Mutual Fund Agents’ Role in the Investment Process

Here is another interesting email from @itsmekat, one of our registered members here in Mutual Fund PH. The email goes like this:

I would like to ask some more questions but I hope you won’t get offended or anything.

1. What if I invest now and you stop being a “broker” later on? My money will still be with FAMI/PhilEquity and the “deal” continues? or will I have to withdraw my money and re-start again? 

2. Also, is it okay if I open an account under a different agent but add investments under you? Or vice versa: open an account under you and add investments through someone else.

3. Can brokers/agents “see” what’s happening to my money? Or it’s something that only I can see?

Hey @itsmekat! Of course, no offense taken. I’m actually glad you guys are keeping my inbox busy by throwing questions like these. For the questions you raised, I’ve decided to keep a post instead. The question has been raised quite several times already.

And as I want to start everything, here is a backgrounder of the function of a Mutual Fund Agent.

An agent, in general, is a mediator between two parties. The selling party, and the buying party. He is there to bridge the gap between the two, to assist the buying party in pursuing the sale, and act in behalf of the selling party to close the sale. However, he is in no way a part of the agreement. Contracts, or agreements, are always just between the buyer and the seller.

Looking at the perspective of a Mutual Fund agent, he is there only to assist the prospect investor in their desire to invest in Mutual Funds. He assist clients in completing and processing the requirements, and try to answer all the concerns of the client.

A mutual fund agent has access to the investment information of his client, meaning, he can, at anytime, look on the status of his client’s investments, upon the requests of his client. A mutual fund agent can only act in behalf of his client.

Of course, mutual fund agents are compensated, just like any other agent, through commissions. These commissions are already embedded on the sales load of the mutual fund.

Now, to answer your questions:

1. What if I invest now and you stop being a “broker” later on? My money will still be with FAMI/PhilEquity and the “deal” continues? or will I have to withdraw my money and re-start again? 

As I have mentioned above, Mutual Fund agents will be outside the investment transaction that transpires between you and FAMI/Philequity. Your investment won’t stop just in case your agent decided not to be an agent any more.

Stock Certificates, if requested by the client, is named after the client and not the investor. Btw, the stock certificates can be requested anytime from the Mutual Fund company.

2. Also, is it okay if I open an account under a different agent but add investments under you? Or vice versa: open an account under you and add investments through someone else.

Based on the commission structure that I am aware of, the agent to receive the commission will be the agent who have assisted the opening of the account. So my answer is yes, it is possible, but commission-wise, the agent receiving your additional investment won’t have any financial benefit from that transaction. He might just ask you to let your previous agent to process the additional investment, or redeem your current investment, and open a new account under the new agent.

3. Can brokers/agents “see” what’s happening to my money? Or it’s something that only I can see?

Yes. Your agent can see the status of your investments upon request to the Mutual Fund Company.

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  • Buddy Liganza

    sir nick, kailangan pa ba ng agent sa FAMI or puede direct ng apply?

  • Rosalyn Dimasangal

    Dear Nick,
    Me and my husband are very interested to invest in mutual funds. We’re here in Jeddah as OFW. We want to invest even if we’re here abroad.Please help us on what to do. God bless!

    Lyn

  • rosalynn

    hi…im an OFW working in Saudi Arabia…i wanted to invest but lacking the knowledge and reading blogs confused me as there were terms im not familiar with….is it possible to invest while im here in KSA…thanks

    • http://nickraquel.com Nick Raquel

      hey rosalynn! yes, it is possible to invest while you’re abroad. I actually have assisted several OFWs already. Let me know how could I help.

  • itsmekat

    Hey Nick! I have another question:

    Is there a charge for additional investments?

    For example,
    Option A: open account with a big amount and drain-your-savings.
    Option B: open account with a small amount and add up anytime you can.

    Also, for example you want to add investments, would you:
    Option C: wait until you have a large amount and invest.
    Option D: invest your money (even if it’s only P5,000) once you have it.

    Thanks again!

    Kat

    • http://nickraquel.com Nick Raquel

      Hey Kat!

      For FAMI and Philequity, sales charges (or entry fees) amount to 2% and 3.5% of your investment, respectively. These are charged every time you make an investment, either initial or additional.

      For the second question, If I have P1,000 (minimum additional investment), I would invest it right away to better spread my purchases. However, I would still spare some amounts in cases wherein buying opportunities arise, I would have funds to take advantage of it.

      It really depends on your strategy. I would suggest you look into the Money Cost Averaging strategy. I have a case study here, you may want to look at http://mutualfundphilippines.com/2012/02/case-study/quarterly-peso-cost-averaging-using-philequity-fund-inc-pefi/

  • Kat

    Thank you! :-)