I am so glad I have been chosen to be a prospective new client for a Taipeh based wealth management company. Please scroll to the bottom to see how glad I was after doing my homework.
According to the call they just gave me, after the lead was confirmed by a Singapore based callcenter, they have a unique opening for new clients in order to establish a mutually fruitful and long lasting investment partnership.
The concept is really quite compelling, and plausible. Their business is to invest themselves, as well as leverage the investment opportunities with foreign investors’ capital. They research each deal a year in advance, and only come forward when there is really a unique opportunity to make exceptional business. One question they asked was:
If you learned about an investment opportunity which is sure to generate a profit for you, would you be interested?
Well, who says no to this question? It is a wonderful concept. Also the next points really appeal.
- As they invest themselves in the same assets that they offer to customers, they have a common interest. They win or lose with the same recommendations they give to their clients.
- Their service is not for free, but also quite affordable. They only charge 1% of the total investment for purchasing the stock, and another 1% for selling. Depending on the size of the opportunity, this is in line with average european bank fees.
- Because they are registered to trade on the Shenzen stock exchange, they can act as gatekeepers for foreign investors, who cannot directly purchase Chinese stock.
- Of course it is highly secured and safe, among other things because the Shenzen stock exchange is highly regulated. It is a very safe opportunity.
- The real goal of the wealth management company is not the current deal in question, but the deals over the next years. It is only a test, on which they can prove their worth. They really want to grow your wealth, and this brilliant, once-off opportunity is only the entry ticket to appeal to you, in order to make follow-up deals with you, for more normal conditions.
- Shenzen stock exchange is highly regulated, any offender get put in jail straight away, so it is very safe.
- The stock I would buy would be bought in my name, which is very dangerous for them, because anybody could sell this stock for me, so I would be fully in control and could even do business without them. They would rely on my integrity to continue business with them.
Of course all of this sounds great. But hang on. Where is the catch?
Well, at first sight, the catch is the 1% fee. This should satisfy most investors, as it is a legitimate fee to make, and a legitimate interest to have in letting customers trade stock. Actually it is very much on the low side as long as portfolio management is part of the deal which would usually come with a yearly fee. But that could be offputting. So it is just the 1%. Or actually 2% if you count the purchase and the sale.
However the real risk is somewhere else.
Given that you transfer an amount of money, namely your entire investment, via bank wire (or SWIFT transfer) to the recipient, the first things you have ask yourself this: Whom are you giving your money? Do you know them? Can you trust them? Be aware that bank transfers are like arrows. You can only shoot, you can’t pull it back. Your bank has no possibility of helping you retrieving your cash once you have transferred the money out. If you want it back, you have to ask the recipient to give it to you. That’s all you can do. I learned that on a different occasion, when I had typed the wrong account number. “You have to be careful”, the bank clerk told me.
The call focussed on safety in trading the stock, the safety in transferring the funds, the safety of getting return etc. – but what good is all that safety when the recipient will never trade, transfer or invest your money anywhere, but just take it and run?
For an entity which you don’t know, have never met, which resides in a different country, with a different set of rules and laws, it is highly complex for anybody to judge who this recipient really is.
If you do your own research and you find an overseas bank, then it may be safe enough to wire your money to that bank. You are likely to find an established player.
However if you received a call from somebody, it was not you who did the research. Somebody else did research on you. You don’t know them, and you have no way of knowing who this is, other than looking at the references they give you, or google the name they tell you.
The transaction fee will not be 1%, but 100% of your investment, if the entity receiving your funds is going to run away with it. Where is the guarantee that you will ever get anything back? You have to fully trust the organisation that you are investing with. And as you don’t know them, it is really a case of blind trust. How can they earn this kind of trust?
Let’s name the horse and the rider, as they say.
I received a call from a Singapore call center, who then arranged for a call time the next week by their client, a consultant who would give me insights on my business. So far so good, not sure how they know about my business but let’s find out. I received a call from Brooks Dawson Alliance. A friendly and professional gentleman introduced himself and his organisation to me and promised to send further material for reading. All was well. The opportunity sounded promising. A Chinese company which had made deals with German companies was about to be sold at a price way above current stock prices. Large players all, solid financials and rocket high growth rates. The stock looks good. They could provide access.
A day later I receive the next call from Brooks Dawson Alliance. A friendly lady follows up on the call. I learn that right now it has been confirmed that the deal has gone through and it looked even better than they anticipated.
When I questioned her on the perils of inside information trading, she became a little more energetic, explaining that this would of course be illegal, and anybody attempting insider trading would go to jail, therefore this could not be it. Their information was from legit sources, because such deals require intensive preparation with banks and other institutions, and they work with such institutions, therefore having access in a legitimate way to the information. I didn’t do further research on insider trading, so lets carry on.
I was asked to write down specific stock prices of the last trading day in comparison with the agreed takeover stock price. I receive a lot of information on how they operate, what fees they take, what their investment strategy is, that they have very limited openings for new clients, it is almost sold out, everybody is very busy (however I have been on the phone for 1 hour with them) and there is even a maximum limit for investment so they can also keep their existing customer base happy. They have a trading desk only for Europe with european calling times, they have a total investment volume of 6 Billion Euro and thousands of happy customers, they have been active since 2008 and I can google them, they are everywhere in the media, on Bloomberg, on Forbes, and so on.
