Beware the scam artist brokers in Thailand.
I have written many times on how important it is for investors to check out the validity of investments being recommended to them.
This same advice applies if the advice is coming from a large investment bank operating from a skyscraper in New York, London, Bangkok or a locally based broker.
For many years I have been an advocate of using a locally based offshore adviser who has roots here, and has been living here for at least a decade, owns property here, has a Thai wife or partner and who has committed his future to living here.
I have advised against using “fly by night” advisers who fly in here every few months. The difficulty is that when you urgently need advice, even reassurance on your portfolio, your advisor may not be available for a few weeks and many of those who represent banks are not truly independent and have a vested interest in their recommendations.
I have talked about the necessity of your advisor being fully qualified but to temper that knowledge with the belief that the biggest con men in the recent financial crisis were Harvard MBA’s and masters of finance from London’s business schools.
It also makes sense to use an adviser who is of the same generation as yourself. A feeble pensioner will not be suited to a bright 20 year old and a bright 20 year old investor will not be suited to a feeble pensioner advisor.
So as my bias has always been to advocate the use of a locally based broker it saddened me last week to hear a story about a Pattaya based investor being abused by a rather large Bangkok based brokerage, operating from plush offices in the city.
The scam operated as follows.
Once a brokerage signs up a client they receive a commission from the company to which the client’s money has been allocated. There are some brokers who are fee charging usually between 500 and 1,000 US per hour and in truth I don’t know if there are any of these operating in Thailand.
Most advisers here operate as the former.
If the broker goes on to do fund management for the client, there is normally a small percentage annual charge usually between 0.25 and 0.50 per cent.
A friend of the recently cheated client explained to me that the scam was in the fund management.
Each quarter he received a valuation statement printed on the broker’s stationery.
This should have set alarm bells ringing.
Doing his own due diligence the client eventually discovered a 15,000GBP discrepancy between the broker’s valuation and the offshore bond providers
It gives me no satisfaction to record this because abuse by one Thai based broker is bad for all of us.
If you have fund management arrangements with your adviser take a few simple precautions.
No matter how professional they appear to be, insist on two things.
If they wish to use their own stationery for monthly valuations, make sure they also enclose statements from the bond provider.
Also even though you may have fifty different investments, chances are they will all be held within one portfolio bond which means that access to just one website will give you total valuations.
"If you are told that a product you are buying is too complicated to value monthly, don’t buy it."
Secondly, If you are told that a product you are buying is too complicated to value monthly, don’t buy it.
This client was lucky; he had the time to research and uncover the scam. He is being held to ransom by being told the 15,000 would be refunded provided he kept quiet about the cheating.
Please be extra careful. You have wonderful opportunities as an expatriate in the investment world. Don’t let some scam artist spoil it for you.
Just try and keep it simple. Never give any money directly to a broker and never accept a broker’s valuation as being truthful.
Get a password so you can check your valuations whenever you want to. You may be busy playing golf and enjoying yourself but this transaction will only take five minutes of your day.
Getting valuations is a separate transaction from fund management.
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