Me & My Money Series (Sunday Times)

temperament,

I am not good in sales; I help people make comfortable decisions themselves.

1) Most people don't buy insurance; they were sold to (by people they thought were looking out for their best interest).

2) Financial advisers or private banking do not help you get rich; they are there to "protect" or "maintain" your wealth for a fee (that helps them to get rich themselves).

There's only 3 ways I know to get rich:

a. Get it yourself
b. Inherit it
c. Marry into it

3) When travelling in tours, never buy anything from shops the tour guides bring you to. You can buy the same item for 70% and less in the local local retail stores that were not setup exclusively for tourists.

If you don't find majority locals in the stores, it's a tourist butcher shop

(21-10-2012, 02:51 PM)Jared Seah Wrote: temperament,

I am not good in sales; I help people make comfortable decisions themselves.

1) Most people don't buy insurance; they were sold to (by people they thought were looking out for their best interest).

2) Financial advisers or private banking do not help you get rich; they are there to "protect" or "maintain" your wealth for a fee (that helps them to get rich themselves).

There's only 3 ways I know to get rich:

a. Get it yourself
b. Inherit it
c. Marry into it

3) When travelling in tours, never buy anything from shops the tour guides bring you to. You can buy the same item for 70% and less in the local local retail stores that were not setup exclusively for tourists.

If you don't find majority locals in the stores, it's a tourist butcher shop

Fully agree with your 3 ways to get rich

Regarding (3), "Boh Pian"

Most tourists understand (3) yet due to "REN SEN TI BU SO" and short of time factor, we all kwai kwai follow tourist guide lol. And then we try like mad not to be outwitted by the "Ti Tau She" sale-people, lol. Ha! Ha!
Of course we lose most of the time.
Of course, you escape. You are already "GRAND Master of Sale" Ha! Ha!
Cheers!

---

(21-10-2012, 02:50 PM)d.o.g. Wrote:

(21-10-2012, 01:43 PM)wsreader Wrote: Wasn't MF Global required to put their clients' money in a segregated account? I thought that is a requirement from MAS. No?

Of course they were. But the law and compliance with the law are 2 different things. Murder is illegal, for example, but it still happens. What matters is (1) prevention and (2) enforcement. Enforcement punishes the perpetrators but doesn't help the victim, so let's focus on prevention.

MAS requires separation of client and broker assets, but it does not stipulate that the assets are LEGALLY separated. What this means in practice, is that the brokers continue to keep client money in the name of the brokers. All they do is open 2 bank accounts, and they mentally label one "broker" and the other "client". Their own money is kept in the "broker" account, and client money is kept in the "client" account.

But clearly, all of the money is still in the name of the broker, so if there is a sudden liquidity crunch, the broker can still take and use the client money, because it legally belongs to them (clients are merely beneficial owners i.e. creditors). If the crisis passes, the broker returns the money and nobody is any the wiser. If the broker fails, that's when people find out that their money was never legally segregated to begin with.

This is a big reason why people should be extremely cautious in dealing with independent brokers. Using client money is illegal, but by the time you find out, it's too late and you have lost money anyway. Murder is illegal, but by the time it happens the person is already dead. Much better to prevent it in the first place.

Bank-backed brokers can call on their bank parents to help, so they don't have to resort to "borrowing" from the client account. Usually the banking franchise is much larger than the broking franchise, making it more likely the bank will absorb the losses in order to maintain client goodwill and its banking reputation.

As usual, YMMV.

Wow!
There are always "financial/legal loopholes" exploited by Financial Institutions that uncle and aunty investors forever will never know about it until too late. And i am one of them. Pray hard and don't invest if not really understand about risks involved, lol.

what are some examples of 'independent' brokers mentioned in dog post above? is philip securites to be 'classified' under this group?

(21-10-2012, 01:17 PM)Temperament Wrote: ...

Have you toured China for the first time?
If you have, how much of your money is psycho by China's sale-people?
In fact the 2nd time, we were psycho by sale-people though this time we half willingly parted with our money.
Third time, we brought as little money as possible and no credit cards.
But in the end we brought one credit card, just in case of "emergency".

