Eyes wide shut

No-one makes money paying 16% for a financial product.

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I did a course in financial product marketing once, back in 1994. In those days the financial product landscape was the Wild West. Whatever you could get away with was up to you. Caveat emptor, let the suckers beware.

On the course, we ripped apart a product that was labelled a 'capital guaranteed leveraged equity investment'. One of a stable of products at the time issued by the cleverest of well-known Australian financial product providers.

It was an educational exercise in how to achieve a premium, quality, guaranteed return, for the issuer, at the expense of the client, and this particular product had been picked out by our lecturer as the pinnacle of all ripoffs, a product that 'dazzled with complexity' and, in so doing, was dripping in fees and, therefore, success, for its issuer. It turns out that in the financial product world, complexity is the root of all fees, because, as we learned, the more complex the product, the less the client understood, so the more you can charge.

There are an enormous number of financial products and most wrap the same process in different clothing. So let me explain the essence of many of them, to this day.

Look out for the following: