In the final instalment of the mystery shopper series to test the quality of financial advice being given by banks, our reporter puts Wing Lung Bank to the test. As before, she posed as a 37-year-old expat mother of two who wanted to invest HK$10,000 a month into a pension. Financial needs analysis/risk assessment: No financial needs analysis or risk profiling is carried out. The adviser does not ask for how long the shopper wants to save or when she wants to retire, or how long she will be in Hong Kong. The only question put concerned the monthly contribution. Investments offered: The adviser recommends a whole-of-life insurance (effectively this is a saving plan that incorporates life insurance) from Hong Kong Life. The adviser only provides product literature in Chinese, even though the shopper cannot read the language. The shopper would have to pay HK$125,000 a year for three years. After 12 years she would have a guaranteed sum of HK$406,104, not much more than the HK$376,591 premiums she would have paid, and HK$495,448 if the non-guaranteed part of the plan performed as expected. There is a life insurance element to the plan, which the shopper says she doesn't want, but the adviser says life insurance is always part of a retirement plan. The adviser then shows her another whole-of-life insurance scheme. Again all the information is in Chinese. The second plan involves contributions of HK$111,000 a year for eight years, but it would take until year 19 for the guaranteed element of the policy to be equal to the amount paid in. The shopper asks about investment products. She is told that the branch she is in does not offer investment products and she will have to go to the main branch to get advice on these. She was also told the branch did not stock material on the investments Wing Lung offers. Fee disclosure: The adviser says there are no charges on the two plans presented, and that she is paid no commission for selling the product. Verdict of mystery shopper: Neither insurance plan fits the needs of the shopper. She felt the advice she was given was poor. No attempt was made to understand her needs, the product she was recommended was not suitable, and she thought it was bad that she was given literature only in Chinese. She also thought it was poor that the bank did not carry information on investment products, even if it did not sell them in that branch, as that excluded considering investments as an option. IFA verdict: Glenn Turner, former chairman of the Independent Financial Advisers Association, says the bank should not have tried to sell an insurance plan without performing a financial needs analysis. "If there is no needs analysis done, there should not be a solution offered," he says. Wing Lung Bank's response: Following an "internal investigation", a Wing Lung Bank spokeswoman said that although the adviser did not do a formal needs assessment, she tried her best to establish the shopper's needs through a conversation. "While we agree that the above information gathered may not be the most comprehensive due to the inexperience of the staff, we would like to reassure you that this is an isolated event and the bank will continue to reinforce to our frontline staff the importance of need-based selling in the future," she says. She added that the branch could not offer advice on investments as it did not have a designated area to discuss investments, as required by regulations. There was also a "system breakdown" on the day the mystery shopping was carried out, which prevented the adviser from printing product information in English. Mystery shopper assessment for all eight banks: Of the eight banks visited, seven pitched an insurance plan first. The shopper was shown investment products only when she asked about them, and then only half the banks surveyed were willing to discuss straight investments. This reflects the fact that insurance plans are more profitable to banks than straight investments such as mutual funds, and certainly more than exchange-traded funds or single stocks or bonds. The mystery shopping also revealed a trend for banks to sell whole-of-life insurance before they sell investment-linked assurance schemes, as ILAS plans are getting a lot of regulatory scrutiny these days. Generally the banks seemed focused on the cost pressures of their business. They tended to recommend the high-profit products, and they cut out the time-consuming steps to financial advice. For example, banks are supposed to know their client before selling a product. But none did a financial needs analysis, less than half administered a risk-profile questionnaire, and advisers typically failed to find out about basic issues like the shopper's financial situation. Banks would counter that they were not selling anything; they were just sharing information with a curious stranger who stepped off the street. Technically this is true, but a violation at least of the spirit of a raft of recent regulations designed to protect individual investors from poor selling practices. Likewise, bank staff all said they received no commission from their insurance sales. But the staff failed to disclose if selling these high-profit products helped them meet sales targets or earn bonuses. The bottom line is that where financial advice is concerned, you get what you pay for, and if you want an in-depth solution, you are better off paying to see an independent financial adviser.