So far I have only offered cold comfort to those fooled by Madoff. I will try to be more positive.

There has not been a level playing field in investing because banks have been self regulating. They have not insisted on the same rules being applied to their own in house advisers as those that have had to be followed by directly regulated advisers such as independent financial advisers. I want to compare IFA with unregulated advisers.

The first difference will be the interviews. The international standard is “know your client”

If you just want to make a sale you start with a product to create interest. The “know your client” principle says hold on you don’t know the need yet. This process is longer and starts with a fact finding interview duly recorded in a fact find signed by the client. This is the basis of the adviser’s analysis. He determines where the client is now and where the client wants to get. A path can be mapped out with plans to achieve the client’s goals and plans to avoid, the pitfalls along the way. Before advice is given a detailed report is often prepared. Sales have to be carefully justified within this frame work. This is a longer but infinitely better procedure. At the end of it the client will be well equipped to increase his net worth. Unfortunately this method is still misunderstood as trying to sell more to the client  If you carefully scrutinize a financial report you will discover that it is unlike a sales copy because it clearly indentifies risks. I usually quantify these and counsel what would be prudent action to safe guard against the worse case scenario.

Next client expectations are managed and modified into realizable ones. This cannot be avoided because projections can only be done in a standard way set by regulation. If you are not given a pessimistic illustration then you are not dealing with a regulated adviser. It is as simple as that.  All projections are standardized and shown at a modest rate whatever the actual historic fund performance.

When the client wants to invest a good professional adviser will have a process he can justify to the regulators.  Sadly I have seen large amounts invested by banks for clients that did not design a portfolio. From the very start of my career I was taught how to do this and I have refined my methods over the years. Computer programs now assist us but they need to be understood and not followed blindly. I cannot imagine someone like Madoff would have anything like that. You must take that as an alarm if your adviser does not design a portfolio. The larger the investment the greater need for diversification in a portfolio. One or two funds are not a portfolio. It must spread risk over different companies, regions, asset classes, different currencies, and different investment vehicles. Its volatility and past performance should be worked out from published figures. It must match the client’s appetite for risk. It must be prepared with consideration to current events and in the light of current commentary. What was best last year may not be the best this year. The adviser needs to consider opinions of experts but be able to analyse himself. Powers that be can be wrong and they often turn on an adviser after the event. Clearly there are no guarantees but still astute people do make money investing.

Once the client has signed he will be given a mass of paper all required by law. These include a fund prospectus for every fund with every detail of truth. Be sure you get these it is the sign of authenticity.

Actually you see it is easy to tell good from bad once you know. In addition you can find authentic companies  and advisers on regulator’s web sites. In my case my own web site is designed to be very open about me. I don’t want to project a cold image like a bank but to be seen as I really am.

I can not help those who have lost everything in the biggest financial scam ever but I hope to keep others from the same fate. To summarise;

• Check your adviser’s credentials
• Expect him to follow international standards in method of working
• Expect written recommendations with the full story
• Expect statutory projections and costs disclosure
• Expect to be given the full prospectus for each fund plus third party fact sheets.

As if things were not bad enough we have a major recession with the stock markets down 50% or more and then a major fraud is discovered!! I hate frauds because they give the impression all advisers are crooks. Happening just now adds further confusion to the scene for the novice investor.

Oh why is it people are taken in by such deceit? It is normally so hard to win the trust of investors but these imposters make it look easy and they manage to get all of a person’s life savings. I fear it is plain greed that entraps people. Let me show you how different they are to a licensed adviser in a regulated environment.

I am really surprised that no one blew the whistle before. It was a pyramid scheme. There was no investment fund into which investor’s money was placed. The scheme depended on inflows of money from new investors to give increase of value to old investment holdings. This type of scheme is doomed to eventual collapse. The investment returns were claimed to be far above the average but were fraudulent.

The attractions here to a new investor were first the persuasiveness of Madoff. Clearly he was very persuasive.  Second the exaggerated growth of the fund. Here is where greed comes in. You always have to ask when faced with above average investment returns why it is so. Clearly they thought Madoff was exceptional. But honestly if it sounds too good to be true it usually is. In investment higher returns are accompanied by higher risk. The increase in risk is fine if you understand it and you are prepared for it.

You should always remember basic financial principles. It is amazing that this simple truth is cast aside nine times out of ten by investors. You will find these principles set forth again and again in my blog. Ignore them at your peril!

