“We’ve just been scammed by Friends Provident, so what now?”

andrew hallam

andrew hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Wiley 2011) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use.

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265 Responses

  1. DIY Investor says:

    Woodie Guthrie wrote it down in song years ago:

    "Yes, as through this world I've wandered

    I've seen lots of funny men;

    Some will rob you with a six-gun,

    And some with a fountain pen. "

  2. CreditDonkey says:

    So unfair. Poor fellows who have fallen to these scammers. Sometimes the desire to earn money can just end up in losing money – lesson learned the hard way 🙁

  3. Paul Carey says:

    Can you please tell me if this is Friends Provident in the Isle of Man?

  4. David says:

    As a Canadian living overseas will I benefit from investing in an 'off-shore' program like Royal London 360 vs. Vanguard where I will have to pay US taxes on my money?

    • Hi David,

      I don't know exactly where you are living, but as an non-American, you can't invest directly with Vanguard. You can, however, open an account of exchange traded funds at a brokerage. If you open an account in a country that doesn't charge capital gains, you're free and clear of paying capital gain taxes. You don't have to live in the country either. People in Vietnam (Canadians) are flying to Singapore to open accounts, then building their portfolio of exchange traded index funds from there. Wiring the money each quarter might cost a little, and it's not convenient, but overall, you will pay far lower fees with this option, than with the service company you are using.

      Also, even with your offshore investment company, you are paying U.S withholding taxes on the dividends, if any of their products have exposure to the U.S market. There's no way around that. Where do you live/work? I may be able to offer a suggestion.

      Cheers,

      Andrew

  5. David says:

    Andrew – I live/work in KL and we have some mutual friends through SAS. I am seriously considering closing my IPP account and cutting my losses. This is a big step and I want to make sure I am making the right choice before I do it. I need a place to start investing once I give up my Royal London 360 account. Any advice?

  6. David says:

    I failed to mention that my wife is a US citizen and we have funds in the US with Fidelity.

  7. bill says:

    David, please share your experiences with IPP and Royal London. I have also invested with them but over 8 months. What are your reservations?

  8. Gary Crock says:

    I have an account with them with these fees.. However, they match 125% of the money we put in..

    The program is called Premier Plus and the wording is:

    ""if you invest $2k per month for 10 years, you will qualify for the current Premier Plus Special Offer – Your Initial Unit Bonus Allocation will be: 125%

    This means that for the first 18 months, for every $2k you invest, there will be a $2500 USD working to buy units in your chosen investments..""

    I have to leave it in for 18 months, but then I can take out anytime.. How safe is this money ? I know they have AAA rating and Life Assurance Regulations of the ISle of Mann (1991)..

    is this a good deal??

  9. Gary says:

    I have an account with them with these fees – Premier PLUS.. However, they match 125% of the money we put in..

    The program is called Premier Plus and the wording is:

    ""if you invest 2k per month for 10 years, you will qualify for the current

    Premier Plus Special Offer – Your Initial Unit Bonus Allocation will be:

    125%

    This means that for the first 18 months, for every 2k you invest, there

    will be a 2500 USD working to buy units in your chosen investments..""

    I have to leave it in for 18 months, but then I can take out anytime.. How safe is this money ? I know they have AAA rating and Life Assurance

    Regulations of the ISle of Mann (1991)..

    But is this a safe and good deal??

    • Gary,

      First of all, it's a 25% bonus that they're talking about. Giving you 100% of what you deposit means you are getting 0%. Getting 125% of what you deposit means you are getting 25%. But look very carefully at the contract. You must deposit money over 10 years, yes, but do you get this 25% bonus after ten years? Or after many other years?

      If you get the bonus after depositing for 10 years and you're keeping the account for 25 years, the "bonus" amounts to less than 1% annually.

      You will pay triple that, annually, in fees. Dissect that contract very very carefully. It's not as transparent as it appears, and it looks much better than it is.

  10. David,

    If you learn about exchange traded funds, you may be able to open a DBS Vickers account in Singapore and use exchange traded index funds, just as I do. True, living in KL makes it less convenient, and you would have to open the account in person (then wire the money) but it's the most efficient way for you to invest. If you check the "expat investing" tab at the top of the page, you should be able to find some useful information.

  11. Andrew Rowan says:

    With regards to the 18 month initial allocation period of the Friends Provident Premier; As I understand it you pay your monthly premium for 18months and it remains in the plan for the term i.e. 10 years. The bonus of say 25% is added to your premium thus buying 25% more units in the chosen investment and again this stays in the plan for the term.

    So ok you pay the fees etc and doing the math you're returning whatever % less the fees right?

    My question is as a lazy investor; If I'm making say 8% p.a. in the product less the 3.69% above means i'm returning 4.31%p.a.? Where 'should' I be investing my money (as a lazy investor) to forget about it for the term that will return me this %?

    As an expat I speak to numerous people, some opt to leave it in a bank account with little to no return others speak of Generali, Skandia etc but surely these are all much a muchness as fees go?

    • Hi Andrew,

      I have some options mentioned under my "Expat Investing" icon at the top of my home page. My total investment expenses average roughly 0.15 percent per year. I use DBS Vickers' online brokerage, and I purchase three exchange traded funds: Vanguard's International stock market index (VEA); Vanguard's total U.S. stock market index (VTI) and a short term Canadian stock market index (XSB.TO)

      I don't pay capital gains taxes on the profits. The dividend yield is low, and I do pay a 30% witholding tax on the dividends. But even in a tax sheltered account with Zurich or Friends Provident, you would pay this percentage on all U.S. stocks or U.S. stock funds (the witholding tax gets removed at the source, in this case, so you won't see it on the account, but you can read about it–in fine print–on their websites)

  12. Linda says:

    hi Andrew

    I'm kinda in the same boat. I had subscribed to the FPI Premier plan for the last 5+ years, sold unfortunately while I was an expat in China. Now i'm back to Singapore (where I am from) and a financial planner friend here alerted me to the high hidden charges that I've been paying.

    Like the American couple that you've befriended, I've also have over USD140K parked with them. Thanks for your advice above – I think I will take out as much money as I can without penalty and reduce my monthly premium to the minimum.

    Thinking back to what had attracted me to FPI originally is the mix of the funds that they had to offer (opportunities to invest in markets like Brazil, Russia, hedge funds) and I had assumed that nil difference between bid and offer price of the funds means a good deal for me. I admit I had not checked on the expense ratio of each individual funds that I hold and I now know the admin fees for the plan fees are also very high!

    My question is whether through a normal brokerage like DBS Vickers, will we still get to invest (at relatively low costs) in markets aside from the likes of US, Australia, Singapore, China and India? do you recommend only ETFs then?

  13. Hi Linda,

    Through DBS, you can buy indexes (ETFs) representing any country you want. I recommend against picking individual foreign markets though. Neither you, nor anyone else, is going to know which markets will do the best over the next year, five years or ten years. It could very likely be a sleeper, like Greece or Ireland. In fact, the odds of that are better than you might think, yet few people would pick them. That said, considering that nobody really knows, you might want to hedge your bets (like I do) by purchases an international index that owns the widest array of international markets, like VT (the entire world) or VEA (the developed first world) coupled with EEM (emerging markets). You might see the method as unsophisticated, but your odds of beating a diversified account of world stock indexes are incredibly low, over your lifetime.

  14. Mel says:

    Hi Andrew and readers,

    Andrew, firstly great book! Congrats on pulling off writing a book in layman's terms that everyone can read, learn and act on.

    I entered the investing world about 2 years ago indebting all my savings with an advisor at a large financial advising company in Canada.

    Over the last few months I have awakened to the fact that my broker's interests are not in my best interests so I have started on the long and sometimes confusing trail of educating myself on investing and how to build and manage my own investments successfully.

    I was hoping you or your readers could give me some guidance. Currently all my investments are spread over 9 mutal funds (surprise surprise, did I mention I worked with an advisor) with an average MER of 2.2%.

    I am thinking of selling my funds to reduce the MER's by purchasing ETF's and Bonds. The problem is all of the funds have DSC's until mid 2016. If I were to sell the funds now I would have to pay around $6,000 in DSC charges. I am not sure if I have gave you enough info here, but do you think it is worth taking the hit now paying the $6k to get me out of mutal funds so I can save the 2% on MER's?

    Or am I looking at this the completey wrong way?

  15. Hi Mel,

    This can be a really tough call. I don't know all of the details, but perhaps, it I paint a compounding picture/scenario, you may be able to use it to make a decision.

    Let's assume that you lose 5% to deferred sales load fees for exiting the funds (I'm not sure what your penalty would be, so you might want to have a look). Then, let's assume that you buy low cost ETFs with the proceeds. The ETFs would save you roughly 2% per year.

    Assume that from 2012 to 2016, your ETF investments generated a return of 8% per year.

    By sticking with your actively managed portfolio, there's a strong probability that you would make roughly 6% per year, based on the higher costs.

    OK…let's assume that your portfolio is worth $100,000.

    $100,000 making 6% per year (assuming you stay) over 4 years would grow to just over $124K

    If the sales load cost you 5%, you would have $95,000 to invest in ETFs, and let's assume you'd make 8% per year. After 4 years, you would have slightly more than $129K.

    Under these circumstances, it would be better to take the 5% hit. But again, I don't know what your hit would actually be for sure.

    I hope this helps you though. And thanks for the kind words about my book! If you have a few minutes to write a quick review on Amazon, I'd be thrilled! Here's the link, if you have time: http://www.amazon.ca/Millionaire-Teacher-Wealth-S
    Thanks Mel!

    Andrew

  16. Lisa says:

    Andrew,

    From this post you are suggesting that someone living in KL can go to singapore to open an account in DBS Vickers and use exchange traded index funds. I was wondering how this is possible as i have checked the DBS Vickers website and it looks like you would need to be working in Singapore (with a valid employment pass) to open an account with DBS Vickers. Can you confirm that a foreigner that does not reside in Singapore (i.e a visitor/tourist) can actually open a DBS Vickers account in Singapore.

    Thanks

    Lisa

    • Hi Lisa,

      You don't need to be working in Singapore to open such an account. You could visit here, bring all your particulars, and open the account–then wire monthly savings to Singapore from your country of residence. I know plenty of non Singapore residents, firsthand, who opened their DBS Vickers accounts. This reminds me that I asked one of them to write a story about it (he teaches in Thailand) and I have it in my inbox somewhere. Firsthand, I know of the following people who have done it: two people residing in Thailand, one residing in Vietnam and one residing in Amsterdam. All three of them are Canadians. If you're American, you won't be able to open such an account. As easier option might be assetbuilder, for Americans: http://www.assetbuilder.com Let me know if you have questions Lisa.

      Cheers,

      Andrew

      • Joe says:

        Hi Andrew, If Lisa is an American, couldn't she just open an account directly with Vanguard? That's what I do, and I can buy or sell Vanguard ETF's for free. That's right, zero transaction costs! Cheers! Joe

        • Hi Joe,

          If Lisa lives overseas, she can try, but unless she tells a small white lie, they won't let her open a Vanguard account. If Vanguard catches a sense that she lives overseas, game over. They brought that into effect about 3 years ago. If you are a current overseas American Vanguard customer, you can keep your account, but if you're trying to open a new account, they won't let you.

          • Lisa says:

            Dear Andrew,

            Sorry, it's me again….I was wondering….you mention that a portfolio should be 40% bond index fund and 60% stock index funds (i am 38 years old). You also mention that it is better to get a stock index or bond index from you home country or the country you plan to retire in.

            Well, i live in Brunei, and we don't have access to buying stock index funds or bond index funds and there is no broker in Brunei when i checked via the link you gave me http://www.selectabroker.com/Brunei-Darussalam/

            So, what index funds would you advise me to buy?

            I am trying to plan where to put my retirement savings once i get it out of Friends Provident!

            If i already have an account with a Singapore Bank where i can buy ETF Tracker Funds should i just buy them from them? I think they would charge USD150 per transaction…..is that a high charge?

            Regards

            Lisa

      • Lisa says:

        Dear Andrew,

        Thanks for all your help & advice. I am not an american, i am Bruneian.

        I will look into the DBS Vickers account the next time i am in Singapore. Since reading your book (i am on chapter 5) and reading your posts i have realised that my retirement savings are with Friends Provident International and London 360….gulp!!!!

        This has happened over the last few days so i am trying to get in touch with my financial adviser to find out how i can get as much money out as possible without paying huge surrender charges. i will use your advice to the other couple where they took out as much as they could without a penalty and left the rest there and reduced their monthly contribution to the absolute lowest possible.

        Wish me luck.

        Lisa

        • Hi Lisa,

          If you learn about exchange traded funds, you could set up an account in Singapore with DBS Vickers. You'll need to fly here to do it. Then you could buy the world stock market index (VT) and the international bond market index (ISHG). That's all you'd need for full diversification. You'd pay $25 U.S. per purchase, so make sure you invest a decent sum at a time. You can then wire your money here. if you ask the bank for help, they will move you into what they want you to buy, and it won't be low cost ETFs! Good luck with Friends Provident. I hope it's not too painful.

          • Lisa says:

            Dear Andrew,

            I will continue to check my options with buying index funds(either low cost with DBS Vickers) or slightly higher cost index funds (at my existing bank). My question would now be…if I set up an account with DBS Vickers what would happen to the money invested if say something should happen to me before I take out the funds to use for my retirement?

            Regards

            Lisa

          • The money would be in your name Lisa. Is as much "yours" and your family's after you die as it would be if it were in any other bank.

  17. mahathir says:

    David,

    I've been roped into Royal London 360 through IPP as well and have been making contributions for over 13 months.

    What has given you cold feet? I will be placing a substantial amount of my savings through this plan as well and am concerned. Would appreciate your kind feedback.

    MM

  18. Lisa says:

    Dear Andrew,

    Thank you for all your helpful advice. I have just finished reading your book & I am so thankful that I did as it made me look seriously at my retirement savings & made me realize that I was being duped!!!!

    You mentioned in your last reply to me that I should get VT and ISHG. I am assuming I should be getting approximately 40% in ISHG and 60% in VT…is that correct? Also in your book you make a case for buying short-term government bonds….is ISHG one of these?

    Lastly, is 2 funds enough for retirement savings and where could I find data showing past performance of these funds? Should I be adding another fund?

    Great book. Life changer for me

    Thank you so much

    Lisa

    • Hi Lisa,

      The historical returns of VT are irrelevant—it's a total world stock market index with a low expense ratio. ISHG is a medium term international bond index, but that should be fine. I don't know of a short term international bond index—I don't think there is one.

  19. Gading Karsika says:

    Hello Andrew

    I live in Bali indonesia and have been reading you posts on Friends Providential currently I am in the 12 month of the 18month payment plan/portfolio. I have already Committed 20,000 USD and need 2 more payments of 10,000USD to complete the initial startup investment. If I default on the next payments I will loose my 20,000. So what should I do? default or continue the payments? Do you have more knowledge on Friends Providential that may calm my nerves on the subject …… or is it to late and I should consider my $$ swindled?

  20. I think you should do the specific math on when it's best to pull your money. I'm sorry to hear about your circumstance, but you may find the best time to pull the plug. Keep in mind, however, that if you remain with them for a lifetime, you will receive very little of what will rightfully be yours. Too much will be eaten by the tyranny of their fees.

  21. Tony says:

    Upfront commissions for the IFA are typically your first 6 months of contributions for a 10 year plan, and your first 12 months of contributions for a 25 year plan. Friends Provident is the one you should be complaining to as they purposely encourage misbehavior by paying their sales force like this. Good luck.

  22. Harum says:

    1." ISHG is a medium term international bond index, but that should be fine."

    You responded to another reader, Lisa, as above. May I know why ISHG is fine even though it is medium-term and not short term? 

    2. Also, you mentioned to her, " Then you could buy the world stock market index (VT) and the international bond market index (ISHG). That’s all you’d need for full diversification."

    Normally you would recommend another index, a home country index, but did you not recommend it to Lisa because she is Bruneian and a Brunei index is not available through Vickers?

    I am a Malaysian, about to study in France. I plan to work in France after my studies but I do plan to come back to Malaysia in the future. (Especially to retire as my money would stretch further)

    Since French ETF and Malaysian ETF are not available through Vickers, should I proceed with a diversification like Lisa's or should I buy UK ETFs (in  lieu of French) and look for other options (besides Vickers) to buy Malaysian ETFs? Or should I just buy Singapore ETFs? Help! 

    • Hi Harum,

      There is a Malaysian stock market ETF. You're right about why I didn't recommend a home country index for Lisa. At this point, I don't know of one. But you should build with a home country equity bias. The ticker symbol you want is EWM. Here's the link: http://finance.yahoo.com/q?s=ewm&ql=1

      You can buy this via a DBS Vickers or Standard Chartered account…any account, actually, giving you access to the New York Stock market.

  23. Message to Gading Karsika,

    As the article said, you need to pay fees until the end of the "term". So if you open the account for say 20 years, you need to pay fees for the all 20 years regardless if you keep deposits going after the initial 18 months.

    At my firm we have tried several times to close this type of accounts and get the money back to clients that come to see us a few months AFTER being sold an account with Friends Provident by Devere, in the same fashion as the article describes. We complain to the Isle of Man regulator but to no avail. The reply is always the same: the client signed a contract that clearly states fees, penalties, etc.

    So the advise is to complete the 18 months and stop making deposits. Also, I recommend to share the story among your network but remember that it was not Friends Provident that advise you, it was most for sure an "IFA" working for some "regulated" company. He was the one that didn't tell you how the account works.

    Good luck.

  24. IFA Abroad says:

    Alfonso – why keep paying for 18 months when the aggregate fees on those contributions are going to be close to 10% per year, for the entire length of the term?

