The following questions and answers are based on 6 weeks of email exchanges, a lengthy phone call, and a couple of in-person meetings. Shawn asked me to correct his spelling and grammar mistakes, so I’ve done that. If you would like to ask Shawn more questions, you may submit questions via the comments section below. All questions/comments will be moderated.
Shawn, obviously you are pissed about the personal financial problems that Convoy has caused you, but your decision to speak publicly about it is motivated by more than just self-interest. Explain.
I hate personal inconveniences, but I hate injustice more. I want investors, fresh graduates and even the ones who want to work as financial planners, to be safe from the harm of this company and this product [ILAS].
How does one become licensed to sell ILAS?
A Convoy consultant is supposed to be a PIBA technical representative to sell ILAS, which requires 3 exams – Paper I, III, V. I only took 2 because my major in university was economics, and I got an exemption in Paper V. For me, the exams were really easy. I used a thin book of past questions (all multiple choice) provided by Convoy, and my preparation for each exam was no more than 3 days. The exams were taken online in a computer room, and one can choose questions to be in English or Chinese.
What educational qualifications does one need to get a license to sell ILAS?
The education requirement for the licence is: “has the minimum education standard of Form 5 or equivalent”. HK secondary school is 7 years. Form 5 means you’ve finished the 5th year. [10th grade.] You can check it out here : http://www.oci.gov.hk/download/minrev_20081001.pdf (page 19)
How often must employees go to the office at Convoy?
For the ones who have a base salary/allowance in probation, they have to go to the office and report to duty by 9:00/9:30 (can’t remember) during the first six months’ probation or their salaries will be deducted. For the ones like me who have no base in the probation, there is no need. Beyond that, there is no compulsory working hours in the office. So employees basically can go to the office only for training or signing of sold products and can choose to not go whenever they want.
How often did you go to Convoy’s offices?
I just went there occasionally whenever I felt like going. I can’t recall what I did in the office…mostly just chill, I guess? Or tried to boost my sales skills by practicing or asking for seniors’ experience.
You said a lot of people selling ILAS are “aunties” and “grandmas” with a lot of spare time on their hands. Can you give me an idea of how many aunties and grandmas are at Convoy?
As I mentioned before, the entry barrier for this job is very low, and there’s no working hour requirements – easy for aunties and housewives to get on with. And you know it’s a sales job – aunties are quite good at doing “persuasive talk” to their knowledgeless peers. So I have no idea how many aunties there are, as they didn’t need to show in the office.
Did you meet any people at Convoy who were non-degree holders? How about fresh grads with no background in math, finance, or economics?
Of course! I bet you still think this is a job with at least some technical skills required, as I once did. But it is not. It is a pure sales job. If you can sell products to ordinary people, then you are good.
How often does Convoy fire people?
Besides probation, Convoy basically does not fire people. Why should they? Their expense is basically zero, and they get pure profit from consultants’ sales. But I do remember there was a clause about the consultant needs at least one sale deal (don’t know if there’s any size requirement) within one period (about 15 or 18 months or something), or the employment will be terminated.
Why didn’t Convoy pay you a salary during your 6 month probation? Is this a regulatory violation?
The biggest loop hole is, all 2000+ (or at least most) Convoy consultants, who are actually frontline sales, are under self-employment contracts with Convoy. This type of employment is a long existing and highly debatable contract wildly used in the insurance industry in HK. So, I think not paying me a salary doesn’t violate current regulations. I believe this is the root of the reason why Convoy can stay safe from all kinds of obligations [when its employees engage in misconduct].
You took out a bunch of loans to support yourself during your “employment” at Convoy, and you are still paying them off. Did Convoy help in securing those loans? Or was that something you decided to do independently?
That was purely my decision, as my parents didn’t know I had no base salary, and I didn’t want to ask them for support even though I knew they would not hesitate to do so. My credit record is pretty good, so it’s quite easy to get installments from HK banks.
Can you clarify about when you started working at Convoy and for how long? When did start having problems with the commission clawback?
I lost my contract copy, so I can’t recall my exact start date. I started to work and train in Convoy around June 2010, but I didn’t sign the contract immediately. I think I signed it around August 2010. Later, my dad came for my graduation ceremony in Nov 2010 and signed the ILAS, and all docs were sent to Zurich by Dec 2010. The first payment was settled in Jan 2011.
I started looking for other job/money making opportunities around May/June 2011. I sent the official resignation by the beginning of Nov 2011 when I had gotten some freelances. After 8 months of payments, I was unable to make further payments (since they were partially made by my father and the rest by myself), and I was also determined that I would leave Convoy. So I asked my father to stop payments. But we didn’t plan to cancel the policy until Zurich sent me a letter after ~6 months or so and said the policy had lapsed. Then we started to realize the problem.
I received a call from Convoy in late May 2013. They told me they had sent a letter for commission clawback a few months before. I hadn’t received it, so I asked them to send it again. Then I sent them the first letter reply in early June 2013. There was not any response. Then I unexpectedly got a phone call from Milliken and Craig in March 2014. This is what pissed me off, and then I decided to break the silence and fight against every injustice Convoy forced on me.
Why did you leave Convoy?
I didn’t believe I had the “thick face” to sell ILAS to my relatives/friends and my parents’ friends while knowing that they didn’t actually need it. I also knew there was no way they would buy it if they had understood the clauses or knew that I didn’t understand them.
You said the brokerage licensing exam was easy. You also claimed that Convoy gave no training sessions explaining how the policies worked or how they were better/worse than other products or how to determine if ILAS, or a specific ILAS, was truly the best option for a client. Did you feel like anyone there actually comprehended how truly rotten these products are? Can you tell me a little more about the minimal training you got that was not related to sales? Was there zero quality control? No attempt to verify that employees had actually read and understood the policies? No one explained that the exit penalty is usually 100% during the ICP [initial contribution period]? This was not even a question on the PIBA exam? How are Convoy “consultants” able to answer questions posed by clients? Do they just make shit up?
Yes, Convoy only has sales-oriented trainings – How to talk to, warm call/cold call clients, how to find their potential needs and how to fire on it, and there are drills within teams to practice meeting clients. There are credit bearing trainings held by PIBA for some required minimum learning hours you have to attend for the license. These are quite general lessons about the industry and ethics, which did not talk about specific conditions or clauses of ILAS contracts. Knowledge about product details are from your own readings or what your supervisor teaches you. I don’t know of any attempt of Convoy’s for verification of knowledge. But I believe my whole small team at that time all had no clear understanding of the ICP, even my supervisor. (Yes, even now I still believe she did not trick me on purpose about this. She just did not have a clear clue either.)
You said Convoy didn’t make any attempt to educate you about the most important clauses and provisions of the ILAS policies you were supposed to be selling. Did they make any attempt to ensure you understood your employment contract?
When I signed the employment contract, no one ever pointed out that there might be any liability or obligation after resignation. And I don’t know why in “commission clawback”, the commission suddenly became “Loan due to Convoy” in their statement. There is a line about clawback in the contract and Convoy pointed it out the other day. It says:
“In the case that commission and/or remuneration received by the Company is subject to any kind of clawback or reimbursement clause(s), the Agent who received such commission and/or remuneration in whatever means and with whatever reasons shall be liable to the same clawback and reimbursement clause(s).”
I have nothing to argue about this statement, but to my understanding, since “commission clawback” is only “in the case that” and is not universally applied, when I was given the particular commission amount which is subject to a clawback clause, Convoy should be obligated to inform me by some means that this particular amount is under a clawback clause. But they didn’t, so didn’t know it was. So now I have this doubt about whether this “commission clawback” against employees has legal admissibility. I asked them a question about this in the email I sent just before they called me…
Can you explain some more about how Convoy is able to exploit mainland students, using their need for a work visa?
