Skip to main content



Most product recommendations 'suitable', but some financial advisers dangle gifts, fail to identify the vulnerable: MAS study

SINGAPORE — Sales of financial products at roadshows were more likely to include “inappropriate influence” through the use of gifts or incentives, a study conducted by the Monetary Authority of Singapore (MAS) highlighted on Tuesday (June 22).

Most product recommendations 'suitable', but some financial advisers dangle gifts, fail to identify the vulnerable: MAS study

The Monetary Authority of Singapore arranged for mystery shoppers to buy financial products at roadshows held by insurers and other institutions.

  • MAS hired an external consultant to conduct a mystery shopping exercise between 2018 and 2019
  • The study found that most recommended financial products were suitable, more so than the last exercise in 2011
  • But lapses were detected especially at roadshows, where inappropriate gifts and incentives were used to influence consumers' decisions
  • A majority of representatives were also unable to identify vulnerable customers
  • MAS will conduct reviews to plug these gaps


SINGAPORE — Sales of financial products at roadshows were more likely to include “inappropriate influence” through the use of gifts or incentives, a study conducted by the Monetary Authority of Singapore (MAS) highlighted on Tuesday (June 22).

Apart from roadshows, MAS' mystery shopping exercise held from mid-2018 to end-2019 found that a majority of financial adviser representatives were able to meet the investment and protection needs of the mystery shoppers.

About 88 per cent of their recommendations were found to be suitable in the latest exercise, an increase from 70 per cent in the last exercise in 2011, MAS said.

The study had put 500 representatives from 12 insurers and licensed financial advisers to the test. The firms were not identified by MAS.

The exercise — which is the third so far — also found that a large majority of representatives properly explained investment returns illustrated in the insurance policies.


The mystery shoppers, supplied by an external consultant, had approached 500 representatives from six life insurance firms and six licensed financial advisers to study their sales and advisory practices.

Posing as customers seeking financial advice, each mystery shopper went for at least two meetings with their representatives, before buying the recommended product and cancelling the purchase during the free-look period.

The process was recorded by the mystery shoppers in order to assess how the representatives fared in six areas:

  • The suitability of their advice

  • Whether the disclosure of pre-existing medical conditions was sought

  • Whether the representatives properly explained the illustrated rates of return

  • Their conduct at roadshows

  • Whether there were safeguards for vulnerable customers

  • How the representatives conducted their fact-finding


The audit found that most of the recommendations of investment and insurance products were ultimately suitable for the mystery shoppers, though there were several deficiencies detected. They include:

1. Some financial advice was unsuitable

Around 12 per cent of the recommendations were unsuitable. These were products that did not meet the shoppers’ financial objectives or had tenures longer than the shoppers’ time horizons.

“In some instances, the recommended product was unaffordable given the shopper’s financial situation. Some representatives also recommended investment products that were riskier than the shoppers’ risk profiles,” MAS noted.

2. Some had poorly explained the investment returns

Around 85 per cent of those tested had clarified that the projected returns that were used as illustrations for the policy were not guaranteed.

Only 8 per cent of those tested failed to explain that the returns were projected, and another 8 per cent misrepresented these returns as “guaranteed”, MAS said.

3. Inappropriate conduct at roadshows

The study found deficiencies in 52 per cent of the representatives’ overall conduct in roadshows.

When the mystery shoppers were making a purchase decision at roadshows, 35 per cent of the representatives sought to influence them by offering gifts or incentives — higher than the 11 per cent of representatives who did the same when the sales had come from customer referral.

In comparison to sales done through customer referrals, sales closed at roadshows saw a greater prevalence of representatives inappropriately influencing shoppers’ purchase decisions and recommending unsuitable products, MAS said.

4. Most representatives did not properly identify vulnerable clients

Nearly three in four, or 74 per cent, of representatives failed to identify vulnerable clients, defined as those who are 62 or older, not proficient in speaking and writing English, and with an education level below O- or N-Level certification.

Even if they did, three in four of those representatives did not advise the customer to involve a trusted person such as a relative or a friend in the sale and advisory process, the study found.

The involvement of a trusted individual is set out under the Life Insurance Association Singapore’s minimum standard guidelines.

And when making product disclosures to the vulnerable, 76 per cent of representatives did not adequately explain the features, risks, and fees and charges of the products being recommended.

Some also did not disclose that there was a free-look period if their clients were to change their minds after the sale.

In cases where vulnerable customers were correctly identified, one in three of the representatives’ supervisors did not reach out to the customer again during the free-look period to affirm their understanding of the purchase — something that they are required to do.

In general, though, 98 per cent of the products recommended to these vulnerable customers were assessed to be suitable, MAS said.

5. Fact-finding of customers’ circumstances insufficient

Fact-finding, such as the need to obtain and document the customers’ financial circumstances, were not comprehensive in 97 per cent of the cases, though the insufficient fact-finding did not impact the suitability of the product recommendation except in 8 per cent of cases.


MAS said that it has required the 12 firms to address deficiencies uncovered in the exercise.

“MAS will also review its rules to improve financial adviser representatives’ conduct at roadshows and consult on proposals to enhance safeguards for vulnerable consumers,” it said in response to two of the concerns found.

It takes a “firm view” that vulnerable customers should be identified so that there could be more safeguards for them, it added.

It also said that it will be reviewing the fact-finding requirements, noting that the study had found that representatives were able to recommend suitable products without being as comprehensive as required by MAS’ rules.

“MAS recognises that while obtaining a full set of a customer’s financial information is important for holistic financial planning, it may not be necessary in the case of simple or low-cost products,” it said in a statement.

Stressing that the culture and tone of sales and advisory practices come from the top, MAS said that board and senior management that have emphasised fair dealing outcomes and have good policies and controls did better in the mystery shopping exercise.

“Customers, too, have important roles to play when it comes to meeting their own financial planning requirements. They should review sales documents to ensure accurate representation of their financial profiles and needs,” it said.

Related topics

MAS financial planning insurance roadshows vulnerable consumer

Read more of the latest in




Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.