If this Madoff’s scheme were genuine and sold in UK or Singapore what would you expect to see? You would be given a projection of expected return on investment with all costs disclosed. Many investors do not understand these and are put off by them. First in unregulated countries charges and costs will not be disclosed fully. The regulation disclosures on the other hand are very pessimistic regardless of the funds actual performance. The fund may be returning 20% pa but the projection will only be for 5 or 6 % pa. There will be a cost comparison which may very well be hypothetical. In Singapore the costs are shown invested at 8% as if in a fund with no charges even though there is no investment like that in existence. What is disclosed then is more than just charges. It is hypothetical loss from paying the charges. No doubt that is a consideration but investors need to clearly understand that. It is almost impossible to exaggerate fund returns when you have to give such to a client, explain it and get their signature. In addition the adviser has to follow a sales route laid down by law. He must gather facts before advising and then put all his recommendations in writing. The regulators will inspect all this material to confirm the suitability of the sale. I cannot imagine that those who bought the Madoff investment went through such a process.

At a sale a good adviser will give full details of an investment. If you have a fact sheet from a third party like Morning Star you have a much better chance of accuracy. That is standard as also is a prospectus for the fund. You will know from that who the professionals are, the solicitors, accountants, trustees etc. Boring it may be but if your life savings are going in you must check it out.

I said don’t ignore basics. The worst of all is the ignoring of the principle of not putting your eggs in one basket. Many people have given their whole life savings to Madoff. How come?  No adviser who has to answer to a regulator would do that. Designing a diversified portfolio is basic and essential. This requires a procedure to access like attitude to risk and explanation of why assets and funds are chosen. It is unlikely Madoff had such. Most advisers will require a client to sign that he has gone through this process and understands it.

There are thousands of honest professional advisers through out the world working according to international standards why did these investors ignore them. The least experienced and skillful would have done a far better job for them.

If you invest be sure your motive is not greed. It is an easy trap to fall into. You can still get a good return over the long term if you are sensible.

As if things were not bad enough we have a major recession with the stock markets down 50% or more and then a major fraud is discovered!! I hate frauds because they give the impression all advisers are crooks. Happening just now adds further confusion to the scene for the novice investor.

Oh why is it people are taken in by such deceit? It is normally so hard to win the trust of investors but these imposters make it look easy and they manage to get all of a person’s life savings. I fear it is plain greed that entraps people. Let me show you how different they are to a licensed adviser in a regulated environment.

I am really surprised that no one blew the whistle before. It was a pyramid scheme. There was no investment fund into which investor’s money was placed. The scheme depended on inflows of money from new investors to give increase of value to old investment holdings. This type of scheme is doomed to eventual collapse. The investment returns were claimed to be far above the average but were fraudulent.

The attractions here to a new investor were first the persuasiveness of Madoff. Clearly he was very persuasive.  Second the exaggerated growth of the fund. Here is where greed comes in. You always have to ask when faced with above average investment returns why it is so. Clearly they thought Madoff was exceptional. But honestly if it sounds too good to be true it usually is. In investment higher returns are accompanied by higher risk. The increase in risk is fine if you understand it and you are prepared for it.

You should always remember basic financial principles. It is amazing that this simple truth is cast aside nine times out of ten by investors. You will find these principles set forth again and again in my blog. Ignore them at your peril!

If this Madoff’s scheme were genuine and sold in UK or Singapore what would you expect to see? You would be given a projection of expected return on investment with all costs disclosed. Many investors do not understand these and are put off by them. First in unregulated countries charges and costs will not be disclosed fully. The regulation disclosures on the other hand are very pessimistic regardless of the funds actual performance. The fund may be returning 20% pa but the projection will only be for 5 or 6 % pa. There will be a cost comparison which may very well be hypothetical. In Singapore the costs are shown invested at 8% as if in a fund with no charges even though there is no investment like that in existence. What is disclosed then is more than just charges. It is hypothetical loss from paying the charges. No doubt that is a consideration but investors need to clearly understand that. It is almost impossible to exaggerate fund returns when you have to give such to a client, explain it and get their signature. In addition the adviser has to follow a sales route laid down by law. He must gather facts before advising and then put all his recommendations in writing. The regulators will inspect all this material to confirm the suitability of the sale. I cannot imagine that those who bought the Madoff investment went through such a process.

