From next year, you will have to go through a financial adviser to invest in unit trusts. You cannot invest in them directly, unless you prove that you have the financial knowledge. This new rule has its positive and negative points. But its most negative point is that it does not address the underlying issue that it is trying to correct.
http://www.reuters.com/article/2011/12/19/singapore-funds-idUSL3E7N73ZT20111219
http://www.reuters.com/article/2011/12/19/singapore-funds-idUSL3E7N73ZT20111219
I agree that these new financial policies has a good objective and aim; to regulate the financial industry and safeguard investors. But this is only from the perspective of the government.
ReplyDeleteHowever, has the government consider the perspectives of investors and industry-practitioners?
I proposed my arguments below:
What about self-directed investors that have spent their precious times in acquiring sufficient investment knowledge (without having formal financial qualifications)?
Are we discouraging these society from investing for their financial security?
And subsequently can the government afford to support these society in their retirement years (when their CPF savings are't enough)?
In raising the retirement age, the ultimate aim is for the society to be self-reliant and self-sufficient. Those already in their retirement years and unable to work, their alternative source of income is maybe to invest. But by disqualifying them to invest, is the government sending the signal that the society can rely on the governmental support for their retirement needs?
What about investors whose profession and passion is in non-financial sectors but yet want to start an investment practice? Is it fair for them to be disqualified just because they hold non-financial qualifications?
The world is undergoing globalisation especially the financial world, and globalisation aims to minimise the effects of physical borders. By having these new policies, doesn't it curb the society even more by having them to have to overcome another border?
Futhermore, the society is getting more and more affluent. By implementing such policies, doesn't it impose a limitation for the society (who are influenced to expand their financial potential and horizons)?
I have a lot more arguments in not implementing these new financial policies, but the above are basically my point.
I hope that the government (and policy-makers) can review its policies before implementing.
As a side note, I recently wanted to start a new unit trust investment through online banking; but prior to the unit trust purchase I was required to take a Customer Knowledge Assessment, which disqualified me from starting my intended investment.
For me, I do not hold any financial qualifications (but a Diploma in the Chemical Sciences and I've even aced a financial planning course and I've even completed a short course in Corporate Finance by NTU); I lack experience; and I can't have proper job due to my medical condition; I am a young adult at 22; my parents are coming of age. But the fact that I can argue through these policies despite not having financial qualifications, doesn't it prove my worth?
This comment above is just my opinions. Thank you.
Mohammed,
ReplyDeleteIf you can prove that you are investment savvy by qualification or experience no one can stop you from DIY . The CKA requirement is to protect consumers from charlatans insurance salesmen. But if you are not sure you will be better off having an 'investment expert' to help you. Anything goes wrong the expert is accountable . But if you claim you are savvy all the responsibilities fall on you and you cannot sue anyone but yourself.You alone is answerable.
You cannot claim section 27 of the law to sue anyone. You understand? The CKA IS TO PROTECT YOU from the wolves.
My understanding is that unit trusts are for those who are blur about investments, thus leaving the decision to expert fund managers who get a cut whatever the outcome of their decision.
ReplyDeleteSince there are questionable trusts and funds freely available over the counter, one can conclude that the government still prefers an unregulated supply of financial instruments instead of barring the dubious ones from coming to market. So if the fund collapses, the investors “went in with their eyes open” and the advisor gets the blame. Kinda like passing the buck?
This shows MAS is unwilling to bear the responsibility of vetting products for sale to ordinary people,
ReplyDeleteand the risk onus is still on the seller and the buyer, and dubious instruments are all welcomed in with open arms as before. Should another Lehman-like case happen again, this time MAS could boldly show its face, and dun need to hide or push out LKY to talk on its behalf, about investors going in with their eyes open.
Great strategy in washing its hands off any responsibility whatsoever. What an easy job for a Regulator, just shake legs, do nothing and get paid by the millions. Even an idiot could take up the post.