Meeting at Speaker's Corner 18 Oct, 6-7 pm

[Ah Hai]

Sunday, December 07, 2008
Spare a though for the foreign workers in Singapore
Read this story:
http://www.yawningbread.org/arch_2008/yax-962.htm

 

[Ah Hai]

TOC: Social Justice and Fairness

Sunday, December 07, 2008
TOC: Social Justice and Fairness
http://www.theonlinecitizen.com/

The theme for this rally is “Social Justice and Fairness”. I like to talk on two points:

1) Our society should be more egalitarian.
2) The elected leaders should represent the people.

Wages
What is being egalitarian? It is being more equal. It means that the gap between the rich and poor should be narrower. In the past 10 to 20 years, the gap has widened.

We know how much the high income earners earn each year. Salaries of $1 million, $2 million, $5 million or $10 million are quite common in Singapore, in the business sector. Even our government leaders earn more than $1 million in salaries, as they are benchmark against the top earners.

I do not mind people earning higher salaries, if they are able to build the economic pie. But, the economic pie must be fairly shared with the other members of society.

I am worried that the low income earners are not earning enough to make a decent living. Many people have to work hard on two jobs, and they hardly earn enough to survive, to meet their monthly expenses. It is important that the salaries of the low income earners should be raised.

In many countries, there is a minimum wage that is tied to the cost of living. Everybody working a decent day’s work should receive a wage that is sufficient to pay for their living expenses, at a frugal level. They are not well off, but they should not starve.

Apart from an adequate wage, we must also give people some security against unemployment, especially if they fall victim without any fault of their own.

In some countries, there is unemployment insurance to give them some benefit for 12 to 24 months. It allows them to adjust a period to adjust. This type of payment ensures that they can continue to pay their mortgage and meet their living expenses for a period of time. They do not have to borrow on credit cards or from loan sharks and pay a high rate of interest, which adds to their burden.

Even America, which is the champion of the free market system, has a minimum wage for their workers. It also has an unemployment insurance scheme that makes payment for 12 months or slightly longer.

Singapore has schemes such as the workfare and assistance given by the community development council. We need to review the effectiveness of these schemes to make sure that they are able to address the real problems. I suspect that these schemes take a lot of work to administer and do not provide adequate assistance to the people in need.

Represent the people
Our elected leaders can represent the people and be the voice of the people. This requires the leaders to be freely elected at the general and by-elections. We should move back to the old days when most elections are contested and the candidates have to go out to win over the votes of the people.

The trend in recent years, where many elections at the group representation constituencies (or GRCs) are won through walkovers is not satisfactory. Some members of parliament have never been directly elected for several rounds, as they continue to win through walkovers.

We should move towards smaller GRCs and eventually to move back to the single member constituencies, which was the case in the 1970s and early 1980s. A free election will bond the leaders to the people. It will lead to a more united country. It will go back to the old days when the people are proud to be Singaporeans.

In recent months, more than 10,000 people have lost their hard earned savings by being misled into investing in the mini-bonds and other credit linked notes. They have signed a petition for the authority to carry out an independent investigation into the possible wrong doings by the financial institutions that created and/or marketed the products.

I hope that the authority will act on this petition, which has been signed by nearly 1,000 people. The signatories need to know if their appeals have been heard and have been fairly considered. They also like to know the progress and outcome of the investigation. As the goes, “justice has to be done, and seen to be done”.

Let me wish the very best for the future of our people and nation, and for Singapore.

Tan Kin Lian
Posted by Tan Kin Lian at 11:00 AM

 

[Ah Hai]

11 comments:

Anonymous said...

I support you on this.

Everyone in Singapore have a problem to speak up what they think is right. They just waiting for things to happen or depend on the other.

Is lucky that they have you Mr. Tan in Singapore else they will have no one to help them. They will to have lost their hard-earned savings without any answer.

Singaporean, you are too QUIET, come on speak out. There are 10,000 investors why there are so less voices, what happened to the rest waiting for miracle.

Mr. Tan, they need more people like you in Singapore.
11:32 AM
Anonymous said...

Can you all remember this words from Highly PAID TOP Talents, "There will be MORE GOOD YEARS to come".

What happened NOW ?

Everything damm things just went UP except our Salary and LESS Jobs more us.
12:11 PM
Anonymous said...

We hv lost our hard earned money, hv lost our savings,
hv lost our faith,
hv lost out trust in big org.,
hv lost our jobs to FTs,
hv lost.....
How to hv more good years????
1:01 PM
Wayangnologist said...

Someone from one of management i know of ever made this striking remark


"Reality is Reality. Ideal is Ideal."
1:30 PM
Concerned said...