At a sale a good adviser will give full details of an investment. If you have a fact sheet from a third party like Morning Star you have a much better chance of accuracy. That is standard as also is a prospectus for the fund. You will know from that who the professionals are, the solicitors, accountants, trustees etc. Boring it may be but if your life savings are going in you must check it out.

I said don’t ignore basics. The worst of all is the ignoring of the principle of not putting your eggs in one basket. Many people have given their whole life savings to Madoff. How come?  No adviser who has to answer to a regulator would do that. Designing a diversified portfolio is basic and essential. This requires a procedure to access like attitude to risk and explanation of why assets and funds are chosen. It is unlikely Madoff had such. Most advisers will require a client to sign that he has gone through this process and understands it.

There are thousands of honest professional advisers through out the world working according to international standards why did these investors ignore them. The least experienced and skillful would have done a far better job for them.

If you invest be sure your motive is not greed. It is an easy trap to fall into. You can still get a good return over the long term if you are sensible.

People spend there lives building up there assets but pay little attention to protecting them. Why is that?

OK lets look at the dangers. Who might want your hard earned nest egg? First if you are in business it will be your creditors. I remember many years ago when I was young and worked in a bank the look in the eyes of a mother whose husband had mortgaged his home to the bank against borrowings for his business.  When the business went under the bank wanted her home! If there had been estate planning that would have been avoided. Sometimes it is the outlay of perhaps 1% which puts off clients. There often seems a fixation on costs. But look at what 1% would have saved!

Who else might be after your money? I'm afraid we must mention divorce here. So many marriages end that way yet there is so little thought about who owns what. It is a touchy subject to be sure but it is easier to work out fairness when love is still there. Most of the cost of a divorce I think goes on working out how to divide assets. At least it was in my case. Again the small cost of setting up an estate plan will save in this area as well.

Perhaps the bigest issue is taxation. I do not teach tax avoidance but tax mitigation. You have to claim allownces on your tax returns else you do not get the allowances due to you. So it is with estate planning. Your affairs can be arranged badly or tax efficiently. Its up to you. US citizens are at a disadvantage here but the rest would benefit from a  well thought out scheme, most especially expats who live in a low tax area. This is most definitely not something you do yourself! It is a skilled job. Done badly it will aggravate tax officials & not protect from determined creditors. In Singapore where I work the authorities understand and encourage estate planning professionals. I personally work with a number who specialise in different areas.

What is at stake is huge. UK inheritance tax is 40% for instance. Fancy spending all your life toiling for it to disappear into the chancelor of exchequers coffers. What a legacy!

www.brianslark.com/blog

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My blog is set up to teach people the basics for free. I recognise that many dont want to see an adviser. I hope to get across all you need to know to help such. On the other hand I believe in what I do so if I can dispel the worries and misunderstandings all well and good.

Here is a test for you to use. If your adviser tries to sell to you on the first meeting you have the right to consider he is not advising you well. Why because you cannot advise without knowing your client. Universally it is a professional standard to do a fact find before selling. You might wonder what pension has to do with mortgage. But do you want to retire whilst still paying a mortgage? You may wonder why he asks where you want to retire to when all you want is to invest. What you haven't understood is that different countries have different tax laws.  Do you really want to give a big chunk to the tax man?

Another test would be has he discussed risk with you so you understand it? You would not want to lose your house or your money would you? Sometimes a course of action carries risk that you have not understood. If that is so an adviser who is acting professionally will want you to ofset that in some way. For example currency mortgages give huge savings but need measures in place against exchange movements. These are simple enough. If they are explained carefully you should not consider them just a way to sell you more.

A good adviser will have studied his craft. He will not mind either explaining his credentials or giving you testimonials. The emphasis of the first meetings will be to build the relationship. He will need to understand your financial position and you will need to learn basics. From these slow beginnings will come trust. I regularly have clients who want to pick my brains for free. But my reward is that they reurn with repeat business. An adviser no matter how good cannot predict let alone control the worlds economy. He can however be a pilot to help navigate safely.

Five Mistakes Investors Make

Are you doing it all wrong and losing money?

1. You panic and sell LOW. Maxim is always sell high and buy low.
2. You believe sales hype. So many companies will publish performance in a non-standard way to exagerate their product.
3. You invest in only one or two funds and do not diversify. Dont have all your eggs in one basket.
4. You buy cheap funds rather than quality. Some funds are worth paying more for if they give better performance or benefits.
5. You dont take the trouble to understand the basics

Be honest, we have all been there. Change today. go to www.brianslark.com/blog  Learn the basics and succeed.
You have nothing to lose.

