If an adviser sells a product of just $1 to Mr. X and that if the product losses 100%, he will kill the adviser for selling a product that has return of -100%. This despite that $1 is probably just 0.000001% of investor’s entire net asset.

If an adviser sells a portfolio consisting of many securities to Mr. X, and that one of the security which is equivalent to $100,000 in amount collapses and return -100%, the investor is not likely to kill the adviser since this $100,000 is just equivalent to 10% of the total portfolio invested via the adviser. Since other securities raises and fall +/- 20% in value all the time, the total lost of one security may not be that material.

Thus, advisers who want to push a single product will eventually find themselves in trouble eventually since it is impossible to know the future performance of the product. This is another reason why portfolio approach to investment is the way to go… of course the adviser is not likely to understand what is portfolio and that the consumer is more keen in free gifts like MP3 players and Fairprice vouchers.