Have you ever wondered whether your financial adviser is selling you something you do not need? Or opened your annual statement for an investment product to find out that most of the money you ploughed into a supposedly 'safe' investment has all but disappeared because of fees and charges, or a market crash?
You may have been unlucky, or perhaps you misunderstood what you were buying because of mis-selling.
The definition of mis-selling, according to Eleanor Wan, chief executive of the Institute of Financial Planners of Hong Kong, is very broad. Wan defines mis-selling as 'selling the customer something that does not meet their needs or risk appetite.'
To find out if this has happened to you, consult a lawyer. But to make sure you do not spend unnecessary time and money on legal disputes, here are some common signs your financial adviser may be selling you something you did not want, did not understand or never requested.
1) Chasing commission
Most financial advisers in banks or independent wealth management companies here are not paid directly by their customers. Instead, they earn their money from fund managers, banks or insurers that pay them for convincing the customer to sign up to a particular product. Almost all investments generate commission for the seller, making so-called advisers extremely motivated to put their own financial needs ahead of their customers'.
'The real job of most financial advisers is to distribute the products of certain vendors,' says Rob Jones, the founder of Hong Kong-based FCL Advisory Limited, a wealth manager that does not take commissions from vendors and charges clients an annual fee instead. Unscrupulous advisers will put their own financial needs first by convincing you to invest in a high-charging product without fully explaining all the potential costs and making sure you are happy to pay up.