Should we require basic information on posts about unregulated investments?

[GSheehy]

would it not be better to have some sort of minimum basic information requirement for those that have invested in unregulated products (like Basic information required for the "Money Makeover") rather than, what appears to be, the usual ' I googled the name of the company when things went South, saw this post, registered with AAM and just wanted to say I lost money too'?

No one is going to learn anything from just that and we'll be here in another 21 years time reading the same stuff. It's not going to stop happening if there isn't some understanding of how and why the money was invested in the first place. I can't recall seeing any post where someone invested in an unregulated product and it didn't turn to mush.

 

[Brendan Burgess]

So here is a first stab at it. Please add.

1) What date did you invest?
2) Was this investment in your own name or was it through a pension fund?
3) How did you hear about the investment? (e.g. a financial advisor, an ad on Facebook...)
4) Did you read the brochure?
5) Did you know it was unregulated?
6) Did you do any research yourself before investing?
7) What proportion of your overall investments was this?
8) If you used a financial advisor, what are they saying to you now?

 

[Zenith63]

Going back one step further, do people who invest in this kind of thing tend to start with Googling “Is the Irish Topiary 10x Mega Fund a good investment”? If so it would make you wonder if AAM could help steer people in the right direction by allowing discussion of specific investments but in an extremely limited way.

Even if it was literally just to allow somebody ask about a fund by name, then a moderator posts some boiler plate text about the risks of unregulated products, the list of questions the investor should ask themselves and then locks the thread. The thread would show up fairly high the next time somebody searches for investment advice about that product and might help save some people from themselves.

Or am I hopelessly naive about the number of these funds that exist or the legal implications of appearing to question their legitimacy?

 

[Brendan Burgess]

if AAM could help steer people in the right direction by allowing discussion of specific investments but in an extremely limited way.

There is no ban on such a discussion?

People regularly report being interested in the Topiary Hedge Fund and the consensus is nearly always to avoid it.

Are you mixing it up with the ban on speculating about individual shares? For example, we don't allow "I am thinking of buying shares in Kerry Group. What do you think?"

 

[Marsupial]

Did you know it was unregulated?

Bear in mind that like, I suspect, many other ordinary investors, I had no idea what "unregulated" meant.

That's why, like, I suspect, many other ordinary investors, I availed of the services of a QFA who was recommended to me and who I trusted.

I have no recollection of my QFA explaining the significance of that word to me, and I suspect that I'm not alone in that.

PS Thanks for the warning about the Topiary Hedge Fund - I was tempted, but decided against when I read about its links to Strimmer Enterprises (Jersey) Ltd.

 

[ClubMan]

Bear in mind that like, I suspect, many other ordinary investors, I had no idea what "unregulated" meant.

I'm a long time poster and don't fully understand what that means to be honest. I.e. what regulation mean need/involves other than being on some Central Bank (?) list.

Register of Authorised Firms | Central Bank of Ireland

Register contains individual registers for all financial service providers and collective investment schemes regulated by the Central Bank of Ireland

www.centralbank.ie

Firm Search

I suppose I should read about it. I presume that this is what's involved?

Supervision - How we regulate | Central Bank of Ireland

The Central Bank’s supervisory objectives are to protect consumers and financial stability.

www.centralbank.ie

 

[Marsupial]

I'm a long time poster and don't fully understand what that means to be honest. I.e. what regulation mean need/involves other than being on some Central Bank (?) list.

Well, one of my dud BlackBee Funds is "regulated" by the Central Bank whereas the other one isn't.

I understand that I may - at some stage in the distant future - be compensated by the Investor Compensation Company DAC up to a maximum of €20,000 in respect of my losses on the regulated fund.

Whereas only the Good Lord knows what, if anything, I'm going to get back from the unregulated one.

 

[Fortune]

then a moderator posts some boiler plate text about the risks of unregulated products, the list of questions the investor should ask themselves and then locks the thread.

Could this be done by a bot like some parts of Reddit use?

 

[Corola]

a moderator posts some boiler plate text about the risks of unregulated products, the list of questions the investor should ask themselves and then locks the thread.

Locking the thread is no good - no one would see their answers. Or if someone else invested in the fund wanted to give their own experience/warning.

Could this be done by a bot like some parts of Reddit use?

A move towards bots would be a real turn-off for AAM. It's one of the fewer and fewer places online that you only get human answers.

 

[GSheehy]

9) Was the investment with 'new' money or moved from an existing investment/pension
10) Did you ask the opinion of anyone other than the person that was selling you the product
11) Was it your money or shared (couple/partner etc.) money

 

[Fortune]

12) Why did you invest in this?

Edit for less cynicism: What investment objective was this fund meant to achieve for you?

 

[ashambles]

I'm a long time poster and don't fully understand what that means to be honest. I.e. what regulation mean need/involves other than being on some Central Bank (?) list.

That is a problem, it's one thing an advisor telling someone a fund is unregulated but another thing to explain why it is unregulated.

While there will be other reasons, I think in practice unregulated funds are usually unregulated because the fund is heavily relying on borrowing money. It won't meet the criteria the CBI have for regulation - their ideal fund is a simple fund that buys a diverse selection of assets under strict criteria and has no borrowing.

Perhaps-

13) Did the advisor explain that the product was using leverage and the implication of this?

 

[GSheehy]

Rethinking this, missing from all the coverage on these failed products/ ventures is the part that the teams of principals, accountants, lawyers, actuaries and marketing folk have in bring them to market. The focus is on the guy/gal at the coalface who sold it to the investor.

But, someone had to sell it to him/her. They believed it would work.

To get to the bottom of these maybe the focus should be on the top.