    • I think investing in one of these variable annuity plans (based on the prospectuses I have seen) will cost something like 3.5-4 percent per year in annual fees, not 10 percent. But I have to agree: these are nasty little products, sold by salespeople keen to make big bucks off the naivity of others.

      • IFA Abroad says:

        Andrew – great work on the site in regards to spreading awareness, but I'm actually correct when I say close to 10%. Have another look at the FP terms and conditions – there is a 1.5% quarterly administration charge on initial units – which is 6.14% a year, on initial shares and all those ridiculous bonuses (the ones that were about to run out before you signed on). Then you still have the investment admin charge of 1.2% and then the external fund fees – which usually add up to around 2% (total expense ratios, AMCs are nonsense). This is also ignoring other fees like funding the account with your credit card (1%) or foreign exchange fees. So there you have it – 9.3% in fees per year – and that's generous! That's charged on the initial units (everything you contributed for the first 18 months), every year for the entire term. If you continue throwing money at them, maybe you can work the fees towards 3.5%-4%, but why would you throw good money after bad?

        People are blown away when they learn it's actually 6.1%. It's so underhanded to quote the fee on a quarterly basis (who else in the world of finance does that??) AND who would have thought an initial charge is applied every year for the entire term? These insurance companies are horrible.

  25. Hi IFA Abroad,

    Gading said "I am in the 12 month of the 18 month payment plan/portfolio" and I assume he was sold Premier from Friends Provident:

    http://www.friendslife.co.uk/doclib/xim16e.tg.pdf

    On page 4 it says the account will be "surrendered", which means closed in life insurance jargon. We encounter this issue recently with a Deveres sold/advised Friends Provident Premier. The client stopped deposits after 14 months because he find out that the information he received was incorrect, but didn't do anything else. He came to see us when Friends told him via letter to deposit the remaining 4 months or else. After we explained how the account really works and what he had been sold –he had been told that there were no fees AT ALL after 18 months– he decided to let Friends close the account.

    The client end up losing the equivalent of 5 months deposits (he had made some investment profits in 2011 and 2012; and luckily he is almost 65 years old, so the "term" was for ten years "only" because of age limit.

    Letting the account close is also an option to Gading, but he needs to calculate how much he will lose, both financially and mentally. If he has signed a contract for 25 years (called "term"), the loss after 12 months deposits may well be… 12 months!

    By the way, to my knowledge Friends doesn't sell directly to the public. So far, all similar cases I have had the opportunity to work with, were sold by an intermediary, broker, IFA. Never directly by Friends.

    • IFA Abroad says:

      Singapore regulators are actually debating whether they should ban commissions – and this is exactly the type of story the press and regulators in Singapore need to hear!

      Organize all the details related to your complaint and submit it to authorities. They can't ignore it if people keep coming out of the woodwork.

  26. Darren says:

    Having read through several of these comments, as well as many others on other sites that describe the Friends Provident "Scam", I am convinced that taking out one of their policies was one of the worst financial decisions my wife and I could have made. Like others, we trusted that our money was going to make money over the long run and we wanted to set up a retirement fund for our new family. As we are both international teachers this seemed like a wise decision and was reinforced by our DeVeere agent who ever so kindly did not go into much of the details of the charges of our plan. We' re 3 years into a 25 year plan now and have recently asked for a surrender value. Here is what I received from Friends Provident via the agency (Total Premium Paid $55,562):

    Plan Value: USD 57,115

    Surrender Charges: USD 26,841

    Surrender Value: USD 30,273

    That's an awful lot of money to lose for us. It makes me sick. The problem though, is that I'm likely to lose even more over time as the"1.4% quarterly charge" depletes all of my initial units. Not to mention the other charges.

    I feel as though we are stuck in a "Damned if we do, damned if we don't" situation.

    Andrew (or anyone else who has been in a similar situation), if you have any suggestions, alternatives or otherwise that might help out our situation I would greatly appreciate it. I just want to make sure that I do more research and analysis this time before I cancel our policy and make potentially the second worst financial mistake of my life.

    • The world stock index, including dividends, has increased by 12% in the past three years Darren. Bond returns have been similar. Rebalanced, you should have made roughly 12% in a low cost global portfolio over the past three years. Your account, unfortunately, is already showing signs of fee hemorraging. If you had gained 12% overall, your plan value would be $62,234, so you are already about $5000 behind. I can't make the decision for you. It's a personal one to make. But I sympathize wholeheartedly with you and only wish there was more I could do to help.

      • Hi Andrew,

        Usually the signs of "fee hemorraging" are seen at years 5 or 6 and after because the product pays bonus during the first 18 months. This is why Devere advisers use this product, 5 years gives the adviser a long time to move to another city, country, cheat a few more, move again…

        I think Darren invested the $55,562 by on a monthly basis and over 3 years; not a lump-sum one time only at the start of 55k. Anyway, if the plan value is now $57k, there are been mistakes on the investment strategy. Who is managing the money?

    • IFA Abroad says:

      I feel for you – no one should ever be in this situation. For a 25 year policy, devere was paid a bit over 12 months of your contributions as commissions – upfront. That should give you a better idea of why the surrender value is what it is (and why he forgot to mention fees).

      A brokerage account lets you avoid the 1.2% investment charge and ETFs drop your fund fees from 2%+ total expense ratios with FP to between 0.1%-0.7%. Sending more money to FP does not make sense compared to the brokerage account alternative (i.e. 3.2-4% charges on new money, or less than 1%?). When it comes to personal finances, you need to start confirming/verifying information – and to start – for all these fees I'm talking about here and in the post adding up fees on initial units – look it up yourself to confirm it applies to you. Look at the portfolio you have and add up all the total expense ratios (you need to make a weighted average), and verify all the other fees I mentioned. And if you see ANY error in what I've said, let us all know in a response (that goes for all the people selling these plans that stumble upon this site as well).

      Technically, your advisor was paid 25 years of commissions upfront to give you advice for 25 years – but do you expect this person to deliver on that? and would you want to continue seeing someone that did this to you? Most people I know just get out of the plan completely to recoup what they can, as the 10% annual charge on initial units is obscene, and sending new money does not make sense either. You could ask the guy how sending new money would help your situation in regards to fees, but make sure to get their answer in writing. If you're American, these are an even bigger mess (PFIC rules).

      Going forward, explain to local regulators what happened with your experience. Warn all your expat friends and colleagues – especially new teachers coming to town. And if you want to talk to the media – the South China Morning Post in Hong Kong is running a series on investment scams – contact them. You could also talk to local media outlets.

    • Darren,

      My two cents:

      1) Complain to Friends Provident Isle of Man with the Isle of Man regulator on copy on all communications; you need to attach all written exchange you had with your Devere adviser. It's fundamental that you prove you were not made aware of the product fees by Devere.

      2) Devere claims they have licenses in every country they have an office but that it's not true. You can also use the same complain and send it to the local regulator. For instance, if the advise was given in Singapore, the MAS will take action. You have an arbitrage court available, for free, to help you.

      3) Go –if you can– to Friends Provident office in Singapore and complain in person. Be aware that they do not know that Devere misrepresents their products and doesn't inform clients of the fees involved.

      4) As "IFA Abroad" said above, share your story with everybody.

      5) Good luck! And PLEASE, if you can get all your money back, do let us know how you did it. I have been trying to close these accounts for several of my clients without success until now.

    • Hi Andrew,

      Usually the signs of "fee hemorraging" are seen at years 5 or 6 and after because the product pays bonus during the first 18 months. This is why advisers use this product, 5 years gives the adviser a long time to move to another city, country, cheat a few more, move again…

      I think Darren invested the $55,562 by on a monthly basis and over 3 years; not a lump-sum one time only at the start of 55k. Anyway, if the plan value is now $57k, there are been mistakes on the investment strategy. Who is managing the money?

      • I was considering the expense ratio fees on the funds themselves. My guess is that they were running about 1.5% to 1.75% each year, for 3 years. Such a drag on performance will also affect Darren over the long haul…and they likely ensured that he underperformed a global basket of low cost stocks and bonds over the past 3 years.

        Cheers!

        Andrew

  27. Darren says:

    Thanks for the replies to everyone. I can give you some more information that might help you to give me some advise on my next move. We opened our plan with Professional Investment Consultants (https://www.pic-uae.com) while living in Abu Dhabi. Our payments were monthly and set at $1600 USD for the first two years. We moved to Oman last year after having a child and lowered our payments to $900 USD monthly as we moved to only one income. Unfortunately, this means that most of our money went into the initial units and are therefore subject to larger fees and penalties upon cancellation. Easy to see with hindsight (and now that I know how Friends Provident fees work) that we would have been better off with minimal payments at the beginning. We were directed to speak with an advisor at International Alliance Muscat (http://www.ia-muscat.com) when we first moved to Oman but on my recent review meeting last month I met with a different advisor. I get the feeling Devere is a large turnover company. Our portfolio for our plan is as such:

    J30 J.F. India (20%)

    P58 Templeton Bric (10%)

    P60 Martin Currie GF Global Resourc (10%)

    S112 Jupiter Global Financials (10%)

    S258 Strategic Growth Fund (USD) (50%)

    I must admit that although I have been watching these funds over the last 3 years I have no idea whether or not they are "good" or "bad" funds to be investing in. My lack of financial experience and vocabulary in this area, coupled with my naivity, led me to believe that was what my financial advisor was to be determining for me.

    I will put together the written information that I have from Devere and FP and let you know what I have. I was mostly just shown projections and estimates for how much money I could expect to have in 25 years at the end of the plan. Obviously, I was unaware at the time at how incredibly well my funds would need to perform in order to offset the cost of the fees. As a teacher who knows the excuses "I didn't know it was like that" and "It's not my fault" simply don't fly, I should have done more independent research.

    Darren

  28. IFA Abroad says:

    Your largest holding – Strategic Growth Fund – try to find the prospectus on it. I haven't researched it before, but I think it's a fund of funds – which would mean there are Strategic Growth Fund fees on top of fees for the funds held within the fund. Find the total expense ratios for all the different layers, and see if the fund company passes any breaks on expense ratios to investors (doubtful). You might be paying 3% in fees a year on that fund alone.

    Your Jupiter Financials is 1.9% a year – http://factsheets.financialexpress.net/frii/_s112

  29. Farly says:

    Dear Andrew,

    I have been with FP Premier since 2009 and in total I have invested about $34000 US of my money which currently has a portfolio value of about $39000. I am 3 years in on a 25 year plan and if I surrender i am looking a 84 or 81% penalty on my initial units which was $27000 of my money plus the additional 42% bonus units that I got on the initial units. I have not contributed any new funds to the portfolio for about a year and its value has fluctuated from $36000 to as high as $45000. It seems to be on the rebound now and I am leaning towards leaving it in for a while to see what happens. What would you recommend?

    Thanks for your input!

  30. David says:

    Hi,

    Are you saying that all savings scheme accounts with Friends Provident are not really saving me anything?

    What do you suggest I do? I am an American who started this account while overseas, but have just returned to the USA to live and work.

    Thank you,

    David

    • David says:

      Just to say that I have been in it 6 years, and so don't have the large amounts that others are talking about. Still, contributed about 13 or so thousand so far, and cash-in value is about 10,000, so I'd lose between 3 to 4 thousand.

      As I don't have much money, Assetbuilder wouldn't accept me, but would Vanguard?

      • Are you from the U.S. David? To invest with Assetbuilder or Vanguard you would need to be American. Otherwise, let me know where you are from and I can try to direct you somewhere.

        Andrew

    • Hi David,

      Sorry, I missed your comment above. Yes, certainly invest with Vanguard. Pull your money out and count your blessings that you caught on to this when you did. As an American, you would have to declare all gains anyway, to the IRS. They would frown on you owning such an account anyway.

      With Vanguard, you could invest the way I describe in the 6th chapter of my book. Also, you could look at the model portfolio in my fairly recent post about investors at Singapore American School (I posted it about two weeks ago). It provides a sample. Or….you could opt for a hands free Target Retirement fund through Vanguard. I also discuss these in my book.

      Cheers,

      Andrew

  31. Brendan says:

    Hi Andrew

    I have just been given the link to this website at an IB conference. So for our story…

    We have been with FP since September 2006. We invested through Warwick Man when we lived in Amsterdam. We are still investing whilst living/teaching in Singapore. According to our latest statement, the interim value is 25500 euros. So now the big question is what should we do? Cash in, take the hit and start again? I am 43 years old so still have time left to rebuild. We do also own property which would is our main retirement nest egg.

    I look forward to your advice and in the mean time I will find out what my surrender value would be as well as open a DBS Vickers account.

    Regards

    Brendan

    • Hi Brendan,

      From a purely mathematical point of view, taking the hit would likely be much better in the long run. With a more efficient investment plan, you would more than catch up. But I can't tell you what to do because there's an emotional component to the decision that might affect individuals in different ways. You know what I would do, and what many of my readers have done. To read more, check out the following link: http://andrewhallam.com/2011/11/zurich-internatio

      If you have other questions, feel free to ask them. There's an army of people who have generously given their feedback on the link above. One of us can continue to answer your questions if you have any.

      So sorry to hear about your misfortune in this case.

      Andrew

      • Brendan says:

        Hi Andrew,

        Thank you for taking the time to reply, I appreciate it.

        I am currently on a payment holiday with FP and as I said before, i am investigating the surrender value of the product. I have ordered your book and await its arrival. I will also investigate which account (DBS-Vickers or other?) to open.

        Do you recommend any account now that DBS has increased their charges? I am looking for one that I can continue to use as I move. By that I mean when we leave Singapore (possibly at end of this academic year). Any suggestions or do I open a new account at each country I decide to live/work in?

        I look forward to your (or someone else who is equally knowledgeable) reply.

        Brendan.

        p.s. My wife and I are Brits and would probably retire somewhere in Europe.

        • Brendan says:

          Just found out the particulars from FP.

          All totals are in Euros.

          Current value: 27938.34

          Fees to close: 6515.07

          So surrender value = 21423.27

  32. Brendan says:

    I just received the surrender value from my original broker and it is a lot less than the surrender value quoted to me by FP.

    If/when I decide to surrender my product, do I have to go through my broker or can I just go straight to FP?

    • IFA Abroad says:

      It's really odd for there to be a difference between what FP and the broker tells you about surrender value.

      Ultimately, you own a product with FP. You can cut the broker out and deal directly with FP at any time.

  33. Debrilepe says:

    Hi Andrew,

    I have been reading your blog with great interest over the last several months. I have also read your book, which really was a lot of fun with excellent information. I do want to thank everyone who has posted comments on this blog, as they really are very informative, and unfortunately in many cases very sad.

    Being in a similar situation to many others who have posted, and having similar sentiments, I was wondering if you know whether anyone has pursued legal action in Singapore, against any of these providers or the financial "service" companies that sell these products? With all the complaints, one would expect that someone would have tried the legal route, and that these kinds of actions should not be permissible in a country such as Singapore.

    Thanks,

    Debrilepe

    • Hi Debrilepe,

      I was asked recently by a representative from a financial firm, here in Singapore, if I would do something to get a group together to pursue legal action. The big issue would be the misleading component. Salespeople flog these things and don't explain how (or how much!) they get paid for establishing an account per client. Nor do they explain the surrender value components clearly, nor how the fees impact returns. Any reader of this blog could likely get something together. But currently, I don't have the time to pursue it myself. Any takers?

      • Debrilepe says:

        Hi Andrew,

        Hmmmmm… That's very interesting. Yes, I am interested in seeing how many others might be interested in a law suit in Singapore….

        Debrilipe

  34. Dear Andrew,

    Thank you for your attention. I'm a 39 years old brazilian and living in Brazil at present. I have just opened an account at Lloyds Bank (Isle of Man). A brazilian Investment Consultant Agency invited me for Friends Provident Wealth Plan. I'm not happy about having to pay a high penalty if I decide to withdraw my money in advance. As I 've just started it ( I paid three contributions only – US $ 1.000 each), I've been thinking about canceling it soon. What options do I have? What could you suggest me? My main purpose is to save money enough (for around 20 years) to acquire (totally or partially) an apartment overseas.

  35. Honest Adviser says:

    Hi Darren,

    The comment about the adviser receiving 25 years of pay for 25 years advice is a great call.

    I tend to use plans with a 5 year period that you can continue paying into ad infinitum if you wish.

    The difference in cost for essentially the same vehicle is remarkable.

    You can then use the accumulated wealth to enter a more flexible vehicle where you can invest in ETFs, direct stocks and bonds, various currencies, alternative investment funds, structured notes etc etc at low cost.

    Trying to surrender the plan now is very bad advice. You should rather make it "paid up" and start afresh. This way you have a chance of preserving the value if you can gain exceptional returns while not adding further funds.

    That said, once you have paid the initial period (this will be roughly the amount you pay in wrapper fees to generate commission for the adviser), the premier plan is quite cheap.

    You are only paying the 1.2% mirror fund costs.

    There are a number of loyalty bonuses that kick in down the line (depending on the style of premier plan you have)

    Best,

    HA

    • IFA Abroad says:

      HA

      1.2% is the mirror fund admin fee, and then you have fund fees on top (say 1.5-2%), so anything after the initial units are going to be annual fees of 2.7-3.2%, and that's ignoring other charges like foreign exchange, mirror fund drag, and 1% credit card fees.

      Is it really possible to save your initial units by agreeing to keep it locked in with 10% annual fees?

      • Honest Adviser says:

        Hi IFA abroad,

        You are correct, the underlying funds all have their own management fees which vary from nearly zero up to around 2% depending on the fund. Etfs will also have an annual fee from nearly zero up to around 1% depending on the ETF.