Mainland students are subject to “Immigration Arrangements for Non-local Graduates”, or IANG. The first year after graduation, we can stay in HK with no condition attached (no need to find a job), but we need a working visa afterwards until we stay here for 7 years. Convoy approaches fresh mainland grads, using their mainland employees to act as “mentor” and “friend”, plot the career in Convoy as warm, supportive, quick money, fast career path, self-fulfilling with extremely flexible working hours, and with working visa provided. And this worked for a young fool like me, and lots of other fresh grads. Even when I had not sold any products, their persuasions could still get me hypnotized to believe that probation was just a small barrier, a little more time is all I needed, a brighter future was right after it, and asking my parents to help at this point was totally worth it.
As I told you before, I was so stubborn and blindly believed I could have a very good income soon after I got on the right track (like my supervisor who supposedly got 600-700k in her first year). The original plan was, I’d have the Vista plan for mid-to-long term savings, and my father would help me with most of the first year payments, after which I should be able to make the payments by myself. But apparently things did not go my way. So I decided I had to cancel the policy when I realized there was no future in Convoy and I couldn’t afford it on my own.
You said fresh mainland graduates can work at Convoy for 1 year without Convoy sponsoring a work visa. But in order to stay at Convoy beyond the 6 month probation period, they need to sell $5 million in “business value”. Is this Convoy’s requirement or the government’s requirement?
This is Convoy’s requirement.
Was the $5 million you sold to your father during probation needed to apply for a new work visa?
For the 1st year IANG, there is no requirement. After that, we need a proper job for a “working visa”, which is still called IANG. A “proper job” means a proper company and a proper income. So Convoy needs me to get a sizable deal to show the Immigration Department that I can have proper income in the next 3 months (something like 10K+ per month, I suppose).
Do local HK employees also face a probation period? Do they have a minimum amount they need to sell to stay employed?
Yes, their probation is the same – total 5m – normally $2m for 1st half of probation, $3m for second half. But there are some probation extensions in case the tasks aren’t done in time. And they also have two contracts – with or without base salary in first 6 months.
How many non-Chinese employees (Western, Japanese, etc.) did you see at Convoy? Does Convoy make an effort to recruit them?
I didn’t see any. But Convoy’s 2013 annual report mentioned its expansion in Japan and South East Asia, so I bet they now may have some.
On the phone, you said Convoy will hire any mainlander that just graduated from university in HK, because Convoy knows their family must have financial resources, otherwise they couldn’t afford to study in HK. You also said Convoy exploits their need for a work visa. Does Convoy put special emphasis on hiring mainlanders because it earns more money from them? Does this lead Convoy to hire mainlanders indiscriminately, and as much as possible?
A bright outlook of money, ability to apply for visa, with extremely flexible working life as a bonus – this package could sound intriguing enough to lots of fresh grads from the mainland. When a senior starts to form his/her team, there is a quota of how many new hirings can have a contract with a base salary, and others can’t. When I started in Convoy, my supervisor was left with only one quota, and she spent tons of time persuading me to give the quota to another girl and sign the contract without base, given that I was unwilling to. Basically, she described the future, told me how much she believed in me, and urged me to take the faster path. (Commission rate and title ascend with the total business value one’s sold. And if under no base salary contract, then one can skip a 1.7% or 1.9% commission phase, I think, and move faster). So this means, Convoy’s yearly salary expense is pre-settled. It won’t cost them anything to hire more people, so why not? And mainland fresh grads – if they do it badly, Convoy doesn’t have much to lose; if they do it well, Convoy can get a lot of money from the big ILAS policies they’ve sold. As I said, ILAS sold to locals are usually only a few thousand a month, but the ones sold to mainland investors are mostly above 10k. Mainland employees can’t survive on small deals as they can’t get the same quantity that the local employees do. They have fewer contacts here.
