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.