A Walnut Creek real estate investment consulting firm has changed its name to Inverness Real Estate Investments.
The name change for the company, formerly known as 1031 Exchange Options, reflects its expanded roster of investment opportunities, said Cary Losson, Inverness founder and president.
Inverness offers consulting on co-ownership structured real estate, including tenants-in-common and Delaware statutory trust properties, real estate investment trusts and real estate fund investments. Its clients have completed more than 3,000 transactions, with a total value of more than $3 billion, according to a company news release.
The rebranding and additional investment offerings will help the company reach a broader market, Losson said.
"While much of our past business came from clients seeking investment properties to complete a 1031 exchange, we have seen over the past three years that our broad selection of real estate investment opportunities is drawing increased interest from direct investors," Losson said.
http://www.bizjournals.com/
Monday, March 10, 2008
Friday, March 7, 2008
How not to be misled by your advisor. 5 tips
Mis-selling and poor advice continue to plague the domain of investment and insurance products. To make matters worse, a section of advisors/agents vociferously claims that the aforementioned don't exist; others choose to justify the same by shifting the onus onto investors. Such trivialities notwithstanding, the ground reality is that mis-selling and poor advice are 'clear and present' menaces that investors routinely encounter.
Typically, by the time an investor realises that he has become a victim of mis-selling/poor advice, the damage has already been done. We thought it would be interesting to come up with a checklist of warning signals that can caution an investor of an impending investment/insurance disaster.
Now, we aren't claiming that this list is an exhaustive one. Perhaps, it wouldn't be possible to create an exhaustive list, given the numerous instances of poor advice rendered and the innovative mis-selling techniques deployed. But this can serve as a starting point for sure.
So here goes. It's time for you to be cautious if your advisor�
1. Only peddles forms and fails to offer advice
If your advisor is the kind who only approaches you for getting you invested in various avenues and offering advice doesn't feature in his scheme of things, then there is a cause for concern. An advisor's primary responsibility is to offer advice.
He is the one who should help you translate your investment objectives into monetary terms, lay out plans to help you achieve the same and get you invested in line with those plans. The advisor is also required to periodically review your plans and incorporate changes therein, if required.
While offering prompt and reliable service is important, offering accurate and unbiased advice is certainly an advisor's core responsibility. And dealing with an advisor who doesn't make the grade on the latter, could spell trouble for you.
2. Frequently churns your portfolio
Churning the portfolio is a term that investors in the mutual funds segment should be able to easily identify with. It means frequently buying and selling funds, especially of the equity variety. You can be sure that you are at the receiving end if most of this buying and selling is in NFOs (new fund offers).
Equity investing is essentially about investing for the long-term and if the advisor's recommendations were correct in the first place, there should be little need for a churn. So an advisor who frequently churns your portfolio is either incompetent or has an ulterior motive i.e. to make more money by getting you regularly invested in NFOs.
For the uninitiated, NFOs fetch higher commissions vis-�-vis investments in existing funds, thereby making them more popular among advisors. While you bear the burden of the churn in the form of entry and exit loads, the advisor makes a quick buck at your expense.
The good news for the investor is that SEBI (Securities and Exchange Board of India) has taken concrete steps to curb mis-selling in NFOs and indications are that we are likely to see fewer equity NFOs going forward.
3. Attempts to entice you by offering rebates/kickbacks
Offering rebates/kickbacks is a practice wherein an advisor 'compensates' you for investing through him. For this he offers you a part of his commission earnings. The rebate/kickback offered is linked to the sum of investments.
Incidentally, the practice of offering rebates is explicitly prohibited in both mutual fund and insurance offerings. Without a doubt, if offering rebates is your advisor's forte, then something is amiss. He is doing so to cover up his incompetence and it is in your interest to steer clear of such advisors.
4. Only emphasises on returns and ignores risk
It is not uncommon to find advisors, whose arguments (to convince clients about the merits of any investment) revolve only around returns with the risk aspect being conveniently ignored. Any advisor worth his salt will vouch for the fact that while evaluating the worthiness of an investment avenue, the risk-return trade-off is of paramount importance i.e. both risk and return need to be accorded equal importance. Furthermore, the suitability of the investment avenue for the investor in question needs to be determined. This in turn entails understanding the investor's risk profile, needs and investment objectives. Clearly, there is much more to making an accurate recommendation than just evaluating the returns aspect. And any advisor who fails to do so, deserves a thumbs down.
