go wrong, an investor should blame himself before anyone else for the wrong judgment call that he has made.
No one point a gun to compel others to buy financial products.
ReplyDeleteNo one forced anyone to be Bank Relation Managers.
No one forced the Relation Managers to force the customers into buying the products. The Relation Managers cannot be said to be forced by their employers as they can decline the job or sell the products consciently.
The blame should goes to the society where the Ethos is the CULTURE OF GREEDS. Imagine Vices have became Engines of Growths too!
The Society is sick.
patriot
'The society is sick.'
ReplyDeleteHow true!
Sick with greed. Sick with over- consumption that is destroying the enviroment.Sick with materialism that is destroying the basic decency of mankind. Sick with excesses in everything. And we thought mankind had progressed beyond recognition. We are going to end up with nothing - nothing at all.