        The etf fee is rightly lower as there is no management to speak of in most cases which can be good in tight markets or for generic exposure. This guarantees average performance against a chosen index which for many people is fine.

        The benefit of using platforms such as FP et al is the institutional terms on purchase of funds from the worlds leading managers. You are also able to dollar cost average your access to such funds for very low amounts and switch without cost as you choose.

        Mirror fund drag is hard to measure and can be negative or positive depending on the market. Personally I would look more at Generali or Royal London if this were a concern as they invest directly without mirrors. Also, neither company charges a credit card fee.

        Exchange rate risk is oft overlooked but monthly cost averaging to your reference currency is right for the majority of people.

        Another overlooked point is the investor protection offered by the (in Friends Provs case) the Isle of Man which is exceptional at 90% with no upper limit. These companies will also provide basic trusts for free.

        I have just run a cost analysis for a 2000 a month contribution to a premier plan over 25 years, the RIY is 1.42% when you look at all the charges and bonuses. (FP add 4.8% of the fund value as a loyalty bonus every year after year 10 for example) The funds then have their own costs.

        So, 1.42% for Friends Provident and their advantages aswell as a full time IFA is fair value in my opinion. The issue is that most people are not given the right plan or explanation.

        In the above case, if you do not stick with the plan for its duration it gets very expensive. If flexibility was more important than discipline for savings a 25 year plan is the wrong advice.

        Once again, everyone is different and it's a good advisers job to give the right solution to everyone.

        Cheers,

        HA

        • IFA Abroad says:

          Mirror fund drag is caused by money held out of the market. Over the long run, this is a bad thing – particularly because of how opaque the practice is.

          I didn't refer to exchange rate risk – I referred to exchange rate fees from when investors are contributing one currency and the advisor is recommending funds denominated in another.

          With these plans, investors don't actually own the funds – the insurance company owns the funds – and investors only own a promise from the insurance company. This is unlike a brokerage account, where the broker holds your funds in custody and investors actually own the funds and not just a promise. Even with investor protection for the insurance company's promise to repay, I would prefer actually owning the funds.

          1.42%? You have excluded fund fees without saying so, and your summary still excludes a number of other fees. The truth is that if the cost was remotely reasonable, the fee structure would be simple. Instead, it's incredibly complicated, because it's the only way to hide and recover the upfront commissions.

          • Honest Adviser says:

            Dear IFA Abroad,

            I am starting to think that you are not an IFA at all. A key skill for an IFA is reading things and absorbing the detail.

            I start my post by saying that underlying funds have their own costs and end the paragraph about the 1.42% RIY by saying it again.

            The 1.42% includes all plan fees, negative and positive, what do you think has been left out?

            Exchange costs often irrelevant as my clients mainly earn, contribute and invest in USD. Where this is not the case it would be a bank that makes that exchange and I fail to see how that is avoided anywhere?

            A mirror fund (not a huge fan myself) is essentially that, a mirror of the underlying fund. It will have a small cash holding as it receives a whole stack of money each day from potentially millions of investors which they collate. That means returns will never be identical.

            I agree that the complexity is a negative. It also means that some so called "advisers" can mislead clients either intentionally or through stupidity.

            How are you remunerated for your time and advice and which savings and investment vehicles do you use? I am always keen to have options.

            Best,

            HA

          • IFA Abroad says:

            HA

            I'm an advisor, but the point of this discussion is the product, not how I work or you work.

            Look at one of FP's illustrations, for example where it says the growth rate is 9% – use a calculator to confirm the end amount's actual growth rate. It's not 9%, it is about 1.1% lower – because the projection includes fixed fees and the best case scenario assumption of never missing a payment in order to get every possible bonus.

            Footnotes clarify that the illustration excludes the 1.2% fund admin charge as well as mirror fund fees. So say a total around 3.8-4.3% a year, best case scenario of NEVER missing a payment. This ignores mirror fund drag, foreign exchange fees and the 1% credit card charge.

            This was hard for me to figure out (I actually had some help from another advisor), and I'm guessing this is big news to you. You made a valiant effort coming up with 1.42%, and I know you're trying to be honest – as very few IFAs would ever try to do what you did, and even fewer would know where to start.

            If you are in Singapore, check out a platform like iFast.

          • Honest Adviser says:

            Hi IFA Abroad,

            I think this conversation is great as we are really clearing things up for people.

            The 1.42% was calculated with my colleague who has a first in maths, the client (a maths teacher) and approved by the actuarial guys at Fpi.

            It came about as their RIY figures on a flyer suggested the plan cost less than 0.3% p.a.

            The 1.2 admin fee is the "mirror fund" charge. The underlying fund fee can't be included in a projection as there are over 230 funds with different amc's.

            It involved a pretty massive spreadsheet and factored in every measurable cost.

            You are correct in pointing out that you need to maintain payments to get all the bonuses whereas costs are a definite. Loyalty bonuses are not paid in years you do not contribute. This should be explained to all clients. Some like this aspect as it pushes discipline though I don't think it's ideal in most cases.

            How you charge and the vehicle you use is important if you are concerned about the clients TER. One option has been denounced but no others truly explained.

            Singapore is a no for me as I and my clients are in bed when they are at work as I am in LATAM.

            Best,

            HA

          • IFA Abroad says:

            HA

            I explained how I got to my number – and with FP's own illustration that gave it to us (not transparently, but it's in there). And that number is the best case scenario.

            You ignored what I explained and say you need to be a math professor to figure it out.

            It's misleading to say that net charges are xx while excluding fund fees. Most portfolios I have seen for people in these plans had 1.8-2% total expense ratios. I have never seen one come in with a TER below 1.7%. Why are the fees high within the plans? Because the insurers get kickbacks from the fund managers for listing them on these platforms. Why can the funds charge so much? Because they're the only ones available.

            If you understand the benefits of index investing, you understand the importance of cost, which rules an investment like this out.

    • Looking though the Generali material, I can't see any inexpensive insurance linked products.

      I have seen variable annuity like products offered from Vanguard that are about as cheap as actively managed mutual funds, with no penalties for early withdrawals. And I have seen some decent fees (although much more expensive) associated with products from TIAA Cref.

      Other company products I have seen seem to have 3% fees associated with them, when counting expense ratio costs.

      • Honest Adviser says:

        Hi Andrew,

        Unless you have terms of business with Generali you will not get to see everything. I am in that position and as such am able to comment.

        This all revolves around client circumstances and what is best for the individual. To advise un-sophisticated investors to buy a couple of ETF´s that may not remotely match their risk profile or investment goals would not be allowed in any regulated market on earth.

        It may however work out well and by chance match goals. It is certainly a low cost way (depending on trading fees and transfer costs) to attain generic investment exposure. I would be very keen to know a lot more about the broker and the investor protection laws in the jurisdiction. (I do not work or live in Singapore but DBS Vickers do recommend any non Singapore resident takes advice where they live)

        The concept of know your client is key. I fear the majority of advisers in the "offshore" market do not worry too much about this and rather look to their own bottom line.

        I have clients at Generali that are paying 0.8% for an open architecture investment platform.

        An example of one that I reviewd last week is about 60% in ETFs. We also hold direct company stocks, some currency deposits, actively managed funds and some alternatives and structured funds. The vehicle is held under trust and can accept further capital injections from anywhere but the US.

        This was the right solution for this client. He is the Regional Director of a household name company and I have worked closely on this with his Canadian lawyers and accountants. All of them are very pleased with the advice and the value of it.

        I think the key is that everyone is different and so are their goals and attitude to risk. The right solution for the right person at the right price. Investors who know what they are doing and do not want or need advice can always look online for accounts to trade. I normally point them to Saxo Bank if in doubt.

        If somebody wants to save an amount each month though, transfer fees to a broker account (typically $50+ or so from most banks) is ludicrous for a teacher saving $500 a month who also wants the advantage of dollar cost averaging without trying to time markets.

        Cheers,

        HA

  36. I love FP says:

    HA,

    Do you invest your retirement savings through these products?

    The only reason why I think any "adviser" uses FP, Royal London, Generali, etc is the lucrative upfront commissions. Product bias is created with remuneration structure. These products are designed exactly to create that bias at the expense of the investor. The complicated fee structure is to hide its true costs. I believe the upfront commissions is up to 7 months of premiums for a regular premium product. If you can sell a USD3,000 monthly premium product, you receive USD21,000 commissions upfront. How attractive is that! FP pays one of the highest commissions. The high early surrender charge is to compensate for the upfront commissions already paid to the adviser.

    Can you tell me the comparative advantages of FP versus direct investment platform of actively managed funds such as iFAST(Singapore), Transact (UK) and Charles Schwab (US)?

  37. Chris says:

    Dear Andrew,

    I must say that having read the rubbish that you have written here about the one of the world's largest and most successful investment companies, Friends Provident International, my own opinion is that if there is any "con" going on it's what you have written.

    It is obvious to me that you have a personal issue with Friends Provident and that you are using the fact that you wrote a little book once in your mundane little life to sully the reputation of an institution that has been around and served millions of people and corporations for over 180 years.

    What you are doing is highly destructive and extremely malicious. You are advising people to early surrender their investments with Friends Provident and you have actually gone as far as having provided a competitor to Friends Provident, Vanguard, as an alternative. This smells of a personal fiduciary interest Mr. Hallam.

    Are you attempting to hoodwink people into believing that Vanguard or any other investment provider does "not" charge Establishment Charges or Annual Management Fees? Is there any company or bank in this world so absolutely charitable that they are prepared to operate their businesses without paying themselves?

    The now retired CEO and shareholder of Vanguard is worth net, 80 Million Dollars. Are you attempting Andrew Hallam, to have innocent investors believe that John C. Bogle and the other Shareholders of Vanguard survive on pure Goodwill? What you are doing, to the financial detriment of any investor that takes your very foolish advice Sir, is hoodwinking people away from Friends Provident over to Vanguard.

    Are you being paid by Vanguard for this service Mr. Hallam?

    There is not one investment provider operating a business on this Planet Mr. Hallam, that does not charges fees for almost every transaction that they do on a client's behalf. Starting at your local Bank Mr. Hallam, when you wire money from your personal Bank Account to someone else, does your Bank charge you, or are in some "special" Bank that does not charge for services rendered? Are you aware Mr. Hallam, of the old adage that " there is no such thing as a free lunch.?"

    Everyone charges Mr. Hallam, including Vanguard. John Bogle did not make his 80 Million because he charged nothing. So what you are doing here, Mr. Hallam, apart from being in very poor taste, is actually quite disgusting. My advice to you Sir, is to leave financial advice, to the professionals.

    In other words Andrew, according to you, every investor ought to cancel all their investments with Friends Provident, Generali, Aixa, Zenith Life, Hansard, Zurich Life, Allianz, HSBC, BNP Paibas and buy the Vanguard Asset Builder?

    Can you tell me Mr. Hallam, but more so the investors that you are advising to cancel their investments with Friends Provident, what special qualifications and experience you have Sir, apart from having written a novel, that allows you to provide such destructive financial advice to these people.

    Can you also let me know Mr. Hallam, why it is that you have herein singled out an organization that has an outstanding worldwide reputation for what they do, and do, well?

    My advice to all of the people that have unfortunately come across this blog and Mr. Adnrew Hallam's views is to ignore this poor attempt by a man obviously carrying his own cross for Friends Provident and seek advice from professionals, not writers of fiction that bear personal vendettas.

  38. Premier Shareholders says:

    The Isle of Man government conspire in the business of obtaining bank transfers by deception by claiming that using bank loans to speculate in traded endowment policies (TEPs) is a “low” risk investment strategy, failing to disclose exit penalties is quite acceptable, that financially unsophisticated pensioners (including 80 year old widows living alone) can be routinely catalogued as “experienced investors” and that the phony “introducers/agents’” can legally be described as “professional financial advisors”.

    This is an evil fraud sponsored by corrupt politicians, fraudulent financial services “providers” and a bogus regulator.

    DO NOT INVEST OR BANK ON THE ISLE OF MAN

    YOU WILL LIVE TO REGRET IT.

    • Premier Shareholders Group:

      Let's hope that there are some financial establishment that are honest and upfront with fees on the Isle of Man. The biggest problem, however, may be the advisors who sell this rubbish for big commissions. They have to be acting as fiduciaries. But they rarely do.

  39. Ceian Schmidt says:

    Hi, I'm new to Singapore. Does anyone use IFS? Any comments?

    • Ceian,

      I am not familiar with this group. Feel free to contact them and ask these questions:

      1. How much do you charge for your services?
      2. Do you invest exclusively in low cost passive funds where possible?

      If they suggest that they don't charge a fee, and that they are paid by fund companies instead, give them a miss. And if they invest in actively managed unit trusts instead of passive funds, you should also sidestep this company.

  40. Ceian Schmidt says:

    Does anyone use IFS? Are they any good, ie honest?

  41. IFA Abroad says:

    To clarify – FP commissions for their products are in line with other insurance companies for these types of products – Royal London, Generali, Skandia, etc.

  42. IFA Abroad says:

    "This smells of a personal fiduciary interest Mr. Hallam."

    I think you meant to say personal conflict of interest, but got confused and thought fiduciary was a bad thing. Not too surprising based on the rest of your comments.

    Vanguard does not pay anyone to recommend them. That's how they keep their fees so low compared to competitors. Since you're an advisor, call them up yourself and ask for an introducer's agreement, or if they can provide you with any finder's fees for sending them business. They will tell you no for both.

    Vanguard has $1.6 trillion under management now – do you know how much the founder of a company of this size would be worth if it was run like any other Wall Street firm? BlackRock's CEO made about $22 million in 2011 alone. Based on the size of the company, Bogle's net worth should be up there with Gates and Buffett right now. Criticizing the founder of one of the best companies in the world for amassing $80 million is absolutely ridiculous.

    Be honest and tell your clients the truth about how much you make when you sell them these products, and let them decide whether it's fair, and whether a payment like that could influence your opinion of how great the product is.

  43. biff says:

    My wife and I "invested" in a PIM product through Royal London 360. They had done due dillgence, or so they said, on Axiom Legal Financing Fund and approved it for sale by their IFA's wthin 9 months we lost our entire investment of $100,000 in this fund. As I remember Royal London is one of those fine firms Chris applauds.

    Sorry, they said, some investments go down! Maybe 10% or 20% but 100% in one day!!!

    Help me understand, Chris. Thank you.

  44. Fred says:

    Hi, Does anyone know of a company called IFS? Are they any good?

    • Hi Fred,

      I am not familiar with this group. Feel free to contact them and ask these questions:

      1. How much do you charge for your services? If they charge more than 1.25%, this is too much.
      2. Do you invest exclusively in low cost passive funds where possible?

      If they suggest that they don't charge a fee, and that they are paid by fund companies instead, give them a miss. And if they invest in actively managed unit trusts instead of passive funds, you should also sidestep this company.

  45. Hi Chris,

    If you sell high-commission paying financial products through a company like Friends Provident then I can understand how upset you would be to see the products fully explained. The book I wrote (which you described as "puny" "fiction" and a "novel" simply references the shared philosophy of some of the world's greatest investment minds: Warren Buffett, Princeton Economics professor Burton Malkiel, Yale's endowment fund manager David Swensen, Harvard's chief investment officer Jack Meyer and a slew of Nobel Prize winners in Economics.

    As a commission-based salesperson, you are indirectly referring to those men as "puny" creators of "fiction" when deprecating a book that simply compiles their consistent philosophy: that high-cost commission paying investment products (such as those you sell) are unfair options for investors.

    Neither I nor Warren Buffett nor any Nobel Prize winner in Economics is on Vanguard's payroll. But we all admire a financial service company that (unlike the products you sell) puts investors first. Vanguard is run much like a non-profit organization. Nobody owns Vanguard shares. There are no public shareholders. Like a co-op, the owners are the (big and small) investors who buy the funds. This is why John Bogle, the founder, is referred by the American press as Saint Jack.

    Because of this corporate structure, you can own a Vanguard portfolio for less than 15 basis points each year, compared to 350 basis points for a Friends Provident variable annuity.

    What "IFA Abroad" suggested about Bogle's personal net worth is true. If Vanguard were a regular "for profit" public, traded company or a private one like Fidelity, then Bogle's net worth would be in the billions (as is Fidelity's Johnson family's wealth).

    As it stands, his $80 million net worth is easily explained by a strong (though unexceptional) salary and a frugal lifestyle. Bogle has been working and writing for 60 years. If you invested $28,000 per year for 60 years at 9.8% per year (roughly the 60 year market average) you would have more money than Bogle: $85 million.

    However, if someone had sold you the products you are selling others, you would pay at least 3% more in annual fees (including Friends Provident costs and actively managed fund expense ratios) and would wind up with $22 million. The long term cost of that extra 3% annual fee, in this case, would be $63 million.

    Granted, most of us invest much less than $28,000 each year, and we won't likely be investing as long, but the tyranny of extra fees becomes very clear with this example.

    It may be time for you to stop challenging me and continue learning instead. Instead of continuing to sell high-commission products, you could opt for products that will better serve your clients. I have written profiles on this blog about such advisors/firms (guys like Tony Noto, Robert Wasilewski, and the firm, Assetbuilder).

    Vanguard is not the only option. There are "for profit" investment service providers that charge more than Vanguard (because yes, they exist to make a profit) but they charge far less than the variable annuity Friends Provident scheme that I will continue to work very hard to criticize.

    As a personal finance columnist with The Globe and Mail, Canadian Business magazine and Assetbuilder (a competitor of Vanguard's) I have never, in my life, seen anything as expensive and unfair as the variable annuity investments sold by Friends Provident.

    Just because a business grows large (Zurich International, for example) doesn't mean that all of its products admirably serve people in a healthy way. Just look at McDonalds, Coca-Cola and the variable annuities sold by Zurich and FP.