Your supervisor encouraged you and your father to buy a $5 million “business value” ILAS to help you get past your probation. Which parts of the needs analysis forms and risk profile questionnaire did your supervisor falsify? For what reasons did she do this? Were any other parts of the documents falsified?
She taught me to designate myself as the life insured. My father was 60+, so it was unreasonable for him to sign a 25 yrs policy with himself as the life assured.
The income was exaggerated to meet the requirement for the large contribution.
The suitability declaration was taught by her.
In the Needs Analysis form:
- Questionnaires were done by her to make it look like medium and higher risk tolerance.
- Accumulative amount of liquid assets was filled in by her, which is I think just a random reasonable-looking number.
- Financial Planning Analysis was done based on examples she provided.
All these were to make my father look like he had 1) sufficient income and assets, which are reasonable and not too much so that there’s no need for proof, 2) medium to high risk tolerance, and 3) determination to sign this policy.
Convoy uses multi-level marketing, a widely criticized and controversial business strategy. Did your supervisor get a cut of your commission? How much? Do you know the commission rate for all the higher levels of management? Is management ever responsible for the misconduct of employees under their supervision? It seems they could benefit financially from teaching their “team” to engage in misconduct, as a means of boosting sales. If so, are the “team leaders” shielded from any responsibility when one of their “team members” is caught?
She had a cut. But I don’t know the number, and I doubt Convoy can retrieve it from her since she might not live in HK now. I can’t really remember others’ rates, but it seems around 2.x%? or 3%? for associate director. You can check out the career path here: http://www.convoyfinancial.com/en_US/careers/careerspath. Consultancy Management Path is the more common one which means you will build your own team. Financial consultant path is where you don’t build a team and your commission only comes from your own sales. But I think the rate is higher than Consultancy Management Path for higher levels. As I mentioned, Convoy’s consultants are under “self-employment”. Convoy and the management is easily off the hook for any liability. Since Convoy’s compliance is very weak and there’s basically no internal control (at least I think so), there could be lots of stuff going on between consultants or external parties for more financial benefits.
Were you asked to recruit other mainlanders?
Of course I was asked to promote Convoy and pay attention to whether anyone’s interested. And there were company tours for fresh grads, and we were asked to share our “success story” and experience to them. But I was at the lowest level, so I was not included in actual recruitments.
After looking at the ILAS applications of multiple Convoy victims, it seems to me that consultants just copy their Financial Planning Analysis out of a guidebook, because all the hand-written statements I’ve seen are identical. Can you tell me a little more about this guidebook? You said you copied the statement on your father’s application. It’s in Chinese, so I can’t read it. What does it say?
I don’t know if there is a guide book, but the statement is definitely mostly copied from previous ILAS plans as examples. Translation of the “analysis” part in my father’s policy:
IV: Financial Planning Analysis
Financial planning goal: Client is now 60 years old, hoping to have this as additional saving in addition to current retirement savings. Thus suggest him to invest in 25 years ILAS.
Affordability: Client’s annual salary is about HKD800,000, and can afford HKD17,000 monthly contribution.
Age consideration: Client chooses the 25 years product, and will be 85 years old by the end of the contribution period.
V: REMARKS Consultant reminded the client that the contribution period may not be finished when he’s retired. But the client pointed out he has the ability to finish the contributions and insist to apply.
(My father’s signature)
How do Convoy advisers decide which funds to recommend to their clients?
As far as I know, it is very common that “advisors” don’t have enough knowledge about the ILAS and related funds they sell. They usually keep several names of funds in mind which have different average returns but all have good track records, and recommend them to all potential clients – if the client is risk adverse, then they give him/her the one with a lower return. They don’t have sufficient knowledge about the market, the fund’s structure, the fund’s investment portfolio and risk level. Most of them just roughly check out the fund’s periodic factsheets (some responsible ones may check out ratings and basic analysis on sites like Morningstar), and as long as the track record is good, it will be listed in their recommendations. And as long as ILAS is one of the products they sell, no matter whether it is suitable or not, ILAS will always be the first thing they recommend to potential clients. How can it not be? – “Advisors/consultants” can get much more commission from this type of product.
