It is near the end of 2021 when I am writing this article.
The advance of technology had enabled many low cost trading/investment platform
Even for the old school unit trust industry,
there are platforms like fundsupermart and eunittrust to buy unit trust at lower fees.
The last article we discussed how unit trust on average outperform their benchmark by 1-2%. But it doesn’t include the sales charge incurred. Which is paid to the unit trust agent serving you.Sales charge varies from 1-5% according to different company.
The question is, is the service provided by unit trust agent worth the fees?
In my humble opinion, the amount of value can be provided by unit trust agent depends on a few factors.
1. Integrity/Honesty
Integrity is the most important attribute an agent could have.
After all, clients invest their money based on agent’s advice
If the agent cares only about his commission,
He or she might just sell you about how high the returns can be
while avoiding to tell you the risk involved as it might affect his sales
How to know if an unit trust agent is honest?
- Ask him about the risks involved in investing in unit trust
- Ask him if himself invests a considerable amount in unit trust
2. The knowledge level of unit trust agent
It is not difficult at all to be an unit trust agent in Malaysia
As long as you
- Are 21 years old and above
- Have 3 credits in SPM
- Passes the FIMM CUTE exam
You can be an unit trust agent.
So the barrier of entry is not high.
Thus there are a lot of people from different background in the industry.
I have seen a lot of agents promoting funds with flaws in their knowledge
If you are from economics or finance background, the chances are you are more knowledgeable than them in terms of investment and market.
This is dangerous, as the agents might be seen as “authority” by the general public,
And general public typically do not have deep knowledge in investing,
They might be misguided to make investments that is not suitable for them.
How to know if an unit trust agent is knowledgeable?
- Ask them about how interest rate affects the market and your investment
- Ask them what books he read about finance/economics
- Ask them what blogs that he read about finance/economics
- Do they have qualifications like CFP? (Not necessary, but is a plus)
3. Quality of service provided
The last is the quality of service provided.
Even if an agent fulfills both the quality above, if his service sucks
His professional knowledge won’t bring you any value
An individual can be smart but not necessarily smart at dealing with people
This is the difference between IQ and EQ
How to know if an agent’s service is good?
Well this is quite easy to tell
- How fast did they respond to your questions?
- Did they feel irritated answering your questions?
- Did they ask about your living environment and life target during sales?
- Did they update you your investment and market conditions very now and then?
Conclusion
To conclude,
whether an agent’s service is worth the sales charge depends on their honesty, knowledge and quality of service
Investing is different for everyone,
Some are busy with work, not interested in studying the market, wanted to spend more time with family, then a good unit trust agent can bring enormous value
On the flip side,
If you are a DIY investor, prefer to do your own research,
A good unit trust agent can bring value too.
At last, it is the same old cliche quote
There is no perfect investment, only the investment that suits you the most
