Last Sunday in Sunday Times there was an article which painted a rather negative picture about some "investment seminars" that turn out to be not so great. After attending a preview, audiences have to pay a hefty seminar fee to attend the "real" seminar which itself is nothing great because it does not necessarily produced good results. However, I observed that there are so call investment seminars that are organized by more reputable organizations that are also doing a bad job.

Many of the so-called more "reputable" seminars teaches the audience the basic instruments in trading. For example, options, futures, CFDs, warrants, ETFs ,etc. While there is nothing wrong with these seminars, unfortunately they tend to attracts audiences which shouldn’t be there. To be fair, these seminars are open seminars – anyone can attend. So the fact that it is an untargeted audience makes things worst. Many of these trading seminars teach people how to trade – but they don’t necessarily teach people how to invest.

Trading and investing are not the same. Investing is closely related to financial planning. It first starts by knowing the objective of the investment – is it for children’s education? Is it for retirement purpose? Is it to protect assets from inflation? These are financial planning questions. Investing than take a step further after these questions are asked and implement them into asset allocation based on the investor’s risk appetite (again, risk appetite is a financial planning matter). Asset allocation has to do with allocating the investable monies into different asset classes and into different geographical locations. After the asset allocation is done, do we go into products or tools to implement the asset allocation. This can be shares, unit trusts, ETFs, hedge funds but seldom does the bulk goes into warrants, CFDs, options and futures. These instruments are normally done as a supplementary portfolio in which a small amount of say a maximum 20% of one’s portfolio goes into these.

Very unfortunately, many of the so called investment seminars do not tell the audience about asset allocation and that these speculative/hedging instruments mentioned above cannot be used for the bulk of money. Personally I do not think it is the duty of these seminars to tell them about asset allocation and financial planning because the objective of the seminars are to teach people about these leveraged instruments. The audience who attends these seminars know about the objective. Very unfortunately I have not seen any advertisement about seminars that tell people how to do their asset allocation properly. Why? It is because such seminars are unexciting and seemingly boring. It is easier to advertise about XYZ instrument that can give 100x leverage and say that for $10,000 investment, you can borrow $1,000,000 to invest. Wah.. sounds good so much money available for investing. As you can see, greed sets into play. Talk about asset allocation? Ha? What’s that? Can it be eaten? However, to tell the readers the truth, asset allocation is the core strategy used by all financial institutions – be it passion fund, endowments, life insurance life fund or sovereign fund. Yet it is strange that the man in the street are not encouraged to use this method but is introduced into highly speculative investment ideas.

I spoke to one client today… he actually attended an investment talk I gave. He told me that he is information overloaded. He has attended so many investments. He tried out using CFDs and got burn badly. Therefore he need to think through all these information overload. When I met him a couple weeks ago, I propose that he invest into our portfolios rather than buy individual products. However, from today’s short conversation, I am so sad to hear that my seminar and our discussion were probably lumped the same league has the rest of the so-called not so "educating seminars".

Personally in my experience so far, it is so much easier to sell a single product than a portfolio using asset allocation. In asset allocation, we talk about managing risk. In selling a single product, we talk about the "story" behind the product. Of course most clients hate to discuss about managing risk but they love to hear "nice stories" which most of the time are just fairy tales that will not come true. Therefore clients just keep on buying products and at the end of the day, they just complain that their returns are losy and they blame everybody except themselves.