Barclay Spencer International

[Arkady]

Hi,

I have been watching this topic with a lot of interest. I work for a big IFA in Bangkok but we deal with clients all over the country and all over the world. All these different IFAs keep trying to champion themselves as the biggest and the best. You can't blame them for doing it. Many of the products offered are the same or similar so distinguishing ones selves from everyone else is important.

I can only speak for my own company. I do know from speaking to my clients that they are being contacted by cowboys multiple times a week. This doesn't make my job easy at all.

My organisation is the largest independent financial advisory. We are U.K. FSA approved. We work exclusively with Deutsche Bank, ING and Morgan Stanley.

While many of you worry about companies wanting to get your money with a quick commission and then leaving you to lose money thereafter we are not like that.

My company uses products with guaranteed protection of the money you invest. There are no clauses like older schemes and of course the potential returns are unlimited. These are very popular products during the current economic climate. However you may worry what if the banks themselves fail like Lehman brothers. While I would say this is highly unlikely, this is not a problem again. The bonds we use are 90%

capital protected to an uncapped amount. That's better than any bank and thus safer. You will not get better risk\reward options.

We offer guaranteed profits, what else can I say. I am happy to speak further with anyone who wishes to contact me by PM etc.

I have no reason to doubt anything you say but I would urge investors to check firms' claims to be FSA approved by simply calling the FSA in the UK. Being part of a group that is FSA approved in the UK is certainly a good sign, as the firm should have a repository of knowledge about ethics and best practice, but that still doesn't necessarily mean you are home and dry. The FSA has no power to regulate overseas subsidiaries or affiliates of FSA approved firm's nor do its regulations apply to sales by approved firms to overseas residents. A lot of people were scammed a few years ago by Gibraltar domiciled funds that would have been illegal in the UK but were set up by an FSA approved UK firm to be sold to British expats. The FSA could do nothing about these cases.

Edited February 28, 2009 by Arkady

[mojo80]

Barclay Spencer, Devere and partners, Montpelier, Austin Morris associates, Global Wealth Management etc etc.

These are all Independent Financial advisors, they work purely on a commision basis.

The commisions are large and some of the best guys in these companys earn ALOT! ie from 100,000-1,000,000 GBP per year.

All inbestments are heald in the channel islands, guernsey, guersey, Isle of man. maybe a few other companis like aviva in singapore.

The compaines are simple an intermediary selling financial products from Zurich, Friends Provident, Generali etc etc.

The funds which clients can be placed in are determined by the those above companies, most funds are by jp morgan, jp fleming, hsbc, morgan stanley, merrill lynch etc etc.

Depending on what your looking to achive depends on the type of funds your placed in. ie high risk = bric funds, Brazil russia india china etc etc.

These plans are good aslong as you only save an amount you comfortable with, dont be pushed to save more while your an expat, as you will have to reduce this ammount once you return home and have less surplus, the charges you pay will be based on the higher figure for the life of the contratc.

and more importantly see it through for the duration of the investment life, ie anywhere between 5-25 years.

Dont be pushed into saving for 25 years as this is simple done so the ifa earns a lot of commision.

If you consider these savings plans, my advice would be to save a comfortable amount if your monthly surpluss is 50,000 baht save about 15-25% of that, into a 10 year plan.

If you saved 50,000k over 25 years the ifa commision would be around 250,000baht for him and 250,000baht for the company.

This is taken out of your initial period which is between 3.6-23 months depending on the plan lenght.

If at any point you not happy with the company your dealing with, contact your pension provider and they can reckomend other companies to service your account. you dont have to stay with the same guys.

Also if you cancel in the initial period you wont get any money back and the ifa wont get paid either. so it is in there best intrest.

These plans work on dollar cost averaging, simple straight forward. these guys are simply sales men, a few will actually be qulified in some way, but not all. alot of them will actually have your best intrest at heart, but unfortunalty most ownt as the bottom line is lining there pockets.

The advice is free, and there can be some helpful areas which you could benefit from. however that depends on the advice your given.

Simple things like letting you bank know your offshores, can stop you from paying tax on some of you savings and isa's with them.

Or if you want to access you pensions in the uk before retirement you can transfer this into a qrops pension, ie a trust set up in hongkong for your uk pension, once held there for 5 years you have full access to you pension with no annuity etc etc.

If anyone needs some unbiase advice about these companys or savings plans please feel free to pm me.

Im not a ifa, but know alot about the industry from past experiance.

[mojo80]

The bonds we use are 90%

capital protected to an uncapped amount.*********** from pete jones.

Those bonds are protected only if the backing company goes under! they are not protected if the companies invested in go under.

The same applies to the " UP TO 90% goverment backed investor protection." This is the case with companies based in the channel islands, however as good as it is for the companies like FPI or Zurich generali, this doesnt however proctect against the funds invested in going under!

Just beaware

[Arkady]

Thanks for the explanation mojo80. What you have described is the British model of financial planning for retail investors that grew out of the sales structure of the insurance industry, starting with all of life policies and on to savings and investment policies. The only difference is that today's commission salesmen are called IFAs and are no longer tied to only one product provider. The model is marginally preferable because the IFAs can choose products from different providers but this of course means that the product providers have to sell to the IFAs and the thing that makes them most appealing to the IFAs is a fat commission structure. These products are laden with fees in order to pay the commissions that attract the IFAs: high initial commission (front end load), typically 5-6%; early withdrawal penalty (back end load); high annual management fees (1-2%) of which up to 50% may be rebated back to the IFA (trailers); performance fees or carried interest (up to 20% of profits of which up to 50% may be rebated to the IFA as a trailer.

