Fund for Blog Development-Please click

Monday, December 31, 2012

Good consultant gives good service

When I buy something, I usually do it because I am happy with the service. On the other hand, no matter how bad I want an item, if I am being treated badly by the salesperson, I would just walk away.
On my way to my appointment just now, I thought about the importance of good services. And if it matters to me, it must matter to other people.
I recently went for a training and one of the things I learned was to do the “little things” for my clients better than everyone else.
I had a long chat with a woman who is in her 40′s, this afternoon. She told me she had given up on unit trust consultants. I don’t blame her. She was “neglected” by one and her existing consultant, based on what she related to me, did not provide her with a good service.
My heart just went out to her when she told me about her experiences and the kind of advice (or rather the lack of it) that she received. So, I sat down with her and explained what unit trust investment is all about.
Unit Trust is a LONG TERM investment, unless a consultant educate her client, it will be very hard to maintain a long and trusting relationship.
Much to my surprise, the woman had never heard of the rule of 72, which is a formula to calculate how long it takes to double an investment, the strategy involved in unit trust investment as well as compounding interests.
She openly told me that she invested in her current consultant because she wanted to help her (the consultant). This woman who like most people, worked really hard for her money said, apart from seeing her consultant’s  face on the newspaper, she hardly ever met her.
“She travels all over the world (she must have qualified for overseas trips due to good sales). However she didn’t have time for me,” she said.
When investing in unit trust one of the most important things to look for is the service. If your consultant is not giving you a good service, it is time to dump him/her. A good consultant is one who educate his/her clients so that they (the clients) are able to make an informed decision with regards to investments.

Have an investment objective, invest and diversify

I caught up with my girl friend for brunch yesterday. She is frantically looking for a nanny for her son as her baby sitter has decided to start a business and leave baby-sitting career behind. I have always enjoyed spending time with this friend. With her, I could talk about anything.
Yesterday she asked me about investment. My friend believes in diversifying her investment. Something that I completely agree with. She invests in stock market, unit trust and put some money in the the fixed deposit.
I took her by surprise when I asked her what her investment objectives are. She paused and after a while said she has never thought about working with an objective when it comes to investments.
I usually tell my clients, just like everything else, they should only go into something if they are clear about what they want. And, having an objective works best with a time line.
Some of my clients invest because they want a better retirement plan. Younger clients have more time on their side while more mature clients have more money on their side.
Most of the people I met depend on the Employee Provident Fund for their retirement. This is a great start. But, why put your eggs in one basket?
Since its incepion in 1952, EPF have not been able to give its members double digit return. So why not diversify your retirement plan?
See below for the details of dividend declared by EPF:

Follow the right strategy

One of my close friends asked me about unit trust investment, the other day. This friend of mine had invested around RM40,000 of her EPF money for over four years. However she is unhappy with her return. When she told me her profit, I was quite shocked at how little she made.
So I explained to her that unit trust is a medium to long term investment. And, like everything else it is vital that the investor follow the right strategy when investing their EPF money into a unit trust fund. And it is the consultant’s job to advise her on the strategy, as followed:
1. Follow the journey: An investor needs to keep his/her the money in the fund,  between at least 3 to 5 years so that they will be able to enjoy the profit. If an investor invest in less than 3 years there is no guarantee that he/she will make profit.
2. Have the discipline: In order to leverage on the dollar and cost averaging it is crucial that an investor top up his/her EPF investment into a unit trust fund in every 3 month. This means, the consultant should come and see the investor 4 times a year (to get the investor’s thumbprint and review his/her investment). Not lesser than that.
3. Choose a consultant who are able to monitor the right time to enter and exit (a particular fund). One that advises an investor on what to do before taking the appropriate measure. The consultant should also keep the investor informed on every move he/she made involving an investor’s money.
When it comes to investing in unit trust, it is important that the investor understands and follow the strategy. And just as important is having a consultant who educate his/her client so he/her can make an informed decision.
At the end of the day, it is your money. So listen to your gut feelings. If it doesn’t feel right, go back to your consultant and ask for clarification. Or go to the respective unit trust company’s website. You can also call the customer service hotline. For some consultants this may be just a job. Make sure you look for one that is able to answer your queries and is accessible.
Unit trust is a middle to long term investment. Having a trusting relationship with a consultant

FAQ Discount on service charge

I met up with a potential client recently and he asked me whether he could get any discount on the service charge when he invests in a unit trust fund with me.
Service charge is fixed. And, as a consultant I am not able to provide my clients with a discount. However, I introduced a recently launched fund to this guy.
The advantages of buying a new fund are:
1. New funds’ price per unit is very low

How to make an informed investment decision

Just the other day, a client asked which fund she should invest in. So I asked her a few questions to determine her risk profile. It turned out she is a moderate investor.
As a consultant I do not decide for my client. My job is to advise and recommend solutions that cater to my clients’ needs.
When I asked her what her investment objective is, she told me, “to make money”. But when I asked how much money she wanted to make from her investment, she said she didn’t know.
I asked her, what if she were to double her investment, how much time was she willing to take? And what was the return she was looking at?
If you are a first time investor, you may want to think about your investment objective. They could be retirement fund, to pay for the down payment of a house, children’s education or acquiring a painting.
Then think about your investment target i.e how much profit you would like to make. For example, if you put in RM100,000 in one lump sum, you may want your investment to grow to RM150,000 or even double to RM200,000.
Another aspect is how long you are willing to wait to see the money grow or double from RM100,000 to RM200,000.
Use Law of 72 to determine how long it takes to double your investment.
(Formula: 72/return)
For example if you put RM100,000 into EPF which gives 5.8% (round it up to 6%) return last year, divide 72 by 12:
72/6= 12
This means it takes 12 years for your investment of RM100,000 to double to RM200,000.
However if you invest the RM100,000 into a fund which can give you a 12% profit per year,
This means it takes 6 years for your investment to double its growth from RM100,000 to RM200,000
Unit trust is a medium to long term investment. So make sure your time frame is no lesser than three years or you will risk losing your capital.
It is also important for you to be aware of your risk appetite. If you are a conservative investor you may want to go for a fund which is low risk yet provide consistently low return. If you are a moderate investor, you should invest in a fund which has medium risk and provides moderate return. As for aggressive investor, you may want to consider a fund which has high risk and give high return.
There are many funds available in the market, choose one that suits your needs. Make an informed decision and invest wisely.