So always try to be mentally strong.
If you want to learn more about sale-people, go and ask "SMOL"

PS:
SMOL is gifted in Sales. But he is Super sale-person without having to use the "Duper" effect. Ha! Ha!
Sorry SMOL, without your permission, i recommended you.
Cheers!

Let me share the experience of my China vacation tour with family.

The tour members were fully aware of the notorious sale-people, and mentally prepared. At the end of the tour, a handful of them spent >10K S$ on TCM, Silk, Pearl and Fengsui related stuffs.

The worst one spent more than $30K

---

(21-10-2012, 02:50 PM)d.o.g. Wrote:

(21-10-2012, 01:43 PM)wsreader Wrote: Wasn't MF Global required to put their clients' money in a segregated account? I thought that is a requirement from MAS. No?

Of course they were. But the law and compliance with the law are 2 different things. Murder is illegal, for example, but it still happens. What matters is (1) prevention and (2) enforcement. Enforcement punishes the perpetrators but doesn't help the victim, so let's focus on prevention.

MAS requires separation of client and broker assets, but it does not stipulate that the assets are LEGALLY separated. What this means in practice, is that the brokers continue to keep client money in the name of the brokers. All they do is open 2 bank accounts, and they mentally label one "broker" and the other "client". Their own money is kept in the "broker" account, and client money is kept in the "client" account.

But clearly, all of the money is still in the name of the broker, so if there is a sudden liquidity crunch, the broker can still take and use the client money, because it legally belongs to them (clients are merely beneficial owners i.e. creditors). If the crisis passes, the broker returns the money and nobody is any the wiser. If the broker fails, that's when people find out that their money was never legally segregated to begin with.

This is a big reason why people should be extremely cautious in dealing with independent brokers. Using client money is illegal, but by the time you find out, it's too late and you have lost money anyway. Murder is illegal, but by the time it happens the person is already dead. Much better to prevent it in the first place.

Bank-backed brokers can call on their bank parents to help, so they don't have to resort to "borrowing" from the client account. Usually the banking franchise is much larger than the broking franchise, making it more likely the bank will absorb the losses in order to maintain client goodwill and its banking reputation.

As usual, YMMV.

Similar scenario with rogue lawyers on conveyancing money. There was enforcement, but no prevention previously. Lawyers have "freedom" to use clients' funds as long as not caught

Ministry of Law has set out new measures for prevention. Law firms now have to set up a conveyancing account with an appointed bank to hold the clients’ funds instead.

Is there prevention measures after MF Global?

To be fair MF Global is a foreign brokerage. Unless we have Uncle Sam power, not sure we should expect SG Gov to go to great length to prevent using local laws.

Onto sales people. If your company is depending on them to hard sell your products, your company is more or less doomed.
if your product is good, very little sales talk is needed. Product will sell itself.

Much like apple, hard selling needed? Much work already being done via RnD/branding.
Much like German Luxury Cars, the amount of development work cannot be overstated.
Much like good lawyers/doctors. Track record speaks for itself.
... ...

(21-10-2012, 02:50 PM)d.o.g. Wrote:

(21-10-2012, 01:43 PM)wsreader Wrote: Wasn't MF Global required to put their clients' money in a segregated account? I thought that is a requirement from MAS. No?

Of course they were. But the law and compliance with the law are 2 different things. Murder is illegal, for example, but it still happens. What matters is (1) prevention and (2) enforcement. Enforcement punishes the perpetrators but doesn't help the victim, so let's focus on prevention.

MAS requires separation of client and broker assets, but it does not stipulate that the assets are LEGALLY separated. What this means in practice, is that the brokers continue to keep client money in the name of the brokers. All they do is open 2 bank accounts, and they mentally label one "broker" and the other "client". Their own money is kept in the "broker" account, and client money is kept in the "client" account.

But clearly, all of the money is still in the name of the broker, so if there is a sudden liquidity crunch, the broker can still take and use the client money, because it legally belongs to them (clients are merely beneficial owners i.e. creditors). If the crisis passes, the broker returns the money and nobody is any the wiser. If the broker fails, that's when people find out that their money was never legally segregated to begin with.

