Simple financial products

COMMENT POSTED IN MY BLOG:

Relationship manager or whatever title they go by is no difference from insurance agents. They are sales persons. They manipulate the sales process. They up play and down play; and non-disclosure and misrepresentation are among tactics they employ.

MAS or CASE should come hard upon these people. This is the high risk group consumers should beware.

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REPLY:

The starting point is for the financial institution (ie insurance company and banks) to offer simple, "honest" products, such as:

* a savings or bank account
* a low cost investment fund (equity, bond or money market)
* government bonds
* insurance products to cover specified risks

Information about these products should be kept simple and made easily accessible to consumers. The consumers should also be educated about these financial products.

The distribution cost can be kept low, as less effort is needed to market the product. For example, there is no need to pay commission to "sell" a saving account.

Preferably, there should be no locked-in period. Alternatively, the penalty for withdrawal should be kept low.

With simple products, there is less opportunity for the consumer to be exploited.