Friday, December 28, 2012

Wealth Management for Filipinos Abroad

Wealth management through a Philippine bank offers a good way for Filipinos based abroad to have access to and manage investments in the Philippines. Wealth management services allow investors to:

1) Open investment accounts remotely;
2) Move funds to and from investment vehicles; and
3) Receive information about upcoming financial products

The service was introduced to me by a former student who works at RCBC. Through the service, I was able to invest in RCBC's peso equity and bond funds without having to go to a local RCBC branch. While the steps that I describe in this post pertain to RCBC's wealth management service, I'm pretty sure that other banks would be able and willing to accommodate a similar procedure.

Opening an account

Our conservative banking laws require signatures on numerous forms for opening a deposit or investment account and make it difficult for overseas Filipinos to avail of local bank services remotely. The most straightforward workaround for this requirement is to have the documents sent by mail to your overseas address, and for you to send the documents back to the bank once they are filled up and signed. In my case, the documents were sent to the bank's branch in Hong Kong so that I did not have to pay for postage in sending them back. Once the documents were received by the Philippine office, a savings account to which I could to remit my funds was opened on my behalf.

Remitting and allocating funds

You can send funds to the savings account that is associated with your wealth management account by any means. I used RCBC Hong Kong's remittance service to transfer my funds to the Philippines.

Investors may choose from available Philippine UITFs and mutual funds, time deposits, and upcoming and outstanding bonds to invest in. Once you have figured out how you want to allocate your funds to different investments, you can simply email your instructions (i.e., which investments and how much per investment) to the bank's account officer or representative.

Monitoring and managing investments

You can also email subsequent buying and selling instructions to your bank contact. My account officer frequently furnishes me with reports regarding upcoming investment products and even regulatory information that may affect my current and future investments (he was the one who informed me of the BIR's clarifications for five-year investment tax exemptions).

You can monitor the performance of your investments through the usual channels (e.g., Bloomberg, the bank's website/e-banking platform).

The costs of availing wealth management services

There is no separate, explicit fee for the service, which means that you just pay fees for that your chosen investments charge; the bank will not charge you for investing on your behalf. You'll have to maintain a certain cash balance in your savings account (10,000 pesos in my case), however, so that involves some opportunity cost.

You also incur some costs whenever you send money to your Philippine account (e.g., remittance fee, exchange rate spread), but these aren't really a direct result of availing the service.

It's not a cost, per se, but wealth management services usually require an initial investment of 1 million pesos, which some of us may find prohibitive. If you're really interested in the service but don't have that much capital available for investment, try requesting for a lower initial investment amount.

To end, if you're a Filipino who's based abroad and you're looking for a way to invest in the Philippines, as far as I know opening a wealth management account is the only way to do it remotely--and efficiently and cost effectively, at the same time. I've done it, hassle is minimal, and it works.

If you have questions that were not covered in this post, please feel free to ask in the comments section below.

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