Should you invest through Bank wealth management team

Firstly, you have made the right decision to start planning for your children’s future through systematic investment plan (SIP). Investing through wealth management channel of a bank does not necessarily mean investing in the bank. Typically a good wealth manager or financial advisor will recommend a set of suitable mutual fund schemes in which you can invest to meet your financial goals like daughter’s marriage or son’s education.

You should ensure that the portfolio has the right asset allocation (equity versus debt) and the right mix of investments. Your asset allocation would depend on various factors like your risk profile, income, assets, liabilities, other financial goals etc. If you have a moderate risk profile, then you should have approximately 50% in debt investments and 50% in equity investments. If you have an aggressive risk profile the equity component should be higher and vice versa if you have a conservative risk profile. For your debt investments you can choose good quality long term income funds, monthly income plans etc. For your equity investments you should have a mix of good quality large cap and mid cap funds. The mix of large cap and mid cap funds will depend on your risk profile. While mid cap funds can provide higher returns, the risk is also higher. Therefore you should weight large and midcap funds appropriately in your portfolio.

You should discuss your financial goals with the wealth manager and ask him or her to make suitable recommendations. You should evaluate his or her recommendations based on asset allocation and investment mix considerations, as discussed earlier. You should ask for clarifications. You should not invest, unless you are comfortable with the investment plan suggested by your wealth manager. You should also ask your wealth manager to provide client references, so that enquire about the quality of your wealth manager’s investment advice and after sales service from his or her other clients and then make an informed decision. You can also look for financial advisors near your home on our website.