Under the old regulations, ILAS illustration documents had to show average returns assuming 5% and 9% (it’s now 3%, 6%, and 9%), yet you said you and your friends at Convoy were given illustration documents which assumed average returns between 9% and 18% [created by Convoy, not by insurers]. You were trained to use these when pitching ILAS to new clients. Can you tell me a little more about this?
I, and all the friends I know who previously worked in Convoy, were taught to use 9% as some sort of “benchmark” safe rate for risk adverse investment illustrations. Usually the return in the illustrations and examples provided to prospective clients ranged from 9% to 18%. I don’t know about the “advisors/consultants” who target local investors, but I suspect this should be quite common. When I was in Convoy in 2010-2011, I didn’t know and wasn’t told by anyone whether there were any regulations on the return assumptions. My friends also didn’t know. The illustration I was taught was normally using 12% as an ordinary case, and also showed the prospective client illustrations from 9% to 18% as well. And the fund examples I was given to show client were also the ones with best returns. The “illustration” is basically an Excel worksheet for a particular ILAS with no fee details (at least not that I know of). The consultant only needed to fill in some conditions such as expected annual returns and years to maturity, then it will run itself.
Did you make any cold calls? Did you have a script to follow? Did you ever call people you know and introduce them to ILAS? What was that like? Do people at Convoy use social media, like Facebook, to advertise their “services”? What’s their other sales strategies?
Yes, I made cold calls (2 or 3 times) based on a list I was provided (it was surprisingly detailed) but mostly for practice since mainland employees are not usually doing business based on cold calls. And of course there were scripts, but now I can’t find any copies. I did introduce ILAS to people I know – not over the phone, but face-to-face when I went back to China – again, extreme flexible working life. I am not sure about the other strategies “consultants” use, but I believe they will use every tool available to do it. Calls, booths, social media, ads…
Did you ever hear anything about Convoy poaching staff members or clients from competing companies?
Yes, I think so. I, for example, did not make any application for Convoy’s job, but I got phone calls and was approached by them and they knew my background and current status. So I don’t know where they got my details. You mentioned that your friends have gotten these kinds of phone calls as well.
Also, when I was new in Convoy, newbies were provided contact lists to make cold calls (I got both locals and mainlanders) including contact names, phone numbers, address, occupations, some even had assets details (like how much their savings are, what kind of properties they owned, what kind of car they drive) and recent personal wealth management activities, if there is any. I know companies like Convoy can always get contact lists from suspicious sources, but I didn’t know the lists could be so detailed.
SwissPrivilege (a company similar to Convoy) has offered clients “free” exotic trips to places like Dubai, Africa, and Eastern Europe. To be eligible for these trips, clients first had to invest ungodly amounts of money in an ILAS policy. Did you ever hear of any “promotions” like that at Convoy?
There are cases I found from news that when meeting or cold calling clients, some Convoy consultants promised gifts upon meetings (like a free trip) but it was just a scam, and they did not give clients anything. And some claimed to be an “MPF agent” when making cold calls. But Convoy’s PR claimed these were all personal misdeeds, and Convoy strictly forbids this kind of misconduct, as always.
How was your commission calculated at Convoy?
Normally, a monthly contributed ILAS will have an 18 month ICP, and the consultant’s commission will be calculated by: his rate*monthly contribution*12*year to maturity. If the ICP is longer or shorter, then the commission will be adjusted with another coefficient (<1 or >1). Following are examples.
Assume: Commission rate is 1.9%. Policy is 10,000/month, 20 years. Coefficients are 0.8 and 1.2 for products of ICP of 12 months and 24 months respectively.
If ICP=18 months, commission=1.9%*10,000*12*20
If ICP=12 months, commission=1.9%*10,000*12*20*0.8
If ICP=24 months, commission=1.9%*10,000*12*20*1.2
You can see, the commission is totally based on how long investors’ money can be locked in.
