Dodgy financial consultants now targeting wealthy UAE expats
Posted on 29 August 2011 with 5 comments from readers
Your mobile rings. Have you won the lottery? Is your wife wanting something from Spinneys? Has something gone wrong at work? An old friend coming to see you perhaps? No, it’s another of those damned annoying financial consultants.
The approach is always the same, whether from an ostensibly blue-chip bank or from the lesser fry who often choose a name somewhat close to a much larger organization to which they actually have no connection.
The call
‘Hello Mr ArabianMoney. I’m Mike from XYZ and we wanted to invite you to come to a meeting to discuss your financial situation. There is no obligation. You might have been thinking about doing something like this, it is only sensible when you are living tax-free in the Gulf to plan for the future’.
If you follow through on this just think of what you are doing. You are telling a complete stranger your entire financial history, explaining everything he needs to know to work out the most comprehensive way to rip you off or alternatively to give you the best financial advice in the business free-of-charge!
How naive and innocent about the ways of the world can you get? Some banks don’t do cold calls, like HSBC, although their wealth management division will happily dispense advice that may not always be entirely removed from the bank’s need to make a profit.
Recently ArabianMoney has learnt that financial consultants who are finding the pickings very lean these days in some global markets are targeting the UAE for victims. Think hyenas looking for the vulnerable young, sick or elderly.
For those readers who may have already signed on the dotted line we have another warning. Be careful who you let examine your case to determine whether you have been ripped off. There is something called double jeopardy.
Fools and money
We realize that a fool and his or her money are easily parted. But we don’t understand how it is that expatriates who come to the Gulf to earn high tax-free salaries can be so careless and stupid with their investments.
The best approach is always to manage your own financial affairs listening skeptically to advice and looking for independent investment ideas in which the person giving that advice has no direct financial interest.
We offer the ArabianMoney investment newsletter with independent advice for a very modest annual fee and that is our only interest (subscribe here). We cannot and have no interest in acting as your personal financial adviser, only you can really do that.
Incidentally those cold calling financial consultants are in breach of UAE Central Bank regulations (click here) but they do so anyhow. If that is all the protection the public can count on in the UAE then you really do need to take adequate precautions yourself.
5 Comments posted by readers:
I am pleased that you’ve gone after these financial advisers and investment fund people.
I heard yesterday that, over the past decade or so, pensioners have not done well but pension fund managers have done very well indeed. A rip off, as you say, and some are calling for tightening the regulations in regard to pension fund investing conduct.
I heard that a relative of mine had left more than a £million and less than £2 million in his will. He was in his nineties when he died and had inherited some wealth as a young man. In spite of his age, his inheritance and his professional salary, he could only muster about £1.5 million on death.
He was so confident to leave the management of his financial affairs to a stock broker he liked, and was deluded to think that they were doing well for him. As far as I am concerned, the stock brokers and others took him for a ride and fleeced him.
If I don’t leave very much more indeed that £1.5 million in my will in my nineties having managed my own financial investment in gold and silver, I will be very surprised. With only an entry fee into the bullion market, I cannot be fleeced whilst my bullion is rising in price during this current wealth cycle in favour of gold and silver.
I will not post names of suppliers, all Western household names, or the odious Advisory companies who are reliant on scant and weak, where present, regulation.
Just be wary of the friendly person in your sporting, churching or mother’s circles, all slippery, mendacious and duplicitous, believe it or not, snakes!
All very true but most people do not have the knowledge or inclination to manage their own affairs. To be fair, there is a huge amount of conflicting information out there, which often confounds us all.
Some of these FA’s are fairly reputable and do at least force the average punter to get his financial house in order and most importantly, to save regularly.
The downside is the high fees that may provide significant drag on funds performance. But a poorly performing fund is better than no fund at all, when otherwise the punter would have frittered away his contribution on the Dubai lifestyle.
The danger is that the FA will point you towards the plan that is best for him in terms of commission while the customer’s true needs are a lower priority. There is an inherent conflict of interest in this regard, because many FA’s are on low salaries or are paid commission only.
At least the major banks pay their Wealth Management advisers a proper salary. While their advice may be geared to the bank’s own funds, it will be decent if not optimal advice.
Alternatively, I spotted 2 reputable FA’s on the British Expats forum. One writes for the National newspaper.
Of course, cold callers are to be avoided.
It is indeed an odd situation that fund managers earn 7-digit salaries while under-performing against the market.
I have lost money over the past several years through my efforts to independently manage my money, however it has been a priceless education.
Initially I was reckless, greedy and seduced by leverage. I was excited by the range of investments I had access to and like a child in a sweet shop wanted to try them all. I was too active, in and out of investments every day, paying fees everyday, enriching my broker everyday.
I have stuck with it and now have twenty or thirty years ahead of me to build on the knowledge I have gained. Its not just market knowledge, not just an deeper understand of financial products, but also a deeper understand
of myself, my flaws, my capacity to make successful decisions in the face of conflicting information, media pressure and market pressure.
At some point in the near future I will be honest enough to write up some of the ways in which I have lost money, the financial flames that have attracted my inner moth. It would make a useful roadmap for anyone interest in preserving wealth.
In the meantime I have a long post about fishing which eventually comes around to a short term trade and hopefully contains some buried wisdom from my hard earned experience, have a look at my blog here – http://canitrade.blogspot.com