Size does matter when you’re planning to retire in Thailand
So, I just returned with my wife and daughter to live in Hong Kong after a decade in Philippines. This is where I started my offshore advisory career way back in 1994, it’s where I met my current, hopefully last, wife.
But what’s changed in ten years? On the face of it, not that much. Clearly there are many more, ever taller buildings than in 2003 but the biggest change for me is the sheer numbers of bodies on the streets. Central district at lunchtime, Causeway Bay and Mong Kok shopping areas early evening and weekends have always been like trying to swim against a shoal of fish coming at you but now, in 2014, it’s utter madness here. People appear to be deliberately aiming at you as they walk down the street.
I look out of my office window and I marvel at the sheer overwhelming feeling of affluence, while even in 2014, only a few miles down the road, many local people live close to the poverty line. In Hong Kong the divide between rich and poor is greater than almost any other place.
Almost all my Hong Kong based clients have moved on, a testament to the transitory nature of the place but many of them are still expat in some other place and easy to keep in touch with.
My new employer obviously expects me to bring in new clients otherwise I’m an expensive “bum on the seat” and so I find myself in much the same situation as I did in 1994 but with 20 years experience under my slightly greatly enlarged belt and this time, I’m not completely skint.
Anyway to quote the late great Peter Cooke, it’s a long introduction but it’s rather a short song. Regulation has come to Hong Kong.
From an industry perspective, two things have changed for me since I was here last. First, the quality of advisors in the industry in Hong Kong has markedly improved. It’s all very much more professional and all the old carpet-baggers have long gone and many fallen on their proverbial swords.
Second, the regulatory environment has tightened up considerably although mostly so far the real burden has been on the product providers with more disclosure and client compliance calls to check on the advice given.
Personally I agree with this as if you want to create a safer and sounder marketplace, it has to be at the product level. It’s a bit like the guns debate in the US, if you don’t produce them, they can’t kill people because guns don’t kill people, people kill people.
There was an old saying back in the day before email and internet which goes along the lines of, “a memo is generally written less to inform the reader than to protect the writer”.
This is what I feel has brought about much of the hideous increase in paperwork that a client must endure just to invest his (or her) hard-earned cash with a financial planner. I mean, the ultimate goal is to retire in Thailand or another beautiful destination, where you can sit back on a beach watching the sunset, right?
The financial services regulators have a policy to cover their own backs protect the investor and they do that by insisting that the investor sign something like eight different declarations on two sides of A4 paper acknowledging such things as “I understand commission is payable”, “I have the right to change my mind”, “I may lose money if I stop paying”. It’s overkill of course, and surely this is mainly common sense and therefore one has to assume that all this additional paper and signature is protection of the authorities that govern, not those that invest.
Personal financial planning and investments, call it wealth management if you like is not, in my opinion, supposed to be financial advisor telling you what to do with your money, it should be a partnership between client and advisor. Accountancy is like physics, there are rules and laws that cannot be broken but financial planning is like art, there are many routes to get to your destination, it’s not an exact science how you do it.
We are here to guide you taking into account your personal circumstances, wishes and desires. It’s just not a ‘one size fits all’ situation.
Of course, we need to be properly trained and carry with us the experience that life and hundreds of clients brings us but it’s a two-way street as much of what we do is personal to you. How do you want to live your life, what is important about money to you, and how are you planning to go about your retirement?
Things go wrong sometimes but this is when we have to work together harder to straighten out problems.
What a strict regulatory environment ultimately leads to is a dilution of the service providers in the market. Ultimately one hopes that it’s a case of quality over quantity and eventually I believe that is what happens.
First, the crooks and the cowboys go elsewhere for easier pickings and then the small one and two-man band firms find that the cost both financial and in time spent is too much for them and so they disappear or get amalgamated and finally even the mid-size firms get taken out as costs go through the roof, Indemnity insurance becomes harder to get and/or prohibitively expensive.
So, what’s my point? In a nutshell, I suppose it’s this;
- Working with an advisor located in a regulated jurisdiction probably means less choice but the quality of the choice will be higher and the opportunity for redress in cases where bad advice is proven, is markedly higher.
Big is beautiful now and will be going forward. I saw the writing on the wall a while ago and while it’s a small culture shock going from one man band to a small cog in a mighty machine, the benefits of being part of that machine are immediately apparent to me with bespoke and exclusive products, financial clout and the most important commodity of all which is TIME. Now I have real time to devote to what I do best. No more negotiating with cleaners or going to the post office or courier, chasing up insurance companies and fund managers. When you’re planning something as important as your dream to retire in Thailand, you want your adviser to be fully focused on helping you achieve that goal.
And let’s not forget, the bigger the institution you are invested through and upon whose advice you rely, the more likely they will be able to stump up the cash in the event you can prove wrongdoing. In the handful of cases where an investor has sued his IFA over the last twenty years, notably Towry Law and the Barber case in Hong Kong, investors did not get fully recompensed. Imagine even contemplating suing Joe Bloggs ‘one man band’. There is no capital there and Professional Indemnity insurers make a career out of finding ways to refuse claims.
None of this of course solves the problems of collective investments going belly up due to fraud or liquidity problems, the latter often caused by scared investors running for the exit as rumours get started.
The zero interest rate policy (ZIRP) of governments around the world is arguably driving yield seekers, mostly elderly, into riskier and riskier investments just to maintain some semblance of income.
Here’s my simple advice to anyone buying, in particular, an investment-linked life assurance policy. When you receive the documents; READ THEM. This will save you a lot of bother because this is the final contract and may or may not bear any relation to what you may or may not have been told by your particular advisor.
This is the important bit. If you acknowledge receipt of these documents and you don’t read them then it will be really hard later to go back in five years time and say this is not what you thought you agreed to.
You know, we can give you all the information possible but even with full disclosure of product information there is an obligation on the part of the participants to take responsibility for using the full information to make their own independent investment decisions. That’s why it’s called financial ADVICE, right?
Author: Mark Plummer
Mark Plummer is currently a Wealth manager with Acuma Hong Kong Limited & founder of the experienced investor website Invest Offshore Direct
This is not an offer to invest. Nothing here should be construed as investment advice. If you want specific advice then you should consult a financial advisor.
The opinions expressed herein are mine and do not necessarily reflect the opinions of Acuma Hong Kong Limited or the deVere Group.