How many of today MPs have similar background like the late Ho See Beng, who can empthaise with the plight of the ordinary folks and is willing to take the gamut on their behalf. Most of them comes from well-to-do families. Are they really talented? Only some. They managed to get ahead of others is because of better head start and connections as most of them come from well to do families. Unlike the late Ho See Beng, they care more for themselves, their carrers and their future rather than the interest of the ordinary folks. Many failed to speak out on many issues when such action is in conflict with the executive. A better gauge of their commmitment to the welfare of community is to let all MPs contest in single wards and let the electorate judge their commitments. Failure of the MP to do the right thing will endanger their electability in the next election rather than the present practice of hiding in the Group Representative Constituencies
1:42 PM
Anonymous said...

Hi Mr.Tan,

I read your blog and was much inspired by your statement.
When our gamen said" MORE GOOD YEARS",Yes is for some of the elite who are in the high earners brackets.Certainly is not for peoples who work in the offices and construction sites.
They planned for GRC and almost captured them all,100 %.
Now.with the demised of Bt.Batok MP,THE WHOLE JURONG GRC is short of one MP,how can they deprived them of a MP?And they are now in the mid term,which means there are abt 2 to 3 years before next GE,how can that be?
WE, and the Singaporean hope that you could offer yourself in the next GE or Elect.President and work for the good course of the citizen of Singapore.

Cheer !

Fish-ball noodle hawker
1:52 PM
Anonymous said...

I support this too. My area is GRC and he has 2 walkovers. I remember once seeing my MP for some issues at my block. When my turn came, all he did first was to pull out a file, and told me that he already know all my past records, fines, etc... (threatening me that he has my past history, do don't play play with him). I think I want a new MP not this current one. However, I have no chance to vote.
1:55 PM
Anonymous said...

Inequality happens in any country. However, to the gahmen, they are more concerned about whether there is social stability and peace and they can remain in power. That's why even in communist China their gahmen is worried when there are mass unemployed and social peace is affected which they think will affect their grip on power.
But in Singapore, peace and stability is assured no matter how the ordinary folks suffered in terms of low wages, unemployment or inflation. The worst is the MP has to stay back later in "meet the people" sessions. So not really much of a concern to the gahmen as long as there is only one Tan Kin Lian so far. If there are more or become a serious threat, there is always the "hard ball" option. Again 50% or more walkovers on nomination day. Uniquely Singapore because this cannot be applied to other countries even if they try.
2:21 PM
Anonymous said...

More good years to justify the ridiculous pay increase which is even higher than the US president's annual income. More GRC to ensure "poa chia" in election. But more Tan Kin Lian will ensure this country is truly democratic and the poor, cheated or deprived has someone to turn to for their hardship.
9:10 PM
Anonymous said...

Vote against them the next time, that's all I can say. It took me 20years to realise, but I now know how should I vote for the next 40 years
10:08 PM
Anonymous said...

Its too late,by the time they implement the single ward poll,we all will be too old to vote or may won't be around to vote. I thing 50percent of Singaporeans would die without ever having a chance to vote at least once in his lifetime.
Its all over folks,long live PAP.
Maybe we all still can vote in the yahoo straw poll.

G Jay

 

[Ah Hai]

The CDO time-bomb

The CDO timebomb – how it works and why it could sink or save the world economy
Wednesday, 19 November 2008
Alan Kohler

http://www.smartcompany.com.au/Free...ld-sink-or-save-the-world-economy-Kohler.html

Extracts:
.... the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.

They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.

As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like “Lloyds names” – the 1500 or so individuals who back the London reinsurance giant.

Except in this case very few of the “names” knew what they were buying. And nobody has any idea how many were sold, or with what total face value.
Posted by Tan Kin Lian at 4:26 PM
3 comments:

Vitali said...

Wow, that is possibly the clearest article I have read on the topic...
4:59 PM
Anonymous said...

modern economic Nuclear Bomb by the US
6:06 PM
Anonymous said...

Although USA appeared to surfer the hardest on the surface, the final analysis would show that USA is actually the sole beneficiary of this big saga. The money that they have collected from all over the world have gone into some unprecedented property development all over the USA.

Obviously the biggest sucker is Europe, who funded much of those property in the USA and suddenly they are told that their money has gone into a black-hole.
9:31 PM

 

[Ah Hai]

Offer of 30% compensation

Two investors met me at Speaker's Corner yesterday. They received offer from their distributor (stockbroker) of 30% compensation and are given a deadline to accept it. They asked for my advice.

My view is that a fair compensation is 50%. If the distributor offers 50%, you should accept it.

For the 30% offer, I suggest that you let it lapse and wait for a better offer. If you wait until February, the prospect of the class action may be clearer. At that time, your option will be clearer.

However, if you are willing to take 30% and call it quits, you should decide on your own. It is better than nothing.
Posted by Tan Kin Lian at 9:15 PM

 

[Ah Hai]

16 comments:

Anonymous said...