Incidentally, a similar view was recently echoed by SEBI in the context of mutual fund advertisements. The regulator was of the view that the rapid fire manner in which the standard warning is recited in advertisements makes it unintelligible. Apparently, the practice of side stepping risk is not restricted to advisors alone.
5. Offers ULIPs as a staple offering for all your needs
This one's for insurance advisors. Don't get us wrong, we have nothing against ULIPs (unit linked insurance plans) or even with advisors selling ULIPs for that matter, so long as proper disclosures are in place i.e. the client is made adequately aware of the costs involved and other implications of buying a ULIP. In other words, the advisor should enable his client to make an informed decision.
However, all is not in order, if the advisor recommends ULIPs as a standard offering for all your insurance needs. It's a well chronicled fact that term plans are the cheapest form of insurance; a term plan should ideally be the first insurance product that you must add to your insurance portfolio.
More importantly, the latter can play an important role in helping you achieve a cover that is in line with your Human Life Value. Of course, offerings like ULIPs and endowment plans can be added at a later stage.
So why do insurance advisors display a penchant for ULIPs? Maybe it's the higher commission earnings in ULIPs vis-�-vis term plans that are driving the insurance advisor i.e. mis-selling.
On the other hand, maybe the insurance advisor just doesn't know better i.e. he lacks proper knowledge. Anyway, being associated with such an advisor is an unenviable proposition for you.
As always, while this article has been written for the benefit of investors, there is no reason for advisors who go about conducting their business in an ethical and righteous manner to feel annoyed. We can only admire them for their resolve in the face of intense competition and tempting commissions.
http://inhome.rediff.com/money/2008/mar/07perfin.htm
Typically, by the time an investor realises that he has become a victim of mis-selling/poor advice, the damage has already been done. We thought it would be interesting to come up with a checklist of warning signals that can caution an investor of an impending investment/insurance disaster.
Now, we aren't claiming that this list is an exhaustive one. Perhaps, it wouldn't be possible to create an exhaustive list, given the numerous instances of poor advice rendered and the innovative mis-selling techniques deployed. But this can serve as a starting point for sure.
So here goes. It's time for you to be cautious if your advisor�
1. Only peddles forms and fails to offer advice
If your advisor is the kind who only approaches you for getting you invested in various avenues and offering advice doesn't feature in his scheme of things, then there is a cause for concern. An advisor's primary responsibility is to offer advice.
He is the one who should help you translate your investment objectives into monetary terms, lay out plans to help you achieve the same and get you invested in line with those plans. The advisor is also required to periodically review your plans and incorporate changes therein, if required.
While offering prompt and reliable service is important, offering accurate and unbiased advice is certainly an advisor's core responsibility. And dealing with an advisor who doesn't make the grade on the latter, could spell trouble for you.
2. Frequently churns your portfolio
Churning the portfolio is a term that investors in the mutual funds segment should be able to easily identify with. It means frequently buying and selling funds, especially of the equity variety. You can be sure that you are at the receiving end if most of this buying and selling is in NFOs (new fund offers).
Equity investing is essentially about investing for the long-term and if the advisor's recommendations were correct in the first place, there should be little need for a churn. So an advisor who frequently churns your portfolio is either incompetent or has an ulterior motive i.e. to make more money by getting you regularly invested in NFOs.
For the uninitiated, NFOs fetch higher commissions vis-�-vis investments in existing funds, thereby making them more popular among advisors. While you bear the burden of the churn in the form of entry and exit loads, the advisor makes a quick buck at your expense.
The good news for the investor is that SEBI (Securities and Exchange Board of India) has taken concrete steps to curb mis-selling in NFOs and indications are that we are likely to see fewer equity NFOs going forward.
3. Attempts to entice you by offering rebates/kickbacks
Offering rebates/kickbacks is a practice wherein an advisor 'compensates' you for investing through him. For this he offers you a part of his commission earnings. The rebate/kickback offered is linked to the sum of investments.
