1
WHERE IS THE MARKET HEADING and WHAT TO TELL
YOUR CLIENTS

• Presented by Nazril Idrus
• (this is an expression of thought and ideas by
  the Nazril Idrus. He accepts no liabilities for
  any statements that he made)

2
Introduction

• You will Learn
• a) The US Financial Situation/Wall Street in a
  snapshot
• b) The Impact of the above to our Clients
• c) What to tell your Clients
• d) Who will survive and make it Big in Public
  Mutual
• Others

3
Training Outline

• Lesson 1 The Financial Crisis
• US Wall Street Banks.
• Lesson 2 Whats In Store for Malaysia
• Malaysias exposure, are we strong enough?
• Lesson 3 Who will survive?
• Only 30 of UTCs will survive. Who are they?

4
Lesson 1 The Financial Crisis

• Investment Banks, Mortgage Lenders, Insurance
  Companies
• Who Are They?
• What Happened?
• Each objective should be concise, contain a verb,
  and have measurable results.

5
Lesson 1 The Financial Crisis
Mortgage-Backed Securities (MBS)
Rating A
Rating AAA
Rating B
MBS Insurance
Mortgage Guarantors
Lehman Brothers
Repackages (MBS) into (CDO) Collateral Debt
Obligation
Lender Insurance
Retail Bank, Mortgage Lending Services
Get Mortgage Loans
Institutional Investors
RISK LEVEL
Low (Good Credit)
High (Bad Credit)
Retirement Funds

• HOME BUYERS

Get service fee
Start Here
6
Lesson 1 US Wall Street (i)

• Major Investment Banks in the US
• Goldman Sachs
• Morgan Stanley
• Merrill Lynch (BoA)
• Bear Stearns (JP Morgan)
• Lehman Brothers

• 2 Giants of Mortgage Lenders (Govt sponsored)
• Fannie Mae
• Freddie Mac
• 1 Major Insurance Co
• AIG (Worlds largest)

7
Lesson 1 US Wall Street (ii)

• What Happened?
• Those who are not eligible given easy access
  including Buyers with Bad Credit ratings
  (Sub-Prime or below par mortgages)
• The Sub-prime mortgages repackaged into
  high-yielding securities (mortgage
  securitization/ mortgage-backed bonds)

• Investment Banks (IBs) are experts at
• Revenue based business / Asset Management/
  Underwriting/ Brokerage
• IBs got into complex areas
• Leveraged Finance
• Speculative Instruments or
• Complex Financial Products that few could
  understand!!

8
Lesson 1 US Wall Street (iii)

• What Happened?
• Mid 2007 US Economy slowed down
• Home-owners income affected
• Loan defaults
• Banks stuck with toxic debts
• Worse!
• Banks are exposed to other complex financial
  products (debt securities and leveraged deal
  financing)

• Losses to Date
• Financial Institutions debts at US 500 Billion
  (writeoffs)
• Likely to continue to more than 1Trillion
• US Government invested into
• Bear Stearns 30Bil
• Fannie Mae/Fraddie Mac 200Bil (they guarantee
  42 of all home loans)
• AIG 85Bil (AIG gave Subprime loans and insured
  SP related assets)
• Merrill Lynch saved by BoA

9
Financial Crisis

• 1930s The Great Depression
• Wall Street crash 29
• 1987 World Crisis
• Oil Prices spiked
• 1998 Asian Crisis
• Asia countries into recession but fast recovery
  by 99

• 2008 US (and World) Financial Crisis
• Losses in Stock Markets (double digits)
• US, Japan, Canada, Italy flirting with recession
• Joseph Stiglitz (Economist) expects the crisis to
  last 18 months

10
US Governments Rescue (BailOut)

• 700 Billion cheque to save the Economy
• For what?
• To buy Bad Mortgage-Related or Toxic Debts
  from eligible Banks
• How?
• Lend the money and be co-owners of Banks

• Why need to rescue?
• To ensure problems dont fall into the broad
  economy
• - Cars, manufacturing, spending

11
Lesson 1 Wrap-up

• It all started with the US Financial
  Institutions executives greed.
• US Governments Rescue Bid to keep the financial
  heart pumping
• Why the Rescue?
• Can it Help revise the situation?