Why is the security firm offering the compensation if it has not breached any law? It need not pay a cent. or is the 30% goodwill gesture?
What do you think?
9:37 AM
Anonymous said...

If amount invested is $50K or less, accept the 30% settlement and move on.

Even at 50% settlement and which you have to fight hard for it, actual amount may be less than 50% due to expenses incurred.

Hope your investment is not the bulk of your money or else it is still painful whether 50 or 30 % settlement.
9:52 AM
Anonymous said...

HONG KONG (AFP) — Hong Kong investors who were allegedly mis-sold mini-bonds in the collapsed bank Lehman Brothers have been invited to mount an international lawsuit against the institutions involved, a lawmaker here said Friday.

James To, a lawmaker from the Democratic Party here, which is acting for most of a group of some 40,000 mini-bond holders in the city, said US lawyers presented them a proposal for a legal action in a US court.

The lawmaker said the lawyers had also approached affected investors in other places, including Singapore.

"These lawyers are very aggressive. They have identified the Lehman saga as an excellent business opportunity for them," he said.

His party is now consulting US legal experts for their views on the proposed action. He said the party would only discuss the matter with the investors if they could be sure that the lawsuit would not place the investors under further financial burden.

The Wall Street icon filed for bankruptcy in September as it buckled under the weight of the collapse in US subprime, or high risk, mortgages.

The investors mounted protests against the banks, the Hong Kong government and the city's financial regulators, urging a full refund.
12:20 PM
Chan J C said...

Is it possible to share which structure product is that? Is it Minibond, Julibee, Pinnacle, etc?

I hope this question is not sensitive.

Thank you.
12:59 PM
Anonymous said...

Another question is whether this distributor is offering this 30% settlement to all its clients or just a selected few and why? Further, is there any value in the notes or just zero?
2:01 PM
Anonymous said...

Law suit is the only way to recover all.You cannot let them get away with this this. Your hard earned money and especially for some their retirement money is at stake.
Prove miss-selling , beach of section 27 and non-dislosure of facts and risk against the RMs and the FIs is the key to winning the case.
2:27 PM
Anonymous said...

FIs are not stupid. Most of the resp I heard of so far are outright rejection, or 0%.
If they are willing to offer 30% to u now, it show yr chance of recover 100% is very very high.
Are u able to disclose yr group (vunerable, etc.)?
I beleive u shd make a very good test case for legl action!!!!!!!
4:36 PM
Anonymous said...

Hi Mr Tan, hasnt the bankruptcy of Lehman brothers happen just a few months ago? Shouldnt the relevant authorities be given some time to respond to this?Currently, I am having some problems of my claim from an income policy but I am assuming things like this just needs some time. Or should I protest and speak at the speaker's corner too?
After all, they insure half our Singaporeans for the opt out DPS.
4:53 PM
Anonymous said...

30% may be little but is better than waiting & nothing.
Going through lawyers does not mean 100% recovery.

Jasmin
6:14 PM
Anonymous said...

surely in the chain of export these toxic products, there must be money hidden somewhere, else, freeze the luxury castle of the L. Bros's CEO.

There could be money in Off shore banks, someone need to track down how these money were remitted from FIs to US or to their off shore banks...
6:20 PM
Anonymous said...

Is is possible to disclose the profile of this investor who get 30% compensation? What is his/her age and education?
6:22 PM
Anonymous said...

If Mr Tan is advising to take 50% means there wasn't any misrepresentation right? If he strongly believes there was a misrepresentation why should agree for 50%
7:30 PM
Anonymous said...

I agree. We should encourage these 2 investors to reject the offer and become the test case to sue the FI for 100%

I am really angry with UOB Kay Hian who sold me these toxic in a negligent manner and now try to disclaim responsibities
10:04 PM
Vincent said...

I think that the previous "anonymous" commentator may have been confused. An insurance claim is different from a misrepresentation claim, if indeed there was misrepresentation.

That being said, if indeed an insurance claim is taking too long to be processed, I don't see anything wrong with the claimant protesting, seeking redress and expedition, including writing to the press, speaking up at the Speakers' Corner or through other channels as available.
11:19 PM
ybcomments said...

I think you mean "securities firm" not "security firm". A "security firm" is a company that sends the angry, generally unhelpful old men, to sit at front desks in office buildings and condos.
11:43 PM
VS Lingam said...

I do not know which US law firm approached investors in HK (and possibly SGP) to represent their class action suit in a US court. However a US law firm by the name of "Coughlin Stoia Geller Rudman & Robbins" was mentioned in a recent blog. I believe our chances of recovery is much higher if our case is heard in the US instead of SG.

