Merry Christmas and Best Wishes for 2010

To the visitors of my blog, all the best for 2010

Tan Kin Lian

Playing with fire

An elderly bank officer told me. He spent a few years as a wealth manager of a bank. He knew the risks of the financial products and were careful in explaining the risks to his clients.

These same products were given to young bank officers to sell to their clients. The young officers did not understand the products but they were bold in recommending them to their clients. They were driven by the commission that comes with the sales and were keen to meet the sales targets.

Why are these young people allowed to play with fire? We need a better way of regulating the sale of financial products. Surely, risky and complex products cannot be allowed to be sold by inexperienced people?

Imagine someone who takes a 3 week course in medicine who is then allowed to prescribe drugs!

Churning the CPF savings

There is a report about financial advisers advising low income families to wthdraw their CPF savings for investment in unit trusts. The financial advisers earn up to 3% on the front end charges and give a rebate to the CPF member. By churning these investments many times, the CPF member is able to withdraw a fairly significant  amount of savings. The problem is - for every $1 that is withdrawn, the CPF member is likely to lose $3 (my guess) of savings.

The CPF tries to bar the errant financial advisers from being involved in the future. This is similar to telling a thief that if he is caught, he will be barred from stealing in the future. I hope that our Government will make this type of activity into a crime that can send the culprits to jail.

We have a law on Financial Advice, which is administered by the Monetary Authority of Singapore. Surely, this law requires the licensed advisers to operate ethically and avoid dishonest transactions, such as illegal withdrawals of CPF savings? If this is the case, the MAS should investigate and take action under this law. We cannot have people who are licenced to abuse their privileges.

Tan Kin Lian

Rechargeable torchlight and shape quiz

You can get them from the following shop in Sim Lim Tower:

Torchlight: $8, Shape Quiz: $2

Skylimit Int Enterprise Ptd Ltd

10 Jalan Besar

#B1-21 Sim Lim Tower
Singapore 208787
Telephone: 62929155 / 62935766
Emal: info@skylimitie.com

Vera and Nadya

My grand daughter Vera is now 3 years old. Her sister, Nadya, is 1 year old. They had a birthday party recently. Visit this blog.

Here is a video of their visit to my home.

Helping the poor

We need a better way to help the poor in Singapore, rather than the bureaucratic, "many helping hands" approach.

Ask about the charges

I am the trustee for a trust fund set up to provide income for a non-profit organisation. The trustees held a meeting with the investment adviser to discuss the investment policy of the fund. The investment adviser made some recommendations on the asset allocation of the trust fund, and in particular, how to invest the cash portion that has grown to a significant proportion.

After discussion, the trustees accepted the recommendation. I finally asked the investment adviser, "how much do you earn as commission through executing the transactions that you have recommended?"

The client service manager was taken aback by this unexpected question, but she quickly recovered and replied, "It is in accordance with what has been told and approved by the trustees previously and that is ....% for shares and ....% for bonds".

Lesson: Never be shy to ask this important question. Do not assume that you know. Even if knew, it s good to get the facts reconfirmed.

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Tan Kin Lian
www.tankinlian.blogspot.com