But how do I know they don’t run away with their money? What about the fact that the chinese stock market regulation has absolutely no effect on Taiwanese civil litigation if your money is gone?
I remain skeptical. I do my homework.
Google gets the search term “Brooks Dawson Alliance”. Including the quotation marks. I get 4 pages of results. Most of the results are articles written by Brooks Dawson Alliance themselves, or financial news post reciting comments by Brooks Dawson Alliance on companies. All of them are therefore texts written by Brooks Dawson Alliance themselves. Not a single hit in these results is an independent journalist making any note of them. A ten year old wealth management firm with multi billion dollar managed capital should receive at least some attention? I am slightly impressed that also on bloomberg.com they were able to post their own article, introducing themselves. But the friendly lady also said “we are on Forbes”. Hmm, Forbes isn’t in the list of hits. If it were, it would be on the first page, definitely. I scroll through the results. Oh there they are, on page three. But the domain name looks strange: forbes-focus.com. I haven’t seen that before.
I look at that site more closely. It sure looks like forbes. I open forbes.com and compare. It looks similar, but not quite identical. I find that most links on forbes-focus.com actually link to forbes.com, except for two articles (!), both of them written by Brooks Dawson Alliance.
This is the point in time when I feel this relief. All this time my tummy told me, something isn’t right. Now I know what it is. “We are everywhere. Also on Forbes” and then I find out they are really on a site designed to look like Forbes, and at first sight, give the impression that really Forbes has their article. But it really hasn’t. Forbes-focus.com could lure people into believing that they are dealing with a legit wealth management company, quoted on forbes.com.
I ask two friends for their opinions. Both recommend to dismiss the call and stay away. Both are quite knowledgeable on investment.
I try to google “forbes.com” vs. “forbes-focus.com” and come up empty.
I check the forbes.com website and try to find out any affiliation with the forbes-focus.com site. The forbes.com site for digital media shows exactly one online site: Forbes.com – and that makes sense from an SEO perspective. All the links must concentrate on this one domain in order to accumulate their value there, and rank high in results. Any additional domain, or subdomain, would water down the effort.
I check cutestat.com: This one tells me that forbes-focus.com is just 2 months old. Another strong indicator suggesting a purpose-built website (forbes.com is 20 years old). I sent an email to firstname.lastname@example.org telling them what I found. Perhaps they will read my hint, perhaps they already know about it.
One step further: Brooks Dawson Alliance was founded in 2008, according to their own statements. How come their website has been registered just 5 months ago?
I write an email to the Taipeh Chamber of Commerce, asking for any record about the company which has contacted me.
Cutestat also tells me that the same server hosts two other domains. Let’s hear them: Wallacewilliamson.com – which turns out to be unreachable – and Lewis Bentley Group, lewisbentleygroup.com, which according to cutestat is just 6 months old – and guess what, it’s a Taipeh based wealth management company! It features an office apparently in a different part of Taipeh, and a company logo using the exact same colours as the Brooks Dawson one. Well the colours you could excuse as they are blue and red, Taiwan’s national flag colours. However the geometric simplicity is somehow suggesting that the designer could have been the same person, it’s just a feeling.
The conclusion of my research is this: I am not interested. This is the sentence I should have said when the first person called me to set up further talks. It was fun, but at the end of the day, I have spent the best portion of a day on research, with the only result that I will stay away from whatever these people offer.
Methods used were
- Sense of urgency, time is of the matter,
- Exclusivity, selected people only and maximum investment is limited, including a plausible reasoning why new customers are included,
- Exceptionality, this is a rare occasion,
- Compassion, every concern from the customer is understood,
- Professionality, very good knowledge of investment vehicles, clear pronounciation, educated and well mannered,
- Diverting attention from the real risks of the transaction to explained safety in previous or posterior details of the transaction,
- Diverting attention from the current transaction to the actually desired followup deals, promising long term collaboration,
- Diverting attention from trust towards the mechanics of the proposed deal, which implies that trust has already been established,
- Repeated affirmative action, as seen in motivational theory, by asking questions which are answered by “yes”, in order to trigger another “yes” when eventually the question is pointed towards the investment decision. E.g.: “You would surely be interested?” “You surely understand?” “You surely would do the same in your business?”
To close with the words of my friendly consultant from Brooks Dawson Alliance on the phone:
If you don’t feel comfortable with it, then don’t do it.
Very good and honest advice. I will take it, and I do advise everybody to do exactly that. Listen to your tummy. If it revolts, back off. My friend gave me even better advice: Invest within your own circle of competence. This is a good way to prevent total losses.
A first hand report of somebody who actually got into business with them can be found here:
http://my-experience-with-brooksdawson.com/ (external link, content unfortunately taken offline in the meantime)
This shows that they don’t stop at getting your first “investment”, they will actually try to squeeze every cent out of you that you own. Stay alert folks….
A list of more organisations which most likely perform the same tricks is here: List of Taipeh based wealth management companies which you should not trust.