Misselling

AAA

DEFINITION of 'Misselling'

The ethically questionable practice of a salesperson misrepresenting or misleading an investor about the characteristics of a product or service. In an effort to make a sale to a potential customer, a financial products salesperson could leave out certain information or describe a financial product as something the investor urgently needs, even though sound financial judgment would come to the opposite conclusion.

INVESTOPEDIA EXPLAINS 'Misselling'

A good example of misselling can be seen in the life insurance industry. Consider an investor who has a large amount of savings and investments but no dependent children and a deceased spouse. This investor would arguably have little need for whole life insurance and, therefore, an insurance salesperson describing the product as something the investor urgently needed to protect his or her assets in the event of death could be considered a case of misselling.

RELATED TERMS
  1. Regret Theory

    A theory that says people anticipate regret if they make a wrong ...
  2. Insurance

    A contract (policy) in which an individual or entity receives ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  4. Moral Hazard

    The risk that a party to a transaction has not entered into the ...
  5. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
  6. Duty Of Care

    One of two primary fiduciary duties of directors, the duty of ...
Related Articles
  1. Personal Finance

    Investment Misselling A Global Problem

    When banks and advisors focus on fees and commissions, it is investors and the market that take the hit.
  2. Brokers

    Top Broker Excuses For Poor Investments

    It is not uncommon for investors to lose money through misselling or other forms of mismanagement.
  3. Active Trading Fundamentals

    Using Logic To Examine Risk

    Know your odds before you put your money on the table.
  4. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  5. Professionals

    Understanding Interpersonal Skills

    Interpersonal skills are the social skills people use to interact effectively with other people. A lack of good interpersonal skills may lead to unsuccessful personal relationships, as well as ...
  6. Investing

    Sarbanes-Oxley Act Of 2002 – SOX

    The Sarbanes-Oxley Act of 2002 is a legislative response to a number of corporate scandals that sent shockwaves through the world financial markets.
  7. Investing Basics

    What are key points to a good corporate social responsibility policy?

    Learn the main components of a good corporate social responsibility policy, including communication with stakeholders, partnerships and measurement tools.
  8. Investing Basics

    What are some high profile cases of companies who failed to be socially responsible?

    Learn about corporate social responsibility. Explore how Enron's lack of corporate responsibility ultimately destroyed the company and ruined many lives.
  9. Personal Finance

    What are the top trends in corporate social responsibility?

    Learn about top trends in corporate social responsibility. Companies are increasing transparency, innovating, investing locally and addressing inequalities.
  10. Entrepreneurship

    How does a customer base dictate goodwill?

    Find out how a customer base dictates the value of the goodwill by providing a ready market for its products and spreading the word about the firm.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center