Their website is http://www.csgrr.com/.
Glancing thru their website, I think these US lawyers are super. They are experts in securities fraud. They have recovered billions of $$$ for Enron shareholders and received only about 10% of it as legal fees. They get paid on a contigency basis, with the % determined by the US court. (We need to chk this out carefully before engaing them.) Even if they get 30% in legal fees (due to case complexity etc), I still say it is worth it. They operate on a "no-win, no-pay" basis. This is unlike several local lawyers who charge up to S$400/hr just for consultation.

They are now working on a case of Citigroup investors against Citigroup. The complaint is at http://www.csgrr.com/cases/citigroupmortgage/complaint.pdf. This case mirrors that of Lehman Minibonds. Perhaps we should approach Coughlin Stoia to evaluate our case.
1:17 AM

 

[Ah Hai]

Re: 16 comments:

Monday, December 08, 2008
Adviser is required to disclose and explain the charge
Dear Mr. Tan

I wanted to terminate my ID2 and was told that I have to pay a charge of 15% of the premium for 5 years, making a total of 75%. I was not aware of this charge, which was not disclosed to me by the adviser. Is it true that I have to pay this charge? Is it a fair charge?

REPLY
During my time, I recall that the charge for ID2 is 15% for 3 years only. The total of 45% was much lower than an average of 150% charged in the market. I was not aware that the charge has been increased to 15% for 5 years. You can check with the adviser.

If you have not been informed by the adviser about the charge at the time that you bought the policy, you can lodge a complaint with MAS. The adviser is required to disclose and explain the charge to you, as set out in A5 of Q8 in this attached document from MAS:

http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html
Posted by Tan Kin Lian at 7:33 AM
4 comments:

Anonymous said...

All the charges should have already been disclosed in the benefit illustration. The illustrated "surrender value" column has already taken into the account of all exit penalties.
8:46 AM
Anonymous said...

I just checked, the latest ID2 worst case surrender penalty is still 15% x 3 years = 45%.
8:55 AM
Anonymous said...

You can lodge a complain against the adviser with the company and get all the refund plus some opportunity cost for non disclosure and other misconduct.If the company refuses lodge with MAS.
9:51 AM
Anonymous said...

Those who have been approached by ntuc agents for revosave and vivolife have to be careful too.
Remember this. THEY ARE DUMB AND USELESS PRODUCTS THAT WILL NOT MEET YOUR NEEDS ADEQUATELY AND AT LOW COST.
They will ANYHOW sell them to you. It is year end and ethics and conscience will take a back seat or throw to the wind.
NEVER , NEVER buy now. Delay buying insurance till next year.Next year is going to be though year. Don't waste your money.What if you lose your job or have your salary cut and you have to give up your insurance policies?
Think carefully before ntuc agents at roadshows or any where con you into buying these useless anticipate endowments, products that the mature markets(US< UK < Australia)are condemning and taking insurers to court.This is as good as scam.
12:13 PM

 

[Ah Hai]

The Online Citizen celebrates its second anniversary

Monday, December 08, 2008
The Online Citizen celebrates its second anniversary. Visit this website for the speeches on "Social Justice and Fairness". It also contains an update of the class action for the minibonds and credit linked notes.

http://theonlinecitizen.com/2008/12/toc-celebrates-its-2nd-year-anniversary/

Six months ago, TOC has an average of 3,000 visitors a day. Today, it has an average of 15,000 visitors a day - a five fold increase. TOC is the work of about 60 volunteers - young and not so young. I write a article weekly for TOC.

Congratulations to TOC. It is becoming an important source of alternative news and views about Singapore.

http://theonlinecitizen.com
Posted by Tan Kin Lian at 8:18 AM

 

[Ah Hai]

Re: The Online Citizen celebrates its second anniversary

Monday, December 08, 2008
Dealing with an adviser - what to look out for
The adviser is required to disclose to you about the charges, when you buy a life insurance policy. Read the answer to Q8 in this FAQ. Read the rest of this FAQ:

http://www.moneysense.gov.sg/publications/guides_publications/Consumer_Portal_FAAGuide.html

Q8: What information is a FA representative required to disclose to me when recommending an investment product?

A: When recommending a unit trust or life insurance policy, a FA representative is required to disclose to you the key features of the product including the following:

1. Nature and aim of the product Whether the product is a life insurance policy or a unit trust, and whether it is meant for protection, savings or investment.
2. Benefits of the productInformation on the amount and timing for payment of benefits and whether the benefits are guaranteed or non-guaranteed.
3. Risks of the productDetails of the risk factors that may result in the benefits payable being less than the illustrated values (for a life insurance policy), and the risks stated in the prospectus or profile statement (for a unit trust).
4. Details of the product providerThe business address and permitted activities of the product provider, and the relationship between the product provider and the FA.
5. Fees and charges to be borne by youDetails of the amount and nature of fees and charges to be paid by you, and the frequency of payment.

Posted by Tan Kin Lian at 9:49 AM

 

[Ah Hai]

Re: The Online Citizen celebrates its second anniversary

Anonymous said...

