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Dec 08 2013

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What Makes A Great, Expatriate Financial Advisor?





Perception is everything.

In my view, a great financial advisor is someone who cares deeply for clients.

He or she provides an ongoing fiduciary standard of care; keeps investment costs down; avoids the entrapment of investment linked assurance schemes, such as those provided by Friends Provident, Zurich International and Generali (You can read more about them here).

But some measure greatness differently. Clients are more like bowling pins to be knocked down at the local alley.

Here’s a video showcasing the Ten Great Habits of Financial Advisors. Inspired by the expatriate market, it describes qualities of the best advisors—those with the ability to earn millions of dollars a year in commissions.

Any mention of doing the best they can on behalf of their clients? Sadly, no.

 

 

I enjoy promoting advisors working well on behalf of their clients. They’re the industry’s true legends.

But in the wild-west meat market of the expatriate world, such advisors are rare.




“Legendary” advisors are those who can seal as many deals as possible, in the shortest possible time.

Meanwhile—especially if the products are investment linked assurance schemes—carnage is left in their wake.

You can watch misguided glory in the video below:

 





About the author

Andrew Hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

Permanent link to this article: http://andrewhallam.com/2013/12/what-makes-a-great-expatriate-financial-advisor/

50 comments

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  1. avatar
    Debrilepe

    OMG, HOW SCARY! They sound like they’re door to door salesmen, selling trinkets or even cookies. But what they’re selling IS your whole financial future! What they sell can really be life changing and these videos don’t make any comment to that. I’d like to see a whole lot more focus on fiduciary care, rather than a focus on having coffee and walking away with $5K in your pocket!

    1. avatar
      Andrew Hallam

      I agree 100% Debrilepe. The expatriate market, for most financial advisors, is much like the wild west. Fiduciary care? Sadly, it’s rather a world or commissions. Wam, bam, thank you ma’am.

  2. avatar
    Afonso Vieira

    Just watched half of the first video, it is too idiotic to continue. I think this line, from the first video, defines what is the Devere style that many expat focused IFAs adopted:

    “You gotta love going out there, meeting people, and selling. For me it is the best job in the world: where else can I go out, meet somebody, drink their coffee, eat their cake, and walk out with 5 thousand dollars in my pocket!”

    It would be a great line for a swindlers movie… But it is happening in real life, real people are getting hurt. And I am not surprised that the speaker keeps mentioning Singapore, where expats are an easy target because they think the financial industry (like most things in Sing) is, checked, verified, safe.

    I have a hard time understanding how come this people can sleep at night. Thanks for sharing Andrew.
    Afonso

    1. avatar
      Andrew Hallam

      It definitely takes a different kind of ethical compass (or lack of one) doesn’t it Alfonso?

  3. avatar
    Screwed!

    The guy in the second video sold me an investment. Totally screwed me. Crazy high costs. Gushy commission for him. Can’t get out without killer costs. World record holder for duping 185 people in a single month?!?! WTF?

    1. avatar
      Andrew Hallam

      So he is selling investment linked assurance schemes…I was hoping that wasn’t the case, considering how many people are involved. A guy hammering so many people out of his own self-interest is going to leave a terrible trail of broken promises and financial heartache. I doubt he could operate in a more regulated environment. With luck, one day, these guys will be held to some kind of professional standard. I believe that commissions are banned in the UK and Australia. But the expat market is a true wild west. Still. With education, perhaps we can change that one day.

    2. avatar
      Afonso Vieira

      Hi Screwed,
      I assume you are talking about Steve Young, which a quick google search shows he is working for iFS – International Financial Services, in Singapore.

      Have you tried to contact/complain to the MAS (Singapore’s regulator?)? And/or to FPAS (the financial planning association)? And/or to the insurance company directly? And/or leave a message in Andrew’s blog looking for more “screwed” people, and take action together? In Singapore when it is an isolated complaint / one single individual complaint versus a financial company (bank, insurance, broker…) nothing much happens. But when there are several people complaining about the same individual/company, action by the regulator is almost immediate.