    I believe, by your impassioned response, that your heart is in the right place. But you need to keep learning. I have faith that you could make the right professional decision, going forward, to model the integrity of some great advisors. But you would have to be prepared to make less off the backs of others.

    Cheers,

    Andrew

  46. Debrilepe says:

    Extremely well said, Andrew! BTW, spoke to our FA whom we started working with a few months back… AND… he told us we should be investing in Index Funds & Index ETFs… for all the reasons you mention in your "novel." ;-)) We also own a few stocks through him, which are all good solid companies and have done very well.

    At one point I asked him about these kinds unit trusts, (or whatever they're called,) his response was,

    "Stay clear of them! You'll never hear me speak about them, I don't own them and don't recommend them."

    Great to hear that out of an FA! Unfortunately, a bit late for us now though. I wish we'd been given that advice several years ago.

    Anyway Andrew, I applaud your response to Chris above, and your "novel" should be become bedtime reading to all the young ones out there, so that they don't make the same mistakes their parents did.

    Debrilepe

    • Thank you Debrilepe,

      And I'm thrilled to hear that you have an upstanding advisor. They aren't easy to find. Hang on to this one and help to promote his/her business if you can. It sounds well-deserved, and your advisor's profit margins wouldn't be that high.

  47. Message to Biff:

    You have an investment account with Royal London 360, an insurance company based in the Isle of Man, a subsidiary of Royal London UK, a large and historical company, with good customer service and some good products.

    PIMS it's an expensive investment account in open architecture, which means you can buy almost any asset you want, with few exceptions. This product is for savers/investors with many years of experience, and to be managed by REAL investment managers not by wheeler-dealers.

    Like many people here, your "financial adviser":

    1- may have "forgotten" to explain the fees of PIMS, which start at 8.5% paid initially or in several years;

    2- may have "forgotten" to explain the investment risk of having all your money in one fund only (Axiom);

    3- and may have "forgotten" to explain the jurisdiction risk of Axiom, as this particular fund is a incorporated in the Cayman Islands, were regulation, controls and checks-and-balances are almost non-existent. By the way, this makes it the right place to create ponzi schemes and other type of frauds. Now you understand why PIMS is for investor with experience.

    4- Finally, he may have told you or not that he made a commission by selling you PIMS, and another commission by selling you Axiom inside of PIMS.

    A few months back my firm was approached by perfect English accent well dressed Axiom people. Even do I explained that my firms' internal rules do not allow us to invest in funds domiciled in the BVI or Cayman, their answer was "but everybody is doing it!".

    I recommend to follow-up directly with Royal London to see if you can recover some of the money. According to this website http://www.offshorealert.com/axiom-legal-financin… it seems there must be little money available.

    Good luck.

    Sincerly

    Afonso

  48. Honest Adviser says:

    If that means me then yes, I do.

    Fortunately, I actually understand the product. I cant hold an account from where I live with any of the firms you mention. Even if I could they would be vastly more expensive as my bank charges $65 to make an overseas transfer. I am 34 and save money monthly so the free credit card payment facility is excellent.

  49. Debrilepe says:

    Well so far so good with this FA. He's not in S'pore, so we don't have the tax haven that S'pore offers, but I feel that he has been upfront with us from the start. I understand and am comfortable with the taxes we pay. His fees were made clear from the start, and are less than 1% of the assets we have with him. He was referred to me by the accountant we use in our home country, so I figure if the accountant uses him, he's likely OK. I'll give him the 1-year test, and if after that time, I still feel the same way, and he doesn't disappoint, then I'll post his name on your blog.

  50. Ceian Schmidt says:

    Thanks for the reply Andrew. Sorry I posted 2'ce, i thought it didn't go through 1st time so ended in 2 postings. I'll talk to the guy who called & see what he says. Feel like I understand a bit more after reading your blog. Will download your book and read it too. Thanks for trying to keep the public informed. BTW, hubby also posted with same question. Never done this blog thing before, & we thought didn't know how to do it. Not very tech savvy here, you know. HA HA HA

  51. biff says:

    Thank you Alfonso. I have been trying to track down who might be liable for the Axiom losses. My IFA, Platinum Financial Services in Hong Kong says not them. Their due diligence was based on Royal Londons due dilligence who relied on Caymen Islands regulators vetting of Axiom Fund. It appears all those levels of due diligence are all just smoke and mirrors. They were all misled by Axiom Fund. When the Fund was asked How are things going. The fox in the chicken coop said: all's just fine in here. When the last chicken was plucked, all the due diligence folks said Dear me, the fox was lying.

    I was sucked into the romance of "off-shore' investing.. Dowhat the rch are doing. Save money on taxes. My experience is: keep your money at home. pay your taxes and get on with your life. Its too difficult to beat the system..

  52. Juarez Barros says:

    Andrew,

    I have just been offered an investment / retirement option by Global Index, with Friends and Provident International, as an expat working in the Oil & Gas industry, with money in the bank. I have no deep knowledge on investments options and have, to date, trying to invest my savings in the housing market in general. As per your comments, I see this is probably not the best option to my savings.

    Thanks

    Best regards

    Juarez

  53. Carrie says:

    Hi Andrew,

    I am in similar position as Gading, having paid Friends Provident $1500/month for 1 year of the 18 months, then upped my monthly premium to $2000/month, which renewed the 18 month cycle, and I have 6 months left. The total I have paid into it is $30,000. I hate to admit that I'm not sure I understand enough about the charges to do the math and figure out when/how I should pull my money – which is why I went with an advisor! I am a Canadian living in Jakarta – do you have any recommendations of who I could talk to who could advise me on how to proceed?

  54. Hi Carrie,

    Reading my book would be a place to start to understand why you would want to invest in low cost ETFs (indexes). I did my best to make it easily understandable.

    Then you could open a discount brokerage account in Singapore—without necessarily visiting Singapore. And you could manage it online…which would take just a few minutes a year, and is incredibly simple. Here's the Amazon link. http://amzn.to/millionaireteacher

  55. Rachel Gawith says:

    I am in similar situation. Invested with them 5 years ago, withdrew some of funds, remaining policy went into administration with management firm behind it, Friends Provident claiming I owe them thousands in charges and interest on these charges as they had not been paid.

    If I even get anything from the fire sale of fund in administration will be a miracle and then still left with Friends Provident claiming I owe them thousands,

    What to do????

    • Rachel says:

      So as an update it seems the funds that Friends Provident were selling via IFA’s were fraudulent but basically all the millions invested has disappeared. The guy is being investigated but we are looking at getting 5p in the pound back if that. And might take years. I have surrendered the policy so it does not incur any further charges (took months to actually get this confirmed), however I am still apparently in debt to FPI for over £40,000 for early redemption charge/fees etc.

      So my question – is it likely FPI would sue me to recover this as I refuse to pay them another cent, they have already cost me thousands and thousands.

      Where would jurisdiction be – I am resident in Bulgaria, British Citizen, FPI are legally based where??? IOM???

      Do I have a good claim to avoid these charges as the fund turned out to fraudulent, they made thousands already in commissions?

  56. Dav says:

    Hi Andrew,

    I have been considering investing in a savings plan with Royal London 360 (quantum plan). I was initially very enthusiastic about investing in this plan until I started reading some of the comments on this website.

    The fees I would be charged are around 1% plus the AMC charge for what ever fund I decide to invest in. Also, as some of your readers know, there is surrender fees if you want to withdraw your initial deposits (18 months worth).

    Would you consider the above structure to be unreasonable? If so what is the alternative? I notice Vanguard is only available in certain countries and I am currently an expat residing in South East Asia. Do you have any recommendations?

    Also – is your book available in electronic format?

    Cheers

    Dav

  57. Keethan says:

    Ok, so this is pretty much a “others are bad, read my book” type of blog.

    1st thing 1st. When a regular savings plan is being signed, you should read carefully the page called “charges” and if you have any misunderstandings you should ask further questions.

    2nd. I no man’s world, an index will ever over-perform the equity market. So if you are chasing returns of 10%, you have to go towards other areas than bonds and indexes.

    It’s so easy to throw mud when you are selling crap yourself.

    Cheers !

    • Thank you for you comment Keethan. The first articles on this topic were published on this blog long before my book was conceived. Unfortunately, only those who sell these products appear disgruntled by these critical articles. I’m sorry if lifting the veil on these schemes has affected your income, but it was bound to happen.

      Cheers,
      Andrew

  58. Rod says:

    Hi Andrew and all,

    I wanted to say thanks to you and the other contributors on this blog for the explanations on those nasty products – a necessary eye opener….

    Before moving on and closing permanently my plan (4 years into a 20 years Generali vision…) I just had a last minute question: is it possible / has anyone tried to convert or shorten the duration of a plan (for example 20 to 5 years) instead of purely shutting it done?
    I guess that is hardly possible considering the fees being paid upfront… But just in case someone would have tried that?
    Thank you,

    Rod

  59. Jon says:

    Andrew
    Hi, great blog!

    You mention Vanguard and Vikers a bit in this blog.
    Though I currently live in South America.
    Any recomendations on where to invest my money.
    I have also just opened an offshore account with Lloyds.

    I am from NZ and am currently living and working in the South of Argentina (for the short term).

    Thanks
    Jon

    • Hi Jon,

      It took me a while to find an answer for you. But let me know if this is helpful: : http://www.moneyweb.co.za/moneyweb-safm-market-update/r-1521

      • Jon says:

        Hi Andrew.

        Thanks for think link, it was really really good!!
        This is exactly something that I am after (Low fee diverse index funds)

        Though……It seems to be availible to people in South Africa.
        Is there anything similar that you know of in South America (Argentina).

        i.e. something better than me having to go down the FPIL route, where I can get a good offshore tax friendly investment and not lose out on fees.

        Cheers & Thanks again.

        Jon.

        • Hi Jon,

          Regardless of where you are in the world, you could build a portfolio of low cost exchange traded funds via TD International, based in Luxembourg. Here’s the link: http://int.tddirectinvesting.com/

          • Jon says:

            Hi Andrew, Thanks so so much for the info, I have been looking into it! Cheers!

            So…from the Blog, I am guess you don´t like these kinds of products, Is that correct right?

            For example: to name the major ones (just been doing some reseach) 🙂

            – Royal Skandia (MSA/MPA)
            – Friends Provident Int (Premier & Ultra)
            – General Int Visions (External Fund Investments)
            – Hansard Intl (Aspire)
            – Royal London 360 (Paragon & Quantum
            – Zurich Vista III (Mirror Fund Investments)

            Some of these products in my opinion seem to be quite ¨”good products”
            i.e. options to invest in a number of funds in a tax friendly environments, where a normal everyday person would not have that option etc….
            Though the BIG question mark is the FEES.

            So for a regualr saver i.e $500-$700 a month you would stay totally clear of all of these (just to be 100% sure).

            Cheers again Jon.

          • None of them are good products unfortunately Jon. There are many other tax friendly options available to expats. And being able to move from fund to fund “for free” only looks like a privilege when the respective company gouges investors on everything else. Why should switching funds ever cost investors money? Ever? I chuckle at the way they promote this.

  60. Luis says:

    Dear Andrew

    I am desperate and I need your help. I have an investement in Royal London 360, I am trying to wthdraw my moment due to sensitive personal reasons and I have been told that I cannot withdraw any money until I finish my initial period which will take place in March 2014. I would like to know whether this is true or it is only a tactic to keep me with the investment during some time.

    This investment is in mutual fonds.

    I would like to know how eary is to cancel the investment, if there is a time where this can be done easily. Any support advice?

    Thank you

  61. Plan Holder says:

    Although your analysis is correct on the face, your conclusion is flawed. Freinds Provident investment plans do have there value for some expats. For example, if I work for BP and am paid in dollars, but receive my bonus in pounds Friends actually will save you money if you are using multiple currencies. Where as having to wire and convert you currency all the time generally will cost you 5% off the top every single time. So … your analysis although correct that they do charge a much higher rate than Vanguard for example is true, it doesn´t mean you would make more money in the long run as you suggested with your comparison.

    • Plan Holder

      Let me give you an interesting example. Imagine two investment firms.

      One firm actually gives you a 50 cent bonus for every dollar you invest. In other words, they provide a 50% bonus every year on the money you deposit. Imagine this firm charging fees of 1.5% per year (less than half what someone would pay with FP)

      Imagine a second firm not giving any kind of bonus, but charging investors just 0.2% annually to invest (baskets of index funds would cost this little).

      If they each invested $10,000 per year, but the employee at firm one had a $5000 bonus added every year by the employer (a 50 cent match on every dollar invested equals a 50% bonus on the deposits) then which which investor would have more money after 40 years?

      Ironically, it would be the investor without the 50% annual matching contribution. Your currency wiring example of 5% is relative peanuts, of course. When doing the math, you’ll recognize that the biggest drag (or perk, if it’s in your favor) is the annual expense.

      To play this scenario yourself, try the compound interest calculator and http://www.moneychimp.com

      I’m actually going to use your example in my next book (which I’m currently writing) because many people confuse percentages saved annually (or bonus percentages given) with ongoing account fee costs.

      I can see how you would do such a thing. It’s a total paradox, revealed only when you actually do the math.

      THanks,
      Andrew

  62. antoine says:

    Hi Andrew,

    It seems that you have access to investment platforms that are totally free of charge.

    Can you please tell me which one you use?
    Do you use Vickers?
    Are you sure there is no fee?

    I am extremely interested

    I live in Thailand and I have no access to Singaporean Banks

    I am considering an FPI saving account.

    What I don t understand is that there is no establishment charge.

    Thanks in advance for your answer

    • Hi Antoine,

      There are fees associated with all investment platforms. But nobody should ever have to pay establishment fees. That’s silly stuff.

      With DBS Vickers, you would pay 0.35% commission to make purchases, and the internal costs of the ETFs used could be as low as 0.2% per year.

      Let me give you an example of why you should reconsider a FP account.

      While each ILAS Pension Provider has subtle differences, most allure investors with the promise of loyalty bonuses.
      To dramatize an example, I’ll introduce you to a hypothetical bonus platform that’s far more generous than anything offered by an offshore pension plan. It’s going to look appealing, but don’t be fooled.

      Here goes:

      If you invest with Hallam’s offshore pension, we’ll guarantee a 50 percent bonus on each cash deposit. In other words, if you invest $10,000 each year, we’ll chip in an extra 50 percent, ramping your invested proceeds to $15,000 per year.
      Annual management charges are just 1.5 percent per year. How can you lose when receiving a 50 percent annual bonus?

      In the fantasy broker scenario above, I haven’t included costs of the actively managed funds. If the fund expenses added another 2% per year, total costs for the account would run 3.5 percent per year (1.5% for the management fee plus 2% for the fund expense ratios).

      Still, that 50 percent bonus appears to trump the comparatively small 3.5 percent annual account charge.
      Keep in mind, no ILAS firm offers a 50 percent bonus every year on annual deposits. But even if one did, investors would still be getting fleeced. Deception with numbers is an art. Not receiving a bonus, but paying just .02 percent in annual fees, would reap far greater rewards.

      Here’s the fantasy bonus pension alongside an indexed portfolio:

      Investor Has $10,000 Per Year To Invest
      Fantasy Offshore 50% Bonus Pension Versus Low Cost Indexed Portfolio

      Assume Global Markets Average: 10%
      Amount Annually Invested By Client $10,000
      Annual Bonus Paid On Deposits 50% for the fantasy pension; 0% for the indexed portfolio
      Total Annual Amount Invested After Bonus $15,000 for the fantasy pension; $10,000 for the indexed portfolio
      Annual Fees Paid On Total Portfolio Value 3.5% for the fantasy pension; 0.2% for the indexed portfolio
      Annual Returns After Fees 6.5% for the fantasy pension; 9.8% for the indexed portfolio
      Total Portfolio Value After 30 Years $1,379,838 for the fantasy pension; $1,739,129 for the indexed portfolio

      To be clear, no offshore pension provider offers a 50% annual bonus on deposits. But even if one did, the investor could still end up hundreds of thousands of dollars poorer.
      Bonuses offered on money deposited or promises of free money transfers are about as appealing as Arthur Miller’s character, Abigail Williams, in the classic play The Crucible. While pretty on the outside, her hidden soul wrapped ropes around innocent necks.
      While high portfolio fees won’t end your life, they can make retirement much less pleasant.

  63. JohnS says:

    Andrew,

    Successful you may be but I am dumbfounded as to why you have taken it upon yourself to give financial advice here on this blog. I am also shocked that people actually come on here and ask for your opinion. You are/were teacher, and to my knowledge, not a qualified and regulated Financial Adviser. Yes, there are fees involved in offshore products, some more so than others, but there is a trade off. The point of a savings plan is to save; the average Joe Bloggs does not have the capacity nor intention to do so, therefore having a disciplined contract over a set time frame provides them with this. Further, I see comments on here about fees and exiting early. If you are transparent (as a Financial Adviser) and explain that the offshore savings plans alluded to are to be treated as a pension, only have the flexibilities added in case you find yourself not being able to keep up for a period of time, then there is no issue. People who ‘want to save for a short while’ then complain because the Friends Provident contract means they have to keep funding until the end, are they type of people who will fail and fall well short of their retirement goals. Do you join a company pension scheme for your 15 year career at a multi-national company and ask your HR Manager to stop putting a portion of your salary in to your pension scheme because you only want to save every so often on your terms? Please! I have worked in the offshore market for some time and I am clear and transparent in the way I explain fees. I have yet to find a client who has had a long term savings plan mature (REGARDLESS OF FEES) and honestly tell me he/she would have saved more had he done it their way. It’s not about what you can net, it’s about what you physically put away over 15-20 years etc. Ask yourself this question people. Are any of you that disciplined you will set up a standing order for 15 years from one bank to another, take the time to invest the money in the poor fund selection your bank provides and constantly manage it? If the answer is yes then don’t bother with an offshore savings account but don’t come on here for financial advice either.