MAS has not been transparent too about the number of financial advisers, insurance agents, RMs being hauled up for misconduct. The consuming public has the right to know about the complaints.
I have heard of churning, twisting, cheating, CPF abuse, miss-selling and misrepresentation and churning by FAs and insurance agents but they are not published or reported in the MAS website. WHY?.
MAS certainly owes us an explanation. We must be wary of these salespeople. Unless MAS publishes their names and misconduct we will bump into them. These errant agents are left free to continue their misdeed.
2:24 PM
Wayangnologist said...

“Our focus is on whether the bank’s complainthandling procedures are working properly."


Listen up, the focus is on Complaint HANDLING


Not so much the Complaint itself


So we can agar agar know the reply to:


“At the very least we should be able to see a breakdown of the nature of the complaints,” he said. “Otherwise, how are consumers going to know what they should be looking for and can expect in terms of service?”
2:36 PM
Anonymous said...

"Lehman lost are peanuts, let's move on, UBS, Citi, Merrill Lynch loss they also never complain or sue any of them."
4:29 PM
ym said...

we dont have a free-market...

the acts of the central banks preventing the formation of a true free-market economy..

main examples of central bank "hobbies" that destroys the free-market are :
- money pumping to control interest rates and forex rates (ie the price of money)
- allowing fractional resevre banking (analogus to allowing counterfeiting of money)
5:49 PM

 

[Ah Hai]

SCMP:Gripes about banks double, but over what?

Monday, December 08, 2008
SCMP:Gripes about banks double, but over what?
http://www.pressdisplay.com/pressdi...442df893c00f&pdaffid=8HM4kDzWViwfc7AqkYlqIQ==

7 Dec 2008
Nick Gentle

In the first 10 months of this year, complaints about banks reached more than double the figure for the whole of 2007 – and that is excluding the 10,000 complaints about their sale of minibonds that lost their value when Lehman Brothers collapsed.

While the Hong Kong Monetary Authority agreed to release the figures – 1,050 up to October 31 against 469 last year – it would not say which banks were the subjects of the complaints, nor what complaints were about.

The HKMA claims it is bound by the Banking Ordinance to keep that information secret.

However, commentators question whether withholding such information is in the public interest. David Webb, a campaigner for better corporate governance, said consumers were entitled to know whether financialservices providers were being complained about regularly.

“ Information is the lifeblood of free markets, and enabling investors and depositors to make informed choices is a good thing,” Mr Webb said. “ I think the HKMA should be much more transparent about its complaints and enforcement activities.

“I see no reason why the HKMA should not publish complaint statistics on a per-institution basis.”

To make sure larger institutions are not unfairly over-represented, the authority could state the figures as a percentage of a bank’s unique account holders.

Mr Webb noted that the Securities and Futures Commission, which regulates stockbrokers and listed companies, regularly published reports on enforcement action it has taken and complaints it has received.

“The HKMA’s traditional reason for not publicising disciplinary action has been that it might undermine confidence in the banks concerned. My response would be: ‘So what? It should’.”

An HKMA spokesman said the authority investigated all complaints to decide whether and how they could be taken further.

“Upon receipt of a written complaint, we will examine it and the written response from the bank concerned,” the spokesman said. “Our focus is on whether the bank’s complainthandling procedures are working properly.

“Should there be concerns about the bank’s handling of the complaint, we will refer the complaint to the bank for reinvestigation and a further reply to the complainant.”

If complaints related to breaches of the Banking Code of Practice, the HKMA would work with banks to address any issues, the spokesman said.
“ The HKMA has a supervisory interest in cases where a bank may have acted in a way that is improper or imprudent,” he said. “The HKMA will pursue these issues … and where necessary, require remedial action to be taken by the bank.”

But Civic Party lawmaker Ronny Tong Ka-wah, who has tabled a Legislative Council resolution asking the government to review the regulatory regime, said keeping issues between the regulator and the bank might not be in the public interest.

“ At the very least we should be able to see a breakdown of the nature of the complaints,” he said. “Otherwise, how are consumers going to know what they should be looking for and can expect in terms of service?”
Posted by Tan Kin Lian at 12:15 PM

 

[Ah Hai]

4 comments:

Anonymous said...

MAS has not been transparent too about the number of financial advisers, insurance agents, RMs being hauled up for misconduct. The consuming public has the right to know about the complaints.
I have heard of churning, twisting, cheating, CPF abuse, miss-selling and misrepresentation and churning by FAs and insurance agents but they are not published or reported in the MAS website. WHY?.
MAS certainly owes us an explanation. We must be wary of these salespeople. Unless MAS publishes their names and misconduct we will bump into them. These errant agents are left free to continue their misdeed.
2:24 PM
Wayangnologist said...

“Our focus is on whether the bank’s complainthandling procedures are working properly."