      Afonso

      1. avatar
        Screwed!

        Pros and cons to that. It would drive me nuts. I’d keep thinking about it. Would feel better to enter a cage match with the guy.

        1. avatar
          Debrilepe

          Hi Mr/Ms Screwed,
          You never know, you could get your chance to take him out in the ring. Doesn’t IFS sponsor the White Collar Boxing thing that goes on in Singapore every year or so? Maybe you could take him on there?? Let us know, and you’ll have a cheering section!
          Sorry this happened to you, then to see him bragging about it on a video must add insult to injury. I hope that you’re able to get some compensation… Good luck!

  4. avatar
    Michael

    How telling it is that the definition of a great advisor which many (not all) believe is one who is driven by money-hungry greed rather than fiduciary care – it’s a sad sign of the day and age in which we live and ought to be criminal!

    1. avatar
      Andrew Hallam

      It’s hard to believe it’s actually real Michael. Most ethical advisors limit their number of clients, ensuring they only have as many as they can adequately serve. I interviewed one gentleman here in Singapore who caps his client number at 70, while providing ongoing care. To think that somebody will sign up more than 100 clients in a month is crazy. And sadly, most of these local jokers get people into products sold by Friends Provident, Zurich International and Generali. They get hammered if they try to get out early. And the advisors make insane commissions. Your word is perfect: criminal.

  5. avatar
    Ruthy Oms

    Arrogant and not sure if it is ethical. He PLAYED WITH PEOPLE FEAR (like making a cut board portrait body/sport injuries to a group professional football players who just had their hard training session) and manipulated their so called prospect clients to make financial/investment decision in a (closed) conference room UNDER PEER PRESSURE (Did he mention 50+ football players?). How could someone think carefully in that situation?

    For the Furness guy, I didn’t see any solid substance in he presentation. It was a random list for a salesman not for a financial advisor.

    1. avatar
      Ruthy Oms

      Arrogant and not sure if it is ethical.

      When you PLAY WITH PEOPLE FEAR (like making a life-size cut board to portrait all sport injuries to a group of profession football players who just finished their late night training) and manipulate them to make financial/investment decision in a closed conference room under PEER PRESSURE, chances are you are going to get 50+ contracts signed. These football players just want to go home, shower change and go out. The guy set up a dead trap.

      As for the Furness guy, I don’t find any solid substance in his presentation. It was a random list to be a salesman not a financial advisor

      1. avatar
        Andrew Hallam

        Thanks for your comment Ruthy,

        I think you’re right. It’s all about sales, not ethics. It’s no wonder the industry has such a poor reputation. I feel badly for the good advisors doing ethical work, purchasing low cost products for clients, helping them with regular goal setting sessions etc. The average expat doesn’t know the difference between an ethical advisor and a selfish asset gatherer. In fact, the greedy ones come across as more convincing, with higher promises. They clearly harm people’s futures–preying on fear and tickling greed.

        1. avatar
          Goodfellow

          It’s the greedy ones that are willing to stretch the truth or flat out lie about the investment and the company they work for, so of course they often come out looking more appealing to the investor. I have first hand knowledge as to how these guys operate and it is amazing the bs advisors tell their prospective clients. Everything from projected returns as high as 20%, to completely making up their personal work history and education, to extreme exaggeration as to the size of the company and assets under management. This is even before they mislead the investor on the details of the investment itself. There was one guy that used to sell a long term regular savings plan as an “18 month bank/savings account”. I think many of these advisors start out trying to be ethical but over time you get ethics creep. They slowly start bending the truth so they can get a longer term and higher premium amount and then the fat commissions start blinding the advisor as to the real harm they are doing.

