My biggest issue here is that after examining these products, there is NO justifiable reason to use them. The fees are extremely high, the plans are not flexible, and the worst of all, the terms and conditions are not transparent. Basically, they are entirely unsustainable. I asked the ‘advisor’ to explain how the fees worked, and I got a vague answer, which I found through further study to be mis-representation. I was also pushed to sign a 25 year investment plan, which is INSULTING. All the more so as he wanted me to sign up for this plan after only our second meeting.
I calculated the fees on a 25 year investment plan with the recommended company. Based on investing 1000$ a month, I would be paying over 2000$ per year in basic fees for 25 years. A quick calculation shows that even in a tremendous bull market, where my 1000$ monthly investment was earning 10% per year, I would still be losing money (around $800 per year). And if the market dives, or just breaks even, I would still be paying that 2000$ per year in basic fees. Even if I decided to decrease the amount of my monthly investment, or stop investing altogether, I would still have to pay that 2000$ per year in basic fees. If I wanted to take out all my money, I would lose everything due to the massive cancellation fees. And let’s assume I WILL want to take out my money at some point, given that a 25 YEAR INVESTMENT plan is ludicrous to begin with!
/profile/39-stickybkk/?do=hovercard” data-mentionid=”39″ href=”<___base_url___>/profile/39-stickybkk/” rel=””>>@StickyBKK – WHY WOULD ANYONE PUT THEMSELVES IN THIS POSITION???? Tell me, how does this in any way relate to your Mum’s pension plan back home?
My conclusions are as follows. It’s a perfect storm here in China. You have salespeople peddling unit-linked life insurance plans disguised as expatriate financial investment plans in a totally UNREGULATED environment. At the same time, you have naive expats who are easily suckered in by these salespeople given these plans are basically outlawed in their home country. Given that there are so many of these investment ‘advisories’ it’s clear many many many expats have been suckered in to these plans by hyper-aggressive salespeople trying to secure massive commissions.
And to your point that expats should read the terms and conditions more clearly, I still find a couple things strange from my last meeting:
1) The ‘advisor’ I met could not supply an answer on how big the cancellation fees would be if I decided to cancel my plan, aside from telling me not to worry about it.
2) The role of the massive “bonus” that accompanied the investment plan. The recommendation I received included a massive ‘guaranteed’ 50% bonus on the $1000 I would invest each month for the first 18 months. Of course, if it sounds too good to be true, it probably isn’t. After running the table on this bonus, it’s clear to me this is an old trick. It disguises the massive 10% annual fees with 18 months of 50% bonuses. The plan seems great for the first 18 months, after which, and for the next 23.5 years, you are paying massive maintenance fees. Of course, by that time, if you cancel the plan you will lose all your money. And of course, my ‘advisor’ would be long gone.