Listen up, the focus is on Complaint HANDLING


Not so much the Complaint itself


So we can agar agar know the reply to:


“At the very least we should be able to see a breakdown of the nature of the complaints,” he said. “Otherwise, how are consumers going to know what they should be looking for and can expect in terms of service?”
2:36 PM
Anonymous said...

"Lehman lost are peanuts, let's move on, UBS, Citi, Merrill Lynch loss they also never complain or sue any of them."
4:29 PM
ym said...

we dont have a free-market...

the acts of the central banks preventing the formation of a true free-market economy..

main examples of central bank "hobbies" that destroys the free-market are :
- money pumping to control interest rates and forex rates (ie the price of money)
- allowing fractional resevre banking (analogus to allowing counterfeiting of money)
5:49 PM

 

[Ah Hai]

Association to educate consumers on financial service

Monday, December 08, 2008
Association to educate consumers on financial service
Several people have asked me to form an association to educate consumers and help them to identify and buy financial and insurance products that are of good value. This will reduce their exposure to bad products such as the credit linked notes and high cost life insurance products.

Is there a need for such an association? What name is suitable for this association? Please take part in the poll on the right panel.
Posted by Tan Kin Lian at 4:25 PM

 

[Ah Hai]

Re: Association to educate consumers on financial service

Monday, December 08, 2008
Association to educate consumers on financial service
Several people have asked me to form an association to educate consumers and help them to identify and buy financial and insurance products that are of good value. This will reduce their exposure to bad products such as the credit linked notes and high cost life insurance products.

Is there a need for such an association? What name is suitable for this association? Please take part in the poll on the right panel.
Posted by Tan Kin Lian at 4:25 PM

http://tankinlian.blogspot.com/

 

[Ah Hai]

Salaries of CEOs of Motor Companies

Tuesday, December 09, 2008
Salaries of CEOs of Motor Companies
Sent to me by AT

According to Equilar Inc., an executive compensation research and data provider, the annual compensation of the following CEOs (in USD) were:

President of Toyota: $1 million
CEO of General Motor (Wagoner: $15.7 million
CEO of Ford Motor (Mulally): $22.8 million,

What’s missing is a formula for determining what is a fair salary. I suggest using 365 times 12 hours per day = hours that an executive works as the basis for an hourly rate to be paid. This gives executives the premise that they work 12 hour days, 365 days per year. hat works out to 4,380 per year. Then determine what a “reasonable” pay per hour is.

The claim that outsize income packages are necessary to retain talent is unproven be the GM fiasco. Mr. Waggoners pay package of around $15,000,000 works out to be $3, 425 PER HOUR. And what did the company get for this - leadership into insolvency?

Using the above formula, Toyota’s president earned under $230/hour and look at the great job he’s done. Did Mr. Waggoner do 20 times as well as Toyota? I leave that to the reader.
Posted by Tan Kin Lian at 6:33 AM

 

[Ah Hai]

6 Comments

Anonymous said...
the same applies to insurance agents.
How much value added to the clients for the commission the agents recieve. 30 minutes of bullshit for 150% of the premium paid by clients.
No wonder there is so much of conflict of interest. No wonder agents prefer and specialise selling whole life and endowment products. No need needs analysis and all the hassles just bull and they get more and faster than lawyer and doctors.

12:00 PM

Morgan Wu said...
This example shows again the difference between US corporate culture and Japan corporate culture. I admire Japan just for the fact that their society is much more egalitarian than western societies. Just look at top 100 richest people in the world. India and China has numerous entries, Japan, as the worlds second largest economy, has NONE.

12:20 PM

Anonymous said...
The same applies to our gahment's salaries. Just compare the GDP of US and China versus S'pore. By paying himself so much versus Bush and Wen JB, does it mean that S'pore GDP is X times bigger than US and China? Is it more difficult to manage a big country like US and China versus a tiny island. You know the answers and you judge yourself whether it is fair.
Worst still, during good times, you will be told what you enjoyed was due to a good gahment and hence they deserved super higher increment. But during bad times, they say cannot be help, we are an open economy and some other bullshits. Sadly, politics here is all about $$$, no more passion or genuine heart to serve the people, just plain selfish motives.

12:28 PM

C H Yak said...
A Japanese company ( Toyota ) and an American company (Ford)decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile. The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing. Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings,dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles. Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

Sadly, The End. You can draw lessons from here and see similarities in other management systems - Banks, Insurers and even Politicians.

1:22 PM

Anonymous said...
The US president and his cabinet did not peg their salaries to the top end in the private sector. If he did, maybe it will be tens or hundreds of millions a year, not less than 1 million. He also does not think he should even though he wields far greater responsibility and power than any in the private sector.

