Steve Elliott Posted March 17, 2022 Share Posted March 17, 2022 For anyone contemplating applying for an investment visa (188b) or Significant Investor Visa (188c), stories are starting to emerge in the mainstream media regarding disgruntled investors stuck in illiquid funds which they are struggling to exit once they have reached the end of their investment term. This follows on from a large scale SIV failure in 2021. I fear this will not be the last. Prospective investors keen to apply for these visas really do need to seek and obtain expert advice. Fund managers are not financial advisers and will typically only talk about their own products. Many investors sadly do not have the skills and expertise to make informed decisions and typically the amount and extent of disclosure provided to prospective investors is much less than that required to be provided to your typical mum and dad investor. These events are unfortunate yet I fear the strong desire to obtain Australian PR often prevails over conducting the necessary due dilligence. I have been an investment adviser for over 30 years and Investment migration is my space, so please, if you have any questions, please reach out. 1 1 Quote Link to comment Share on other sites More sharing options...
Scott5297 Posted April 5, 2022 Share Posted April 5, 2022 Steve, that's a very good and important post. I made a significant investment last year. In the process I spoke to a variety of fund managers. It appears that often: they are not giving independent advice fees can be high performance fees were based on very low targets, eg better than bank interest rates funds were designed solely to exploit migrants they give glitzy, compelling presentations with promises of huge returns. One suggested I could possibly double my money! funds were not registered with ASIC I also believe that migration agents in some cases get sizeable commissions for recommending fund managers. Certainly, if you were going to invest in the U.K. you would take independent advice from a registered advisor. Also, I believe the large scale failure you mention involved a company that went bust owing $325m, much of the money presumably stolen. You definitely won't get a visa if the fund gets nicked. I concluded there was a hint of the Wild West when I looked into it. Caveat emptor! Scott Quote Link to comment Share on other sites More sharing options...
Steve Elliott Posted April 7, 2022 Author Share Posted April 7, 2022 Scott, You have obviously did your homework and raise some valid points. The introduction of the SIV back in 2012, created an opportunity and need to create investment solutions which would satisfy the strict rules of the complying investment framework. Had this not been done, potential applicants would, left to their own devices, have struggled to come up with a compliant solution. A number of investment houses saw this as an opportunity and came up with creative and packaged solutions to appeal to the target market. Some have been quite successful in terms of the number of investors they attracted however there have been some failures. Some of these failures appear to be characterised by a primary motivation to make money themselves rather than providing quality solutions designed to met client's primary objective, that being PR through the 888 visa. What many prospective applicants and their advisers overlook, is that there are several money managers in Australia, who have compliant funds and who, very importantly, have a long track record extending well beyond the inception of the SIV as we know it today. Many of these money mangers are highly respected in their respective fields. Not all however are particularly visible or specifically identifiable as SIV compliant funds. This is because their primary focus is managing money as opposed to marketing. Some are not easily accessible to retail investors but they do exist and their fees are reasonable too. It is mandatory the IV and SIV investments comprise a blend of funds, each managed separately. Fund managers typically are not experts in every area, as each requires very different skills and knowledge sets, so it makes sense to use a blend of managers, each of whom is an expert in their respective area. While this requires a little more work to facilitate, the rewards should be worth it compared to a "Jack of all trades' approach. If you don't have the knowledge, expertise or time to do this yourself, there is merit in engaging someone to do this for you. The revamped SIV framework introduced in 2015, really didn't get much momentum until 2017-2018. So, we are now in a window in which a wave of SIV's will be reaching their four year anniversary. Only when investments have been fully redeemed will it be possible for some investors to assess performance The provision of "independent" advice in itself is a hot topic. A fund manager is not licensed to provide personal financial product advice. That means they can only talk about their own products. They also cant take into account your personal circumstances, goals risk tolerances etc and certainly cant compare their offerings with solutions from competitors. Liken this to buying a car where the Government specifies you must buy a car , not any old car, but specifically an EV, it must be blue, have a high safety rating, comprise x% Australian components and pass an annual compliance check. So, you go to the first car dealership you find on Google, you are unfamiliar with many of the car brands in this new country so you pick the one with the best brochures and images which talk to "you" . The salesman shows you the cars which they believe meets the government requirements, indeed he claims the entire range meets the criteria. However, it's up for you to decide which features and options are best suited to you. The salesman can't even ask you or even take into account your personal preferences or compare their vehicles with those of their competitors. This process can be daunting, and after all "we don't know what we don't know". What the prospective car buyer would benefit from is the insight from an industry insider and or trusted expert who can do the leg work on their behalf using their industry knowledge. Someone who understands the rules, reputation, performance and costs. Someone who can look beyond the sales brochures, take a look under the bonnet, so you even if you want to buy that shiny new car with all the options, you can do so with your eyes wide open. When considering the investment side of the 188b (investment) or 188c (significant investor), prospective applicants might benefit from seeking out the help of someone who is going to put the investor's "best interests" ahead of anyone else.(Including their own). If you obtain a referral to a fund manager from a Registered Migration agent or Lawyer, you should ask them upfront whether they receive a commission or benefit from the fund manager for the referral. Such arrangements must be declared in writing and agreed to by you the applicant. I hope the above provides some useful insight and well done Scott on your research. Quote Link to comment Share on other sites More sharing options...
