May 14, 2018

Everyone is talking about nothing except the shocker of the Malaysian election results which should not be too surprising given all the developments around the world—the new Italian government, the new South Korean government in 2017, the crazy new Philippines government 2 years ago and of course, Donald Trump.

Who cares except that it will make Dr Mahathir the oldest head of state in the world, not counting Robert Mugabe who was 93 when he stepped down last year. And we confess we do not have cable TV at home, thus making it hard to keep up with what is happening to Mrs Najib’s Birkin bag collection and the much talked about pink diamond, kudos to her for her sharp investing acumen since Birkin’s have outperformed the stock market and gold in the last 35 years.

Crazy Rich Stuff for Crazy Rich Asians

More confession time—we have never read the book Crazy Rich Asians or thought about picking it up at the bookstore and now it is about to hit the big screens in Hollywood. Curiosity piqued enough to watch the official trailer and after 15 mins of Wikipedia, nah, we are not buying the book because it immediately strikes us as one of those Cinderella themed HK, Korea, Taiwan and you name it, soaps.

It just brings us back to those sultry childhood afternoons when you tried to sneak in some TV when mom and maid were out except there was nothing to watch, but for that same teary doe-eyed beauty suffering abuse under the rich tyrannical matriarch of an in-law with big permed hair. All we learnt was that big hair = rich, besides the whole Cinderella routine.

Then we have the nut and drink chucking Korean heiresses in the news and it strikes again that there would not be much hype about Crazy Rich Asians if not for K-Pop’s help, the K-Wave that has swept the world and made everything Asian cool.

And to be fair, the film set had some serious opulence compared to the cheap studios of the soaps and just because it happens to be set in Singapore, we have Singaporeans complaining that it does not portray their lives, possibly because they consider themselves rich, as well?

Many Singaporeans would claim to be rich Asians minus the crazy bit, as wealth continues to accumulate to us in our property valuations and the rising stock markets which makes it hard to be poor in the abundance that is showered upon us with each passing day and a new en-bloc sale.

Is Too Much Money a Bad Thing?

It surely cannot be a bad thing but Warren Buffet has already warned us in February that, “doubling your net worth won’t make you happier”, and we do not blame him because he is sitting comfortably on US$75 billion and if Bill Gates spent US$1 million a day, it would take him 245 years to spend all his money.

Then we have the world mostly mad at Jeff Bezos because of his intentions to spend his US$131 billion “like a Bond villain”, funnelling US$1 billion per annum to his space travel venture, Blue Origin, when Amazon’s median employee pay is 9% less than industry average, well below the U.S. living wage and a large number of them living on food stamps.

Crazy-Rich-Asians-Art-1Source: NY Post

We guess Warren Buffet would be richer than Jeff Bezos today if he was not stupid enough to give US$46 billion away since 2000, leaving him just his US$75 billion these days but we will keep our mouths shut because that sort of charity has not been matched in Asia and no one would be criticising the Asian billionaires if they did nothing.

The Worries of the Typical Rich Asians

Typical rich folks worry.

We hear friends lamenting they do not have enough for retirement, the rest worrying about their portfolios and now, they realise they have a bigger worry—living for too long!

Yes, the rich can bet on living to 100 and beyond, from Hong Kong to Singapore to the US and you do not even have to be rich to expect to live to 90.8 years if you are a Korean woman born in 2030.

Crazy-Rich-Asian-2Source: Bloomberg

Crazy-Rich-Asians-Art-4Source: SCMP

We can see why there is a need to worry. Because Warren Buffet is wrong—doubling your wealth is necessary to afford the comforts of growing old as we read about the V.I.P. E.R. (apologies for the unfortunate arrangement of letters) service in the U.S. where you need not wait in line for treatment for just a membership fee of US$10,000 a year. (Cheers to Singapore who has got it sorted out.)


A Good RM Can Save your Wealth and Life

We only read mostly about the success stories and happy stuff, but do not come across much in the way of bad news, the negatives and failures.

What about the 200 creditors and investors of SixCap who lost US$143 million that we have not heard much about?

