Ee said clients should be empowered through engagement and effective communication leading to better product understanding.
She highlighted some firms sending out a post-sale survey via SMS to check whether customers really understand the investment products they have purchased.
“I would like to encourage all of you to shift from product-centered advice to goal-based advisory so that you can deliver more holistic and comprehensive financial advice to your customers.”
A recent survey by the CFA Institute revealed that only 10% of Singapore retail investors believe that their financial adviser consistently puts their interests first.
The global average is 35%.
On conduct, she said notoriously bad practices like late-night home visits were still happening “sporadically”.
“I would like to take this opportunity to remind [financial advisory] firms and representatives to conduct your roadshows and other marketing activities in a responsible manner, so as not to damage the reputation of the [financial advice] industry or cause any harm to consumers.”
More could be done to align advisers and customers with regard to a firm’s remuneration strategy she said; but praised firms who had taken steps away from a sales incentives in the way they paid representatives.
Technology, said Ee, had the biggest role to play in oversight through data analytics.
She highlighted one example of a firm that “generates monthly reports to identify changes in customers’ details such as their educational level, language spoken and risk profile”.
“Such changes may suggest that representatives are making amendments to their customers’ profiles so as to be able to sell them riskier or more complex products. When such changes are detected, the supervisor will contact the affected customer to confirm the changes made to the customer’s profile.”
She continued: “It is heartening that more and more of you are harnessing technology to enhance the advisory process for customers and to strengthen your compliance monitoring systems to identify potential misconduct.
“These efforts will go a long way towards improving the financial well-being of Singaporeans and enabling the industry to identify emerging risks early.
“As more advice firms embark on this digital transformation journey, it is important to remember that technology is an enabler, and not an end in itself.
“Financial advice is fundamentally a people-centric business.”