Part 2 The Way We Were - The Tech Bubble Reached the Bursting PointCommentary on the last 12 Years of Individual (and Institutional) Investor Growth in BermudaThe financial investments suitcase salesmen strolled in and raced out, some never to be seen again. Others had figured out the game long before. Bermuda was (and still is) a regular stop for them. They (some firms globally known as well) are allowed to solicit investment business here, but the invitation to solicit business in the United States is not reciprocated; it is also illegal.Financial investments firms incorporated in Bermuda, working, hiring employees, paying taxes, health insurance, pensions and other benefits to Bermuda government are placed at a distinct, discriminatory, disadvantage.The scammers left the local trusting investor poorer, sadder and bitter. Global prosperity was the initial public Offering that never happened, even after years of promises and collecting local investor hard-earned cash. In 2005, the owners were convicted in the United States and jailed for tax evasion.Viatical settlements salesmen also came to Bermuda in the early 2000's. How many know what this product is, or truly understand how it creates a return on investment? The business of insuring the living dead is a multi-billion dollar market, demonstrating once again that whenever there is an opportunity, someone will leverage it into an investment. You just want it to be legitimate.Mutual Benefits Corporation sold more than a billion dollars in the US and the UK before it was shut down in 2003. Many of the principals are in jail. It is unclear if the investors have recouped. How could they have possibly obtained enough information to understand these transactions?The market roared, then the 2000 tech stock market crash happened, just as employees in Bermuda were introduced to the very first mandated Bermuda National Pension Scheme. Many had never invested, ever. Their entire experience in saving revolved around real estate and fixed deposits. It was a total immersion investment experience for Bermuda residents, and a grinding out learning curve as the market slid downward for three years.Possibly, then, it was still too early in investment environment for individual investors to accumulate the understanding of investment choices, structures, and capital markets necessary to feel comfortable with their choices. And unfortunately, many learned about asset allocation, diversification, and the risk-reward seesaw the hard way in spite of industry efforts to provide them with information and advice.But, the financial environment continued to mature and looking back, we have come a long way in a compressed period of time.For a tiny island, we've legislated1. Investment business act with several amendments2. The Bermuda National Pension Scheme3. Trust Act with Amendments4. Mutual fund legislation5. Know Your Client - Compliance regulation and monitoring6. Money laundering regime7. And others, driven by the Bermuda Monetary Authority along with all of the demanding insurance regulationsAlmost all financial institutions have investment walk-in centres. People have become more comfortable with the concepts of investing and planning.In the current environment, there have been serious setbacks, personally for residents and the industry. I am so very sorry for everyone affected by circumstances that in many situations were beyond their direct control.On an individual level, small investors still need better, easier access to independent financial information in one place. The finance industry as a whole can only do so much in publishing their proprietary documentation and providing access to investment centres.Having said that, investing and planning still comes down to individual responsibility, taking control of, and understanding one's own finances.We know this because without enough information, investing decisions are not always the best. I have heard and seen a rather large share of good, bad, and just plain ugly financial situations.Readers have made random comments to me; they send me emails; sometimes they call me up. One anonymous stranger ranted on for 20 minutes after a certain devastating loss, “ I just had to talk to someone who knew what I meant,” the person said. I can share some general feedback and observations with you, but confidential stories can never be told.From this reader feedback, it may come as a surprise to you but there is a financial literacy gap here when it comes to handling personal finances. It is no different in the United States where only 40 percent of adults could handle basic high school financial problems, yet people truly want to understand what they own, how to handle their money, and work toward financial success.Why the low financial understanding gap? Our attitudes about money are deeply ingrained. If you think about it, where does learning about money start? As children, do you remember how money was handled in your household?A child soon figures out what money means to him or her. He or she will work the angles to get some to spend. If mom or dad never talked about money, couldn't save money, never taught you to manage your money, allowance, grocery bagging etc. the discipline to put that into practice is never learned.It is always a surprise to realise that parents may not have received that grounding from their parents. The child then heads on the way to adulthood, but without that family influence to guide you there are significant financial hurdles.What changes those ingrained family financial habits are excellence in education, access to easy to understand financial information equals the road to financial literacy. No matter who they may ultimately work with on an investing choice, the financial final decision, though, still rests with the investor.Here is the start of some comments that have been made to me over and over. This is when know that we still have big gaps in financial literacy when you understand that these comments are from hardworking smart individuals.l I like that mutual fund because it is getting a guaranteed eight percent.l I've had my money in an Australian fixed deposit. Great interest rate! Why is the amount less than I deposited?l I have tried and tried to figure my pension choices out, but I just don't understand, so I just picked one. What difference does it make? They all just seem to lose money.l They signed a mortgage with a parent as a guarantor, and have come back to see us “we don't have any idea what we just signed and we are very worried”.Part 3 stay tuned for more comments and observations, completely anonymous, of course, along with a Wish list of constructive changes.Martha Harris Myron is JP, CPA, TEP, and an international Certified Financial Planner™ practitioner specialising in tax, estate, and strategic retirement services for Bermuda residents with cross-border and multi-national connections, dual citizens of the US and Bermuda, and US citizens living abroad. She is the American Citizens Abroad country contact for Bermuda and a Masters in Law candidate in International Tax and Finance. For more information, contact martha.myron[AT]gmail.com or 296-3528 Patterson Partners Ltd.