      2. avatar
        Debrilepe

        Hi Ruthy,

        You bring up SUCH an interesting point here. I hadn’t even thought of that! To me, I was just shocked how this Steve Young, can post on a video that he makes a million a year and has broken a world record of 198 sign ups! (Mr/Ms. Screwed, you actually have your numbers wrong, he signed up 198, not 185, but what’s a few thousand dollars here or there? -;)

        In my opinion to brag about that on a YouTube video is just crazy. What prospective client would want to see that those are the goals of the advisor and the company, International Financial Services, or IFS? But, I guess, I’m not a prospective client, as I probably don’t make enough money to be worth his effort, and probably wouldn’t be worth the trouble to reach his million a year anyway. After all, a million a year has to be a LOT of clients, paying a LOT of commissions!

  6. avatar
    Sean

    They approached us at school, (cold call to the administration) about 5 years ago, offering the usual (and quite relevant) banter about how are you preparing for your retirement. I remember in our first meeting, I was right upfront with them stating that I didn’t intend to pay any more than maybe 1 to 1.5% for financial services, they at that point in time were quite clear that that was unrealistic but that they could certainly find something in the region of 3%. Of course, by our second or third meeting the number of the absolute baseline had increased to 4 to 5%… they assured me that it was quite ridiculous for me to expect to pay any less than that in international market. The salesman in question (I have his name if you want it, a very nice man but aren’t they always?) continued to attempt to follow up with me over subsequent years, I think my last email from him was in 2008. I remember asking how he can afford to send his kids to TTS and the nice shiny Lexus in the car park, I can’t remember his response but I know it didn’t allay my concerns about their overheads. Yes, all of the products they were advising were Aviva etc, but mainly Zurich.

    Seán

  7. avatar
    Screwed2

    I’m Screwed2. I’m American, and International Financial Services sold me some of these products, now I’m screwed 2ce. 1st by the ridiculous fees and surrender penalties and 2nd by the IRS.

  8. avatar
    Goodfellow

    Friends Provident pays for Frank Furness to visit brokers to provide training. The video of Steve Young is one of his tools. Ethics is a relative term, I honestly think that a large number of the commission based advisors believe in what they are selling. In the UK it is very common to have an insurance based investment, and I have never met a Brit with an online investment account. Unfortunately there are a lot of expats that don’t know the proper way to invest and get sucked into the sales process. At the end of the day people buy people (for the most part) and these commission guys are well trained to be liked and sell. I have one of the few fee based advisories in China and I spend much of my time educating people on the difference of what we do versus the high commission guys and still not everyone gets it. At the end of the day many investors are looking for someone to trust to make the investment decisions that they don’t quite understand.

    1. avatar
      Andrew Hallam

      Goodfellow,

      That must be one of the most frustrating parts of the business: trying to do the right thing, but people not recognizing that you offer something better than a Friends Provident-type of offshore pension. As a personal finance teacher, I’m trying to educate kids on this. They will grow into far more educated, discerning financial consumers. I only wish regulators would put a stop to commission sales, as they have done in Australia and the UK.

      Cheers,
      Andrew

      1. avatar
        Andrew Hallam

        Hey Goodfellow,

        I wonder who removed those two videos from Youtube. I guess a couple of guys felt like they fell on their own sword. Ouch.

        1. avatar
          Goodfellow

          it was quite stupid to put those videos on youtube..so you teach personal finance in High School. That’s great, is this an elective class? Is it common for the international schools to offer this type of course?

          1. avatar
            Andrew Hallam

            Hey Goodfellow,

            Yes, the personal finance class is an elective. I wish it were mandatory. Fortunately, it’s a popular class–all three of my sections for the second semester are beyond regular capacity, so I’m thrilled about that. It isn’t a regular course among international schools, but I’m really proud of the program we have built at Singapore American School. Students really like it. And as you can imagine, parents love it! How long have you been in China? Where are you from originally? Where are most of your clients from?

