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It used to be very simple. When we were small, we filled our piggy banks so we’d have enough money to buy a toy. Then came savings accounts our parents opened for us, and where most money gifts went so we could “save for tomorrow.”

Unfortunately for a lot of people, savings accounts and other bank products like time deposits are all they know about investing. This has resulted in their savings earning a lot less than what it would have had it been parked in higher yielding investments.

Because you can make your money work for you – not the other way around – it is wise to seek financial advice from an investment manager or a financial adviser. If your net worth is not that sizable, and your income is coming mainly from your full time job, you can get financial advice by attending personal finance seminars, reading personal finance articles and books, or consulting with your bank manager. “But high net worth individuals with little time, limited experience, or both, in managing their personal wealth are ideal customers for investment managers,” says Heinz Bulos, managing director of First Country Bank.

Bulos says an investment manager or a financial planner can do many things for you, including help you set your financial goals, assess your appetite for risk, set your investment horizon, and manage investments in your behalf. “Of course, you can get regular reports on how your portfolio is doing.”

An investment manager should be able to inform you of the various investment options available, how much potential yield you can receive, and the risks involved. “If you want the investment manager to have full discretion on where to place your money, within the limits you set, you have to sign an Investment Management Agreement. Or you can have a Directed Trust Arrangement, wherein you tell or give approval to the investment manager on where and how you want your funds invested,” explains Bulos.

The Citibank Guide to Building Personal Wealth by Leo Gough and the Citibank Asia Wealth Management Team, a book Citibank published for the Asia Pacific investor, says those in need of financial advice may approach any of the following:

• Accountants and lawyers. Since they practice their professions independently, they are not likely to give advice tied to particular companies and products. But because investment is not their main expertise, accountants and lawyers may not have enough specialized knowledge to identify the best investments in a given category.

• Insurance agents. Because they are connected with one or more insurance companies, they are expected to push for the products they sell, and may not be able to give good advice on other kinds of investment.

• Banks. Depending on their facilities, banks may have access to a wide range of financial specializations and services. “Many universal and commercial banks as well as insurance companies offer investment management or financial planning services. Often, they would require a minimum of between P1 million and P5 million in investment funds to accept you as a client,” says Bulos.

Bulos says investment managers charge as management fee a certain percentage of your investment assets under trust. Insurance agents and brokers get a commission. “There are also so-called financial advisers who are actually glorified sales people who push their company’s products for a commission. Others offer financial advice for free but they just recommend their company’s own products,” he says. Shop around before deciding whom you’re going to entrust your money with.

When retaining an investment manager, make sure you have a document stating the terms of your service agreement and your conditions. The Citibank Guide to Building Personal Wealth says these should be included in the document:

• Services to be provided
• How you will receive advice (by phone, face-to-face meetings, letter, or e-mail)
• Details of commissions, charges, and fees
• How the adviser will handle your money. Normally, the amount you deposit will be kept in a client account, separate from the advisory firm’s own account
• A warning about the investment risks you will have to take

“The more that you and the adviser put in writing, the better you are protected, since you will be able to prove what has been said,” the book adds.

Money master

You know you’ve found a good financial adviser if he does the following:

• Listens to your needs. He should be able to make a portfolio “tailor made” for you.
• Reviews your portfolio periodically and adjusts your strategy if necessary.
• Rebalances your portfolio. Market conditions change, so your investments should be adjusted accordingly.
• Protects you against ‘churning’ or making frequent buy-and-sell transactions in pursuit of a better return but means higher transaction costs, which, in the end, may affect your yield.
• Have transparent charges.
• Give access to specialists.
• Give tax advice.
• Be available. “A good advisory firm is interested in developing a long-term relationship with you, and you should be able to contact them whenever you have an investment matter to discuss.”