Financial planners

that's horrible, James
I just wondering why you didn't invest your money by make your own business...

Like all businesses, "independent financial planners" exist first and foremost to maximise their own profit, not your investment returns.
As you have just painfully learned, your planner was pretty good at that.
I never trust any of them!

Hello James,

What you are asking about involves Contract Law, it's doubtful you're going to get detailed information here on the blog.

You must have signed a contract with the financial management company. What does the contract say about cancellation? And why didn't you ask at the time you signed on? If you didn't understand the contract before you signed it and the provision for this 19 years of administration fees is set out in the contract there is absolutely nothing you can do about it.

If it is not set out in the contract then you are under no obligation to pay and you should retain a lawyer who will make it abundantly clear to them that you will take legal action against them should they try to deduct anything more than the 1.5% fee. If necessary your lawyer can obtain an injunction which would freeze that money if they do deduct it.

If there was no contract signed then you need to check with a lawyer if this kind of fee is permitted under Chinese laws, same story there if it is you're sunk, if not the lawyer can act.

My question has always been... Why would anybody use a financial planner? They make their money by playing with other people's money and if they were so darned good at it then wouldn't they be rich and not need to work?

  Cheers, 
  William James Woodward – Brazil Animator, Expat-blog Team

This is the clause they will claim under which I did question and was told that after the 1st year this would not apply due to the high premium that I was making

Full Surrender
The Surrender Value of a Plan is the current Investment Value less any accrued charges, any administration fees which would have otherwise been deducted over the remaining Premium Payment
Term (i.e. the value of all Initial Units held), any pro rata investment administration charges due, any applicable early discontinuance charges and any applicable third party charges.

If you fully surrender your Plan before the end of the Premium Payment Term, all Initial Units held at that point will be cancelled to reflect the outstanding administration fees due over the remaining Premium Payment Term.

I think basically I am screwed. From looking at blogs about this subject, I can see that less than 10% of these policies are ever fully carried through. I am interested to hear of any others that have similarly been misled.

Sorry to hear about your situation. Reasons like this are why I use Vanguard. Financial planners (especially after fees) can not statistically beat the S&P500 index reliably. I don't know how to help with your current situation, but in the future, I would do some reading on low-cost index funds for long-term investing. I use Vanguard because their fees are lower than the industry average, but there are other reputable companies out there as well.

Below is a long thread of today's correspondence, I do not think I have a hope in hell of getting anything much back out of this but will do my bit to inform others. Read the fine print, always have an independent person read over the contract even if you need to hire a lawyer. If your too busy making money to review things properly, keep our money in the bank. The big problem is that these guys are a big company, they are quite clearly ripping people off but when you have been ripped of the last things you can find is money to pursue your loss. They have a great scam going and no one to stop them, got to love that. Read on, some names have been changed to protect me from further losses.

Financial advisor

Sorry, it has taken me a tad longer in replying to you but I really had to investigate fully with Xxxxxx as to the current state of partial surrender procedure as regards your policy.

The Devils ears Platform facility as regards en-cashing is not a problem at all and the USD24,000 that is currently the invested amount can be transferred to your named bank account anytime .I have to get a signed instruction from you and so I can activate the transfer anytime that I can get the instruction from yourself. Once I get the instruction then I shall contact the Platform Dept and in effect carry out your instruction –from instruction to the sale proceeds hitting your named account –say apx 2 weeks .No fees will be deducted and the sale proceeds will be credited as “cleared funds”.
This sum(USD24K) was transferred from the General policy and was basically mentioned to safe guard; protect some of the General policy money.
This has been protected and can be accessed quickly.
So if we add the USD24k and the current value of the General USD52k—this would equate to USD76k against total Premium injections of USD78k-charges would have taken an over-riding effect against no monthly premiums.

General policy. (Valuation provided).
The General Policy is a little more involved Jamie, and as I alluded in our last meeting –the regular policy like the General Vision does really rely on monthly premium and as you appreciate this has stopped .We have not had a regular monthly premium and Jamie I fully understand, between jobs, change of employment from the construction business etc but in essence General have not received any premiums at all. I did say at the last meeting it would be ideal if you could commence or re-commence with at least USD150 per month for at least the next 6 to 9 months to reactivate the premiums.
This is a 19 term premium commitment that commenced on the May 2008 for a 19 year term –so the USD51,986.39 is in fact “ring fenced” and at this moment so  can't be assessed as a partial surrender nor a full surrender sum .
The Partial Surrender amount currently has no surrender amount and the full surrender amount is USD 1379.

I have been debating the issue with General at length over the past few days and it all culminated this afternoon and the above figures hold good.
They (General) need the balance to cover their charges over the remainder of the term, hence why the figures are so low for Full Surrender.

