The Plainspeak / Mis-selling

A belief · a banker's account

The person who mis-sold you was mis-sold first

Most mis-selling is not a lie told at the counter. It is a half-truth passed down from a training room.

By 37xBetter · a banker's view

The usual story is that a bank employee lies to you to earn a commission. That is not what I have seen inside the system. What I have seen is subtler, and it works better, because the person selling you the product usually believes what they are telling you.

Here is how it actually happens.

Where mis-selling really starts

Bank staff are told to pass the insurance and mutual fund exams that the rules require. Most people pass them with the least effort that clears the mark, because nobody expects more. Passing these exams does not make anyone an expert on a product or on personal finance. It only gives them permission to sell.

Then a representative from the insurance company or the mutual fund company comes to the branch to train the staff on a product. This is the moment the mis-selling happens, and it happens to the staff first.

The representative gives the selling points. He leaves out the parts that would make a customer stop and think. He does not explain the real return after costs, or what the customer gives up, or what happens if the customer needs the money early. The staff do not have much financial training of their own, so they have no way to catch what is missing. They believe what they are told.

After that, the staff repeat it to the customer in good faith. By the time the product reaches you, the person recommending it is not lying. They are passing on something they were told and believe. The representative mis-sold the staff at the training table. The staff then sold it to you at the counter.

The question that gets you labeled

When I started reading about personal finance on my own, I began to see the gaps. In one of these training sessions I asked the representative some direct questions about a product. He could not answer them well.

What happened next is the part I remember. A senior did not turn to the representative and ask him to explain. A senior turned to me and said I was asking too many questions and had a negative attitude.

Notice the direction the discomfort travelled. The person who could not answer the question was left comfortable. The person who asked it became the problem.

That is how the arrangement keeps working. Nobody has to answer the hard question. They only have to treat the person asking it as difficult. Most people learn that lesson fast. You ask once, you get labeled, and you stop asking. A branch full of people who have stopped asking is exactly what the product company needs.

Why a sincere seller works better

A seller who has doubts sounds like it. A seller who believes the pitch sounds sure, and a sure voice from someone you already trust is far more convincing than any script.

So the training room is not careless. It is doing its job. It is easier to keep the staff uninformed and confident than to make them experts. An expert asks the questions I asked. A confident believer just sells.

This is why I do not think the branch staff are the villains here. They are the first customers of the same product. They were handed a partial story and told to carry it to you, and most of them never found out how partial it was.

What breaks the chain

There is one thing that stops all of this, and it is not a rule or a regulator. It is the customer who asks the questions the staff were trained to stop asking.

What is the real return after costs. What am I giving up to get this. What happens if I need the money before the term ends. Ask these out loud, before you sign. If the person across the desk cannot answer them, that silence is your answer, and it is not their fault. They were never told either.

I built this site so that you can ask those questions with the numbers in front of you. Run the endowment through the calculator and see the real return. Read the plain version of what a product does before an agent explains it to you.

Here, asking too many questions is the whole point.