But in Singapore, our leaders think differently because it is uniquely Singapore, not US. To add insult to injury, nothing has improved for the ordinary folks.
It can happen because it is unique tiny island state, unique people, unique gahmen and hence unique situation. Just like US and Japan are themselves unique in their own ways.

1:26 PM

Morgan Wu said...
But seriously, before this post, i couldn't even imagine Toyota's CEO's pay is only 1 million. A lot of people handling MUCH MUCH smaller organizations are paid much higher. Something is seriously wrong in Singapore and US.

2:17 PM

 

[Ah Hai]

Giving a fair deal to policyholders

Tuesday, December 09, 2008
Giving a fair deal to policyholders
We have to be honest in our dealings with other people. Honesty is to be transparent and fair. We have to give the relevant information to the other party, so that they can make an informed judgement.

Let us look at the opposite value, which is dishonesty or cheating. Cheating is defined as taking advantage of another person, for one’s personal benefit, at the expense of the other person.

Let us look at the example of the sale of life insurance. The policy has a high upfront charge to pay commission to the agent. The commission earned is excessive, compared to the value of the service. The policyyholder pays an average of $2,000 on a typical policy of $100 a month. This high charge is hidden from the policyholder.

It takes about 15 years for the policy to earn sufficient investment income to cover the upfront charge. If the policy is kept longer, it may show a positive return on the premium. The policyholder does not realise that the high charges take away 40% or more of the total investment income. It leaves a poor return to the policyholder, that is insufficient to cover inflation.

The policyhohlder could have inviested in other "fairer" products that have lower charges and give a better return to the customer.

The insurance agent is able to sell the life insurance contract at the high charges, because they are trained to over-sell the value of the insurance contact. It tells the customer about the importance of protecting the family from the financial loss due to the death of the breadwinner.

A more honest way is to advise the policyholder to buy term insurance, where the cost is much lower and affordable.

To prevent the excessive abuse of customers, it is important for a life insurance company to act honestly and to reduce the excessive charges. When I managed an insurance company, I observe this principle and reduce the expenses to give better value to the customers. After my departure, this organisation has increased its expenses tremendously.

In many countries, the authority sets limits to these charges, to prevent abuse of the public. In Singapore, there are no limits, so long as the commission is disclosed. Unfortunately, this approach does not work, as the public is not informed about it.

 

[Ah Hai]

8 Comments

Anonymous said...

Remember that your PROTECTION value and RETURN in wholelife and endowment products depend on a few factors of which COST and the return on investment play a crucial role.
Increased cost means low protection and low return.
What are the components of cost?
Operating expenses like the salaries of CEO, senior managers and other staff , the fixed cost and other variable cost(marketing etc) and Insurance agents' commissions.
All these costs have gone up and up but the return on investment has NOT. This explains why whole life and endowment products are giving miserable return and protection.
Some companies are resorting to RESTRUCTURING THE BONUS BY REDUCING ANNUAL BONUS TO FREE UP SOME MONEY FOR INVESTMENT in the HOPE TO RETURN YOU MORE MONEY IN THE FORM OF SPECIAL BONUS. High hope indeed!!!!You shall see next year's bonus declaration. Your money already got burned.!!
Restructuring is not without a price, that is , the company is putting your money to HIGHER RISK and YOU bear the risk because SPECIAL or TERMINAL BONUS is NOT guaranteed.
If this is the practice why should you let the company invest for you
where your money is put into a pot with other people's money without considering your needs, time horizon and risk.This is a "one size fits all" investment which is unfair to every policyholder.
I AM NOT SURPRISED THAT ONE DAY YOUR ANNUAL BONUS WILL BE REDUCED TO ZERO and if this doesn't work PONZI methods will be used.This will be the end of the company.
I urge consumers to understand the development of WL and endowment products is not working to your advantage.Don't let them fool you.
Those of you who had bought WL or endwoment long time ago, check the return and protection and see whether the recent ones are increasing or declining.
Currently insurers are resorting to the use of 'decorating frills' to cover up the deficiencies of the product like the protection and return which are basic to financial planning. The frills or supplementary and rubbish benefits like retrenchment, 3 times death benefit due to accident, increased in sum assured in first 15 years and conversion to annuity, limited payment term, they are intended to cover up and to distract you from the truth, from the rotten core . These are marketing ploys, some fanciful footwork at the best.Financial planning doesn't work with this type of products. They can ONLY BE SOLD as an end itself and as a product without the direction. That is why companies are training the greedy salesmen to PUSH and PEDDLE the products resulting in shortchanging you, your needs, and also miss-selling and misrepresentation.
The salesmen are also trained to lie, scheme, manipulate you. Conscience and ethics have been thrown to the wind. The mercenary instinct is kill to gratify greed.

10:30 AM
Anonymous Anonymous said...

