Saturday, February 27, 2010

Confused by financial jargon? Help is on the way



Sat, Feb 27, 2010

The Straits Times
 
By Gabriel Chen
 
 
 
 
DO CREDIT events get your mind boggling, and do structured deposits send your head spinning?

Well, help is at hand in the form of a financial products dictionary that aims to shed light on the notorious jargon that so annoys investors.


The online dictionary is being launched by the Financial Planning Association of Singapore (FPAS) and will be available in English and Chinese in October.

It will give consumers a better understanding of financial products so they can make informed investment decisions, said FPAS president James Sim at the association's Chinese New Year charity lunch yesterday.

'The financial products dictionary grew out of the lessons learnt from the Lehman crisis,' he said. 'There is a real need to explain, in clear, layman's language, what financial terms actually mean, in order to remove any ambiguity. This is especially so for new, innovative and often complex financial products.'

More than 10,000 investors lost money when a number of structured products were terminated, along with the collapse of United States investment bank Lehman Brothers in 2008.

Investors, including many elderly and poorly educated people, said the risks of the complex products were never clearly explained. Some were subsequently compensated for their losses.

FPAS is working with a number of local bodies to launch the dictionary. These include the Life Insurance Association, the Investment Management Association of Singapore and the Securities Investors Association (Singapore). The dictionary will be available at http://www.financialproductsdictionary.sg/

Separately, FPAS yesterday announced the results of an inaugural survey of 387 financial planners here.

About 71 per cent of respondents were optimistic that their financial planning business will improve in the next six months. The survey also found that 31 per cent of planners felt it was a challenge to persuade customers to do financial planning, while 26 per cent felt the process was easy.

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