In Singapore, we’re constantly inundated with annoying sales pitches. I don’t know about you, but every time I get an SMS messages from property developers, sales calls from banks or emails from insurers – I’m one step closer to self-registering at the Institute of Mental Health (IMH).
Registering in the Do Not Call (DNC) Registry should reduce some of the hassle of dealing with annoying sales pitches – but it won’t stop them all.
That’s because you’re always going to run into someone who’ll try to sell you something – whether it’s a sales associate at your favourite retailer, your financial advisor, insurance agents at a road show or mass media advertising messages.
Now that we’ve established the fact that you’ll never escape annoying salespeople – here are the 5 common sales phrases you should definitely watch out for according to “Alvin”, a financial advisor with experience in the banking sector:
#1 We’ve Just Launched a New Savings Plan That Earns 5%+ Interest!
What does this sales pitch really mean? “In short, it probably means that someone is trying to sell you an insurance plan,” says Alvin. “They’ll try to lure you with the high interest returns of 5% or more and tell you that you can get some cash out of it every year starting from year two onwards”.
Most of the time, you’ll hear this sales pitch from an insurer calling you or from a financial planner. If your financial planner is really pushing this product be VERY cautious because this isn’t just any ordinary savings plan. More than likely, it’s an endowment plan that’s going to be in place for the next 20 to 25 years!!!
Yes, saving money is a good thing. No one can argue that. But from a financial standpoint, it might be better put to use purchasing additional insurance coverage (to protect your wealth) such as Personal Accident Insurance to cover your immediate needs.
Falling for this sales pitch can really affect your future financial planning, especially if you’re in your 20s. “If you’re a 25-year old you might not need a 20-year endowment plan because that’s money that can’t be used on key purchases such as wedding expenses and your home”, says Alvin. “That money is locked in for good until the plan matures”.
#2 We Have a New Investment Opportunity That Safely Earns 20%+ Returns Per Year!
What does this sales pitch really mean? “In short, it is probably a scam such as a pyramid scheme or someone is trying to sell you some very high-risk investment products”, cautious Alvin. “The truth is that there’s no such thing as a ‘safe’ high-return investment”.
As the old saying goes – if it sounds too good to be true, it probably is.
Unfortunately, the elderly are particularly susceptible to such sales pitches. Fortunately, we’ve written articles on some of the most common scams Singaporeans can expect to encounter (you can read it here).
Even if the investment turns out to earn 20%+ returns by some miracle, be very cautious. “Investing is about timing”, relates Alvin. “Investments will rise and fall and while it might make that much returns during that time period, the investment’s returns might be on the decline when you hear about it from a salesperson, so buyer beware”.
So if you hear “my customers have made huge profits from this fund, investment, etc.”, just remember – if it sounds too good to be true, it sure as hell is!
#3 We’d Like to Invite You to This “Free of Charge” Seminar (You’ll Receive a FREE Gift!)
What does this sales pitch really mean? “In short, it probably means someone is trying to sell you time shares, insurance, investment fund house products, courses, etc.”, says Alvin. “They want to lure you to the seminar so you can ‘learn’ something and when it’s done, that’s when they’ll start pushing whatever it is they’re selling on you”.
Do you know what the biggest travesty of this sales pitch is? Many of these seminars only give you the FREE gift AFTER you buy whatever it is they are trying to sell!
“If you want to know what’s products will be pushed on you after the seminar, just look at the seminar’s sponsor listing”, says Alvin. “If it’s sponsored by some big insurer or investment house, expect them to hard-sell their products to you”.
#4 We Have a Balance Transfer Facility We Want to Offer You at a LOW Interest Rate
What does this pitch really mean? “In short, it probably means that a bank wants you to transfer your credit card debt with a much lower interest rate than you’re currently paying”, says Alvin. “The rate is only a promotion rate that lasts 6 to 12 months only”.
Before you fall for this sales pitch by saying YES, just keep in mind that you’ll still need to do your own calculations to see if transferring your balance makes good financial sense.
For example, most balance transfer packages require an upfront “processing/admin” fee that’s usually 1% of the balance. You must take this into account as well as the “promotional” period that you’ll be able to take advantage of the 3% to 5% interest rate.
If you can’t pay off your balance in 6 to 12 months – your interest rate will revert to the bank’s “pre-offer” interest rate which can easily be 17.99% or higher, which might even be higher than the interest rate you’re paying now!
#5 We’d Like to Offer You a Personal Loan at 0% Interest for the First Year (or for as Little as a Few Dollars a Day!)
What does this pitch really mean? “In short, it probably means a retailer wants to make a huge profit off of you by having your impulsively buy some high-dollar item”, relates Alvin. “You’ll end up paying more than you bargained for through the interest payments over several years”.
For example, if you take out a personal loan, you’re committing to a 3 to 5 year loan tenure where you’ll get 0% interest on the first year (you’ll probably have to pay a 1 to 1.5% processing fee), which will jump to some ridiculously high interest rate after the promotional interest rate expires.
Another sales pitch that can cost you serious cash involves some retailer offering you some high-dollar item, for example, a 55-inch SMART LED TV priced at $2,099. If you fall for the retailer’s “low” in-store financing at $2.60 a day, guess how much that TV will cost you over the course of 60 months?
“Before you fall for this sales pitch, make sure you read the repayment terms, charges, processing fees and interest rate after the promotional interest rate ends”, advises Alvin. “Most of the time it’s not, so if you really want to get that high-dollar item, save and wait another 2 or 3 months so you can afford to buy it without having to take out a personal loan”.
What are some other common sales phrases Singaporeans should watch out for (and avoid)? Share your thoughts with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!