“Dear Wilfred, I wanted to buy Product N. But I was so disappointed that I couldn’t buy it as the Product N was withdrawn just after 4 working days it launch the product. I read from another blog that the company wanted to raise $80m for Product N but it turns out to be 2 times oversubscribed. Why is this so? – Regards E”

Dear E,

You will realize that Product N did not require any advertising. The company just sent mass email to advisers. In other words, it did not spend any money on marketing and advertisement. The total commission that the company is paying is only 0.26%. So for a $10,000 investment the total commission is only $26. The adviser probably gets around $18. Compared this to say a 3% sales charge on unit trust, this product pays extremely small amount and it is as good as having no commission at all. The reason is because Product N is a simple product and has yield much better than other alternatives.

In fact, there are many superior products that has better performance compared with alternatives and yet it pays no commission too. Unfortunately many consumers do not know about it due to ignorant. If distributors and advisers do not introduce it, nobody will know. Therefore, it is important to engage an adviser who do not need to rely on commissions to earn a living.

Wilfred