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Wealth Management: What should I know about wealth management institutions?

Your Responsibilities As A Client


As a client, you will be asked by your wealth management institution to give a fair amount of information about your company and the owners, i.e. yourself and your business partners.

This is to enable the wealth management institution to draw up a financial plan that fits your financial goals and to comply with the requirements of the Anti-Money Laundering Act 2001.

Investing Via Wealth Management Institutions


Most wealth management institutions impose a minimum amount for investment. This ranges from RM50,000 to RM1 million. These funds could be invested in various investments such as fixed deposits 1, listed equities, corporate bonds 2, unit trusts 3 or structured products.

Before recommending any product to you, the wealth management institution will need to determine your risk profile.

Different wealth management institutions adopt different risk profiling tools to assess the clients' risk appetites. The most common method used is questionnaire approach. A sample of the risk profiling questions and sample plan for an investment plan are given in Appendices I
and II.

Before signing up with a wealth management institution, you should:
  • Ensure that it has clearly explained all information regarding its services

  • Seek clarification if needed

  • Confirm the fees and charges that are applicable to your account


After signing up as a client, you should:
  • Obtain timely statements for all the transactions that were made
    on your behalf

  • Obtain monthly statements that summarised your investment portfolio and the transactions made during the month

  • Review the performance of your investments over time by comparing the Time Weighted Rate of Return (TWRR) 4 of your portfolio against fixed deposit rates (for conservative investors) or Kuala Lumpur Composite Index (KLCI) (for aggressive investors)

Ensure

that all facts and figures are accurate and the strategies and recommendations meet your goals


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References
  1. Fixed deposit - Money placed with banking institutions for a fixed tenure, e.g. 1, 3, 6, 9, or 12 months to earn interest.

  2. Corporate bond - A debt instrument for a loan which is issued by a borrower to an investor who is the buyer of the bond and lender of the money. In return for the money, the issuer agrees to pay regular interest to the bondholder for the term of the loan and the principal sum borrowed upon maturity.

  3. Unit trusts - Pools of money managed by an investment company. They offer investors a variety of choice, depending on the fund and its investment objective.

  4. Time weighted rate of return - A measure of compound rate of growth in a portfolio.


Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)


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Notes
Knowledge Base ID :   1444
Last Reviewed :   May 22, 2014
Source :   BankingInfo
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