- Deputy Prime Minister and Chairman of the Monetary Authority of Singapore, Mr. Lee Hsien Loong in a parliamentary address on 16 October 2003.
So it is Caveat Emptor or Buyers Beware - read the fine prints and ask questions so that you understand the investment products before you put your hard-earned $ in them; don't be rushed into a quick decision, especially when clouded by tempting offers of freebies.
You may have to bear fees, expenses and/or investment losses if you change your mind about purchasing the product, or decide to sell it prematurely.
Key Questions To Ask The Financial Adviser's Representative:
1. Why is this product suitable for me?
2. What type of product is this? Is it a life insurance policy, unit trust or structured deposit? Is it primarily for savings, investments or insurance protection?
3. What benefits does this product offer? Which benefits are guaranteed and which are not?
4. What instruments does the product invest in? How risky are these underlying instruments?
5. Is this product suitable for individuals with low, medium or high risk tolerance levels? What is my risk profile?
6. How long must I stay invested? What are the penalties, restrictions and procedures if I decide to liquidate some or all of my investments earlier?
7. What are the various fees and charges? Does the product provider have the discretion to change the fees and charges at any time or is there a cap?
8. If I were to purchase the recommended product, how can I monitor the performance of my investment? What reports and updates will I receive? How often will I receive these reports and updates?
9. What if I find that the investment product is not suitable after I have purchased it? Can I return the product and get my money back? If so, how soon must I inform the Financial Adviser of my decision to return the product?
As the old saying goes, "A fool and his money is soon parted". Take responsibility for your own money and decision instead of crying foul to regulators when the investment decision turns bad. Don't buy any investment product that you don't understand.
2 comments:
Well,some of us may be lamenting,"Life isn't or should n't be like that." You bought a bond or stock,and it blew up.And bonds are supposed to be safe investments.
But then again,sometimes things happen that cannot be foreseen.Who could have foreseen Lehman going belly up,or for that matter,AIG running into dire straits?
Still,if the banks are found (negligent)in advising their customers,they must surely bear some responsiblities.
That said,it does not obviate the need to understand and scrutinise thoroughly any investment;more so,if they involve a large sum of money.When it comes to our own hard-earned money,we can never be too careful.
Surprisingly,I too succumb to the habit of checking,rechecking,and even quibbling,alas,over only small purchases at the supermarket;trying at most to save a few dollars.But when it comes to buying stocks,I sometimes dispense with the analysis.Irrational? Maybe.
As the saying goes, "The lawyer who represents himself has a fool for a client."
Maybe, that applies to us financial advisers as well, as we lose objectivity when we handle our own investments.
I agree that it was probable that many of the banks's so-called Relationship Managers might have tended to gloss over the details and point to the strength/reputation of the issuers, when pushing seemingly safe financial products, but ultimately, it was our own responsiblity to sieve out and verify the facts before parting with our hard-earned money.
Remember that the oldest tricks of confidence tricksters are always to play with one's greed, compassion and/or fears, we should be wary when people come to us to sell products that promise high returns at low risks, much like a fund once upon a time called Dynamic Guaranteed Fund - the low risk was right but the high returns never materialise.
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