Recently on the expatriate message board ShanghaiExpat, an anonymous online poster Chavster questioned many things, but in particular that “The fact remains that you are hosting an event that is predicated on drumming up new business for your firm. There is no other reason to be doing this.”  We didn’t debate this at the time since we wanted to give away all the event contents prior.  We have now held the event, and it was successful.  We had a room full of active participants, so now we can detail the content of the event, and its purpose.  Judge for yourself whether Chavster was on the mark.

The content:

The event was designed to look at global investment platforms and how they have evolved.  In particular how the business model of financial advisors has changed over time.  In the beginning it was merely the sale of mutual funds for a 5% brokerage fee until this was abused by brokers (churning through 2-3 funds in a year) and clients wised up, demanding discounts on fund entry.  So the industry moved to a sale of “fund platforms”, which charge commission to start an investment and restrict exit, and is, more or less, the stage where most of the other financial advisors in Shanghai remain today.

We then looked at one of the more popular products sold by advisors in Shanghai.  We picked Generali Vision, but we could have chosen from 4 or 5.  We looked at its fees, benefits and restrictions and overall cost calculations and then compared that to a brokerage account.  We provided details on Interactive Brokers and TD Direct (previously Internaxx) which is part of the TD Ameritrade Group.  We believe that Interactive Brokers and TD Direct provide much cheaper and far less restrictive accounts for expatriates.  They are our preferred approach for ourselves and our clients.

We believe, perhaps ‘hope’ is the right word, that financial advisors will work for transparent management fees in the future, rather than hidden commissions.  Effectively moving to a transparent fee-for-service approach.  We even discussed briefly how to use brokerage accounts funds to manage an account and buy exchange traded funds (ETFs) for those in the audience that were the DIY type.

The content, as described above, helps put in context the explanation of our purpose for our “Global investment platforms that make sense”.

Here is our purpose:

1. Brand Building.  No point denying the advertising raises the profile of our company.
2. Assist DIY community: To help those who are DIY clients to find their preferred approach.  By helping those that are DIY to try to manage themselves and won’t become our client (or anyone else’s) it will help improve investment knowledge in the wider expatriate community.  This will help separate our brand and service from competitors and perhaps lead to a supportive community, possibly on this website.
3. Build broader expatriate knowledge and awareness: The truth on the options (particularly fees and access restrictions) will allow our prospects to take a more informed and considered decision when looking at financial advisors.  We also hope they pass this information on to other expatriates, particularly the newly arrived.  This may either lead some people away from our competitors to our services or to DIY.  Yes, our competitors may respond with better more attractive service, but then the expatriate community in China will be better off, won’t it?
4. Directly recruit clients: That some attendees will become clients as a result of our clear explanation of our approach and its benefits.

Not the same

If you think we blame Chavster, or hold some kind of grudge, you’d be wrong.  He is right about the costs, fees, access restrictions and conflict of interest for many products of the personal finance industry.  That’s why we avoid them.  We also agree that a small dose of cynicism and skepticism is healthy; in fact we’d argue that’s the case even when investing at home.  But to say that financial advisors in China are “all the same” is a long way from the truth, here or anywhere.  This debate, however, is getting tired to us since we would prefer to be positive.

We think it’s time to move forward

We know that some will assume “you are all the same”.  It’s a fact of life.  We think it is time however to be positive and move past that to the future.  How should expatriates invest?  What is the most cost effective way to invest?  What do professional investors recommend?   Why are funds that are exchange traded much cheaper?   What resources are out there to support people in managing their money and investments?   Living in China is a pretty darn complicated environment, clouded by a lot of rumor, misleading sources and vested interests.  We think any added clarity is a step in the right direction.

The future is what you make it

We want to help build a better community for expatriates in China – a better future.  It is a cliché to be sure, but still the truth, despite how saccharine it might appear to the cynical.  The event we held last week was a strong success, we believe, at least in part, because of our transparent approach to our investing and community building.  A success we are proud of.  Several attendees encouraged us to run this event again in 2013 and do so in conjunction with different chambers of commerce in Shanghai.  We have already spoken at several events in 2012 with the Australian Chamber of Commerce and we may discuss further events, bring in outside speakers, or simply run them ourselves next year.  Whatever they are, we hope to see you there.

Spread the word.

About Caterer Goodman Partners

Caterer Goodman Partners is a Shanghai based wealth management firm established with a clear vision to provide a new level of personalized financial planning services for expatriates in Asia. Our financial advisors provide guidance for our clients in all areas of investment, specialising in managed accounts, money-market funds, retirement planning and alternative investments. At Caterer Goodman Partners, we offer our advice and experience to provide low cost, tax-effective and simple solutions to match our clients’ interests.

About Owen Caterer

Since graduation Mr Owen Caterer has worked with the Queensland Premier's Department in Trade Facilitation and then as a financial adviser in Shanghai from 2005 until 2010.  He then rose to Senior Adviser, then Business Development manager and then to Chief Investment Officer responsible for portfolios to a value of US$280 million across Asia. Following that Mr Caterer left to found his own firm with a partner in the financial advisory and wealth management area.   This focused on developing China and Asia's first fee-based financial advisory (rather than commission-based). This has grown to now have 8 staff and and managing almost US$35 million for clients throughout Asia. This business success was recognized as a finalist in the 2013 ACBA in the Start Up Enterprises category and are one of a small number of foreign managed firms to have a full asset management license in China.  Owen has also been active in the community volunteering for the Australian Chamber of Commerce in Shanghai and acting as the Vice-Chair of the Small Business Working Group (2012-2014) and as the Co-Deputy Chair of the Financial Services since 2013 until the present. They have continued to grow their business and have now been selected as a small group of companies who are platinum members of the Australian chamber of commerce. The achievement they are most proud of is their efforts to reform the financial planning industry in China and push it away from a hard-sales commission driven model to a more ethical management fee and long term customer service model.   Owen has a Graduate Diploma of Applied Finance from the Securities Institute of Australia of which he was a member as a Fellow of Finance for many years and also has an undergraduate degree from Griffith University in International Business.  Owen's interests are tennis, running and his wife and two children.  He speaks fluent Chinese, first arriving in China in 1997.