Incidentally, the practice of offering rebates is explicitly prohibited in both mutual fund and insurance offerings. Without a doubt, if offering rebates is your advisor's forte, then something is amiss. He is doing so to cover up his incompetence and it is in your interest to steer clear of such advisors.
4. Only emphasises on returns and ignores risk
It is not uncommon to find advisors, whose arguments (to convince clients about the merits of any investment) revolve only around returns with the risk aspect being conveniently ignored. Any advisor worth his salt will vouch for the fact that while evaluating the worthiness of an investment avenue, the risk-return trade-off is of paramount importance i.e. both risk and return need to be accorded equal importance. Furthermore, the suitability of the investment avenue for the investor in question needs to be determined. This in turn entails understanding the investor's risk profile, needs and investment objectives. Clearly, there is much more to making an accurate recommendation than just evaluating the returns aspect. And any advisor who fails to do so, deserves a thumbs down.
Incidentally, a similar view was recently echoed by SEBI in the context of mutual fund advertisements. The regulator was of the view that the rapid fire manner in which the standard warning is recited in advertisements makes it unintelligible. Apparently, the practice of side stepping risk is not restricted to advisors alone.
5. Offers ULIPs as a staple offering for all your needs
This one's for insurance advisors. Don't get us wrong, we have nothing against ULIPs (unit linked insurance plans) or even with advisors selling ULIPs for that matter, so long as proper disclosures are in place i.e. the client is made adequately aware of the costs involved and other implications of buying a ULIP. In other words, the advisor should enable his client to make an informed decision.
However, all is not in order, if the advisor recommends ULIPs as a standard offering for all your insurance needs. It's a well chronicled fact that term plans are the cheapest form of insurance; a term plan should ideally be the first insurance product that you must add to your insurance portfolio.
More importantly, the latter can play an important role in helping you achieve a cover that is in line with your Human Life Value. Of course, offerings like ULIPs and endowment plans can be added at a later stage.
So why do insurance advisors display a penchant for ULIPs? Maybe it's the higher commission earnings in ULIPs vis-�-vis term plans that are driving the insurance advisor i.e. mis-selling.
On the other hand, maybe the insurance advisor just doesn't know better i.e. he lacks proper knowledge. Anyway, being associated with such an advisor is an unenviable proposition for you.
As always, while this article has been written for the benefit of investors, there is no reason for advisors who go about conducting their business in an ethical and righteous manner to feel annoyed. We can only admire them for their resolve in the face of intense competition and tempting commissions.
http://inhome.rediff.com/money/2008/mar/07perfin.htm
Banks, insurance, pension funds
Banks
Banks will assume a more cautious approach to lending activity in 2008, especially in regard to retail loans, Deputy Governor of Bulgarian National Bank (BNB) Roumen Simeonov told the sixth Banks, Investments, Money conference.
Overviews of the different financial sectors and the trends in banking, insurance and pension funds were discussed at the international exhibition, which took place on February 27 to 29 in Plovdiv.
According to Simeonov, banks were becoming more conscious of households looking to borrow more than they could afford. The adjustment was more of a forward-looking change to policy than a problem that banks were facing and needed to eliminate now. There was no concern about the share of bad loans both in regard to corporate and retail loans at the moment, Simeonov said. The shift in the market, from consumer to corporate loans, that started last year was set to continue for a number of years, he said.
It was unlikely that the new risk awareness of banks would translate into fewer new loans this year, either in terms of value or number. Therefore, according to Simeonov, credit growth would remain strong but not at the same levels as in 2007.
Last year, the cumulative loan portfolio of banks rose by 63.7 per cent, with the bulk of the growth coming from corporate loans, which grew at 71 per cent. Household loans during the same period grew by 52 per cent. Corporate loans accounted for about 62 per cent of all bank loans at the end of 2007, consumer loans for nearly 25 per cent and mortgages for 13 per cent. The total cumulative loan portfolio was equal to 70 per cent of GDP.