            Cheers,

            Andrew

          2. avatar
            Goodfellow

            Hi Andrew,

            It’s great that you offer this class, managing your personal finances is a basic skill everyone should learn as early as possible. Education has always been an interest of mine and have thought about approaching International schools in Shanghai to develop a similar course. Would like to learn more about how you structure the class. In regards to myself I try to keep a low profile on public blogs, it is amazing the abuse fee-based advisers get from from the insurance sales people, especially in Shanghai. They are extremely threatened by our existence. I would be happy to continue this conversation outside of the blog I think you have my email, is yours listed in somewhere?

            GF

      2. avatar
        Aussie Expat Adviser

        Hi Andrew, it would be great to see other countries follow suit with the changes we have gone through in Australia. As of 1 July 2013 the level of disclosure that we have to provide to clients before they become a client is almost too much but I don’t think that’s a problem, it just means they get more paperwork. Better too much than not enough. Then ongoing we have to provide them with a Fee Disclosure Statement (FDS) every year which outlines to the client how much they have paid to us in fees over the past 12 months.

        As a adviser who services Australian expats from Australia I would come across 3-5 horror stories a week of expats being duped, conned and straight out lied to. Latest one was a client in Shanghai who after 5 years was going to lose 76% of his capital for a “early” redemption.

        I believe the MAS in Singapore are making slow changes to adopt a similar program but all that will mean is that the less regulated markets like Thailand, Vietnam, China etc will become the new homes for these “advisers”.

        1. avatar
          brett

          Aussie Expat Adviser, do you have any Japan based Aussie-expat clients?

          1. avatar
            Brett Evans

            Hi Brett,

            yes I do. I have a couple of long termers but most would be 2-5 year year residents. There certainly has been a lot of activity and debate over there for the past 6-12 months about the declaration of assets for citizens and residents alike. It’s like a Japanese FATCA.

            Cheers,

            Brett

          2. avatar
            Andrew Hallam

            I do Brett. They could buy off the Canadian, Aussie or British markets using the brokerages I mentioned in the post.

  9. avatar
    No Surprise

    It’s no surprise that they removed the videos. I can’t imagine that they would want their valued clients knowing how they really felt about them. I wonder if IFS clients are at all concerned about the amount of senior staff who are leaving, the 1% charge for investment advice when no one is currently licensed to dispense that advice or the fact that their CEO has been hauled into bankruptcy court by HSBC this year. Or do they cover up this information too?

    1. avatar
      Andrew Hallam

      No Surprise,

      The irony is that they posted those videos in the first place. They didn’t mind the world seeing it then….funny how they aren’t as proud now. Do you have a personal experience to share with IFS? Thanks for offering your comments. This stuff is important for people to learn—as you know.

    2. avatar
      Debrilepe

      Hi No Surprise,

      Your comments really ARE a surprise! I’ve seen International Financial Services promote themselves so much around the expat community, that for a few brief moments I actually thought they were one of the better ones out there… that is… until I saw these videos! (Hey Lindell, good job re-uploading these!) No Surprise, is what you say really true? How can MAS let IFS get away with this?

      Debrilepe

      1. avatar
        Andrew Hallam

        I have a lot of faith in the Monetary Authority of Singapore. I think they will eventually insist on a fiduciary standard of care for financial advisors, which will end the wild west commission wrangling that occurs with a few financial firms operating here. Fortunately, the De Vere group left Singapore. They claim they didn’t want to operate here because they were fined for selling an offshore pension product to a person who was leaving the country. But the romantic in me hopes they were pressured by MAS. Either way, these commission hungry models won’t last in a country with an educated, ethical base. I have plenty of faith in Singapore.

        1. avatar
          No Surprise

          The MAS have built a decent, ethical framework. But what happens when companies decide to circumvent requirements and get “Creative”?

