Why I Started This Blog
After years of working with clients across the Middle East, I noticed a recurring trend: many expats are investing in complex financial products without a clear understanding of the risks. Similar advice is given globally, but the concentration of expats in the Middle East makes this issue particularly relevant here.
Typically, when clients purchase bond products or mutual funds, advisors receive a commission—often around 5%, spread over five years if they’re non-fee-based. In my view, paying an extra 1% annually to work with a knowledgeable advisor can be worth it, as these advisors often provide valuable guidance. However, the real concern arises with alternative investments, where advisors may receive commissions of 15% or even more annually. This model can lead advisors to “churn” investments, moving clients’ funds every year into new products simply to collect repeated commissions. Over five years, that can translate into advisor earnings of 75-100% on a client’s portfolio.
While this may seem lucrative for both parties, it’s rarely sustainable. When these investments underperform or fail—which, in my experience, they often do—clients can lose 80-100% of their capital. In fact, over 95% of these alternative investments end up going bust. Unfortunately, many clients only realize this risk too late, leaving them disillusioned and often facing significant financial losses.
The blog’s goal is to educate both clients and advisors on the hidden pitfalls of high-risk investments. It’s critical that clients understand all potential risks upfront. When clients make fully informed decisions, they can assume responsibility for the outcomes, even if an investment doesn’t pan out. I respect advisors who are transparent about potential losses, rather than hiding behind fine print. However, I’m concerned when clients are “sold a dream,” assured of safety, and then later face substantial losses.
Ultimately, if this blog helps even a thousand people avoid financial loss, the effort will have been worth it. And with the reach of the internet, perhaps it can impact many more.