    • Thank you for your comment John.

      Where you see a pension, I see a high commission trap. No respectable corporate pension in North America charges 3.5% per year. Instead, their internal charges run half a percent or less. In Britain (where I believe you are from) these private pensions are fleecing investors silly. You can view a BBC Panorama documentary about similar products here: http://www.youtube.com/watch?v=pc-gGmBcG78

      You’re selling a racket costing at least 3.5% annually including internal fund costs. If global markets average 7% and inflation averages 3.5% (which is lower than the past 40 year average) then your investors won’t make a penny, in real (after inflation) returns including fund management costs. But selling such platforms serve your needs, and your corporation’s needs. Over a working career, somebody investing $3000 per month into such a platform will have less money than somebody else investing $1000 per month into a far cheaper and more ethical platform. You might be a good guy who doesn’t recognize this. On the other hand, you may understand how devastating such fees are over time and have rationalized for a massive paycheck. If that’s the case, you may eventually wrestle with your conscience. I hope the better half wins. You don’t have to sell these things John. You could set up a business to charge 1% per year on assets, build ETF portfolios for clients, and work with them every quarter on a goal setting process. Play with a compounding interest calculator, and read a Nobel Prize winning economist’s study in, The Arithmetic of Active Management. http://www.stanford.edu/~wfsharpe/art/active/active.htm

      You may make a decision, eventually, to serve. I hope so.

      Andrew

  64. Julius says:

    Hello Mr Hallam, I’m working with MetLife based in Dubai, I was wondering if you could give me your email so I could forward a sample policy to you w/c I normally provide to my would be clients. I just wanted to know if I’m providing a great product for my clients. It’s a life insurance combined w/ investment. I would really appreciate your input. Thanks

    • Hi Julius,

      From U.S. sold variable annuities to the offshore pensions offered by groups like Friends Provident, I’ve never seen an investment combined with an insurance policy that makes any mathematical sense. They pay high commissions to brokers, but because of their high fees, perform poorly. Including expense ratios and platform costs, your clients are paying roughly 3 percent per year. For those hoping to make money, these products are extremely inefficient.

  65. Imagine a “financial advisor” selling investment linked assurance schemes to 185 people in a single month. Well, here’s a guy who appears to have done just that…and he seems to be proud of it: http://andrewhallam.com/2010/11/beware-of-zurich-international/

  66. Fatima says:

    Hi,
    I’m in UAE and i did the frends Provident Int. At the beginning, they told me that afre 17 month, i can withdrawal all my money. i have alredy save 9000 Dollar now i want to cancel and take all my make back. But now the told me i need to pay penality and it is better to not cancel. Do you know how much should i pay for the penality???

    • Hi Fatima,

      Unfortunately (as is often the case) they lied to you when you started the investment policy. To find out what the penalty would be, you will have to ask the person who sold you the product. And after you get the number, be sure to tell the person that their mother would be ashamed of them for misleading people…and costing them money, just to earn a fat commission.

      Andrew

  67. A gullible Devere/FPI Client says:

    Hi there Andrew.

    Thanks for your website and all the advice you’ve provided (as well as the discussion opened up via the forums)- I am currently a down-hearted client of the Friends Provident Premier Advance plan, as sold to me by DeVere.

    After reading through the comments and trying to understand them as thoroughly as I can, I know I want to leave.
    However, my only confusion is when!

    I’m currently 10 months into the 25 year plan.
    As mentioned before, there is a bonus for the first 18 months.

    So far I have invested $5430 dollars, and am currently still sending $543 per month.

    If I leave now, I lose it all, but stop sending good money after bad.

    As you know, with every year that goes by the surrender charge reduces, but I’ll have put considerably more in.

    The alternative that I can see is to try to change my monthly payment so that it’s the lowest possible, and wait until the surrender charge/total means I’ve broken even (how likely is that?). I’m not even sure it’s possible to lower the amount per month during the first 18 months.
    The other thing I’ve heard about is making it ‘paid up’ once the 18 months are done, but I’m not sure what this involves, and whether the subsequent charges would simply make the money dwindle into nothing.

    If I choose to stop paying them immediately, do I have to notify them of this? Or can I just stop the SO from my current account?

    I’d love to hear if anyone knows a decent advisor who could help me set up decent long and short term investments in ETFs, as I’ve heard so much praise for them.
    I am British, and in my mid 20s.

    Thanks in advance!

    • Devere Client,

      I think you’ll have to speak to your advisor and see what the redemption value would be at different stages. Only then will you be able to make a decision about what to do next.

      By the way, when you signed up for this policy, did the advisor make it clear what you would pay if you bailed out early?

      Andrew

      • A gullible Devere/FPI Client says:

        Hi Andrew thanks for your quick reply!

        I’m ashamed to admit this; I was naive and gullible when it came to signing up to the financial products that my advisor gave me- whilst I’m normally savvy when it comes to finances, my guard was down as I considered my advisor to be a very close ‘friend’ for a couple of years before we had a financial meeting.

        Looking back through the documents I signed, the details of the surrender charges at each year are indeed listed, as well as many of the charges (I’m not sure all those mentioned on this forum are apparent, but certainly some of the main ones).
        I was simply sweet-talked into glossing over the negative aspects of the contract (the assumption being that I would carry out the full term, therefore the surrender charges seeming to have less gravity than they really should have), whilst the positive aspects (favourable projections for the amount of money I’d receive at the end of the plan, as well as the 18 month bonus) were highlighted.

        The surrender charges in my case are as follows:

        Within the first year, 100% surrender- this is what I’m seriously considering.
        From the 1st to the 8th years, the surrender value is 93% decreasing by 3% each year.
        From the 9th to 11th years it then drops by 4% each year (from 68% in the 9th year to 60% in the 11th year)
        From the 12th to the 19th years it then drops by 3% again each year (from 57% in the 12th year to 36% in the 19th year)
        From then onwards it drops 6% each year from the 20th to the 24th year, (from 30% in the 20th year to 6% in the 24th and final year)

        Earlier on in the contract it gives projection values as to what the surrender value would be assuming an annual growth of 7% after deduction of fees and charges, and assuming I still put in $543 per month (if I was to carry on I would instead try to find out what the minimum amount I could invest would be, which would affect the projection).

        The surrender values based on those assumptions are as follows:

        From the 1st year onwards:

        1 – amount invested ($) = 6,516, surrender charge = 384
        2 – ai = 13,032, sc = 4,156
        3 – ai = 19,548, sc = 11,368
        4 – ai = 26,064, sc = 19,546
        5 – ai = 32,580, sc = 27,861
        6 – ai = 39,096, sc = 36,735
        7 – ai = 45,612, sc = 46,208
        8 – ai = 52,128, sc = 56,321
        etc…

        I feel as though the fund would have to perform extremely well in order for me to get out without losing any more of my cash.
        He’s invested me in mirror funds- mainly in Jupiter Merlin international, but the rest in umbrella funds for companies in Korea, Thailand, Japan, and finally a global property fund.

        What would you suggest?

        Many thanks again in advance!

        • Hmmm, that does look pretty rough. Unfortunately, I can’t give advice. The Monetary Association of Singapore has received complaints about me from the advisors that sell such products. I’ve been asked not to provide any opinions online, nor am I supposed to suggest what I would do in your place. I understand I’ve hurt the revenue (of offshore pension sellers).

          But here’s something you could think about. Costs for this platform will be roughly 3.5% more each year than a lower cost platform would. Use a compound interest calculator at http://www.moneychimp.com to plug in some different rates of return: perhaps using 8% in one scenario and 4.5% in another. Play with some different time periods to see how long it would take to recoup any money lost. For example, assume you had a $50,000 investment, and that you would only get back $30,000 if you pulled out. Compare how $50,000 would grow over 25 years at 4.5% per year, versus $30,000 per year at 8% per year. How long would it take for the lesser figure ($30,000 in this case, growing at 8%) to exceed the value of the $50,000 growing at 4.5% per year. Play with your own specific variables, and please share what you come up with. My apologies for not being more helpful. I would like to be of more help, but I cannot.

          Andrew

          • You’re right, that was pretty hard core, and to be honest, I’m not sure how much it added to the bottom line. It didn’t take me too long to figure out how crazy that was. It makes me chuckle when I think about it today.

  68. Andre Erasmus says:

    Dear Andrew

    It is with ineterst that I read these posts on your website.

    I have twice written to Friends Provident previously, but have never received a reply. Not even a confirmation that my concerns were received.
    Needless to say – deeply disappointed. I have read the above comments and it seems that there are other people out there who have also been scammed by Friends.
    I was duped by an “advisor” from deVere in Thailand in 2010 into entering into a policy to top up my inevestment palnning. My monthly contributions being $1,000. I have now been informed, however, that the policy’s actual value is almost zero. All my contributions have gone to “administration fees.” And, I was told, that this is normal. After around 12 years, I might actually break even! $48,000 for administration fees in 4 years???? Unbelievable!
    Now, I am not a financial expert and I was told by the broker from deVere that FP is one of the safest funds available. Like an idiot, I believed him. I was never informed that over 80% of contributions are swallowed up by “administration fees” Really??? He informed me that I simply have no choice. I can stop payments, but then I will lose everything I have “invested” in this scam.
    I fully understand and appreciate that a small percentage of contributions go towards administration fees, commissions, etc. However, to now be informed that the first 10 years of contributions are solely for this sounds impossible. Have I known this before, I would have obviously never been tricked into this investment scam.
    Is there honestly no option for me at all? I have tried discussing this with the brokers before, but they only try to pressurize me in taking out additional policies or increase my premiums (of course, these will only go to admin fees). I have and will continue to warn all my expatriate friends and colleagues against both the deVere and Friends Provident scam. despite being this being third time I write to you. But, I will continue to do so and also contact as many people as possible in an effort to somehow get some of money back from this scheme.

    I know: “a fool and his money” and, I feel like quite an idiot have been taken for such a ride. But, do you have any advice for me to possibly get some of money back?

    Sincerely,

    Andre Erasmus

    • Hi Andre,

      One of my latest blog posts is about a guy who got his money back. I am surprised that your value would be nothing, upon redemption. Also, an entire decade’s worth of payments won’t go towards fees (not even with a Friends Provident platform). So your situation does sound a bit fishy. I suggest you document all email contacts (or otherwise) that you have had with the advisor, then go directly to Friends Provident with the issue. Your advisor doesn’t work for Friends Provident, but receives massive commissions from them to sell such products. Good luck, and keep me posted.

      Andrew

      • Bart Versteijnen says:

        Dear Andrew,
        Just read your reply to Andre in where you mentioned you wrote about a guy who got his money back from Friends Provident.

        Could you tell me how and how much of his initial 18 months he got back and what his circumstances were?

        I have a FPI Premier Advance with USD 27000 paid up in 18 months. Although my statement says the plan is now worth USD 40500, that is just the USD 1500 x 18 months plus the 50% extra (USD 750) that they give you as a ‘bonus’.

        Going through my statements I see lots of charges on each fund but apart from the bonus my plan has increased in value a total of 0% after 18 months. My Devere guy did explain the 18 months as crucial in the sense that I would need to contribute 5 years to ‘keep’ the bonus but it is only after cleaning up my papers that I sat down and read through the policy only to learn of the surrender fees. This has shocked me to the core- while planning for the future I find out I have made the worst financial decision of my life and I am ready to do what it takes to get my money back in full.

        I did read that the FPI Premier Advance out of Isle of Man is titled a ‘Savings Plan’ and I am thinking that as savings plans go, one should be able to take the money out. Surely is there a lawyer out there who could look up the definition and maybe sue on this bases? Also, if it comes to that, in which jurisdiction should a case be filed.

        I called my Devere guy who explained he had ‘explicitly gone over this with me a number of times’ and said that the money is still there and not ‘effectively gone’ as I would call it when I cannot use it now and do not know if it will still be there in full after 20 years. He said it is a pension plan with me in mind and to keep contributing. I can’t because I will not contribute money to a company with these terms, I simply can’t override and ignore my gut feeling that this is wrong.

        I’m devestated and feel my money is in prison and I would need someone who could make a calculation forecasting what is the best option: A contribute the minimum term of USD 300/month to term and withdraw USD 900 quarterly to get it back (note the penalties for reduction in the policy), or B stop contributing and let FPI surrender it automatically (this happens when no payments are made into the plan) or C surrender now and cut my losses and lose 90% of my hard earned cash.

        I feel these kind of practices should be forbidden and those responsible locked away.

        Please Andrew or anybody out there if you know of a loophole out of this one, please do share it on this forum or email me direct [email protected]

        Thanks in advance and best regards,
        Bart Versteijnen

  69. JW says:

    I narrowly avoided buying one of these from a financial advisor in Dubai. I did a similar analysis and came to the conclusion the fees were outrageous and gave it a miss. Unfortunately some of my colleagues at the time weren’t so lucky…

  70. philip says:

    Just to point out the Friend Provident International (IoM) appear to be crooks.
    They work through dishonest IFAs who rarely disclose any of the fees or penalties.
    The IFA and FPI conspire together to rake in the highest fees while no allowing you any real information.
    My IFA (an out and out crook) invested my money in whatever paid him the highest hidden fees.
    Many of the companies have gone to the wall.

    The money I have left (about 1/3 of my pension) I cannot get any details of how or when I can transfer it out.
    FPI care completely uncooperative, and refesed to give direct answers on when or how I can transfer my money out without penalty.

    If you use any IFA who suggests using FPI, he is a crook trying to steal your money.
    If you manage to invest in FPI directly, you need mental help.

    Really, these guys are just crooks.
    How they can live with themselves, stealing from pensioners, I just can’t understand.

  71. Thu Dang says:

    Hi Andrew,

    I bought the Friend Provident policy in 2010 in Malaysia, without reading carefully the fees section. Now I live in US, and want to surrender the policy. I just re-read the policy and found out that the fees are too high, and I can’t get all the money back. I would like to ask if I surrender now, accept the surrender value, can I claim losses in US tax?

    Thanks, Thu

  72. Wololo says:

    For people who stumble upon this blog looking for information related to those ILAS schemes, in particular Royal London 360, I have written a tool that people can use to compare the RL360 fees with their “other” investment platform. This gives a clear view of the actual fees, and numbers. You can calculate how much you would get out of the plan VS your other investment platform, and, maybe more importantly, it can also simulate a “leave now and take a loss” scenario to see if it’s worth stopping your plan in the middle of it.
    The tools should be flexible enough to be able to compute other ILAS values as well, I believe:
    http://howtoretireearly.net/ilas.php

  73. Mark says:

    I would add a few additional points to just reading the “fine print”… after all it is your money we’re taking about here!

    – work out the costs in excel (compute how you understand it will be charged and have it verified by your advisor) if they struggle to explain this then walk away.
    – Validate this against what existing clients are seeing on thier statements.

    There are additional advantages to these types of scheme in the tax treatments they recieve from certain national authorities, but you should still ensure that the fees being paid and the favourable tax treatment recieved make sense over the life of the scheme. In the posts above I can see alot of big fees being quoted therefore I’d also recommend you negotiate. These policies are available from a wide number of advisors, get 2 or 3 on the case and play them off against one another to drive down the fees. (be prepared to walk away)

    The scheme we looked at was a lump sum policy, 0.85% for 8 years as a fee for the product (this is based on the initial contribution, not the raising market value of the fund) a flat admin fee of approx 500 USD per quarter (indexed for inflation…let’s see how that is treated in these deflationary times!) and thats it. Advisors will offer thier Portfolio Management services for and extra 1% etc.. this advise can be obtained for free elsewhere.. and if you select right you shouldn’t need to change that often. think Macro!

    Our evaluation focuses on the favourable tax treatment given to proceeds from life policies which would not be the same as an outright investment in funds (unlike the case which the article outlines)

    The other thing to watch on asset allocation within these funds…some will offer advisors (not you…the guy you’re paying) kick backs to invest money with them, do your homework on the funds that are being recommended to you as it is not uncommon for there to be one recommendation in there which is being “incentivised”. (Stay away from new startups in unproven sectors with complex org structures (but that’s common sense, right?)

    There are all sort of these schemes out there make sure you are doing it for the right reasons and do the numbers yourself before parting with your cash, join and investment club or use your network to validate schemes you hear about because it’s important to compare like for like. generally the fees on these schemes are high and there needs to be an additional benefit as opposed to buying the index directly (eg. Vanguard ETF’s) if it’s not there, don’t do it.

    Good luck.

  74. Craig says:

    Hi,
    I have a friends provident premier plan through devere. After reading this and other websites I contacted Devere and asked about the charges involoved. They contacted friends provident and FP came back with, my investestment only needs to make above -0.06% over the life of the plan (25 years) to break even and get my money back at the end. Yes that a minus sign there. This is due to the bonuses that are part of the plan.
    How can that possibly be true?? I’ve read through my contract a few times and the only fee actually in numbers is the 1.2%. where are you getting that the plan works out above 3%? It mentions other charges but nobody says if or how much these are.
    Any help/information anybody can give would be helpful.
    Thanks

    • Craig,

      You need to also count the expense ratios on the funds you own. You are likely paying at least 1.8% per year on those. So that puts your annual costs at 3%. I believe the Friends Provident Premier plan also has hefty fees for the first 18 months. All told, I believe you are going to pay roughly 9% in annual fees during the first 18 months of your plan.

      • Craig says:

        I’m 4 months in and will be cutting my losses then, I will lose every penny already invested but it seems like the best thing to do.
        I will bring up these charges when I speak to devere and friends provident and see what they say. Can you break that 9% down into more detail so I can have plenty of comeback when they try and sell it to me again and stop me leaving?

