Scary truth about accredited investor rule

As an investment blogger, my commitment is to deliver quality content so that readers can benefit from reading my blog. Beyond this, I also hope to build a community by engaging my readers. Thus, if you find this article useful, please email subscribe to my blog for free or share your thoughts in the comment block. Today, I will share the scary truth about accredited investor rule in Singapore.

I learned about the accredited investor rule a few years ago from a local entrepreneur who worked in the financial sector for many years. He candidly shared with me his experience as a wealth manager and touched on how the industry made money from investors based on this rule.

I have previously written about this rule in this blog but apparently many readers still have many doubts about it. You may check it out here.

Make your money work hard

Like many people, I share the same aspiration to enjoy the good life through building wealth. In this regard, my conviction is that investing offers the possibility of a ticket to financial freedom.

But have you ever wondered why so many Singaporean investors lost big sum of money in financial products like Minibond Notes, High Notes 5 and Pinnacle Series 9 and 10 Notes back in 2008?  Instead of making money work hard for them, ironically they lost substantial wealth. Last year, many investors also got burned after investing their hard-earned money in Swiber corporate bonds.

Singapore banks

Many of you would presume that you would not suffer the same fate but you may be wrong. This is because these investment products are not scams, but legitimate products sold by reputable banks and financial institutes to retail investors. This means that it could happen to any one of us.

Many of these individuals are affluent but were unaware of the risks behind these financial products. Given their lack of understanding of these investments, how on earth did they manage to get access to these financial instruments in the first place? This is where the accredited investor rule [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: March 13, 2019 — 9:07 am

9 Comments

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  1. Thanks for raising this for discussion. Too many scams or near scams around.

    The culprits are usually banks themselves, not companies. When biz companies need to raise funds such as bonds, debentures, going IPOs and other products, they seek banks as underwriters who provide the expertise, advice and to underwrite by buying all the issues for a fee but mostly a percentage. It then re-sells them to retail investors mostly their banking clients. It is a very lucrative profit for these investment banks, better than the business of lending. They have all their rich clients data and through their ‘relationship managers'(RM), who call them to market these products. They also market the Notes, bonds, whatever fanciful product names from overseas.

    In 2008 during the GFC, our local banks import many of these toxic products ( which you mentioned) from US to market them here. Some years back, even POSB is not excluded in its fervor to direct clients (with big sums) to be interviewed by RMs for some fishy products.

    Yes, hopefully MAS tightens the definition of AI. It is too loose. Those complicated products also require us to sit for a so called test. Haha….ask most people taken this test, might as well not bother.

  2. Thank your Lucky Stars or your GOD if you escape from buying anything from this so called RMs from your banking activity.

    Not only HNIs are targeted, those who have higher amount of FD in the banks too.

    MAS’s legislations or not, just thank your Lucky Star or your GOD that Greed has not taken over your Wit at the spur of the moment.

    After a few skirmishes with Bank RMS, they will most probably don’t want to waste their time on you anymore.

  3. will a cert or sth similar be provided by bank or financial institution once qualified as accredited investor?

  4. Good and truthful article. With interest rates at a low, customers have to be alert.

  5. Thanks Philip. Yes, Singaporeans need to be aware of the scheme to avoid paying painful money lessons.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  6. Hi Bruce,

    I am not aware of any certificates to be granted because accredited scheme reflects a person financial status. You don’t need to undertake any courses or examinations to be qualified as accredited investor.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  7. I guess Singaporeans need to be vigilant and read the forms before signing our wealth away.
    You might have relatives or family members qualified as accredited investors. So I guess you should remind them of the peril.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  8. As far as I understand, AI scheme is different from SIP which requires test.
    To qualify as AI, you just need to have the asset or income.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

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