I recently talked with a gentleman from Russia.
He indicated he used Citicorp as his investment manager.
Oh, I asked him, what are your fees. Fees, they don't charge me anything, he replied.
Oh really, how do they pay your advisor? Hmmm... we both said.
Sounds like they're charging embedded commissions.
I quickly explained conflict of interest, issues regarding commissions and referred him to William Bernstein's works.
Oddly, his investment options are quite limited. There really are few if any domestic mutual funds. He invests in equities in what is essentially a fast growing commodity extraction (oil) economy. Although he may diversify specific equity holdings, he doesn't have any real diversification.
I asked if he had any non-equity assets. He did:
Real estate development bonds - capital is protected and earnings are less aggressive than equities.
It was unclear if he has the equivalent of treasury bonds.
Standard asset allocation models as we construct in the USA would be very difficult.
Domestically, Russians do not hae 401k plans. They have social service pensions that are highly taxed. I imagine they are more comprehensive than the USA's Social Security plan, but would you really trust either to be around in 25 years?
My thoughts and recommendations were for him to open brokerage accounts external to Russia. For stability either in Switzerland or the UK and invest at least half of his assets through such channels. I'm assuming he'd have access to many ETFs, but am unsure what mutual funds - especially Vanguard products, he'd have access to.
This information verified what I had learned from several central european colleagues who have little structured external retirement plans other than official government pensions. Actually, these were very senior executives. It really seems they'll be living off what they could save personally with few if any government endorsed programs (like 401ks, etc...).