This is a big reason why people should be extremely cautious in dealing with independent brokers. Using client money is illegal, but by the time you find out, it's too late and you have lost money anyway. Murder is illegal, but by the time it happens the person is already dead. Much better to prevent it in the first place.

Bank-backed brokers can call on their bank parents to help, so they don't have to resort to "borrowing" from the client account. Usually the banking franchise is much larger than the broking franchise, making it more likely the bank will absorb the losses in order to maintain client goodwill and its banking reputation.

As usual, YMMV.

Hi d.o.g, my dad has some wells fargo shares bought through Dmg & partner securities, from my knowledge, US shares are not held in CDP, so is it possible that if dmg falls, he may lose his shares in wfc?

(22-10-2012, 10:17 AM)money Wrote: Hi d.o.g, my dad has some wells fargo shares bought through Dmg & partner securities, from my knowledge, US shares are not held in CDP, so is it possible that if dmg falls, he may lose his shares in wfc?

The US has no central depository system equivalent to Singapore's CDP. So all the US shares are held by 3rd party custodians such as brokers or banks.

DMG probably uses a nominee company to hold the foreign shares, but you should double-check. However the cash is not held by the nominee company, it is held by DMG directly in a bank account under its own name. If DMG fails, usually the nominee company, being a separate legal entity, will be able to return the shares to the beneficial owners, PROVIDED the shares are not held on margin. The cash however will be stuck and there may be losses.

As for parentage, DMG is a JV between Deutsche Bank and OSK. OSK is now owned by RHB Bank. So DMG is owned by 2 banks.

(22-10-2012, 11:30 AM)d.o.g. Wrote:

(22-10-2012, 10:17 AM)money Wrote: Hi d.o.g, my dad has some wells fargo shares bought through Dmg & partner securities, from my knowledge, US shares are not held in CDP, so is it possible that if dmg falls, he may lose his shares in wfc?

The US has no central depository system equivalent to Singapore's CDP. So all the US shares are held by 3rd party custodians such as brokers or banks.

DMG probably uses a nominee company to hold the foreign shares, but you should double-check. However the cash is not held by the nominee company, it is held by DMG directly in a bank account under its own name. If DMG fails, usually the nominee company, being a separate legal entity, will be able to return the shares to the beneficial owners, PROVIDED the shares are not held on margin. The cash however will be stuck and there may be losses.

As for parentage, DMG is a JV between Deutsche Bank and OSK. OSK is now owned by RHB Bank. So DMG is owned by 2 banks.

Thanks thanks. Omg, now another thing to consider when holding US shares, the nominee company can also fail, haha it seems better to have a cdp like singapore, it feels safer

(23-10-2012, 09:29 AM)money Wrote:

(22-10-2012, 11:30 AM)d.o.g. Wrote:

(22-10-2012, 10:17 AM)money Wrote: Hi d.o.g, my dad has some wells fargo shares bought through Dmg & partner securities, from my knowledge, US shares are not held in CDP, so is it possible that if dmg falls, he may lose his shares in wfc?

The US has no central depository system equivalent to Singapore's CDP. So all the US shares are held by 3rd party custodians such as brokers or banks.

DMG probably uses a nominee company to hold the foreign shares, but you should double-check. However the cash is not held by the nominee company, it is held by DMG directly in a bank account under its own name. If DMG fails, usually the nominee company, being a separate legal entity, will be able to return the shares to the beneficial owners, PROVIDED the shares are not held on margin. The cash however will be stuck and there may be losses.

As for parentage, DMG is a JV between Deutsche Bank and OSK. OSK is now owned by RHB Bank. So DMG is owned by 2 banks.

Thanks thanks. Omg, now another thing to consider when holding US shares, the nominee company can also fail, haha it seems better to have a cdp like singapore, it feels safer

If my understanding is right, CDP under SGX is also a nominee company. It can also fail. IIRC, there are investor protection schemes available, but not clear on detail. I assume in US, similar schemes available.