        Thank you for your time Andrew.

        • Craig,

          Here’s a quoted section from The Global Expatriate’s Guide To Investing.

          Steve warmed to a representative selling a Friends Provident scheme. Describing the perks, the representative told Steve he could earn loyalty bonuses after the 10th year. He also said Steve could switch his money between funds at no extra cost, and that the money would grow tax free, offshore.

          Steve felt confused by the advisor’s explanation of the pension’s inner workings: a percentage in fees taken here, a percentage taken there, reduced costs here, bonuses gained there. It looked messy. But Steve trusted the advisor. “I was really proud of myself for setting this up at first,” he said. “But I wish I knew then what I know now.” 12

          Steve’s money was invested in actively managed mutual funds, costing an average of 1.97 percent a year. Not only was he paying high costs for the funds, but his first 18 months of savings will bleed for 25 years.

          Steve invested $9,266 during the first year and a half. His Friends Provident Premier Advance plan charges 7.2 percent annually in fees for the first 18 months. External mutual fund costs deducted an additional 1.97 percent per year. As such, during his first year and a half, he paid gob-smacking costs of 9.17 percent annually. 13 Even if Steve’s investments had made 9 percent a year (before fees) during this 18-month period, Steve would have lost money.

          As stated in the contract, Friends Provident would reduce Steve’s annual charges by 6 percent on all deposits made after 18 months. But he’s stuck paying costs of 9.17 percent per year for 25 years on the first $9,266 he deposited. If the money Steve invested during the first 18 months made (before fees) 9.17 percent per year for 25 years, it would match Steve’s investment costs. His initial $9,266 becomes a corporate Dracula’s drinking fountain.

          Some people donate to charity; others give to family. Few place financial firms on their philanthropic lists.

  75. Charlie says:

    Hi all,

    It seems like deVere Group’s lies are catching up.
    The worlds biggest Ponzi scheme has been busted. Just google Belvedere, run by Kobus Kellerman.
    They had Billions of investors money. Turns out that the CEO of deVere was close to Kellerman and they sold funds to deVere clients.

    Tick, tock…

  76. Edgar Velez says:

    Hi Andrew.

    I have never feel more insecure in my life than now reading your post, I have put a big part of my savings in FP, I work in the oil industry and the panorama today is gray and blurry in the last months I have been thinking the deal with FP is not giving me something to leave after my retirement (I’m 37 and start at 31) and I would like to know what options do I have, I really don’t know much (or nothing) about finance, investments and so…

    I saw people on my company buying houses to rent, some other invest in stocks or create their own personal business and I thought I do my right choice but as I said I can be more insecure now.

    All the best and thanks for the eyes opener

    Edgar

  77. mark says:

    You mention the 101% return in the event of death (cash-in value). After that section in the policy it states cash:

    Cash-in value
    Your plan may be cashed-in at any time for its current
    bid value less an early cash-in charge and outstanding
    establishment charges in the first five years.

    Is this cash-in value different to the death cash-in value, as under this section it mentions bid value, which would include gains incurred during the life so far of the policy.

    • Hi Mark,

      If you died, your heirs would receive the value of the account, including any profits. If the account value was less than what you deposited, upon your death, your heirs would get one percent more than what you deposited.

      If you are alive, and you cash in, you will face heavy penalties (up to 80% of what the account is worth) if you cash in before the policy has expired.

  78. Darren says:

    Andrew,

    We are taking our money out of FPI that can be taken without penalty and putting it into our TD Direct account. I noticed that you recommended some funds for those people who have their money stuck with Zurich. Which funds do you recommended for the money that will remain with FPI? I am seeing their “advisor” this week and would like to be able to tell them which funds I want.

    • Hi Darren,

      If you provide me with a link to all of your fund Friends Provident fund options, I can have a look.

      Cheers,
      Andrew

      • Darren says:

        Thanks for the quick reply Andrew,

        This is what I currently have:

        P58 Templeton Bric (10%)
        J30 JPMorgan India (20%)
        P60 LeggMason Martin Currie Global (10%)
        S112 Jupiter Global Financials (10%)
        S114 Jupiter Merlin International B (50%)

        The above Jupiter Merlin Fund used to be in this one but has recently changed. To be honest I’m not entirely sure why.
        S258 Strategic Growth Fund (USD)

        Here’s a link to see the funds available with Friends Provident. My funds are with Isle of Man:

        http://www.fpinternational.com/fund-centre/factsheets-prices-and-performance-figures.jsp

        At TD Direct I am now currently holding VSB, VXC and am planning to purchase HXT or VCN this month. Am I on the right track??

        • Darien says:

          Hi Darren,

          Let me guess, you live in the Gulf and were sold this fund by Devere, right?
          I can tell, because the funds that start with an S (Jupiter, Strategic Growth Fund) are funds that Devere developed themselves.
          S258 went up in flames. Its alleged that the worlds biggest Ponzi scheme was responsible for it and Devere may or may not be involved.
          Just google Belvedere Fund/Devere/Kobus Kellerman.
          It is very dodgy.

          I got out of these with a kick in the teeth after finding Andrew’s blog and then buying his book.

          Take the hit and get out before more funds are suspended.

          Take care, D

        • Hi Darren,

          I haven’t given up on this task. I’ve been very busy with my columns. But I’m tackling your question now, and I should have a blog post up in a couple of weeks, with respect to what kind of portfolio construction you may want, with Friends Provident options.

          Cheers,
          Andrew

  79. mark says:

    Hi Darren,

    I have done something very similar to you. Be careful though as the money you have left is likely to be incurring the most fees so you will likely need to be earning +10%PA in order to break even (with inflation).

    I am going to use my ICP – which would be lost if I removed it now – to invest in high risk index funds and when it gets very low, I will move it all into gold and let it sit there until such time the market starts to fall and gold increases.

    I’m no financial guru, this is just my thoughts and plan. After all anything I recover from this account in 20 years time will be a bonus.

    • Darren says:

      Hi Mark,

      Thanks for your response. Which “high risk index funds” should I be targeting. Would you suggest Mark’s approach Andrew?

  80. JackJ says:

    Hi Andrew,

    What would you recommend for a global bond index in the market today? Preferably a main trading currency of USD but not on one of the US exchanges.

    Thanks again.

  81. Ian Carter says:

    Good morning Andrew. We where sold an investment by de vere in dubai (PIC) in 2007 , the financial advisor sold us an investment that was run by a company called castlestone which friends provident was the conduit for. Our investment matured this year with a loss of 90% even though the investment was sold with a 8% stop loss against any downturn , this bond was withdrawn without our knowledge , we had a e mail from a freelance lawyer acting on behalf of de vere in dubai. Saying that all the paperwork / bonds have not got de vere letter headings and that we should engage a lawyer and go after castlestone In the e mail the lawyer stated that he can’t prove in writing but is aware that castlestone have paid monies back to investors , have you got any. Recommendations re our situation , surly if nothing else de vere and the financial advisor have got a duty of care , this is the only time we have invested money and we relied heavily on the de vere guidance which with hindsight has been exploited for there own financial gain . Also castlestone did not even attempt to move the money around the aliquot portfolio. Regards Ian

    • Hi Ian,

      I am so sorry to hear about this. How much money did you invest? Whether you go after it, or not, I suppose you have to look at the long term financial impact on you, as well as the emotional impact. I do know a woman who got a lawyer and went after Friends Provident. I can’t give you her name, because Friends Provident signed off with the stipulation that nobody would find out about it. If you have lost a significant sum, go after DeVere. You trusted your money to them. If you lost a significant sum, it could be worth fighting for. Just be aware of spending more on legal fees than the issue may be worth. And always remember the emotional impact.

      Ian, please keep me posted on what you decide. I really hope you can lean on DeVere hard, and get something settled simply.

      Andrew

  82. Charlie says:

    Hi Ian,

    I also got lied to by deVere. Was the freelance lawyers name Colin Barr by any chance?
    I was recently contacted by a former deVere guy who told me how crooked the company is and that clients money is put into deVere owned funds.

    Best of luck with whatever you decide.
    C

  83. Ian carter says:

    Morning Andrew
    Thank you for your reply , we invested 135,000 U.S. Dollars which was sold to us with the 8% stop loss guarantee by devere consultant / professional financial advisor . We have been in contact with devere over the last 5 years and just get the go away pill not our fault hiding behind paperwork. Andrew I am not bitter about losing money on the investment that was our risk. (8% stop loss of the 135.000 U.S. Dollars ) what is upsetting is ,the amount it is worth today is 15,000 U.S. This was a major sum of money that was going towards our pension pot . We placed 100% trust in the advisor who was installing confidence by using the de vere brand name as a reassurance support to ease our concerns due to our nativity when investing money .wold it be possible to guide me towards a legal team that have got the relevant professional exsperiance in handling such matters please. Regards Ian

    • Hi Ian,

      I don’t know of any legal teams, personally, with experience in these matters. But if you find one, could you share the firm’s name? Others could benefit from their services as well.

      Cheers,
      Andrew

  84. Ian carter says:

    Hi Charlie , that is correct. How did you got your situation sorted?

    Regards

    Ian

    • Charlie says:

      Hi Ian,

      Unfortunately I cut my losses. I was mis-sold a 25 year plan. Mis-sold sounds like a strange word to use, but the ‘Advisor’ left out so many details, it was a joke. 50% of my funds were in the Strategic Growth Fund. The fund went bang. I lodged many complaints with deVere locally. Eventually I mailed their legal team in Malta and their lawyer came back to me basically saying that they did nothing wrong. I have also recently raised a complaint with the DFA in Dubai and am awaiting their response. It is very difficult to win against these guys. I tell everyone I know to avoid them and recommend Andrews book, perhaps that is my way of winning. Take care.

      • That’s frustrating to hear Charlie. I’m sorry that happened. I guess the best we can do is educate others. Keep spreading the word about these offshore rackets….especially if you’re still in Dubai. These guys love grab expats working in the Middle East.

  85. Francis says:

    Hi Andrew,

    I am just reading through your book at present and beginning to realise that I have made some very poor investment decisions.

    I signed up to a 25 yr Zurich Vista plan in the Middle East in 2009 paying 1350 USD for 18 months now reduced to 300 USD. Details as follows:

    Current value USD 41,797.94
    Surrender value USD 19,298.18
    Maturity date 30/09/2034
    Total regular premiums paid USD 36,940.00

    The biggest problem I have is finding a reliable financial advisor over here in the Middle East as they are all trying to sell products and I firmly believe they do not understand the charging structure of these policies anyway.

    What to do? Escape from the policy now or stay in and hope I can recoup my IC at expiry? Appreciate you can’t give specific financial advice but general feedback would be welcomed.

    Cheers

  86. Ian Carter says:

    Hi Charlie Will be interesting how the DFA view this The world is getting smaller and the legal net is getting bigger. We just need to be patient and find the the right lawyer Because there is one out there. These big brands should not be able to advise on such important issues and just take there fees with no consequences. Please keep in touch. Regards. Ian

  87. Michael says:

    Hi Andrew, Just got your book! I wish I had seen this website a year ago! I invested with Devere with Premier Advance, paying in 500 USD a month in May 2014. I have split my money 2 ways , with Vanguard US 500 and Value Partners High Dividend. I know one is being switched tho. What do you suggest I do? The surrender value is a few hundred dollars at the moment. I just didn’t know their fees were so high. I would appreciate any suggestions. Thank you for your time. I live in the UAE and I am from the UK.

    • Hi Michael,

      For starters, stop contributing money as soon as possible. Whether you keep it in there or not is your decision. My book described a calculation (chapter 6) that you could do to determine whether you should take the hit (and withdraw what remains) or not.

      Cheers,
      Andrew

  88. Alejo says:

    Hi, I m looking to open an off shore brokerage account in Channel Islands, I want to invest on financial assets (not insurances, not pension plans) like auto-call notes and other structured notes, but Im not sure what is a good entity there to do this. I was offer to open with Royal London 360 or Generalli, do you know if these are trustable institutions?? annual fees are between 1% to 1.5%? is this ok or do you know other good brokers with lower fees? Thanks!!

  89. Alejo says:

    Thanks Andrew..
    I m not american citizen, do you know if I have to pay local country taxes when operating when using these companies? is any of them “off shore”?
    Regards

    • Hi Alejo,

      You would not have to pay capital gains taxes if you live in a jurisdiction that would allow that. Tax-wise, the treatment is exactly the same as it would be with a Channel Isle firm. You could open an account with Saxo in Singapore, or TD Direct International, based in Luxembourg. Neither jurisdiction charges capital gains taxes. Both types of accounts could be opened without having to visit each respective country.

      My book shows you what to buy: http://www.amazon.com/The-Global-Expatriates-Guide-Investing/dp/1119020980

      Cheers,
      Andrew

  90. Adnan Sami says:

    I have a query about the “Initial Charge” which applies on the “Initial Units”. I have Friends Provident “Premier” policy. I started with USD 500 per month contribution for which the quarterly “initial unit charge” was about 110-120 USD (USD 440-480/year). After a couple of years I increased the premium to 1500 USD per month so accordingly, due increase in the “initial units” the “initial charge” also went up to about 350-360 USD per quarter (about USD 1400/year). This increased premium lasted for about 2 years. As the fund was not performing well, I decided to lower the premium back down to USD 500/month. Although the premium was lowered back to USD 500/month over three years ago, I am still being charged the initial fee of approx. USD 1400/year for a contribution of only USD 6000/year. This amounts to a charge of over 23% (apart from other charges) of the yearly contribution.
    Kindly advise if in your opinion there could be an error from the friends provident’s side and the initial charge should also drop down once the premium is decreased or is it a one way alley that once you increase or decrease your premium, the charges will always be based on the highest premium that was paid into the policy.
    Thanks

  91. Alejo says:

    Hi
    Do you know if in these brokers you mentioned I can fin auto-called notes or any other structured note to invest?
    Thanks!

    • I’m not sure Alejo. But I don’t recommend that you invest in those. Just build a diversified portfolio of stock market ETFs. Odds of success will be higher. Your risk will be lower.

      Cheers,
      Andrew

      • Alejo says:

        I followed your advise and declined this insurance company in Isle of Man (and bought your book..) now I need to choose between Vanguard and Saxo (Unfortunately Im currently living in Mexico and TD Investment does not open accounts if you leave here), what would be the best option? are these trustable companies?

        • Hi Alejo,

          In my book, it shows that investors who can use Saxo cannot use Vanguard, and vice versa. It’s an issue of nationality. So what’s your nationality? If I know what it is, I can make a suggestion.

          Cheers,
          Andrew

          • Alejo says:

            Hi, Im from Argentina and living in Mexico. And it is true, yesterday I got confimation from Vanguard that can no use them.. What do yoi suggest Saxo or there is any other alternative? How trustable Saxo is?
            Thanks!!

          • Hi Alejo,

            It might be easier for you to use Interactive Brokers instead of Saxo. But you will need a minimum of $10,000 to get started.

            Cheers,
            Andrew

        • Alejo says:

          Andrew, blog does not let me answer t oyour last reply but on your coment “It might be easier for you to use Interactive Brokers instead of Saxo. But you will need a minimum of $10,000 to get started”

          In fact I plan to invest more than $100K so no problem with the minimum? are these international brokets trustable? Considering this amount of money is International Brokers the best option? My Bank HSBC offers JP Morgan mutual fund on US growth with 1% annual fee or 3% upfront fee (and you don t pay in the future).. what do you think?

          Thanks again

          • Hi Alejo,

            The fund you mentioned, via HSBC, costs an annual management fee that’s 20 times more than you should be paying for a fund. It’s called an actively managed mutual fund. Instead, you should be buying index funds (ETFs). You could buy a U.S. stock ETF that charges as little as 0.04% per year.

            Also, the 3% commission to buy the actively managed mutual fund through HSBC is more than 15 times more than you would be paying with Interactive Brokers. I think you will get a lot out of my book, The Global Expatriate’s Guide To Investing. It explains, in detail, why you don’t want to own such actively managed funds. http://www.amazon.com/The-Global-Expatriates-Guide-Investing/dp/1119020980

            As for Interactive Brokers, they were awarded the world’s top broker by Barron’s for 4 years in a row: https://www.interactivebrokers.com/en/index.php?f=809

            Cheers,
            Andrew

  92. Darla says:

    Hi,
    Also living in Dubai and stuck in a crap FP Premier Investment. Sadly started out with $2000/month payments and after a year got persuaded to increase our payments which increased our initial units which are charged 7.2 % in fees plus the fund fees. And I now notice the latest fund our so called advisor put us in has 4% fund fees (unreal). We started this policy in 2008 so we are in deep. In Nov. our policy was at 0 gain, premiums in were equal to value. Sadly we were busy moving and just as we were ready to pull out the markets dropped drastically. So now we face a loss of $35,000 on our accumulation units. Our initial units have suffered $11,000 loss. If we take out our initial units now based on the years remaining they will charge us 45% in fees. So that means us walking away with $40,000 and them keeping around $32,000. In Nov. the decision would have definitely been take out accumulation units and we were debating about the initial units and whether anything would be able to return the needed 7.2% fees plus fund fees. But now with the market being so low and having the value of our fund drop overall by $36,000 we don’t know what to do. In total we have $240,000 in it. We are good savers, just really bad at making good decisions and put it in the worst place possible.
    Embarrassed to having been taken for such a ride and not having realised all the fees involved. Initial advisor (had about 4) said 1.5% forgot to mention the quarerly part. But we are where we are and have to cut our losses.
    We are 10 years from retiring and need to not mess up again. I have your book (after my son told me to buy it) and have been reading up on the ETFs and we want to open an account at one of the places you mentioned.
    I have an appointment with the “advisor” and am unsure as to what to do. My son says get out even if market is low and take it and put it elsewhere.
    We would hugely appreciate any advice you could give us.