I asked them how and what the Client has to do to re-activate the policy and so protect the policy so in the future you can get money from the General Vision.
They have replied later today that they would like to see USD150 per month for at least 6 to 9 months then followed by a higher monthly premium amount –ranging from USD 500 upwards for say an additional 12months and then eventually USD1000 at some later stage.
I fully appreciate jamie this is not the news that you wanted to hear but I must politely remind you that the term was set from the original date when you started the policy back in 2008, with Josh and this actually commenced with monthly USD1500, then later it went to USD2000 per month and then I remember in Feb 2010 it went from USD2k to USD3k per month.
The policy is designed to net a fixed sum at the end of a specific term (19 years in this case) and Jamie I am not being smart or difficult in any way at all –but the commitment to the term ,allowing for job fluctuations and family issues etc that lots of Clients do experience ,is vital.
I fully appreciate that the moving from your company and the job career move did have major monthly premium deviations for you and I did hope this was going to be for a short period egg 6 9 12months and then you would reactivate when you found alternative/similar monthly salary earnings –so you would have then been able to re-activate the premiums, albeit at USD500,or USD1000 or whatever –as long as the premiums were being received by General–then at some time in the future a Partial Surrender amount would have been forthcoming.

I genuinely thought, that in the near future that you would have been able to find a job here in China or neighboring country and then re-activate the monthly premium amount. When you mentioned at our last meeting that your intention was to return to Australia –then I feared that General would need compensating for the outstanding term and would “ring fence” or Shut Down the encashment option to cover the remaining years to come.
I appreciate Jamie, this is not good news at all, and that prior to your vacation you do not need or want this news.
The General Policy at present, will only increase on the back of the economic positive financial markets and presently is valued at apx USD52k and will continue to rise ,in my opinion over the next 4 to 8 months but ideally, we need a monthly premium, even at USD150 per month in the short term to protect the overall policy.
I am relay Sorry to disappoint you Jamie, but General do stick to the term that was originally signed up for, and monthly premiums ---no matter how small, do make the policy tick along. No Premiums for a longish time, do cause problems.


My reply

Hi Kevin,

I truly do not understand this, Xxxx told me that after the first
12 months all my administration costs had been covered and the fee to manage my account was 1.5% of the funds shown in my account, hence I agreed to increase the monthly premiums as I had already covered admin costs. From what I have read today I have found that less than 10 % of these policies are ever redeemed and that Xxxx was not giving me the best advice, I feel he was trying to get maximum bonus at my expense. i clearly cannot accept the fact that i have worked so hard to save money to put into this account to have it taken away, i do not have any funds to start paying further premiums into an account that is not going to benefit me. I was told in April last year, by yourself that in an emergency I could claim back $59,000. I had banked on these funds being available. I truly do not know how I will be able to set myself up in Australia and will be forced to sell my house to cover payments. Please send me through the form immediately so I can redeem my XXX funds.
I still fail to understand why I will be charged administration fees for a fund that I will close, is there a way of explaining this to me that I can make sense of. XXX told me a 100% different story to this when I questioned him on this part of the policy
This product was never a suitable option for someone like myself who requires flexibility due the nature of my work and having a young family, the fee structure of the General Vision product clearly is not a suitable investment plan for me.
I am sure you would say that this fee structure is disclosed in the terms and conditions. However, this feature of the product was not communicated to me clearly and was actually explained differently to what you have now stated. I was advised by a person that was supposedly looking after my best interests, but it appears that he was fraudulent, by advising verbally that the Very high premium I paid negated admin costs after the first year. I have no doubt that had the associated costs of surrendering the policy been communicated to me properly I would not have signed up for this policy.
How can a product that sells itself as being flexible, have a fee structure which is designed to trap unwitting investors into maximizing initial contributions, than maintaining or increasing contributions over long periods of time by charging ‘fees' based on probable contribution levels rather than a logical basis for charging fees? At the very least this should be highlighted in the marketing material and by the Advisor who earns a commission from selling the product.

I would be grateful if you could speak to General again and advise on how I can withdraw the funds invested. I had over $100,000 in my account when you took over. The share market has continued to rise since 2008 but I am left with $26300 for all my overseas work efforts.

Devils disguising themselves with a cloak of respectability

I agree, it looks like you're not going to have much luck at getting much of your initial investment back. If the clause in the contract DIDN'T apply after one year has elapsed, it certainly would have been explained clearly in the clause.

Just goes to show you, when somebody makes a promise or some kind of statement that effects your wallet you should ALWAYS get them to put it in writing. Just taking somebody's word for it, as you are now finding out, can cost you a fortune.

  Cheers, 
  William James Woodward – Brazil Animator, Expat-blog Team