12
Lesson 2 Whats In Store for Malaysia?

• Exposure to US debacle?
• 1998 all over again?
• Likely impact on Malaysian Economy?

13
Lesson 2 Content (i)

• Malaysias exposure?
• Malaysias Financial Institutions (FI)have
  limited exposure to the US Financial crisis
• There are no Asset Bubbles or excess Leveraging

• Repeat of 98?
• Probably not?
• Reserves 125Bil or15th ranked in the world
• Able to sustain strong economy having Long Term
  Economic Policies and not affected by political
  developments (Steve Forbes, Sep 2008)

14
Lesson 2 Content (ii)

• Rough Ride?
• YES

• Why?
• Consumer confidence cutback
• Businesses (put off projects) and consumers
  (spend less)
• Fall in external demand for our exports
• Results in lower production (eg. Export to US
  drops)

15
Lesson 2 Wrap-up

• Summarize important points.
• Allow time for questions.

16
Lesson 3 Which Unit Trust Consultant will
survive?

• Champion Unit Trust Consultants
• Raymond Chan (started in 1997 pre Crisis)
• Tey Kok Tai
• Wong Kian Meng (both started during crisis 1998)

17
Lesson 3 Which Unit Trust Consultant will
survive?

• Those who
• Joins the industry during these times as their
  clients make heaps of money when the economy
  recovers

• Those who
• Investment Talks
• Reads
• Books (eg., Brian Tracy, Jay Abraham, John
  Maxwell, Brian Tracy, Brad Sugars)
• Magazines / Newspapers
• Trainings

18
Lesson 3 Wrap-up

• 30 of all current Consultants will survive this
  bad financial onslaught.
• The remainder will be on the sidelines and fade
  away as they dont know what to say or how to
  react.
• Those who join during these times and who
  continuously upgrade their skills and knowledge
  are the ones who will be successful GAMs in 3-5
  years!
• Allow time for questions.

19
Summary of Training

• List important points from each lesson.
• Provide resources for more information about the
  subject.
• List resources on this slide.
• The Edge Financial Daily
• The Star Newspaper
• Fortune Magazine
• Raymond Chan Agency
• Provide handouts with additional resource
  material.

20
Other Issues

• A) Your LVG Business Cards
• Insert FMUTM number
• WHY?
• RM22 per box / RM40 for 2 Boxes
• Non-LVG qualified members

21
Other Issues

• B) Your LVG Domain name
• Eg., izary.iqbal_at_lvgconsultants.com
• WHY?
• RM35 per half year / RM60 per year
• Early Birds (before 1st October)
• RM25 for half year / RM40 per year)

22
Other Issues

• C) Your LVG Website
• www.lvgconsultants.com
• Why?

23
Other Issues

• RM 250 membership
• LVG domain name RM40
• Out The Gates RM100
• OTG Book RM15
• 21 Success Secrets RM35
• 2 P/Mutual Classes RM20
• 1 LVG Starter Kit RM40
• Com of Oath
• Thumbpad
• Forms
• Testimonials
• LVG Client Updates

• D) LVG Memberships Value Add to Everyone
• RM 250 (refundable)
• RM 250 membership

24
Other Issues

• E) October December Activities
• OCTOBER
• 1001points Activities Challenge
• Grand5in5 Preview
• NOVEMBER
• DECEMBER
• Lvg Retreat (PD or Janda Baik or Kuala Kubu)

25
Other Issues

• F)

26
Assessment and Evaluation

• Prepare a quiz or challenge to assess how much
  information participants learned.
• Survey participants to see if they found the
  training beneficial.