Banks in Bulgaria had seen limited impact from the international financial crisis and were unlikely to find it difficult to procure financing for growth, Simeonov said. However, the cost of financing was expected to grow as a result of the crisis and this would cause price adjustments to banks.
Currently, 50 per cent of the banks’ financing came from deposits and the remainder from their parent companies, he said.
To ensure banks remained on course for stability, BNB will retain its conservative policy regarding the control and oversight of banks. Specifically, the central bank will raise quality requirements, as well as the requirements to maintain additional funds and liquidity in case of unexpected events. Banks will also be urged to notify customers about any risks they plan to undertake.
Insurance
The insurance discussion focused on growth. The share of the four largest insurers in Bulgaria decreased over the year, demonstrating that competition on the Bulgarian insurance market was growing, Zhivka Slavkova, head of Insurance Oversight department at the Financial Supervision Commission (FSC) told the expo.
The market was also seeing double-digit growth. The sector’s gross premiums last year were up 21 per cent in absolute terms to 1.498 billion leva. After adjustments for inflation, growth in revenues was 10.8 per cent.
General insurance was the largest part of the market, with 1.264 billion leva in premiums and a year-on-year increase of 19.1 per cent. The life insurance segment reported an increase of 25.7 per cent on the year to 234.1 million leva.
General insurers paid out 454.4 million leva in indemnities, an increase of 25 per cent from 2006. Indemnities on life insurance rose by 13.6 per cent on the year to 77.3 million leva.
Last year, the share of the top four general insurers in Bulgaria declined to 52.22 per cent, and that of the top life insurers was down to 67 per cent.
Local insurance penetration, the ratio of gross collected premiums to the gross domestic product, was 2.73 per cent in 2007, an increase from 2.54 per cent the year before. Insurance density, which measures the amount of total annual premium payments divided by the population, was down from 162.38 in 2006 to 100.9 in 2007.
Pension funds
Pension funds were also expected to see fast growth, especially if the Government made the relevant legal changes, said Valentina Dinkova, director of the FSC social insurance supervision division. By 2010, the net assets of pension funds are set to increase to six billion leva and proceeds from supplementary insurance instalments to 890 million leva.
This year, supplementary pension contributions are forecast to reach 675 million leva and 780 million leva in 2009.
Dinkova called for a series of legal amendments to allow pension funds to expand and diversify the scope of their activities, including a brand new bill, which could allow pension funds to buy into bonds of large infrastructure projects. The bill, to define the procedures for the issue of bonds, could allow pension funds to buy into the securities either through the stock exchange or through a major financial institution, acting as the project’s main investor.
According to Government estimates, Bulgaria will have spent more than nine billion leva on large infrastructure projects by the end of 2015. The transport sector is expected to need more than 3.5 billion leva, environment 307 million leva and energy 5.2 billion leva.
The idea for the bill can only be developed if there is a broad discussion between the ministries, municipalities, FSC, BNB, the Bulgarian Association for Supplementary Pension Insurance Companies and the Association of Banks in Bulgaria on the subject, Dinkova said. It also has to run alongside legal amendments to the State Property Act, the Concessions Act and the Black Sea Coastal Area Act.
Other changes that might drive the operations of pension funds, are the passage of the bill on the funding of funds and the law on pension funds with a view to raising the requirements of pension licence issue.
Pension funds are also awaiting regulatory changes that could allow them invest in initial public offerings and the liberalisation of some investment limitations such as the increase of the capital in corporate bond investments.
http://www.sofiaecho.com/
Banks will assume a more cautious approach to lending activity in 2008, especially in regard to retail loans, Deputy Governor of Bulgarian National Bank (BNB) Roumen Simeonov told the sixth Banks, Investments, Money conference.
Overviews of the different financial sectors and the trends in banking, insurance and pension funds were discussed at the international exhibition, which took place on February 27 to 29 in Plovdiv.
According to Simeonov, banks were becoming more conscious of households looking to borrow more than they could afford. The adjustment was more of a forward-looking change to policy than a problem that banks were facing and needed to eliminate now. There was no concern about the share of bad loans both in regard to corporate and retail loans at the moment, Simeonov said. The shift in the market, from consumer to corporate loans, that started last year was set to continue for a number of years, he said.