          There are pages of legislation dealing with the “fit and proper” criteria for a Director of a Financial Services company in Singapore – including an obligation to report to the MAS any bankruptcies or pending actions. However, the onus is on the individual to report rather than the MAS to investigate.

          Similarly the MOM sets minimum salary requirements for EP holders. But what happens if a company makes a transfer of the agreed/stated salary every month but internally accounts for that (or a large proportion of it) not as a salary payment but a debt against commission earned? Playing by the rules. or playing the system? However you view it, it does account for the Commission-Hungry salesman syndrome as without the high commissions, they are literally hungry.

          1. avatar
            screwed2

            From what your saying, things don’t seem kosher with ifs. Don’t want to say anything here, but I’m not a happy customer.

  10. avatar
    American

    I’m an American who has lived in Singapore for a number of years. I opened an account through Friends Provident (FP) when I first came to Singapore on the recommendation of a friend. After a few years of investing, a tax preparer I started working with and a financial advisor I met with both strongly encouraged me to close this account, citing heavy fees and possible U.S. taxation issues. I withdrew what I could, but a chunk of my investment would have been hit with a huge penalty, as you mention above, so I have kept that portion in to this day. Had I to do it again, I’d never have opened an account with FP.

  11. avatar
    Lindell Lucy

    These two men are perfect examples of why commissions should be banned worldwide, not just in the UK and Australia. I was quick enough to download a copy of these videos before they were removed from YouTube, and I have reposted them on my blog here:

    http://therapeofhongkong.com/2013/12/15/this-is-your-brain-on-commissions/

    According to the Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for “fair use” for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. Non-profit, educational or personal use tips the balance in favor of fair use.

    I won’t be taking the videos down. These men have only themselves to blame for posting them in the first place.

  12. avatar
    Mike

    I heard someone in Singapore is suing IFS in court. Apparently, they believe this Steve Young guy in the video sold them products that they think were wrong for them.

    1. avatar
      Andrew Hallam

      Hi Mike,

      I don’t know anything about the lawsuit. But I hope the advisor didn’t sell an unsuitable product. And I hope the advisor didn’t mislead the client. Unfortunately, this is all too common.

      Andrew

      1. avatar
        No Surprise

        I believe that the lawsuit to which Mike is referring was lodged by an American client and centers on questions of jurisdiction and suitability. It’s not the only claim currently on-going.

        1. avatar
          Screwed2

          You say, it’s not the only claim currently going on. I’m curious, is anyone pursuing a class action then? If there are several unhappy people, has anyone reported IFS to MAS?

  13. avatar
    Fred

    Here is a blog that seems to be a spin off to this one:

    http://www.expatsingapore.com/forum/index.php?topic=97699.0

    There are quite a few more comments about Steve Young and the IFS video. It’s had over 1200 hits, I wonder how many of these readers are potential customers?

  14. avatar
    John

    I had the misfortune of working for this company and I left after only a short time because I wouldn’t / couldn’t recommend (sell) these products anyone, not even someone I disliked. What is worrying though is that not only do the majority of advisers have no credible background in finance (few have degrees and some have never worked anywhere else), they don’t seemed to understand their own products – highlighted by the fact that many of them have Vistas/ Generalis etc!
    The exams set by the regulator in Singapore are far too easy. It only took me about a month to pass all the exams with very limited prior knowledge & no experience. What shocked me most were the fact directors and senior management from large Banks & the Big4 invested with them! It certainly makes me think twice when I’m reading a certain auditor’s reports / industry outlooks!

    1. avatar
      Panzoneria

      Hi John,
      Many thanks for sharing your work experience with iFS, my friend has thought about working for them as well and I was wondering whether he can get in touch with you and learn from your experience, and potentially avoid wasted months/years?
      Regards
      Panzoneria

  15. avatar
    Lindell Lucy

    One way for victims of ripoff investment products to fight for justice is by petitioning law-enforcers. If you can show that your adviser accepted undisclosed commissions that were well-above the average market rate, then he or she likely breached the anti-bribery laws of your country.

