Unit Trust really can make money! For agent OR for investor?
How many people have invested in Unit Trust and earned an average return of 12% per year?
How many people have lost 10-20% in Unit Trust, going nowhere, and no longer believe in this investment tool?
I am writing this because I read the news that two consultants in Malaysia were barred by authorities for performing frequent transactions using clients’ funds, which allowed them to earn the Sales Charge or so-called commission from these actions.
I recall when I was an apprentice in a Corporate Fund House; I met one of the Unit Trust Consultants. I often saw him entering the submission center almost every day. One day, out of curiosity, I asked him, “Wah! Business bagus ni! Nak tanya jap, macam mana dapat so banyak customers?”
I was new in the financial industry at that time, curious about how people could get so many leads, and business was non-stop. Surprisingly, he shared with me, “Eh, bukan, saya tak ada new submission… ini semua existing clients!”
After listening to his sharing, his strategy was to ask clients to invest with him and monitor the market closely. Once the account made some profits, he advised the clients to redeem and then invest in another fund with a lower NAV, repeating this process. Why so tedious? Because this is how a unit trust consultant can earn – the sales charge. Each time he bought into a new fund, he could charge up to a 6.5% commission. However, he gave a flat rate of 4% to the clients.
This is what struck me mentally. If I were his investor, I would be very concerned! Unit trust is mainly for long-term capital appreciation, not for short-term trading. I was confused when he told me that this made him easy money monthly. Imagine he has 100 clients, each with an RM 5,000 investment; every month in and out, he can earn RM 20,000 without looking for any newcomers. WOW!
But is the client profile healthy? Wouldn’t it break even after N years of investing with him? Once there are some profits, redeemed (in layman’s terms = sold), and then buying in requires paying a 4% sales charge. Not to mention if the market goes down, then what?
After practicing as a full-fledged licensed financial planner, today, whenever I see investors with doubts when it comes to unit trust, I feel I need to stand up and educate Malaysians. Unit trust can generate an average of 8-12% p.a. to me and my clients! As long as we use the right strategy and choose the right funds!
I hereby applaud FIMM (Federation of Investment Managers Malaysia) for taking this serious action to bar the two consultants who made a fool of the investors. Earn money, use the right path, shouldn’t we?
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs.
Published By:
Annie Wong 黄如金
Annie is a passionate trainer who was inspired by her idol to teach what she learned and to give what she earned. She has more than 10 years of experience in the field of training and SME business consulting.​
She graduated with a Bachelor in Science from Campbell University Summa cum laude (First Degree Distinction). She was awarded book prizes and Matthew Bailey Prize Award due to her distinguished academic performance. She then pursued her career switch from a Pharmaceutical Regional Manager to a Financial Consultant.
Currently, Annie is an internationally recognized Certified Financial Planner (CFP Professional) cum International Certified Professional Trainer (ICPT, IPMA, UK). She is a CMSRL Financial Planner (Licensed by Securities Commission Malaysia) and has impacted people financially. She is now one of the core trainers in the Certified Financial Coach Program and is the only accredited Color Accounting Trainer, who can train in both English and Mandarin.
