Rickmers Maritime Trust

[corydorus]

The problem with this RM industry is they may tell you higher risk. What do you mean higher risk ? And what we mean by conflict of interests. Want to protect we need to do it properly. Don't propose half Sh**.

They need to state

1. You have XX% (or Range) chance to lose all capitals.
2. they need to warn customer against invest in such high risk products. like health warning in cigar.
3. there are required to offer same time of different safer alternatives investments required at different return scale else cannot offer higher risk products
4. they are not allowed to said is industry norm in risk or safety etc
5. all must be video recorded
6. Customer can only sign after a week of thoughts

breaking this 6 they may subject to steep fines and termination, and can be private sue by customers for compensation including management levels.



Cory

[Behappyalways]

The effort one spent on choosing and buying a $1 fresh vegetables in NTUC might be greater than the same person spent on a $250kk bond. So whose to blame?

[ksir]

It is unfortunate that accredited investors ("private clients") had signed onto papers without looking at every single word on the thick stack of paper.

For 250k a pop, it is certainly a reckless action.
I had not met many RMs. But, for the few that I had met, it is already a risk to entrust your $$$ to their recommendations.
Maybe there are higher class private bankers that are much more savvy. But, looking at the uncle that owns $8 mil of notes, i suppose he already got the Crème de la crème of recommendations and services from the bank.

My personal experience with one of these RMs.. she convinced my parents to buy a 250k investment in a perp issued by a local property company (luckily its a very solid company). What ticked me off was that she called again after a few months (after the interest had accrued enough to breakeven) to ask them to sell the bond to invest in another one. Obviously she was just doing that to collect her commissions. 

Of course not all RMs are bad, but the selling of these investments need to change in a major way IMO

Just thinking out loud, will it be better in interest alignment if the commission comes in as the product itself.
Meaning commission of the bond sales will be the bond itself and can not be sold until it expires or your clients sell it.
Same goes for equity or mutual fund.

Then the RM will persuade u to sell then buy then sell then buy ......

Yes but in this case, once you sell, your profit is locked and her commission released. Buying new ones, her commission on new ones is locked again. Cycle goes on.

[ValueMushroom]

I always wonder the need of financial advisors in buying stocks and bonds? if they are worth their salts, wouldnt they be spending their time investing their own money? The only way to have no conflict of interest is that they co-invest in the products they recommend.

[Bibi]

Then the RM will persuade u to sell then buy then sell then buy ......

Yes but in this case, once you sell, your profit is locked and her commission released. Buying new ones, her commission on new ones is locked again. Cycle goes on.

Exactly. RM will keep advising one to buy,sell,buy,sell regardless whether the customer is earning profit or making losses. RM still earn their commission.

[BlackCat]

The problem is that no one is willing to pay for financial advice.

If you blindly take financial advice from someone who is only paid when they sell you something, you get what you deserve.

If you expect RM's to forego their commissions and put your interest above theirs, then you are expecting them to work for free.  Do you think the they talk to you all day because they like you?  Do you think the bank pays them to educate you?  If you expect people to work for you for free, you are an idiot.

No government regulation can prevent this.

[CY09]

There is an online forum where its members talk about company analysis and personal finance stuff.

There are also finanical bloggers who have been talking about term insurance, good financial habits, pitfalls of investing, perils of the current financial industry etc. All done on a pro bono basis

The question is who will you trust more. In our society, it seems people listen more to those holding the job title or paper degree in the financial field

[ksir]

Then the RM will persuade u to sell then buy then sell then buy ......

Yes but in this case, once you sell, your profit is locked and her commission released. Buying new ones, her commission on new ones is locked again. Cycle goes on.

Exactly. RM will keep advising one to buy,sell,buy,sell regardless whether the customer is earning profit or making losses. RM still earn their commission.

The difference is that the commission is less when the security value dropped, because the commission is in the security itself.
They can even design it in such a way that only when the client lose money the commission is cut in half or nill, but that will be too rigid.

[donmihaihai]

Yup probably attracted by the high yield... they shld know higher yield higher risk...

higher dividend yield higher risk? And equity has higher risk than bond

Same bond class; one is offering 3% coupon payment and the other is offering 8% coupon payment, this usually means the higher yield bond has a higher risk of default.

What i meant was equity higher risk than bond. 
Using yield as the measurement. Isnt higher dividend yield stocks have more risk than bond?

[CityFarmer]

The order of course-of-effect, is important. High-risk, thus compensated by high yield. It isn't high yield, thus high risk.

Equity yield, isn't on dividend yield alone, but on earning yield.