It was unlikely that the new risk awareness of banks would translate into fewer new loans this year, either in terms of value or number. Therefore, according to Simeonov, credit growth would remain strong but not at the same levels as in 2007.
Last year, the cumulative loan portfolio of banks rose by 63.7 per cent, with the bulk of the growth coming from corporate loans, which grew at 71 per cent. Household loans during the same period grew by 52 per cent. Corporate loans accounted for about 62 per cent of all bank loans at the end of 2007, consumer loans for nearly 25 per cent and mortgages for 13 per cent. The total cumulative loan portfolio was equal to 70 per cent of GDP.
Banks in Bulgaria had seen limited impact from the international financial crisis and were unlikely to find it difficult to procure financing for growth, Simeonov said. However, the cost of financing was expected to grow as a result of the crisis and this would cause price adjustments to banks.
Currently, 50 per cent of the banks’ financing came from deposits and the remainder from their parent companies, he said.
To ensure banks remained on course for stability, BNB will retain its conservative policy regarding the control and oversight of banks. Specifically, the central bank will raise quality requirements, as well as the requirements to maintain additional funds and liquidity in case of unexpected events. Banks will also be urged to notify customers about any risks they plan to undertake.
Insurance
The insurance discussion focused on growth. The share of the four largest insurers in Bulgaria decreased over the year, demonstrating that competition on the Bulgarian insurance market was growing, Zhivka Slavkova, head of Insurance Oversight department at the Financial Supervision Commission (FSC) told the expo.
The market was also seeing double-digit growth. The sector’s gross premiums last year were up 21 per cent in absolute terms to 1.498 billion leva. After adjustments for inflation, growth in revenues was 10.8 per cent.
General insurance was the largest part of the market, with 1.264 billion leva in premiums and a year-on-year increase of 19.1 per cent. The life insurance segment reported an increase of 25.7 per cent on the year to 234.1 million leva.
General insurers paid out 454.4 million leva in indemnities, an increase of 25 per cent from 2006. Indemnities on life insurance rose by 13.6 per cent on the year to 77.3 million leva.
Last year, the share of the top four general insurers in Bulgaria declined to 52.22 per cent, and that of the top life insurers was down to 67 per cent.
Local insurance penetration, the ratio of gross collected premiums to the gross domestic product, was 2.73 per cent in 2007, an increase from 2.54 per cent the year before. Insurance density, which measures the amount of total annual premium payments divided by the population, was down from 162.38 in 2006 to 100.9 in 2007.
Pension funds
Pension funds were also expected to see fast growth, especially if the Government made the relevant legal changes, said Valentina Dinkova, director of the FSC social insurance supervision division. By 2010, the net assets of pension funds are set to increase to six billion leva and proceeds from supplementary insurance instalments to 890 million leva.
This year, supplementary pension contributions are forecast to reach 675 million leva and 780 million leva in 2009.
Dinkova called for a series of legal amendments to allow pension funds to expand and diversify the scope of their activities, including a brand new bill, which could allow pension funds to buy into bonds of large infrastructure projects. The bill, to define the procedures for the issue of bonds, could allow pension funds to buy into the securities either through the stock exchange or through a major financial institution, acting as the project’s main investor.
According to Government estimates, Bulgaria will have spent more than nine billion leva on large infrastructure projects by the end of 2015. The transport sector is expected to need more than 3.5 billion leva, environment 307 million leva and energy 5.2 billion leva.
The idea for the bill can only be developed if there is a broad discussion between the ministries, municipalities, FSC, BNB, the Bulgarian Association for Supplementary Pension Insurance Companies and the Association of Banks in Bulgaria on the subject, Dinkova said. It also has to run alongside legal amendments to the State Property Act, the Concessions Act and the Black Sea Coastal Area Act.
Other changes that might drive the operations of pension funds, are the passage of the bill on the funding of funds and the law on pension funds with a view to raising the requirements of pension licence issue.
Pension funds are also awaiting regulatory changes that could allow them invest in initial public offerings and the liberalisation of some investment limitations such as the increase of the capital in corporate bond investments.
http://www.sofiaecho.com/
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