It is difficult to change unless the present government is also changed. This is because they have made a strategic error in raising their salaries. That strategic error has serious future implications for the PAP as well as for Singapore. We are but seeing just a small indirect impact of that one decision in the way companies and organisations are taking higher and higher risks and going towards the path of putting their own interests higher than the interests of the consumers, thus adopting an adversarial relationship with the customers rather than a partnership one.
In this case, the insurance companies can get away with it just as the Minibonds sellers are able to because the present government has lost its MORAL AUTHORITY to take action against such dubious practices. More importantly, more and more average citizens including hawkers and small businesses now see it acceptable to make as much profit as possible at the expense of consumers nowadays thus making life for the average consumer harder and harder.

11:00 AM
Anonymous Anonymous said...

I remember reading an article in the ST by Dr. Lee Wei Ling that medicine is a calling and not a business to fleece their patients.That explains why she is not in private practice.And she gets a lot of satisfaction and meaning out of her work.
Insurance and financial planning should also be a calling and not a temporary job after retrenchment, get rich quick job or an alternative job while waiting for another job or 'to try job' or 'can make good money job'.
I notice that many of the insurance agents don't see this as a calling.The fact that many of them are not qualified and they don't bother to upgrade themselves shows that they have no interest to help their clients with best advice.
Their interest is to squeeze as much out of their clients.
These agents often cover up their lack of qualifications and competence by providing non financial services like cleaning their clients' toilet, buying them food, sending children to school or hospital ,celebrating birthday , chaufferring the clients or so forth . Some agents claim or show sincerity or caring in their dealing with clients but sincerity and caring are NOT criteria for "FIT and Proper" under the FAA but competence and honesty are.In fact agents like them create more disasters in the cleints' financial life.The minibomb saga is a testimony where trust plays the central role and not financial advice and like many cheating cases where sincerity and trusts led to disaster for the victims.
Financial planning or life insurance is a calling and when it is then it can be assured that these people give off their best to the consumers.

11:18 AM
Anonymous Anonymous said...

Dear Mr Tan,
I noticed my Protection Policy from Income has its cash value dropped from the month of Oct to Nov, i.e. Oct has a higher cash value compared to Nov. Why? I thought it should increase instead ogf decrease over time. I have this policy for 17 years already. Hope you can advise what should I do?

12:19 PM
Anonymous Bee Bee said...

My 15-year endowment policy will mature in Jan 09 and the insurance company has notify me of the total amount of the policy upon maturity, including all declared bonuses and final bonus.
After taking the total premium I have paid, the net profit is about 3.5% to 4% p.a.. I wonder whether this is a reasonable return for a 15-year endowment plan with participation.
Can Mr Tan advise please?

1:35 PM
Anonymous Anonymous said...

Bee Bee,
15 years ago policies incepted that time can give you that kind of return, relatively not bad, ie compared to others. But it is still bad because there is no REAL growth in the value of your money if you adjust for inflation.
When investing or saving you MUST beat the inflation. In your case you MAYBE just protecting your money. I say maybe, because this year's inflation is average 6.5% but over the long term it maybe 3.5-4%. So you are preserving only.

Now the new products will not give you that kind of return anymore unless "miracle" happens in the special bonus,ie the insurer doesn't lose but make a lot of money in their investment otherwise you get zero or nominal .

Don't buy endowment if you are saving. Just invest regularly in a low risk fund or funds. The overall risk is lower than an endowment. You get better return and break even point is much shorter.
Endowment is high risk if you consider the return at every stage of its life.
Insurance agents like to sell you this type of products because they earn more commission.It is not that it is a good product. In fact it is dumb product. In US the consumers spit at them.They call it a scam because there is a better alternative like above and is less risky than endowment. Insurance agents not recommending this because they earn them peanuts and how to qualify for mdrt?

3:03 PM
Anonymous Anonymous said...

Anonymous 12.19PM,
see your agent and ask for explanation and hear what your agent has to say. It will be very interesting.
Let us know his or her explanation

3:05 PM

 

[Ah Hai]

Financial Services Consumer Association - Survey

Tuesday, December 09, 2008
Financial Services Consumer Association - Survey
If you wish to serve in the pro-tem committee to set up this association, or to help as a volunteer in some capacity at a future date, or give some suggestions on the work of the association, you can participate in this survey:

http://www.surveymonkey.com/s.aspx?sm=mFi1bCabtn2VHpVrBPRuUA_3d_3d
Posted by Tan Kin Lian at 10:28 AM

 

[Ah Hai]

Survey results - consumer association for financial services

Tuesday, December 09, 2008
Survey results - consumer association for financial services
Results of survey: 154 people replied.

What is a good name for the consumer association for financial services?
FISCA - financial service consumer assocation 66 (42%)
CORE - consumer research and education 39 (25%)
SACRE - Singapore association for consumer research and educaiton 12 (7%)
No need for this association 37 (24%)
Posted by Tan Kin Lian at 6:44 PM :oIo: