How banks fare on investment advice
Recommendations given to our 'mystery shopper' are assessed by an expert, as revealed in the first of a series
Hongkongers buy most of their investments through banks. They count on bank staff to recommend good instruments that suit their investment needs, income and risk appetite - rather than products that just help the adviser hit his sales quota.
To get a sense of the quality of financial advice offered at banks, the sent a correspondent to visit eight banks. We look at the amount of time bank staff spent getting to know the customer's needs, the quality of investments suggested, how transparent they were about fees, and whether they propose investments that fit a client's budget.
The survey is done in the spirit of the Hong Kong Monetary Authority's "mystery shopping" exercises, where HKMA staff pose as investors, and ask banks to offer investment advice. They then assess the banks' compliance to the authority's rules on the sale of investment products. The HKMA publishes occasional reports on these exercises discussing banks' levels of compliance, including their lapses, without indentifying the banks.
This exercise takes things a step further in that we actually name the bank under review.
Our correspondent posed as a 37-year-old expat mother of two, looking to invest money for a pension. She told bank staff she has HK$10,000 a month to invest, and a medium attitude to risk. She was not sure if she would retire in Hong Kong or abroad, so requested flexibility.
We asked Glenn Turner, who recently stepped down as chairman of the Independent Financial Advisers Association, to give his assessment of how the bank staff conducted themselves, based on our notes.