188BFirst Posted April 9, 2022 Share Posted April 9, 2022 On 18/03/2022 at 01:49, Steve Elliott said: For anyone contemplating applying for an investment visa (188b) or Significant Investor Visa (188c), stories are starting to emerge in the mainstream media regarding disgruntled investors stuck in illiquid funds which they are struggling to exit once they have reached the end of their investment term. This follows on from a large scale SIV failure in 2021. I fear this will not be the last. Prospective investors keen to apply for these visas really do need to seek and obtain expert advice. Fund managers are not financial advisers and will typically only talk about their own products. Many investors sadly do not have the skills and expertise to make informed decisions and typically the amount and extent of disclosure provided to prospective investors is much less than that required to be provided to your typical mum and dad investor. These events are unfortunate yet I fear the strong desire to obtain Australian PR often prevails over conducting the necessary due dilligence. I have been an investment adviser for over 30 years and Investment migration is my space, so please, if you have any questions, please reach out. Steve. This is my first post. Well, it is not a new topic so it is probably not really a post. Anyway. You are obviously doing great work and helping so many people. So here I am. Please feel free to tell me where I should go and what I should do as a newbie to comply with the generally accepted practice on the site, as I am completely new and inexperienced at this, and I don't know the norms and practices yet. I would like to introduce myself quickly: My name is Dirk, I have completed and received my 188c through Austrade, Investments through mafinancial.com i.e. Moelis, and before we could do the first entry, covid happened. We are late to it, but I need to do the first entry now - to any state- due to Austrade Application. My wife and I are vaccinated but my 13 yo son is not vaccinated and it is going to stay that way for the foreseeable future, due to personal reasons. So I am here to find out the exact sources where I can monitor the conditions of entry for 12 to 17-year-olds accompanied by vaccinated parents. We can only visit with the kids during school holidays, then I stay longer, but this is just the first entry, we are obviously trying to avoid isolation. If you could give me a pointer, I would hugely appreciate it. We would probably do our first entry 1 July 2022, if possible, and probably to Sydney. 1 Quote Link to comment Share on other sites More sharing options...
Steve Elliott Posted April 12, 2022 Author Share Posted April 12, 2022 Hi Dirk. I am no expert on this aspect I am afraid. I suggest you you seek out further guidance from your intended port of entry eg NSW. 1 Quote Link to comment Share on other sites More sharing options...
wrussell Posted May 6, 2022 Share Posted May 6, 2022 Quote If you obtain a referral to a fund manager from a Registered Migration agent or Lawyer, you should ask them upfront whether they receive a commission or benefit from the fund manager for the referral. Such arrangements must be declared in writing and agreed to by you the applicant. A RMA must disclose particulars of commissions received or expected, but do not always do so. Lawyers do not have to, but sometimes do. My solution is to not to seek or accept commissions from course providers, insurers, travel agents, or any other party. That did not stop the ATO from sending a form letter threatening me with dire outcomes for failing to declare commissions. Quote Link to comment Share on other sites More sharing options...
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