I talked to a client and he asked me why FA in Singapore could only offer unit trusts to their clients? What happen to shares, bonds etc? The following are my personal opinion (I stand corrected):

1. It seems true that the banks, tied agencies and IFAs could mostly offer unit trusts or single premium ILP. (Banks have also been quite aggressive with structured deposit)
2. I think it is partly because unit trusts have a good sales charge (typically 3%) and trailer fees. This is better than recommending shares which have just a small brokerage fee and no trailer.
3. Advising stocks require significant work. It is totally not logical to tell the client to invest 100% into one stock. For diversification purpose maybe at least 30 counters. So the research is to be done is huge and the remuneration of merely the brokerage charge is a laughing stock. The remuneration problem can be overcome like what some securities firms have done by charging a management fee with performance fee in place through a discretionary-managed portfolio. In this model, investors’ monies are pooled but usually the client will have little say except choosing the type of portfolio like “Conservative, Balance, Aggressive.” To me that is like a CIS (unit trusts) already. So we are back to square one – CIS again. Anyway to lengthen the story, most FA firms license comes from the FAA. To do discretionary managed portfolio, the CMS license from the SFA is required. I have still yet to understand why the law is split into two – SFA and FAA. Maybe I am slow to learn but from what I see, there are overlaps in both activities.
4. Platforms –perhaps unit trusts really became really became big in Singapore when iFAST and Aviva Navigator offer their platforms to FA firms. Suddenly FA’s investment platform becomes more powerful than the banks. The free switching and the ability to charge a wrap fee are really very powerful. iFAST client-adviser portal makes transaction seamless. Whether the client invests $1000 or $1m, just a few clicks on the button and transaction is done. The platform captures the details of the fund purchase(or sale), amount, sales charge, trailer fee disclosure, commission disclosure, rationale of recommendation, terms & conditions, right of free look and the fact that the client enters his password to “agree” is as good as he signs on the dotted line. It is truly an amazing platform. Ur.. Navigator is a little bit primitive but many FA still use it because it is slightly cheaper.
5. Other platforms are not as powerful as iFAST and so many FA still stick with the platform. Unfortunately only unit trusts is offered. Some Restricted schemes like MAN Investment hedge funds and Platinum are available on  iFAST but there is all. So it is quite limiting.

Currently I use Friends Provident Global Portfolio to do ETFs. This platform is extremely powerful because it can hold almost anything like notes, hedge funds, unit trusts and of course ETFs. Unfortunately it is only for Accredited Investors (life is so hard on us …)

I personally believe that the next explosion is when a company launch the first IFA platform that is able support Shares, ETFs, Bonds, Forex. Would any entrepreneur take up the challenge?