Does Convoy disclose to its employees how much commission Convoy receives from the insurer? The new regulations require intermediaries to disclose ILAS commissions. Obviously, the client would want to know how much the insurer is paying in total to Convoy, not just how much Convoy passes along to the employee. Convoy itself has loads of interest conflicts which, as you mentioned, corrupts the way Convoy hires and trains employees. If intermediaries aren’t disclosing Convoy’s cut of the commission, then they’re arguably violating the regulations. But if Convoy is withholding this information from employees, it’s not the employees’ fault. Convoy is forcing them to violate the regulations, which means Convoy should be held accountable.
When I worked in Convoy, I was shown the commission rate for different positions along the career path to associate director. But I have no idea how much commission the company gets.
I agree it could be a violation now if the client doesn’t know the whole commission package for Convoy and all the related senior employees. But if it is not treated as a violation, then the regulators have created a big loop hole in the new regulations for Convoy to take advantage of.
How do Convoy advisers decide which ILAS policy to recommend to clients? Why did you buy a Zurich Vista instead of something else? I’ve met a large number of Vista victims, so it seems to me that this policy has been flogged harder than others. Do you know why?
Zurich Vista is a pretty standard ILAS in HK, given its standard 18 months ICP. For my case, all I wanted was an ILAS of $5 million “business value” for passing my probation, and Zurich has several selling points compared to others including a better company branding, “reasonable” annual management fee (maybe), a larger diversified fund pool, and good bonus. My bonus was 100% of ICP contributions. Sometimes the bonus can be approximately 120%, but this is changing periodically.
So, for a consultant, as long as the ICP and policy life span (or lock-in period) is confirmed, his/her commission is basically also confirmed. Then they can start to consider the client – amongst the several similar products, which one has slightly better or more attractive clauses for the client. Zurich Vista could be a “better” one for normal cases.
However, I do remember (but not clearly) that there are some clauses of Standard Life’s or Friends Provident’s that seem to be better for a policy with shorter life span, say less than 10 years. But obviously, the longer the policy is, the happier the consultant will be. So Zurich seems to be a more “attractive” one for a policy with longer life.
Some regular premium ILAS products are MUCH more flexible than others. In particular, I am thinking of Skandia’s Executive Wealthbuilder Account (EWA) and Managed Capital Account (MCA). Both of these products don’t have a minimum contribution period, which means clients lose nothing by suspending payments. The MCA only has a 5 year lock-in, and the EWA has no lock-in. It seems to me that brokers are violating their fiduciary duty when they don’t recommend these more flexible products, but instead recommend policies with massive exit penalties and 25 year lock-ins. 99% of people allegedly exit these policies early, and face a penalty. I was wondering, does Convoy have an agreement with Skandia? If so, why isn’t Convoy recommending Skandia’s regular premium products?
I know there were Skandia products in Convoy. I remember that they had some better clauses for investors, but it was never on the top list for consultants to sell, so I can’t recall the details.
Based on the features of the Skandia MCA, I do remember Convoy had this product, or at least something similar. But when calculating the commission, it will be much smaller. This is obviously something that a consultant only presents to a client when another ILAS hasn’t worked out.
Of course there are some regular premium ILAS products that offer more elasticity for investors like the Skandia ones you mentioned. However, more elasticity for investors means less financial benefits for insurers, so they give less commission to consultants. For products like the Skandia Executive Wealthbuilder Account, the consultant will not be interested.
In your letter to OCI, you mentioned that ILAS may be recommended to mainlanders as a way to launder money, protect assets, and avoid taxes. Can you explain some more about this. Why would someone in the mainland want to use it for these purposes? What is the tax rate on the mainland? Does there really end up being any tax savings after factoring in ILAS fees and the damage caused by reduced earnings from compound interest? I am curious to know if there is a rational reason for a mainlander to want to own one of these. If there is, I am certain it would only make sense to own a single premium, or something like Skandia’s Executive Wealthbuilder Account, which has no minimum contribution period and no lock-in.
