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Online Share Trading

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Advice needed

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Alonzo7
Frequent Contributor
Good morning All. I have a few investors (mainly Family) that provide me with funds to Invest on behalf of them. I guarantee my Investors a Minimum Rate of Return per annum (at least 3% over & above the "Big 4 Banks) and I guarantee my Investors Capital as well. I wish to extend my services to a few Friends as well (as they have shown interest in Investing with me). Facts: (1) I trade under my Company Name (CC), (2) I am not a Registered Financial Planner & I am not registered with the FSB. All of the above Facts are stipulated in my Agreement with my Investors as a Discalimer/Certification as well as the Guaranteed Minimum Rate of Return & Capital Guarantee. Question & Advice needed: Can I in a legal sense provide this service to Family & Friends only. Your responses would be appreciated. Thanks,
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17 REPLIES 17
Not applicable
Yes, I've phoned them about something similar. The minute you go public you'll need to be inline with the Collective Schemes Act, but if its just family and friends and not millions then the FSB really doesnt care about you.
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SimonPB
Valued Contributor
actually the FSB do care about you, maybe they just to busy .. but you breaching the law .. and what of the guarantee ?? can you actually cover it ?? Coz if not then a law suite is possible and then the FSB wll be all over you as nobody can sign away their FSB rights ..
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buyme
Contributor
what kind of a financial planner are you? do you sell long term insurance products etc. cause then you fall under the FAIS act. and to be a financial planner you have to be registered with the fsb and your licence will dictate as to what product categories you are allowed to advise on. do you have professional idemity cover to cover the guarantees? it's a very dangerous game you are playing with.i refuse to trade for family and friends as i am a financial planner and not licenced to advise ANYONE on specific shares.simon's right the fsb does care about what you do ! if things ever go really south is the profit you are making worth a massive fine or imprisonment? the fais act is that strict.
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Jim_Bean
Regular Contributor
Eish, Alonzo7 you asking for trouble... do you take a fee for your "service" if so is it a flat rate or % on return. Personally I believe you are exposing yourself to a lot of risk. When things go well family and friends will support you, its when it goes badly that you will regret your decision to help them. Liquidate the investments and repay their capital and returns...its the best thing to do for yourself!
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Wino
Super Contributor
Irrespective whether the investors signed a disclaimer, basic rights cannot be signed away. Basically, what you are doing is breaking the law even though it is just family or friends. You are operating an investment vehicle on behalf of others and for this you need registration. If things go wrong, and that could be for any reason - besides markets, include health trauma etc. and one of your investors complains to the FSB because you can no longer meet your guarrantees, you will be in deeper trouble when you most don't need it. People, whether family or friends do not accept losses easily and investment is risky business. A few family and mates have asked me to do likewise and I have refused for these reasons.Just not worth the candle.
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Not applicable
sorry forgot to add, it is illegal to charge money to do this if your not a qualified financial advisor. Like the others I also wouldnt advise adding a guarantee.
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Not applicable
You can get the requirements to register under FAIS here:
ftp://ftp.fsb.co.za/public/Faisdep/BN106of2008.pdf


Its on the website www.fsb.co.za -> FAIS (top right)
Fit and Proper Requirements -> Board Notice 106
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Not applicable
And what's with all the Capitalized Words? Trying to come across as a pro? Or just a naff. Might be better to form an investment club. Lots of info out there on how to go about.
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Alonzo7
Frequent Contributor
Hi All. Thanks for all of your responses. Amazing! - I started out doing this soley for myself only, BUT then basically just wanted to help out some family members earn better returns on their funds (invested in fixed deposits within Banks etc). Simon, in terms of Capital & Guarantee - Yes, I can actually cover it (I always keep a "Cash Buffer" on hand that covers the Capital amounts invested with me). 'Buyme" - I am not a Financial Planner. 'Jim Bean" - I do not charge a fee for my services, BUT I do however take a % of the return (over & above my % R O R guarantee). Wino & BC01 - thanks for your input & will look into it. – I thought about the health & even death issue (even have a back up in place), BUT yes this would complicate things."Stachel" - will look into this as well. I have to admit that in some instances it is just not worth trying to help others...as one may just end up in trouble. I certainly will discontinue this practice soonest. If it is anyway breaking the Law then I am against it. Thanks again,
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Preston
Super Contributor
Go for it . Most billionaires are created by taking a risk outside the realm of their comfort zone and also by screwing someone in the process. In your case, it would be your family members and families always forgive one another. Good luck in your venture.
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partridge
Super Contributor
Authorised advice needed! 1. ONLY AUTHORISED FINANCIAL SERVICES PROVIDERS may provide financial advice. (Section 1 definitions of FAIS). 2. "Financial Advice" means "any recomendation , guidance or proposal of a financial nature furnished by any means or medium to any client or group of clients - a) in respect of the purchase of any financial product ;or b) in resepct of the investment in any financial product ; or...." "financial product" means inter alia "shares in a company"..... Section 45 Exemptions.... (1)(iv)provides that "the provisions of the Act do not apply to the rendering of financial services by- the parent tutor or guardian of a minor or such person acting on behalf of such parent , tutor or guardian" ( but not where ) "the financial services are rendered as a regular feature of such persons business." You work it out.
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Alonzo7
Frequent Contributor
Thanks Partridge (I fully understand), But why is it then that Std Bank Online Share Trading has under "My Trading Profile" (My details/preferences? - "Non Professional" as meaning - " A client who uses the service soley for purposes of managing his personal funds AND/OR the funds of his immediate family?.....This latter part confuses me then as it clearly spells out "Immediate Family"?? Simon, can you please explain this? Or is it simply an error that Std Bank has to remove & if so then they should kindly remove this soonest so as to not potentially cause confusion. Then under the next category Std Bank has "Professional"...under this it clearly spells out that you have to be registered..... Thanks,
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SimonPB
Valued Contributor
general leagal defination of preofessional is do you receive payment for the service ?? I manage my wife and sisters account, but not for any reward so not professional .. if I charge them, than I a pro ..
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Alonzo7
Frequent Contributor
Thanks Simon & All. "Crystal Clear".I have also checked with the Call Centre, they say one can manage funds/trade on behalf of immediate family only (spouse & kids) as this is in line with JSE Rules. I still think a "grey area" would be immediate family (Std Bank Call Centre defines immediate family as spouse & kids) anything else you would need "Power of Attorney" etc etc.
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SimonPB
Valued Contributor
you need "Power of Attorney" for anybody, except a minor over which you are gaurdian .. I have PoA for both wife an sister ..
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partridge
Super Contributor
Alonzo. FOCUS FOCUS (please). 1. Forget about what Standard Bank do on their site : its irrelevant to you insofar as YOU are providing financial advice without a licence. You will be 100% wrong if you think that your understanding of and compliance with the FAIS Act requirements can be derived from a third parties internal arrangements or that your understanding of these or relianace on these somehow exempts you from any of the requirements of the FAIS Act. (I will leave you to go to the FAIS Act and find out what the PENALTIES for non- compliance are. Suffice to say you might be best advised not wear your newest pair of trousers when you read it? They are significant.) 2. you are recieving a financial benefit for your advice - that means you are in contravention of FAIS as you are not Authorised. It doesn't how its couched or paid. 3." Immediate family" does not appear in the ACT - MINORS do - see the exemption in my previous posting. The reason why parents advice to monors is exempt is obvious.
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Alonzo7
Frequent Contributor
I appreciate the feedback,Partridge. Thanks
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