    • Hi Darla,

      Here’s an option, if you don’t want to “take it on the chin.” Take out whatever you can, penalty free. Ask your broker how much you can sell without getting hammered by penalties.
      You could leave the remaining money in the portfolio. But DON”T let your broker pick your funds. If you haven’t made money since 2008 that means your broker built you a portfolio based on how well he could “make a sale.” In other words, he showed you charts of funds that had done well in the past. Then he stuffed your portfolio with those funds. He didn’t care about diversification. He didn’t care about fees. He just cared about commissions.

      So, with the money that you leave with Friend’s Provident, build a responsible portfolio. In this post, I discussed how: http://andrewhallam.com/2015/05/if-you-invested-with-friends-provident-make-the-best-of-a-bad-situation/

      Whatever you do, don’t add more money to this portfolio. Follow the strategies in my expat book to build something low cost, and diversified.

      Cheers,
      Andrew

  93. Darla says:

    Hi again,
    Thanks for the quick reply. So even though the mkt has dropped and our poorly chosen portfolio has been hit hard, you would advise to pull it out and take the market loss. We are down a lot. As far as the initial shares if we pull out we are charged 45% of the amount remaining so walk away with 55%. But it carries the heavy fees of 7.2% plus fund fees. Will we ever find enough return to make that pay off? We have 10 years remaining and each year the percentage they keep as a fee for early surrender decreases by about 3%.
    He has us in a totally non diversified portfolio full of equities which have been hit hard.

    We took a payment holiday a couple months ago so are not paying in right now. You can do 12 months without penalty.
    Thanks so much for your advice. It is hard to know where to turn with so many companies like these around every corner and even trying to find an independent financial advisor is difficult.
    Thanks again,
    Darla

    • Hi Darla,

      Investments drop when markets drop. If you sold an amount (penalty free) and used that money to buy ETFs, you would be going market to market. Let me explain this another way:

      You buy a home for $200,000. It’s now worth $150,000. You want to buy the house across the street but you don’t want to take a loss on your home. However, you would be going “market to market.” The house across the street would also be lower priced, in proportion to the lower price of your home. If you wait for your house to be worth $200,000 again, the house across the street would have risen in value as well.

      As for selling everything and taking a financial penalty, that’s your decision to make.

      Cheers,
      Andrew

  94. Dave says:

    Hi Andrew…

    Just a question regarding my portfolio…

    Currently, these are the allocations and current % of each index…
    Australian Bond Index: 33.3% (Currently 31.36%)
    Australian Shares Index: 33.3% (Currently 33.45%)
    International Shares Index: 33.3% (Currently 35.19%)

    According to asset allocation rules, my next purchase should be Australian Bond Index, which I an happy to do…

    But (and it is a big but), the Australian Index has drooped a lot in recent times and so that brings me to my question…

    Q: Do you

    1) simply stick to asset allocation and forget the market

    or

    2) Look at the market and take advantage of drops by purchasing even if you are exceeding the index allocation %…

    While im at it, I have one more question…

    Is there a better time each month (historically speaking) to buy the index? In other words, is there a time in the month when it tends to be lower?… Currently my purchase is the 1st of every month…

    Also, is there a better time of day to purchase?

    Thanks so much Andrew!!

    Dave

    • Hi Dave,

      To answer your other questions, there is no best time of year, month or day to buy an index. It’s pretty random. Sometimes, we get fooled by randomness to create patterns that don’t exist.

      Cheers,
      Andrew

  95. Mark says:

    Hi Andrew,

    I am Irish 26 year old living in Singapore and have recently read your book for ExPats. I have set up A TD Direct Investment account on your advice but note that you suggest not using them for currency conversion. Have you any advice on who to use? My bank is charging about 1.6%. Ideally I’m imagining somewhere I can just trade the spot markets for a small fixed fee but have not yet found someone who allows that and to make withdrawels in a different currency to lodgements.

    Cheers,
    Mark

  96. Dave says:

    Hi Andrew,

    Just a question regarding purchase of index funds…

    My current portfolio allocation is:
    Australian Bonds Index 33.3% (Currently 31.58%)
    Australian Shares Index 33.3% (Currently 33.21%)
    International Shares Index 33.3% (Currently 35.21%)

    So according to my asset allocation, I should next be purchasing Australian Bonds…

    But, my Australian shares index has dropped quite a bit from average purchase price. In fact, its down nearly 12% and I am wondering if I should be a little greedy and purchase some now…

    What would you do Andrew?

    Would you ever go outside of your asset allocation in order to get a bargain?

    Also, is there a better time in the month to be purchasing Indexes?

    Thanks Andrew

    Dave

    • Hi Dave,

      Your current allocation doesn’t mean much, unless we compare it with your allocation this time last year. Ensure that your current allocation and last year’s allocation match. Rebalance so they do. I’m guessing you had about 40% in the Australian index last year, based on what you are showing me here, and based on what you are telling me about its drop.

      Cheers,
      Andrew

      • Dave says:

        Hi Andrew,

        My portfolio allocation is always aimed towards
        Australian Bonds Index 33.3%
        Australian Shares Index 33.3%
        International Shares Index 33.3%

        At the end of every month I will always invest in the index with the lowest % as outlined in your book…

        The only problem is this month the australian index has tanked, yet, as it stands I will be investing in the bonds index this month due to them being the lowest % in my portfolio…

        Hope this makes sense…

        I just feel that the Australian Index is ‘on sale’ at the moment…

        Thanks

        Dave

        • Hi Dave,

          To clarify, you say the Australian index has dropped considerably. Yet your allocation remains roughly the same? I’m confused. If you had your portfolio split evenly, three ways, and the Australian index got hammered, you would now have far less than one third of your money in the Australian index. What am I missing?

          Andrew

          • Dave says:

            Hi Andrew,

            Yes, I do have my allocation split evenly, but I guess because currently I only have 45k in my portfolio, it tends to have fairly large swings in allocation when I do my once a month investing in only one of the indexes (the index with the lowest % at the time)….

            So even though the Australian Index has gone down 12% in value, its still not the lowest in % allocation…

            So due to the large % swings when investing once a month, the bonds are currently the lowest %wise…

            Does this make sense?

          • Hi Dave,

            Yes, go ahead and buy the Aussie stock index.

            Cheers,
            Andrew

          • Dave says:

            Andrew, I am a little confused…

            Is there an exception to the rule with rebalancing the portfolio??

            Are we aloud to overload in % allocation on an index that has dropped significantly?

            Or is it wise to stick mechanically to the purchase of indexes based on asset allocation?

            I am a disciplined investor and can not go against rules that I set… Thus I am wanting to see if there is any room for a rule change regarding purchase of index…

            Thanks Andrew

            Dave

          • Hi Dave,

            It’s better to stick mechanically to a game plan. I can’t see all of my comments from here. Are you the guy who asked me earlier about buying the Aussie index because it had fallen? Frankly, that one confused me a bit. Stick to the allocation set. But don’t get too crazy about it when the portfolio value is small. Any new purchase can send the numbers askew. Relax. And just keep adding fresh money to the lagging index. The allocations don’t have to be perfect. It’s not set in stone. In fact, sometimes letting the portfolio drift a bit can help things out. But you’ll never know when and under what circumstances. So just set a plan to keep the allocations close and maintain that throughout. https://assetbuilder.com/knowledge-center/articles/should-you-even-bother-to-rebalance-your-portfolio

            Cheers,
            Andrew

  97. Darla says:

    Hi Andrew,
    Met with the advisor and got a surrender value for policy. We would take a huge hit with the Initial Units and lose 48% of their value. But with 7.2% base fees and except for our Vanguard fund, the rest have fund fees of between 1.5% and 2%. So with at least 9.2% in fees, I don’t see opportunity to pull it around. I saw one of the funds is Jupiter Merlin with the “S” in front and of course it is a trailing fund feeding money into Devere’s pockets. As sad as the whole thing is, I believe taking the hit is the best option. After 8 years in, we sit $35,000 down in the policy plus the early surrender fee, what a joke. I need to hand over the original policy which after all of this crap even that makes me nervous. I feel like filing a lost policy form and retaining it. Also, evidently 3 days to sell funds and up to 10 days to get the money.
    Also, as soon as we have the funds we want to set up for access to index funds. My husband is German and I am American living in Dubai with about 10 years left to go and are unsure as to where we will retire. Could you please provide some advice as to which one of the institutions in your book would best meet our needs. I see Saxo has an office here, but I remember someone earlier wrote that although they are in Dubai, they signed up online with Saxo in Denmark. Same question as Mark regarding currency exchange.
    I am very glad I bought your book and will continue to read it through a few times. Too bad I didn’t find you 8 years ago or hear you speak. Dubai is a hotbed for these institutions. Infact, big “Wine & Cheese bring a friend night” tonight. Poor victims that attend

    Thank you,
    Darla

    • Hi Darla,

      I’m so sorry to hear about your experience. Please do your best to educate others.
      Your husband could open an account with either Saxo Capital Markets or TD Direct International. Don’t worry about foreign currency conversion costs too much. There’s always a spread when you switch currencies. It’s not something you can avoid. And in the end, it’s absolutely peanuts, only occurring when you make an investment, unlike an ongoing fee which drags on your portfolio forever.

      You have some choices. Your husband is German. That means he could open an account in his name, at one of the brokerages I mentioned above. As an American, you should never have owned an investment with DeVere in the first place. I hope the money wasn’t placed in your name. If it was, there’s a possibility that you could go after that lost money. One woman did so, and won. But it cost her a lot of headaches and money in a legal battle. You could simply threaten to tell the media that the broker sold an American a policy in a capital gains free jurisdiction. That might get their attention. Odds of getting the money back are slim. But it’s like taking a ball and tossing it blindfolded at a hoop. If you don’t toss that ball, it will never go in. Go for that media threat and see what happens.

  98. Daren Taylor says:

    Hi Andrew,

    Please contact me via email (email removed by moderator) I would like to check with you prior to posting on your site.

    Many thanks

    Daren

  99. Shawn says:

    Hi Andrew,

    As a Canadian looking to start a portfolio of stock and bond indexes where should I start? I’d like to have a portfolio consisting of low-cost indexes if possible.

    Thanks,

    Shawn

  100. Daren says:

    Hi Andrew,

    The S&P 500 regular savings plan is a solution. It simply tracks the Index for 15 years. You can transfer lump sums and pay premiums up front. Capital is 100% guaranteed with a 40% minimum return at maturity. Plan term is fixed at 15 years only (hence the guarantee) so ideal for someone locked in a long term plan who is looking to surrender and transfer. There is also a 7 year pure lump sum option which gives 100% capital protection but no guaranteed return. Plan is not available to US citizens. By transferring into the regular 15 year you essentially pay premiums up front (up to a maximum of 3 years premiums per calendar year) This effectively reduces the payment term down to 12 years which you can continue to pay off early if you wish. Bonus at year 10 and year 15. No expensive funds or fund switching and no expensive top ups!!! If people want to know more they can contact me and sorry to see so many horror stories.

    Well done on a great site!

    Hope this helps

    • Daren, this notion of “paying premiums” doesn’t sound cool. What firm are you writing about? What fees are there? Can investors pull their money out, unscathed, after just 3 years if they need to? Also, only a fool would invest in the S&P 500 alone. It’s not a diversified portfolio.

      • Pankaj Sinha says:

        Hi Andrew, I am starting off on S&P500. Would like to know why are you making such a strong statement – “only a fool would invest in S&P 500 alone. please elaborate.
        thanks

        • Pankaj,

          The S&P 500 is only comprised of large U.S. stocks. You are better off going more global. Why limit yourself to roughly 30% of the global market’s capitalization? Reduced risk comes with diversification.

          Cheers,
          Andrew

    • toony says:

      This has the classic signature of an offshore ILAS scheme (Friends Providence/Generali/Zurich, etc) you are constantly warning us all about Andrew!

      Saving plan -> hard fixed contract that only benefits the salesman and insurance company
      Premium -> insurance related product
      Not avail to US citizens -> due to the US tax evasion law (banning ILAS)
      Lump sum option/loyalty bonus -> sound awfully similar to the FPI Summit
      No fund switching fees/top up -> but massive front load of ~5% into new funds.
      S&P500 -> the IL in the ILAS part. Also using the words index tracking to throw ppl off the scent. Also you NEVER own the S&P500 index funds – a mirror of it with extra layer of fees.

      I’m also guessing it’s commissioned based sales right Daren?
      And this product is also illegal in countries like UK, Canada and Australia no doubt!

      Basically, this product allows the insurance company to collect the massive upfront fees (the initial period/allocation/units or whatever they are calling it now) and then bleed your S&P500 dividends dry for 15 years while returning a minimum 140% percent (barely beating inflation). Note – at 7%, your money doubles every 10 years

      Sounds like more snake oil, any takers out there?

      Your instinct is spot on Andrew – I wouldn’t expect anything less of you 😉
      Putting $10 on the firm being DeVere 😉

  101. Frank says:

    Hi Andrew/All
    I have a document that was given to me by a Financial advisor 10 years ago with Friends privident letter head which was tailored for me showing my contributions each month and my total investment, showing its growth over a 25 year period at 6% net and 10% net per annum.

    At the time as 10% net seemd to be a possibility with this product the way it was presented in this document, so I decided to sign up for this product as I was sure to get 6% I thought… In fact after 10 years the growth was closer to 0.6% per year….

    Just wondering has anyone else received such a document from their advisor?

    I have since asked Friends Provident to show me a fund that has delivered 10% net per year over a 25 year period. I asked them 2 weeks ago and am still waiting thir response…

    • Hi Frank,

      They could show you plenty of funds that have earned a 10% annual return over the past 25 years. Unfortunately, that’s like looking in the rearview mirror. It’s difficult to find such funds ahead of time, as you found out. What’s even tougher, however, is to make 6-10% over a time period when you are paying hidden fees of 4% per year. That’s the case with your FP pension. That’s one reason you didn’t make money. The second reason is that your advisor would have bought funds (to impress you) that had strong recent performances when you signed up. This is one of the worst things someone can do: stack a portfolio with yesterday’s winners, for no other reason than the fact that they may have performed well in the past. Most FP advisors just want their commission. They care little for professional diversification. That’s why your portfolio is likely very lopsided as well, lacking the kind of diversification that would have made you money while providing a degree of safety.

      Cheers,
      Andrew

      • Frank says:

        Hi Andrew
        Thanks! for your reply.
        It was en expensive lesson, anyway Its interesting in the the inter-connected world we live in today, that they still find customers for these funds…
        Regards
        Frank

    • Mary Rich says:

      Frank, the Financial Services Authority fined Friends Provident £675,000 in 2003 for chucking out thousands of genuine complaints from customers whose complaints were genuine and deserving redress, because the procedures were (according to the FSA) “inherently not fair and biased against customers.”

      And in 2012 Friends Provident battled Nic Hughes as he lay dying from cancer to avoid paying out on his critical illness policy. But massive publicity forced them to pay up. Awfull company!

      • Frank says:

        Hi Mary
        Actually I lodged a complaint to Friends Provident a couple of weeks back and they responded with “we treat any expression of dissatisfaction with our service very seriously indeed” I guess now I know the reason 🙂

        Basically I surendered my policy and am asking for all my funds to be returrned to me without penalty, as it never grew and so is just my original contributions which I see as my money. Will be interesting to see what happens

        I agree with you they are an awful company doing people out of money like this…

  102. Steven says:

    Hi Andrew,
    It’s been quite some time since I last posted, and I’ve been waiting for my FPI (now Aviva) Premier mutual fund savings plan to reach 5 years before doing anything. I initially put in 1000 a month, then dropped down to 500. My “advisor” told me 300 was the minimum, and cautioned (sarcastically) that if anything, I should be increasing my savings amount, not decreasing it. When I spoke with their office in Hong Kong, I was told that 150 was the minimum, so not only is he arrogant, but he’s also out of the loop.
    My policy value (overall) is 44,000 (USD) and the surrender value is 32,300.
    I’m a Canadian, non-resident, living in Korea.
    Is there any way to contest the high penalty, or should I, now that I’ve passed the magical 5 years, pull out and cut my losses, weep in my beer, and get on with it? I’m guessing there must be better ways to float a boat, even considering the world economy is a manipulated thing in many ways, but given the right approach, one could actually keep their head above water.
    Appreciate your feedback, as always, and will be picking up the book when I hit Toronto this summer, and will happily leave a review.
    One of these days, I’ll put Singapore on my travel plans, and buy you an organic craft beer. 😉
    In the meantime, if you ever plan to speak in Korea, I would be happy to spread the word.
    Cheers.

    • toony says:

      Steven,
      Your advisor was pissed off when you reduced the amount because his trailing commission was reduced by the same %.

      After the initial period, Aviva don’t care how much you drop down to each month. Find print allows them to bleed you account as if you were contribution at $1000 pm 🙁

      The longer you stay with Aviva, the more they can bleed from you and the longer it takes to recover the losses. Pull out asap and reinvest your remaining funds as described by Andrew in his book. Smile and thank your lucky stars that you found out today and not 10 years down the track 🙂

      • Steven says:

        FPI Hong Kong’s latest reply, regarding my comment, “My advisor LIED to me…” was, “If you find your advisor lied to you regarding your policy, please kindly contact with your advisor company”.
        I’ve contributed 42.000 USD since Dec 2010, and the current value is 44,150, approximately, a gain of 2150.
        My surrender will be just below 12,000.
        What I want to know is, is this legal? Is their response to my (documented) claim that my advisor knowingly or unknowingly provided false information actionable?
        Do I just swallow my pride, take the hit, and get out now, after almost 6 years, or try to fight them somehow?
        I told them that I am a contributor to an ex-pat blog (well, truthfully, yes…this is an ex-pat blog), and in a sense, so is Facebook, YouTube, etc. Is it legal to post disparaging remarks about them in those forums, as long as it is truthful information?
        Any advice from Andrew or other contributors is much appreciated.
        I’m ready to pull the plug, with gritted teeth.
        The bass turds!

