I was at SingPost that day queueing up to post registered mails when i noticed that all counterstaff were quite persuasive to get each customers to sign up for some free gifts. The customer in front of me showed interest and was redirected to a Prudential insurance adviser. It seems to me that the Prudential adviser had to explain to the customer what this free gift is and how he could get it. For those who isn't aware, SingPost distributes insurance products by getting Prudential to be station in its distribution channels. When I saw what was happening, I really wanted to ask the Prudential adviser whether is this the kind of career he wants - that of a salesperson whose main job is to entice the customer to get that free gift by buying an insurance policy. The agent was very young only. Maybe in his mid twenties. In the industry, using free gifts is what we can lead generation. Moreover, the free gift serves as an "opener" for the salesperson to talk about other things - in this case it will be insurance. However, since the opener is totally unrelated to insurance, this is when it is possible for mis-selling to be able to take place because the customer was looking at the free gift rather than getting the insurance protection. Why such thing happens even in the open? The following are the reasons:
1. The insurer must be able to get people to push products in this fashion. So SingPost staff must be willing to "seduce" customers to look at the free gifts. Moreover, the insurance adviser must be willing to use the free gift as fishing bait to get a customer.
2. The customer must be greedy so as to be tempted to want the free gift.
These two conditions must exists so that there can be product pushing and mis-selling. Whenever there is some mis-selling, I always see the insurance adviser be 100% blame. I don't think the adviser should be 100% to be blame. The customer shares equal responsibility for being greedy. Thus each party share 50% of the blame.
In the meantime, other investment products such as those linked to lehman brothers etc made massive losses. The mass media portray that it is the salespersons that is 100% to be blamed. But I felt that in many cases it is also the greed of the customers that played a role. Sometime the greedy is so strong that a mere one or two percentage point extra yield is enough to tempt the customer to purchase a dangerous product. For savvy investors, one or two extra percentage points is quite meaningless but those who are both greedy and ignorant will fall into the trap. If a customer is both greedy and ignorant, this is the most dangerous combination.
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