What about the Taiwanese inventor who lost a few hundred million on accumulators and options?

Occasionally we read about Oei Hong Leong suing Goldman Sachs private bank for “exotic” currency trades that lost him US$34 million in 2014 and Citibank in 2009, but most of the time we do not hear about the US couple with financial assets of US$ 3 million because they had US$ 13 million 3 years before, as we read in Reducing the Risk of Black Swans by Swedroe & Grogan.

Do we really expect the retired millionaire doctor or lawyer to read all that and apply that to his investment portfolio?

It would be easier to leave it to the banker RM.

After devoting certain years to our vigilante financial education work, we decided that, to the best of our beliefs and observations, educating rich folks is just too hard.


People expect the service for free because banks give financial advice for free and would assume to be in their best interests or they will start blaming the government.

People do not want to learn about bond math and derivatives, let alone calculate for themselves.

People do not want to spend the day reading dry, old, boring financial news and developments because they are rich and want to take it easy.

People in Asia have had it too easy in their usual success formulae of punting real estate and penny stocks (or blue-chip stocks like Venture which was decimated this week) so they do not think wealth preservation will become a priority till they are really old.

People just like to be treated as rich when the RM’s gift and dine them.

It is just as simple as that.

The fallacy to their beliefs is as follows.

Banks pay their staff according to their income, if not percentage in lieu, then as a performance bonus.

Banks are beholden to their shareholders more than their clients because they are private entities after all, and not charitable organisations.

RM’s have little competition besides themselves because there is a dearth of independent financial advisory services in Asia, besides those insurance agents masquerading as private financial advisors because people will not pay for the service.

Litigation does not work as much in Asia if history is a guide and we will probably not get a Wells Fargo fiasco here because class action lawsuits hardly get past the door although it could be because Asia has the best regulators in the world and such fiascos cannot even take root.

Luck is better than smart and if one has gotten by on luck then smart is not so important.

We have no answer to that but we know that Dr Mahathir lived to his ripe old age by engaging his mind daily besides exercise and lifestyle, although we harbour no such wish and would welcome death as 104-year-old scientist, David Goodall, did earlier this week at a Swiss assisted death clinic “when life is no longer worth living”, checking our insurance claims at the same time.

Back to the good RM story, yes, a good RM can save your life at 104 to make sure you and the dependents are financially sound which could be a tall order given that in the US, parents are still footing the bills for 1 in 4 millennials who are working full time.

The Tale of 2 RMs’ and the Family Office

We came across 2 RMs’ recently, both good-looking folks, one successful enough and one less so. Strangely, the successful one is the one who needed more help because the person cannot count to save her own life except that she rakes in the bucks of AUM while the less successful one has trouble getting the AUM because he cannot lie to save his life and thus cannot make the million dollar promises to the potential clients although he would stake his life to reassure them that he would work in their best interests.

It was simply hilarious when we made the comparisons because it would have been so simple if we had an A.I. to read through the “epidemic of dishonesty”, to borrow from Michael Bloomberg, and find ourselves the person who would work in our best interests who is not our mother?

Happy Mother’s Day!

Yes, mother. Yes, family and the answer has been apparent to us for a while now – family. The family office concept, where there is staff to work for you because their compensation depended on it and there would be less conflict of interest as the independent financial advisor for the preservation of your wealth even if you have to give up the exhilaration of that gain that you would have netted if you went and bought that Himalayan Croc Birkin, the Holy Grail of handbags and possibly as timeless as a Picasso, at cost price.

Singapore is seeing the rise of the family offices that even banks are starting to claim they will branch out into the family office business and maintain as little conflict of interest as they can because being part of a family office can get one into the World’s Most Elite Trader’s Club.

Well, successful RM is on a mission to milk as much commission as she can get her hands on, in the meantime, to close the gap between herself and the Crazy Rich Asians.

For us, we really would not mind paying ourselves for financial services advice except that we are not really financial advisors or RM’s and we are not Crazy Rich Asians too, for the matter.