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Investment advisers: Whose side are they really on?

Legacy Phuket Gazette



PHUKET: In the world of providing financial planning and investment advisory services, just about everyone claims to be, or tries to pass themselves off as, an expert looking out for your best interest. But just who is an investment adviser really serving and more importantly, who is watching over him or her? For expatriates, asking such questions is important because once you leave your home country, the world of investment advice becomes rather murky and trustworthy counsel can be hard to come by.

Understanding fiduciary verses suitability standards

When I relocated to Thailand from the United States, I would receive phone calls about offshore investment products – just like you have probably received. The difference between the calls I would receive and the calls many of you have probably answered was that the callers wanted me to sell their offshore investment products targeted towards expatriates in exchange for commissions of as much as five per cent.

However, I cannot accept such commissions because I operate under the fiduciary standard rather than the suitability standard. Under the fiduciary standard, I am required to put my own interests below those of my clients, and I am required to provide information that is as accurate or complete as possible while avoiding conflicts of interest. And rather than earn commissions paid by investment firms for selling their financial products, I earn my income by charging a small annual fee that is the percentage of the amount of assets you have me managing – meaning I have an incentive to grow your investment account while avoiding both risky investment and excessive trading to generate myself commissions.

In contrast, most other investment advisers, especially those targeting expatriates, operate under the suitability standard where they are not required to give you the best and most objective advice possible and are largely being compensated by commission. These investment advisers are encouraged to trade you in and out of investments (in order to generate themselves commissions) and they are most likely receiving a commission when they sell you certain types of financial products – especially offshore investment products that come with high fees.

However, and no matter what standard investment advisers operate under, truly professional advisers should be willing to disclose to you any relationships, compensation, other incentives or potential conflicts of interests that could impact their ability to provide you with objective advice. In that way, you can evaluate whether their advice is truly independent and in your best interest or not.

Who’s watching your offshore investment adviser?

If you are wondering who regulates or licenses most offshore investment advisers who provide investment advice to expatriates, the answer is probably going to be nobody.

Of course, there will be some accountability for offshore investment advisers who are somehow affiliated with a large international insurance or brokerage firm or other financial institution, as who they are affiliated with will have an interest in protecting their reputation. However, unscrupulous expatriate investment advisers or firms targeting expatriates rather than locals can easily operate above and beyond any laws or regulations in Southeast Asian countries – meaning it’s the wild west and buyer beware for expatriates.

Given that’s the case, you need to ask potential investment advisers, or whoever cold calls you to sell you an offshore investment product, what licenses they hold and what jurisdictions they are accountable to. Moreover, don’t just take their word for it as the regulatory authorities in most countries should have websites where you can search for the names of individual licensed investment advisers or their firms.

In my case, I am licensed by the US Securities and Exchange Commission (SEC) who hold me accountable to stateside fiduciary standards and other regulations. I am also a Registered Investment Adviser (RIA) and I have passed the Series 65 Investment Adviser Law Exam.

Don Freeman is president of Freeman Capital Management, a Registered Investment Adviser with the US Securities Exchange Commission (SEC), based in Phuket, Thailand. He has over 15 years experience and provides personal financial planning and wealth management to expatriates, specializing in UK and US pension transfers. Call 089-970 5795 or email:

— Don Freeman


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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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