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This is a very personal post. I'm blowing my own trumpet, something I do rarely. I checked some clients portfolios that I had designed for them. I checked them with fear and trembling because the stock markets are down 50% or more. I was shocked ! In one case the portfolio had gone up! Wow, the market is down 50% and my clients money has gone up! True it was only an increase of 2% but it was way over the index.

The shame of it is that in Singapore these funds can only be sold to very high net worth individuals. The regulator is strict so we have to follow them.

My policy is to diversify as much as possible into different currencies(there have been large movements in these), different geographical areas, different companies, different asset classes,(bonds,equities,alternative investments,commodities and so on). This manages risk as much as can be. I had put these assets into a personal portfolio bond. This enables me to put in almost anything so I can select the best funds I know under one umbrella. It is easy administratively and allows for funds to be changed when conditions dictate. Many are wary of the complicated charging structures but this example shows the very real benefits not available in any other way. The Isle of Man has a compensation scheme in place which gives vauable protection in these troubled times.  Use of the personal portfolio bond(an insurance wrapper) was fully justified by the results.

I try to think both defensively and offensively. Every client wants their money to grow and nobody wants to lose their money. I view the bonds as defensive and the equities as offensive. The hedge funds are designed  to grow in all weathers. Theoretically they increase performance and decrease risk but the portfolio modelling theory does not always follow form. There is no way to know exactly what markets will do but if the ship is designed well it should keep sailing whatever happens.

www.brianslark.com/blog

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I will try to explain world events for you as they will effect you.

It started in America with mortgages sold to those who could not afford them . These were low start mortgages which are virtually banned in UK. They were missold in large numbers. They were sold to those with good credit as well. People were persuaded to go well beyond there means. These mortgages leap up in cost after the initial period.  Of course then the buyers could not afford the increase & defaulted in large numbers.

So how come it becomes an International Problem? The Americans packaged these mortgages up & sold them on in the form of a bond. By repackaging & repackaging it became impossible to know what the risk of the bond was. Those firms who assess risk & values got it wrong.

The banks were greedy for profit & thought they could handle the risk. They argued that if 10% of morgages defaulted the value would only drop 10%. They were wrong ! The market has taken the view that because the banks wont come clean & tell us how much of a problem they have & because it is known that it is bad lending in the first place they regard these bonds as contaminated . No one wants them  so they have no value.  Take those  assets out of the banks balance sheets & they look very sick.  In fact  the crisis is about whether they have the funds to function at all.

We fondly imagine that when we give cash to a bank it is taken to a safe & kept for us. Not so they lend it out. But what no one told us was what risk the banks take with our money. They have taken the highest risks. If the banks were ordinary business they would not now exist (with but few exceptions). The amazing thing is how interconnected the world is. We find these mortgage bonds are world wide. Also most large companies are international with subsiduaries throughout the world.

The one saving grace has been the central banks. Everywhere these lenders of last resort have launched their liferafts quickly & effectively. The banks have been really reckless & incredibly stupid but they survive with tax payers money. Insurance companies have been seriously affected as well. Those not rescued by government have been snapped up by the market. The situation is now stable but the cost has been high. Because banks are short of money they are now much harder on borrowers. You need to be carefully to follow sound long term plans. Watch cash flow & liquidity. That has always been our policy in advising. It is vital now. I would suggest we all need to rethink what is risky & what is not. The behaviour of the banks makes me question whether they are safe. We have always assumed so but we were not told the truth. I am not saying dont use them I am saying other assets are not as risky as we sometimes think. I am saying be balanced.

What concerns me is when the stock market went down the public piled into property. When property went down the public piled into cash. At each change the public has sold low & lost. Such short term decisions show that there is little basic understanding of how things work.It is in fact jumping from the frying pan into the fire. Far better to have a well thought out financial plan & a well diversified portfolio & to keep to the maxim buy low sell high. When the stock market goes down it is not bad. It is only low tide. If you keep liquid you will be able to buy at a bargain price.

There is also much misunderstanding of offshore bonds. They are complex but they bestow advantages not available elsewhere. A 2%pa cost can save you 90% of your capital.

