When a bit of finance training can make all the difference
Published in the Financial Review, March 2009
by Simon Davey
A little knowledge - too little - can be dangerous for some investors.
Author, commentator, trader, educator and boutique fund manager Dale Gillham likens much of the current education on leveraged products to giving a high powered car to a child, with the result being frequent smashes. A few years ago, Gillham was semi-retired from finance education, but old clients kept seeking his advice. In the end he says the repeated requests helped him realise there was a demand for training in the industry, so he created his own training course.
Gillham, who appears often in various media, including Sky News, says the basic courses offered by providers of many leveraged securities simply get investors excited about the trading the vehicle, without really showing then how to trade.
‘Then they try to drive it (the vehicle) and they’re like a 12 year old with a V8. A lot of people are getting killed with options, warrants, contracts for difference or futures and they have been for many years, not just the last 12 months.’
Client motivation was another concern. ‘A lot of people without much money attempt to trade highly leveraged areas, yet they’re exactly the people that shouldn’t be’ (doing so), he says. ‘There are many out there who mistakenly believe they can attend a free workshop or a paid weekend workshop and learn how to trade. That isn’t possible. Worse, some believe an over-priced software package will make them a successful trader. Sadly, most waste their time and money. Anyone can put a trade into a platform but very few know how to manage a trade from start to finish. I believe around 90 percent of people trading CFDs only know the ‘what’ and not ‘how’ and in my book that means they’re gambling.’
Gillham responded to client demand by returning to the educational fray, starting with single sessions in Sydney and Melbourne, then committing to a six-month stint. Finally, he set up Wealth Within. It was granted an Australian Securities and Investments licence and pursued federal accreditation as a registered training Organisation - equivalent to a non-government TAFE. But accreditation brings restrictions.
‘A registered training organisation cannot be misleading in any marketing, PR or the like as we have strict guidelines (which I agree with), unlike most share market educators who are not RTOs’, Gillham says.
Time will tell if the Institute changes the industry, as Gillham intended. However, he notes that the Financial Planning Association has now accredited the diploma course, as has the Malaysian Securities and Investments Development Corporation and now ASIC has placed the diploma on the training register for professionals.’
Current volatility is affecting his business. ‘We’re a boutique fund manager– we run individual managed accounts’, he says. ‘Last year I thought the markets were too risky and we pulled clients’ funds out. We were 90 percent in cash by May. Until the market tells me it’s going up, I’ll stay out.’ So far as his own funds are concerned: ‘I’m being very careful and picking my mark as there’s still a lot of fear and indecision in the market - I’m not trading much.’
The training courses have also been affected. ‘The past 6 months have been erratic’, Gillham notes, ‘with two of our best months ever amongst some ordinary months - on the whole we’ve seen increased inquiries especially from the professional markets like financial planners and accountants and from those who are really serious about learning to trade properly.’
‘When I'm on Sky News, people often ask can I buy now?’ Gillham notes. ‘I say if you want to invest in the banks or some good blue chip shares right now, expect there could be 10 percent more downside but over a ten year period, you’re going to make money. The story of the tortoise and the hare is something everyone should read because it is so apt to the share market - the tortoise always wins.’
