Anton Casey unintentionally became an internet sensation with his distasteful comments about Singaporeans. Singaporeans were quick to rebut him and hatred spread like wildfire on social media. Things could not get better when Crossinvest Asia officially announced the sacking.
I am definitely upset when a foreigner had such impressions of us. The information about his background were not concrete, and I can only speculate that he was a wealth manager or a “high-class” financial advisor who served the rich in Singapore. Crossinvest has many companies in various countries and it manages funds. I believe wealth managers like Anton Casey were promoting them. It seems like the flagship fund for the Singapore Branch was the Crossinvest Asia Pacific Fund.
I found the fund performance from this website.
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I must say the performance was quite bad. It under-performed MSCI Asia Pacific and an investor would have lost close to 30% of his investment for the past 4 years! I do not really trust the source so I ran a check on Bloomberg and found that the fund only had less than a year’s history, with its inception on 19 Jul 13. The fund NAV dropped about 6% in half a year and the results were not as bad as depicted in the first website. A year is too short to judge the performance.
Nonetheless, it doesn’t bode well with the reputation of the financial industry. Numerous research have shown that most funds are unable to beat their benchmark indices after costs are factored in. Funds have to charge high fees because of high marketing costs to reach out to clients and good remuneration to keep good analysts and managers. The high marketing costs was due to the lucrative commission structure to maintain a horde of wealth managers and financial advisors. The clients have to eventually bear these costs. In essence, clients pay to be sold.
I have seen advisors driving nice cars while clients take public transport. There is nothing wrong as these successful advisors have really worked hard. But it is unacceptable when advisors look down on the same people who gave them the business. I know, these are the few black sheep in the industry, and moreover, some of them sell to the rich and not the middle class Singaporeans. But even so, they do not have the right to scorn at people because of their wealth. I have no problems with financial advisors making good money, but I believe the remuneration can be better structured for a win-win relationship between the advisor and the client.
The Silver Lining
There are talks about changing the current commission structure to a fee based remuneration (charged by consultation time, just like lawyers). Although Monetary Authority of Singapore and the Financial Advisory Industry Review did not adopt it, things are moving in the right direction. Advisors would not be motivated to sell products because of high commissions and clients’ interest could be better taken care of. Fee-based advisors are also more likely to introduce low cost Index funds and ETFs with better returns, which today’s commission-based advisors are unlikely to do so.
Burgeoning of Low Costs Index Funds and Services
I was happy to see OCBC and POSB launching their regular investment savings plans. They have made investments more affordable. Retail investors can put aside a monthly sum to invest in STI ETF and the process is done automatically, at lower fees than investing in unit trusts. I believe more beneficial products and services will be introduced in the future. However, it doesn’t stop here. We cannot expect the masses to understand these products by themselves. It doesn’t happen that way.
Bridging the Gap
The gap is awareness. Singaporeans invest in unit trusts more than index funds. This is because we have more financial advisors selling funds than the number of educators seeding the idea of low cost funds. The reach is definitely incomparable. I have stood forward to spread the message, no matter how small the impact, I am willing to save one starfish at a time, as I believe most Singaporeans would be much better off financially if they have taken the index investing path.
Anton Casey could be right calling Singaporeans poor. We are indeed poor in terms of financial literacy and not knowing what is good for our financial health.
Thank you for reading and I hope you would play a part in relaying this message.