Well I have gone on a bit but if I had been able to predict the events we have seen in the last year you would have told me I was mad. We have witnessed a shacking of the System that I have never seen before. We are witnessing incredible events. We need clear thinking to survive.

I will try to explain world events for you as they will effect you.

It started in America with mortgages sold to those who could not afford them . These were low start mortgages which are virtually banned in UK. They were missold in large numbers. They were sold to those with good credit as well. People were persuaded to go well beyond there means. These mortgages leap up in cost after the initial period.  Of course then the buyers could not afford the increase & defaulted in large numbers.

So how come it becomes an International Problem? The Americans packaged these mortgages up & sold them on in the form of a bond. By repackaging & repackaging it became impossible to know what the risk of the bond was. Those firms who assess risk & values got it wrong.

The banks were greedy for profit & thought they could handle the risk. They argued that if 10% of morgages defaulted the value would only drop 10%. They were wrong ! The market has taken the view that because the banks wont come clean & tell us how much of a problem they have & because it is known that it is bad lending in the first place they regard these bonds as contaminated . No one wants them  so they have no value.  Take those  assets out of the banks balance sheets & they look very sick.  In fact  the crisis is about whether they have the funds to function at all.

We fondly imagine that when we give cash to a bank it is taken to a safe & kept for us. Not so they lend it out. But what no one told us was what risk the banks take with our money. They have taken the highest risks. If the banks were ordinary business they would not now exist (with but few exceptions). The amazing thing is how interconnected the world is. We find these mortgage bonds are world wide. Also most large companies are international with subsiduaries throughout the world.

The one saving grace has been the central banks. Everywhere these lenders of last resort have launched their liferafts quickly & effectively. The banks have been really reckless & incredibly stupid but they survive with tax payers money. Insurance companies have been seriously affected as well. Those not rescued by government have been snapped up by the market. The situation is now stable but the cost has been high. Because banks are short of money they are now much harder on borrowers. You need to be carefully to follow sound long term plans. Watch cash flow & liquidity. That has always been our policy in advising. It is vital now. I would suggest we all need to rethink what is risky & what is not. The behaviour of the banks makes me question whether they are safe. We have always assumed so but we were not told the truth. I am not saying dont use them I am saying other assets are not as risky as we sometimes think. I am saying be balanced.

What concerns me is when the stock market went down the public piled into property. When property went down the public piled into cash. At each change the public has sold low & lost. Such short term decisions show that there is little basic understanding of how things work.It is in fact jumping from the frying pan into the fire. Far better to have a well thought out financial plan & a well diversified portfolio & to keep to the maxim buy low sell high. When the stock market goes down it is not bad. It is only low tide. If you keep liquid you will be able to buy at a bargain price.

There is also much misunderstanding of offshore bonds. They are complex but they bestow advantages not available elsewhere. A 2%pa cost can save you 90% of your capital.

Well I have gone on a bit but if I had been able to predict the events we have seen in the last year you would have told me I was mad. We have witnessed a shacking of the System that I have never seen before. We are witnessing incredible events. We need clear thinking to survive.

                                           HILOT

The Science of the ancient Filipino Healing Art

I.            Definition

a.      Hilot

b.      Manghihilot

c.      Albularyo

II.            HILOT Philosophy

III.            HILOT Health Concept

IV.            HILOT Healing Concept

a.      Harmonizing the Faculties of Man (mind, emotion and body)

b.      Balancing the Elements in the body (fire, water, earth and air)

V.            HILOT Healing Modalities

a.      Putting back into harmony the Faculties of Man

b.      Putting back to balance the Elements of the Body

VI.            HILOT Diagnostic Methodologies

a.      Pulse Reading

b.      Thermal diagnosis (Hot and Cold)

c.      Phrenology, Physiognomy

d.      Stool analysis

e.      Urine analysis

f.        Perspiration analysis

g.      Skin analysis

The above outline was for a tlk given by Bibiano S. Fajardo, Phd(am)

www.citem.com.ph

                                           HILOT

The Science of the ancient Filipino Healing Art

I.            Definition

a.      Hilot

b.      Manghihilot

c.      Albularyo

II.            HILOT Philosophy

III.            HILOT Health Concept

IV.            HILOT Healing Concept

a.      Harmonizing the Faculties of Man (mind, emotion and body)

b.      Balancing the Elements in the body (fire, water, earth and air)

V.            HILOT Healing Modalities

a.