Think a bit about the claim that commission sellers earn from £100k to £1 million a year. If a top performer can earn an average in the middle of that range, say £500k, getting 50% of personal sales commission and they are selling products charging a whopping 10% in the first year, they need to sell £10 million a year, perhaps £330k each to 30 clients. That is already quite a stretch but, if the total fees are a lot less than 10% it is hard to imagine that there are enough wealthy expats in a backwater like Bangkok to pay those sort of incomes to the sellers. If the clients invested in exchange tradable funds (ETFs) by themselves instead, they would probably pay only about 0.55% i.e. £1.8k rather than £33k on a £330k investment. The managed investments have got to really do great guns to catch up from being 10% down off the starters blocks. Unfortunately less 5% of them regularly beat their bench marks. Then you have pay the back end loads to get out of them, if you are unhappy with the performance.

Even more worrying than the insurance company or investment bank products is perhaps the trend of the last few years for offshore IFAs to sell unregulated hedge fund products to their clients. Hedge funds are allowed to operate with either nil or very light regulation on the basis that they only accept subscriptions from wealthy individuals with minimum levels of liquid assets - around US$5 million in most jurisdictions. While professional fund of fund managers screen hedge funds based on their performance and low level of fees, the offshore IFAs select them based on their high fee structure and most importantly the existence of a front end load in order to get their commission. This latter requirement limits the field drastically because the hedge fund industry is by necessity orientated towards wealthy individuals and institutions, nearly all of whom refuse to pay front end loads. If the hedge funds IFAs are working with are in respectable jurisdictions they are likely to be violating anti money laundering regulations by not doing due diligence on their investors and rejecting investments from individuals who do not have liquid assets of at least US$5 million. Alternatively the IFAs may be pooling the assets of clients to invest in the hedge funds which means that assets are no longer legally owned by the investors and can vaporize along with the unregulated offshore vehicle used to pool the funds. More pernicious still is the possibility that some offshore IFAs may have gone the whole hog and set up their own fund of fund hedge fund management companies via unregulated offshore companies that may have paid-up capital of only US$1. See another thread on this possibility http://www.thaivisa.com/forum/London-Nomin...ds-t244542.html .

Some of the IFAs operating in Thailand are undoubtedly licensed in the UK but I would suspect that most of the rank and file commission sellers are not. At any rate while they are operating offshore and selling to overseas based clients, including British nationals, they are untoucable by the UK authorities. Certainly not a single one of the Thai based IFAs or their firms are licensed by the Thai SEC, despite some ludicrous claims to the contrary. This can be verified easily on the phone by the SEC's English speaking staff.

[Arkady]

No Darwin,

I don't think that you're getting the distinction in portfolio theory between asset allocation (what Yale & Harvard do) and asset selection (what individual managers do). Maybe I'm partly toblame by falling into the trap of talking about active versus passive. What we really should be looking at is asset allocation versus asset selection.

The "Vanguard approach", as it's generally understood, was a reaction by Bogle to the over-reliance on stock-selection following the rise to prominence of the nifty-fifty - "the kidder-Peabody" approach in the late 1960s. At that time, moving away from this reliance was a good thing. However over time turning that into a mantra that passive index replication was the only true way became as much of a blind alley as the Kidder Peabody approach had been in the first place. Within a portfolio there is a place for active and for passive - using ETFs as a proxy is something that we frequently do BUT we don't try to make a religion out of it - you have to use the right tools to exploit a given situation; a blind disciple of passive asset selection is as likely to be wrong as a blind disciple of active asset selection and meanwhile the really dangerous thing is that they're creating this furore about something that's relatively irrelevant (constitutes less than 5% of portfolio returns) and distracting people like yourself from the real issue that drives 90% of returns, asset allocation - which is an active process per se.Since you ask, our clients pay low fees and have had access to, thanks to the allocation approach (we have used the same portfolio manager for almost 10 years now), what is, according to S&P, the best 5 years returns for every 5 year calendar period starting since 1998 except for one. This is pretty exceptional and yet the media focus remains on the debate about asset selection because it's easier to turn that into soundbites and also because the SEC still regulate using a framework drawn up by Joseph P Kennedy!

Higher net returns at lower risks come from the active process of asset allocation and not this humbug debate about which kind of asset selection that the media (especially US TV financial media) loves to perpetuate.

cheers,

Paul

I hear a lot of name dropping and flannel here but nothing of substance justifying why it is beneficial to carve large chunks of front end load out of clients’ nest eggs at the outset and then charge layers of hidden fees, topping it all out with a back end load when they try to escape.

Several years after this debate was opened the Thai SEC still has no record of any one at this firm registered as a licensed financial advisor.

The original framework of the US SEC established in the 1930s, the Securities and Exchange Act, which was not drafted by Joseph Kennedy who was merely the first head of the SEC, was largely very sensible and is still applicable in today’s environment. It forces a great deal of disclosure on the issuers of securities and makes it more difficult for unregulated products to be sold to average investors in the US. Another important piece of legislation that came in alongside the SEC Act as a response to the Crash of 1929 was the Glass-Steagall Act that separated the activities of commercial and investment banks. Repealing this sensible law in favor of self regulation by banks was responsible for much of the ills faced by the global economy today.