Giving "Wealth" a Bad Name

Anyone that has something to do with money and finances is now a Wealth Planner or Wealth Manager/Advisor. In the last installment I plan on doing about players in the trust industry are these "wealth" people.

Trust people were traditionally very weak in finances and investments. Only in the last 30years or so have trustee investment laws evolved to account for the ever changing investment market. Before, trustees were limited to "safe, low risk" investments so investment performance and ability wasn't a big a weakness as it is today. Jurisdictions like Hong Kong are still in the dark ages when it comes to trustee investment laws. Trust people traditionally built the structure to house the investments but now the investment people run it.

So who are these investment people? Now with the financial advisers, it gets a little messy. Like gold-diggers are attracted to old men with heart conditions, this mish-mash of IFAs, independent stock brokers, wealth managers, retirement advisers, financial planners/consultants, financing and forex traders are springing up all over the place trying to capture a piece of the lucrative market. They can be small and local or large and international. They can be ex-Lehman Brothers, they can be fresh grads. Some have even opened up restricted banks. All of them seem to offer advice on wealth protection, succession, estate/probate and will planning and trusts. Now you say that's no different than some of the retail trustee banks and independent trustees out there. True to a certain degree, but the difference is those organisations actually have trust companies and trust licenses and typically end up with the trust. These advisers only yap from the sidelines, they have no trust companies. Their goal is to manage your money, sell you those unit trusts, put you in some product. They couldn't care less about the whats or hows as long as they are the investment manager of the funds.

For those who know they know a little and refer their clients to a trust adviser are commendable (even though they may get a referral commission). I have no problems with those.

Although I wish it was an urban myth, I have seen FAs and WMs that have trust application forms in hand. To speed up the process, they are essentially representing some trust company that they are aligned with and have the audacity to fill out the forms and complete the trust documentation themselves and of course, appoint themselves as the trust's investment adviser/manager. The trustee never meets the settlor and everything is sent back and forth by the FA/WM. If that doesn't scare you then nothing will.

The ones I do have a problem with are those that try to plan trusts (or even estate or tax planning). Here is where a little knowledge is a very dangerous thing. They are regulated as far as investment and their insurance sales but when it comes to trusts, these are by far the scariest advisers (if you can call them that) I have ever encountered. Some of the most incorrect, misleading and incompetent trust advice and planning have come from this bunch. If you believe they are good for something fine, just don't let them advise on trusts. If you need to work with them, tell them to shut and let you do the talking. These guys make private bankers look respectable. Wait a minute, some of them are ex-private bankers! Some of them weren't good enough to even get a private banking job. Harsh words and a disservice to those that try hard and do well for their clients but prove me wrong. If they have good trust people, I haven't seen them. You really need to do due diligence on their people before signing up with them. Have any of them worked in a trust company before? Are any former probate lawyers?

Just to be fair, I know about a half a dozen former Head of Private Banking or Director Trust and Fiduciary Services out there in their own financial advisory firms in Asia. If they are your financial adviser than I say you're one of the lucky ones and that if they have trust advice then it is probably very good. Unfortunately, that's only 6 out of the hundreds of FA firms out there.

In case it appears I am undecided, then I make it simple: avoid these types of trust advisers. They spew out catch-phrases and buzz words but know little of the implications. They prey on the unsophisticated (and many with wealth in Asia are unsophisticated, simple hard-working entrepreneurs. Just look at Li Ka-Shing, one of the wealthiest men in the world and he is as educated as your typical country pumpkin. That's not saying he isn't smart, he's just not sophisticated). They abuse their position of trust by "pretending" to be all-round competent advisers.

They are selling aspirin as a cure without any medical training or knowledge. Aspirin may offer some relief but it doesn't cure a lot. Aspirin can kill too.