Back in the day, well back in my day, there weren’t a lot of products that we had to sell. Most clients were on repo’s (repurchase agreements) and life was very easy.

You just informed clients of your rates, then they would call around and place the money.

However, the investment landscape has changed drastically since then. Investors have been basically discouraged from placing their money in repo’s and with the lowering of interest rates, there have been a plethora of options. There are preference shares, a vibrant stock market, corporate papers, local bond offerings and many more. However, many of them require the investor to be accredited. What does that mean?

The idea of an accredited investor is not unique to Jamaica and guidelines are issued from the SEC (Securities and Exchange Commission) in the US. In Jamaica, the guidelines are issued by the Financial Services Commission (FSC). The concept of allowing certain instruments to bypass the registration requirements of the FSC and sell to only accredited or qualified investors allows deals to be made that much faster, fosters innovation and really enhances the investment landscape.

The accredited investor is assumed to either have the financial cushion to deal with any losses that may arise from the investment or they are able to either understand or go to the appropriate persons for advice on the investment.

Under the guidelines, you can meet the criteria through one of two ways. Firstly, if you have a net worth of $50m or more, then you would be accredited, or if you earn $10m or more for the last two years.

Some investments may state that you can invest in the paper if you are placing a minimum of US$100,000. This is not included in the guidelines.

Some clients get upset when they are told they can’t qualify to invest in certain products. And this is understandable. Many times, these investment options seem very exciting, and really attractive in terms of rates. However, the idea behind it is to protect the “little man”. So yes, most times the investment will be good, but there are times when things go south and the feedback is given that the investor either didn’t understand the risks inherent in the investment or could ill afford to lose their hard earned, albeit small savings.

It is not a foolproof system because a high net worth does not guarantee sophistication in the world of investments. In addition, highly skilled financial analysts may not meet the financial criteria for an accredited investor. However, no system is perfect, and this is quick way to expedite investments.

If you don’t qualify for an investment now, take heart-keep investing till you get there, and be mindful that these things tend to have higher minimums and if your net worth is not very high, you need to be careful about putting too high a percentage of your money into one investment.

Yanique Leiba-Ebanks, CFA, FRM is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: if you wish to have Sterling address your investment questions in upcoming articles, e-mail us at info@sterlingasset.net.jm.