        • Steven,

          I’m sorry this happened to you. No, your advisor should not have lied to you. But you signed documentation that explained exactly what the fees were, and how the redemption penalties worked. Your advisor didn’t discuss them, but when you signed those papers… Consider this a relatively cheap (and yes, painful) education.

          Andrew

          • Frank says:

            Hi Andrew/Steven
            I am in the exact same situation, they told me its the fault of the advisor; friends provident just host the funds, there is nothing they can do/will do

            I was shown a document with friends provident letterhead showing potential 6% and 10% growth of their funds over a 20 year period, so I signed the douments based on this false information, surely this is illegal?

            Frank

          • Steven says:

            Thanks, Andrew, as always. I echo the enquiry of Frank, below, where he asks if this is legal.
            Is it possible for us to launch a class-action lawsuit?
            I advised the Hong Kong office (what a bunch of incompetents…parroting is their specialty) that I’d be blogging about the outcome.
            Is that just tilting at windmills, and raging after the fact, with little to no positive outcome?

          • That’s a tough and expensive road to travel Steven. I have heard of two people who got their money back after threatening to go to the media. A third got involved in a very costly lawsuit. It cost, in the end, far more money than she had “lost” with Friends Provident. Legal costs were high. But she did win the “settlement.”

          • Steven says:

            Quick update for you all. I fired off an angry missive to Dora Tsang in the HK office, having been in “communication” with her regarding the surrender. I’d become frustrated with the lack of deeper understanding of the points I’d been making, so in a fit of pique, I basically demanded all my money back! I asked if it was common practice for them to just shrug their shoulders (not my exact words) and tell the customer to deal with any false statements directly with the person who made said statements.
            Well, it got bumped “upstairs”. I got a reply from Jennie Swann in Distribution Support Governance (talk about a nebulous name for a department), and it was very, VERY professional. Courteous, concerned, and it detailed a very thorough plan of action designed to address my issue and bring it to a fair resolution.
            I’ll keep you all abreast as to the outcome, as it could provide useful information should you ever find yourselves in the same boat….bailing out.
            Cheers.

          • toony says:

            Steven,
            ARRRGGHHHHH! *Bangs head on table* when I saw the name Jennie Swann!

            Lets hope what I’m about to tell you saves you some time, frustration and anger so you can move on from this fiasco faster.

            Jennie is ALWAYS smiling and being professional. She loves playing ‘ping pong’ with you! Her real job is to simply deny EVERYTHING, IGNORE all evidence of fraud/misspelling and most importantly, NEVER payout/return any money! All done while smiling and sounding soooooo sincere until the end! It’s all an act!

            Long story short
            Here’s what you can soon expect Steven! Jennie’s will try to get you to resolve the situation first with the company! They will refuse to return your money, saying they are only brokers and the product is FPI. Since FPI has your money, you should talk to them to get a refund – see where this is going yet?

            You will be asked lots of silly questions and to prepare lots of statements on the situation (which takes days to do) and attend meetings in person…which has to be done during office hrs so you will need to take time off work. These meetings may be ‘reschedule/cancelled’ by either parties at last second!

            After both sides get tired of playing ‘ping pong’ with you, Jennie will get you to do a full formal statement with facts, information, dates, etc for a ‘full investigation’ by FPI. (This is just a farce by FPI – there is no investigation at all!)

            Eventually you will get a report from the smiling and very professional Jennie that simply state (paraphrasing here) that “no wrong doing was uncovered and FPI gets to keep all your money”.

            You may demand to see the investigation report, statement by the finance company addressing your allegations etc. Legally she has to give them to you. However, she will keep ‘accidently’ forgetting to attach it or attach some random doc until you blow up in frustration (there is no report to send as no investigation in the first place!)

            Then, (for legal reasons) she will be smiling and very professional when she sends you the final email saying “If not happy with investigation, here are the Isle of Man ombudsman contact details”, while knowing full well that the IoM does not regulate the financial industry like other countries (that’s why they are located there).

            The only option left is to take legal action. As Andrew already mentioned, this is so expensive (especially in a foreign place) that it does not make financial sense (are you willing money on flights/accommodation during that case that could take months to complete? FPI knows this hence Jennie is instructed to ALWAYS deny every case, regardless of merit!

            In my personal situation, I discovered DeVere’s salesmen had fraudulently used my signature to open up a FPI account and how they did it (I was trying to open an offshore bank account at the time!) This would be considered major fraud with possible jail in most countries like the UK, AUS and US. Despite providing all the evidence to support my claims, I seem to have receive the SAME generic response from Jennie as everyone else who has complained!

            Steven, be weary of throwing good money (and time) after bad money. Best way to get them back is inform as many ppl as possible across as many platforms as possible.

            ANDREW, I am still writing the article for you on my experience as promised! It is harder than I expected (emotionally spent) and had to rewrite several sections to clarify things.

          • Thanks so much Toony

          • Steven says:

            Update: Despite my angry missive to Jennie Swan, pursuant to loony’s message about the futility of dealing with any “enquiry”, I basically told her that her name, and her game, were well-known, and that she could save the red tape, as the outcome was guaranteed to favour their side.
            I just received an email, with a password-protected document alerting me to the results of their “investigation”. It was dated Dec. 2013 and pertained to someone else. Such efficiency!
            I’m curious….is this something that, based on the embarrassment factor, might result in me getting a more favourable outcome?
            I’m going through the tedious process of surrender (they always need just one more document…..my file folder didn’t contain the original copy of the contract, strangely, so that meant a host of notarial procedures), and will, unless I somehow win, lose about 11,000 USD, getting back just over 32,000. From everything I’ve read here, that sounds like a pretty good thing. I’ll try to fight for the rest after I get that amount back.
            Cheers.

          • toony says:

            Steven,
            I thought Jennie Swann was pretending to be dumb when she couldn’t attach the right file despite many attempts!!

            Classic delaying tactics from them in return your money 🙁 They know they can steal, scam, obstruct, obfuscate etc and nothing happens to them – hence deny all claims of miss-selling/fraud etc to maximize profits

            $11k is small change considering the amount of time/money/energy/hoops they will burn and make you jump through – consider it your finance tuition fee 😉

            More effective thing to do is warn others about the bear traps 🙂

  103. Jitin Goel says:

    hi Andrew
    This post and the comments have been an eye opener for me. I am living in Singapore and have been pursued to invest into global funds through Friends Provident Platform. Locked in for 20 years, however they have given 48% bonus for my first 18 months investment which will be locked for 20 years. On top of that I have been refunded 2 months of my investment from my bank.
    They could convince me about this product as a long term discipline investment into global equities where most of the charges already covered by the bonus units and 2 months refund.
    But after reading so many posts on internet my confidence is shaking, at this stage if I close the investment my loss will be just 4 months of investment.
    not getting any sense of direction, will be grateful for your kind advise
    regards
    Jitin
    (Indian resident working in Singapore)

    • Jitin,

      If you can get out now with minimal losses, you really need to do it.

      • Jitin Goel says:

        Thank you Andrew….so all these bonus units and 2 month refund are all farce and to lure you into something which is bound to create pain in future?
        just going through various thoughts before taking a final call before 15th of June when my next payment is due.

        • Jitin,

          They are a farce. Here’s why. It will say that you have received such a bonus on your statement, but try to claim that money after the fact. You won’t be able to. Your money will be held hostage for years. During that time, Friends Provident will bleed your account in fees. They need to recoup the commission they paid the advisor. In the end, your account will be far worse off, than if you had never heard of Friends Provident. If you can get out with minimal damage, do it today!

    • toony says:

      Jitin,
      If Andrew wasn’t clear enough, Admiral Ackbar has the following advice “IT’S A TRAP”

      Bonus is a clever illusion to deceive you. ALL bonus units are part of the “initial units” which you never see a cent off…unless you stay the ENTIRE period (which allows them to bleed 100k+ over the 20 years in return for given you a few thousands back)

      Lucky to get out with only 4 months…most people don’t realise for years!!

  104. lakmin says:

    Hi Andrew,

    i bought and have read both your books and found them very informative and real good. personally i preferred the second one more as it had more detailed info :D. actually i asked this query regarding Saxo Bank before from you where i mentioned as a Sri Lankan they are the only brokerage firm i can invest in in the UAE and you mentioned as a DIY investor to go for it. just a couple of follow ups regarding the same,

    1) if i am investing first up 1OK USD ( i am only 31 so i figured i will focus on the stocks first up as you also mentioned not to worry about re balancing until reaching 50,000 euros approx.) what vanguard stock index would you recommend that is available in Saxo bank? and maybe an alternate bond index?
    2) you mentioned due to commission charges that if you have for e.g only 500 Euros to invest dont bother to buy units as cost is too high and wait until u have accumulated a higher amount. How much is the least amount where it could be viable to invest on a monthly basis? i didnt quite get that part actually.

    Greatly appreciate any help you can provide.

    Thank you

    Lakmin

  105. Nick Stephens says:

    Hi Andrew,
    I’ve read your book “The Global Expatriates Guide to Investing” and found it so helpful that I gave it to some friends I thought would benefit from the same guidance (Christmas gifts).
    We all live in Dubai and have opened ‘Swissquote’ savings account (no investments as yet), but after reading the section in your book outlining “couch potato portfolio” we were curious to know your thoughts on the company (Swissquote)? Would you recommend Swissquote to yield this type of investment portfolio? Your guidance would be greatly appreciated.
    Regards,
    Nick

  106. Lakmin says:

    Hi Andrew , not sure if u missed my comment above but any advice on which stock ETF to purchase on Saxo bank to start with ? Thanks Lakmin

  107. Lakmin says:

    Hi Andrew, not sure if you did not see my comment but any advice on my query ? Thanks Lakmin

  108. Frank says:

    Hi Andrew/All
    So I have surrendered as much as I can without penalty and have about 8K left in this Friends Provident product

    The ETF options recommended by Andrew have done well recently, I am very happy with the result, Thanks! again Andrew

    So I had a look at my remaining 8K with FP that has not grown at all in the last couple of months considering the recent stock market rally.
    So I selected the “Transaction History” tab in my account and I see Friends Provident have deduced 118 STG in fees last month…
    I do have my 8K spread across 6 different funds though….
    But still is a high deduction by them…. The Fee is labeled by them as “Inl Unit Charge”
    Frank

    • Frank,

      It never surprises me how Friends Provident finds a way to bleed money over time.

      On the index fund front, remember that you don’t really want your index funds to rise. If you are adding regular sums, you should prefer that they stagnate or fall. It’s not cool to lose money in different funds when index funds rise. But you shouldn’t be happy to see your index fund valuations increase, if you will be adding to them for many years. Think like a collector. And with Friends Provident out of the way, you’ll be a low cost collector.

      Cheers,
      Andrew

      • Frank says:

        Hi Andrew,
        “It never surprises me how Friends Provident finds a way to bleed money over time.”

        They are experts indeed.
        It will be interesting to see, for how long more they can keep doing this.

        Regards
        Frank

  109. Troi says:

    Hi Frank, Hi Andrew,
    I am another lazy investor (soon to be educated investor)that invested in FPI. I have been communicating with someone in the Singapore office and my next email with be to demand they return all my money with out penalty or remove me from the “bonus” plan. From your comments I am sure it will fall on deaf ears, however this is not ok in any way. We were lied to by Montpelier Malaysia and the office doors were closed. Currently I am in the process of removing them as financial advisor on the account. This leave me with the option to pull the money and take a 13K surrender fee, lower my monthly premium for a year but still get charged the percentage on the initial units, or something I haven’t thought of yet. If there is anyone out there that has been able to get the money back with out a surrender fee I would greatly appreciate the information on how they did it or if there is anyone out there thinking about stopping this so this doesn’t happen to some one else. Please respond to my email: [email protected]

    Thank you,

  110. Frank says:

    Hi Troi,
    ” I have been communicating with someone in the Singapore office and my next email with be to demand they return all my money with out penalty ”

    In my case the surrender penalty is just 4K, and I have been asking FP since the beginning of April for my money back, but have had no success…

    Their argument being they just host the funds and I should check with the financial advisor who sold me this plan. They also had the nerve to tell me that all investments carry an element of risk….

    Probably the best way to stop FP from doing this to other people, is for people to make posts on financial mailing lists, and spread the word among your local expat community

    Frank

  111. Troi says:

    Hi everyone, I was reading the above posts again to try and get my head around things. I have been told I can take out around 13K with no penalty, however I will still be paying on the initial units (signed up for 5 year). Should I take that out and invest it in one of your recommendations and leave the rest there? If I leave it, what funds should I put everything into for right now? Or should we take the hit on the surrender fee?

    I am still going to threaten to take this to the media but from all the comments it doesn’t sound promising. My last email I asked them to return all my funds or remove the Int charges.

    The word is spread on our community as we were not the only ones scammed by Montpelier Malaysia, now the same broker has moved to the Labuan Island office and was trying to get back business in the area.

    I don’t know how to post on financial mailing lists, but if you email details on how to do that I will get right on it.

    Thanks, Troi

  112. John says:

    Hi Andrew, I live in Bangalore India. I got an opportunity to work as an investment consultant with a company called efssaveinvest . I think they have tie up with few providers like RL360 etc. My job is to get investors to invest money , but this efssaveinvest is acting as a middle men or intermediary between the providers and the parties. Can I trust them, is there any risk associated with this?

    • toony says:

      John, “investment consultant” is their fancy word for luring you into a role that’s commonly known as an “insurance salesman” – nothing more. “Investment products” is simply the smoke screen to peddle extremely expensive insurance that no one needs or would ever buy!

      As a job bonus, you are likely to be paid commission only with minimal/no no sick/annual leave etc. It takes a long time to become good unless you have a natural gift and/or become desperate to use despicable sales technique to put food on the table.

      Overall, the whole can be seen as a large MLM scheme where only the insurance and intermediate companies make all the money while you do ALL the work and pay ALL the costs of doing business!

      They will also recommend you to start with immediate family members and close friends and branch out from there. It’s only a matter of time before your family and friends discover they have been financially scammed and will turn on you – have read many, many cases of this!!!

      Apart from the things I have mentioned, the job and website sounds great!

  113. JPExpat says:

    Hi All
    I have also surrendered my Policy with FP, and am now fighting for the rest of my money back
    The was I see it, this so called “financial advisor” who sold me this product, was paid a bonus for selling this, and so now my money is locked into this policy because of this bonus.

    After reading the below articles on how these financial advisors actually behave, I am determined to fight for my money

    http://www.andrew-drummond.com/2014/09/lm-appalling-offshore-stitch-up-of.html
    http://www.scmp.com/magazines/post-magazine/article/1558078/when-investment-fund-goes-bad

    JPExpat

    • toony says:

      JPExpat,
      Well done on cutting your losses and getting out! You are angry – I get that. However, think with your head instead of emotions!

      Don’t chase after your losses like a gambler at the casino – it never ends well. FP have rigged the game and even the law is on their side. Chasing your losses will cost you many times over – due to many tactics up their sleeves.

      What to get back at them? Tell and warn as many people as possible. Every person you save will deprive them of 10s to 100s of thousands of dollars! Much more effective and easier to achieve!

  114. Daniel says:

    I am starting to realize that I have fallen for the same scam as everyone else on this blog. I was 100% mis-sold a policy with FP. I am a couple of years into the policy. Should I take the hit and remove all the funds which I deposited after the initial 18 month period?

    I was informed I could take everything out after 18 months; in reality, I can take the funds which were placed in after the 18 months. Total scam.

    I have put in about 30K and the valuation is approximately 48K. My question is – Do I take what I can out now or surrender later down the line? Should I also stop paying into the account with immediate effect?

    • toony says:

      Daniel,

      Yes, you have been mislead, mis-sold, lied to and likely had fraud by deception committed on you by the insurance salesperson (masquerading as an IFA).

      Unfortunately no legal recourse due to lack of regulations and the parties involved (insurance broker/insurance company/regulators) getting kickbacks from each other at your expenses.

      Here’s the attack plan to minimise your losses:
      1. Stop the payments IMMEDIATELY!
      2. Full surrender ASAP to get as much of your funds back as possible
      3. Treat the loss as your financial education and don’t beat yourself over it
      4. Get Andrew’s book and see how easy it is to DIY, with step by step instructions
      5. Inform as many expats about the scam as possible.

      Some notes for you:
      – 48k valuation is a sham (has inflated and imaginary initial units which is the upfront non-refundable fees)
      – 30k over 24 months -> 1.25k per month.
      – they steal 100% of everything you put in the first 18 months (and 4-6% as yearly ongoing fees)
      – looking at getting 7-7.5k back as this is the REAL value of portfolio when you surrender.
      – Don’t be fool into staying longer or freezing etc to reduce the “surrender fee”. This is another trap – every dollar of “surrender fee” they reduce, they will take 105% of it in “account fees” from the REAL part of your portfolio! Ie, the longer you stay, the further you fall behind financially!
      – Hard to see but the 4-6% annual costs is >>> than losing 100% of the first 18 months (5% in fees means they steal 70.5% of your entire portfolio in 25 years – imagine losing that much of your entire life savings!)
      – Never ever deal with an offshore “IFA” and insurance companies when it comes to your finance again!

      Good luck 🙂

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