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A FULL TIME unit trust agent, Chin
quitted his corporate professional job as he saw better prospects in
providing investment services.
He prides himself being professional and honest.
On one occasion, he was introduced to an investment mindset coach. The
following is a record of the casual conversation between them.
Coach: Mr. Chin, I understand you believe in your unit trust products.
Do you invest in the products yourself and do you also invite your
relatives and good friends to join you?"
Chin: Sure. Most of the times I have to explain with efforts on the
benefits as most of them lost money in unit trust before?
Coach: What differentiate you from other unit trust agents?
Chin: Unlike others, I do not push sale to earn commission only. I
educate my clients on proper way to invest in unit trust
Coach: How do you do that? Every fund is supposed to be a good product.
You sell such products, another agent who is greedy for commission, also
sell the same products?
Chin: Different fund will achieve different objectives, and that must be
matched with the investor's risk-profile and objectives. For example,
certain fund is for long term, another aggressive, conservative, ...
Coach: Is it possible that with good matching, say long term,
conservative etc. and the investor can still lose money dearly?
Chin: It shouldn’t be
Coach: Really? What is the degree of certainty that the investor will
not lose money, and must be better than bank interest rate?
Chin: There is a high degree of certainty. I cannot tell exactly
Coach: That means there is a
small chance that the investor can lose money badly?
Chin: Nothing is guaranteed in this world.
Coach: How does one protect the investment capital then, if such
eventuality happens?
Chin: I educate my investors on diversification. Don't put everything on
one basket. Say, they should have some investment in aggressive fund,
balanced fund and bond fund.
Coach: Wouldn't diversification contradict the matching principle :
mixing, say, high risk-profile with low-risk, long term and short term
objectives ...
Chin: Well ...
Coach: Again, how would one ensure the investor would not lose dearly
with good matching and diversification? And what is your diversification
formula, how much this fund, and how much another fund? How well is this
formula tested?
Chin: If my potential investor has such concern, I will introduce him
‘Dollar Cost Averaging’, that is, consistently invest a fixed sum of
money regularly, say every two weeks. If the price is high, you get less
units, if low, you get more units. Over long years, you make money
Coach: Have you tested such system of investment on different funds,
different time frames, say 5 years, 10 years, some started at market
high, other market low, and observe different return of investment, and
how do they compare with the bank fixed interest rate?
Chin: Not really. We have a few examples from the unit trust company,
they all show good return of investment.
Coach: Still, with good matching of client's risk profile and fund
objectives, diversification, dollar cost averaging, no one is sure about
the future, say another market crush and the client can loose money
dearly!
Chin found an excuse and left the investment mindset coach.
The operating mindsets of the
agent can be summarised as : "I am professional and honest. I follow the
rules given by the unit trust industry. That will help investor to grow
their money."
Given an opportunity in investment mindset coaching, the coachee will be
invited to explore another mindset : "Protection of investment capital
and preservation of profit made, if any. And minimise loss that is
pre-determined."
This will lead to strategies and system of investment with disciplined
implementation, as per QuaSyLaTic
Investment System training.
End.
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