    Below is a petition aimed at Hong Kong’s Independent Commission Against Corruption, requesting the agency to charge insurers, fund managers, and brokers with bribery.

    http://therapeofhongkong.com/2014/06/15/savings-scams-portfolio-bombs-a-petition-to-the-independent-commission-against-corruption-icac/

    Please feel free to sign the petition or use it as a model for your own purposes.

  16. avatar
    Lindell Lucy

    One way for victims of ripoff investment products to fight for justice is by petitioning law-enforcers. If you can show that your adviser accepted undisclosed commissions that were well-above the average market rate, then he or she likely breached the anti-bribery laws of your country.

    Below is a petition aimed at Hong Kong’s Independent Commission Against Corruption, requesting the agency to charge insurers, fund managers, and brokers with bribery.

    http://therapeofhongkong.com/2014/06/15/savings-scams-portfolio-bombs-a-petition-to-the-independent-commission-against-corruption-icac/

    Please feel free to sign the petition or use it as a model for your own purposes. The more signatures the better. Note that change in Hong Kong could potentially lead to changes in Singapore and other countries.

  17. avatar
    Lindell Lucy

    One way for victims of ripoff investment products to fight for justice is by petitioning law enforcers. If you can show that your adviser accepted undisclosed commissions that were well above the average market rate, then he or she likely breached the anti-bribery laws of your country.

    Below is a petition aimed at Hong Kong’s Independent Commission Against Corruption, requesting the agency to charge insurers, fund managers, and brokers with bribery.

    http://therapeofhongkong.com/2014/06/15/savings-scams-portfolio-bombs-a-petition-to-the-independent-commission-against-corruption-icac/

    Please feel free to sign the petition or use it as a model for your own purposes.

    The more signatures the petition gets the better. Any positive developments in Hong Kong could potentially cascade to Singapore and other countries.

  18. avatar
    Lindell Lucy

    Andrew has done a great job of warning people about the dangers of “insurance-linked investments” and exposing salesmen who misrepresent themselves as “independent” financial advisers. Other Singaporeans are also doing a fantastic job of raising public awareness about the troubles with this industry. If you are interested in learning more about what they have to say, check out the links below:

    Former Singaporean Presidential Candidate Blasts ILAS, Whole Life, and Other Ripoff Insurance Products
    http://therapeofhongkong.com/2014/06/29/former-singaporean-presidential-candidate-blasts-ilas-whole-life-and-other-ripoff-insurance-products/

    Group of Young Singaporeans Slam Insurance Industry for ‘Unethical Profiteering’
    http://therapeofhongkong.com/2014/06/29/group-of-young-singaporeans-slam-insurance-industry-for-unethical-profiteering/

  19. avatar
    Renee

    I love this line:

    “I enjoy promoting advisors working well on behalf of their clients. They’re the industry’s true legends.”

    so, where can I see your recommendations?

    1. avatar
      Andrew Hallam

      Hi Renee,

      Here they are: http://andrewhallam.com/category/indexing-financial-advisors/

      My apologies for not having more. I had a third and I will ask my webmaster where he went! What are you looking for? I may be able to help with a suggestion. My latest Assetbuilder article lists a number of firms Americans can use. http://assetbuilder.com/andrew_hallam/fidelity_says_no_to_overseas_americans_but_theres_a_silver_lining

      And my upcoming book focuses an entire chapter on different firms for different nationalities. I also hope to update the book over the years to expand on the number of advisors I profile in this chapter. To qualify, however, they must all build portfolios of index funds only.

      Cheers,
      Andrew

    2. avatar
      Andrew Hallam

      Hi Renee,

      Here’s the third one I profiled. For some reason, it got placed somewhere else on the site: http://andrewhallam.com/2014/02/jarrad-brown-singapore/

      Cheers,

      Andrew

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