ILAS basically allows people to put lots of money in it and packages it as an insurance product registered in some tax haven, such as Isle of Man. For mainland investors, Convoy makes them think this is a safe product and hard to trace. China’s tax system is still underdeveloped, so tax is actually not a major concern for them, but Convoy still likes to emphasize future possible needs for tax avoidance. Other reasons, which may not be “rational” (i.e., may not be valid, but Convoy makes investors think they are valid) include:
- Eligible for Investment Immigration scheme
- China may apply heavy inheritance tax in future
- Saving for their children
- Income/assets proof is not needed if contribution is not too large
- Or simply: offshore, insurance appearance, hard to trace
Lots of mainlanders have this strong but blind belief in the Hong Kong financial industry, and think it is well-developed and well-regulated, and the products are way better than the ones in China. Of course there are investors who invest in ILAS with legit reasons and considerations. But the fact that lots of mainlanders want to put their money outside the country is not something new, and mainly because the source of their assets may be unlawful, especially for those who work for the government, it could be a major concern. So for them, safety is prioritized above liquidity and fees/costs. Convoy makes them believe ILAS is safe.
Why do they invest in regular savings ILAS products with long lock-ins? One reason is, they don’t know about the others. They only know what the consultant presents to them, since they live in China and don’t have a clear idea about the industry in Hong Kong. Regular payment is also something that has a lower entrance fee, looks easier for investors to accept and can generate the most commission. For instance, if an investor makes a 5m one time lump-sum in a plan with no lock-in period, then the business value for the consultant is 5m. If he makes a 1m one time lump-sum with 5 yrs lock-in period, the business value is 5m too. If it is ILAS, 17k/month, 18 months ICP, 25yrs, it only requires investors to put 17k*18=306k or 0.306m in the plan, and the consultant can have a 5m business value too. So, for the consultant, the most important thing is to let investors know that regular is better than lump sum (using something called Dollar-Cost-Averaging theory), and using legit or illegit wordings and techniques or diverting investors’ attention to ease their concern about the lock-in period and simply skipping it in their presentation.
How do you feel about Convoy calling itself the largest IFA company in Hong Kong?
I think one main argument about whether Convoy is a legit existence is the use of the name “Independent Financial Advisor”. Usually for a type of product like ILAS, most companies give the same commission to consultants, because of the products’ similar structures, which are 18 months ICP, and ICP contributions are completely locked in during the whole life span of the policy. Thus, Convoy always claims that it is indifferent when choosing which insurance company for clients, so that it can act completely for investors’ benefit, which is complete bullshit. For a real IFA, the bottom line is, there is not any sort of interest conflict between the advisor and the client. Thus, for most cases, the advisors are only compensated by the client for the service. However, for companies like Convoy, the interest conflicts are hidden. They play the wording game and fool people that they are an IFA and act only for investors’ good. Convoy likes to say something like “indifferent in choosing insurers”, but what Convoy does not tell clients is, it is only “indifferent” when choosing insurers if the commission is the same. So, what this means is, amongst all products, ILAS offers the highest commission, and as long as they can persuade clients to buy ILAS, it is “indifferent” when recommending different insurers’ similar ILASs.
What I don’t understand is, why have the government and regulators allowed them to use the term “IFA” to fool the public for so many years?
How should a Convoy victim structure a complaint or take legal action against Convoy?
They may fire against Convoy’s violation of code of ethics when dealing with interest conflicts and prioritizing its own interests over clients’ while claiming to be an IFA without further disclosure. I know for SFC regulated activities, these are all 100% misconducts. But for the insurance industry, which is mostly self-regulated by entities like PIBA, even though it may be morally wrong and violates the code of conduct, I doubt there is enforcement power over that. People in PIBA’s committee are industry players too. They won’t punish misconduct if it raises questions about their own behavior.