What do you need to know about trust management if you have never heard of it?

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1. What is trust management
2. What types of trust management are there in the financial market?
3. Advantages and disadvantages of trust management
4. Checklist: how to choose a management company
5. What should be in a trust agreement?

If you don’t want to understand all the intricacies and nuances of investing, you can outsource asset management to a trustee - a stock market professional. Let's figure out who can benefit from trust management and what its advantages are.

What is trust management

You can’t just go to the stock exchange and immediately buy securities. Any investor needs an intermediary - a broker. It is he who makes transactions on the instructions of the client on the stock exchange: after the investor independently makes decisions about which securities to buy and when to sell them, the broker begins to act.

But what about those who have never invested or have little understanding of the market? Contact your trustee. Most often, this role is played by a bank or management company (MC), which must have a license from the Bank of Russia to work with private investors.

Here's how it works: an investor enters into an agreement with a trustee and then hands over his money or securities to him. The client only needs to roughly decide what he would like to invest in and periodically monitor the state of his investment portfolio. The management company will conclude transactions for him: buy and sell assets, trying to extract as much profit as possible for their owner. She will do this, of course, for a fee.

In Russia, more than half of investors prefer to create a portfolio on their own. Only a third of market participants cooperate with trustees. The basic rules of investment for beginners can be found in the article.

Expense planning

It is better to manage finances not in your head, but on paper or in an electronic document. Mikhail Bondarenko: “Now there are many convenient mobile applications (including some banks within their application) that help you figure out how much money comes to a person per month and how much goes out. If you ask yourself frankly how much money was spent last month, very few people will know the exact figure. And you need to know it.”

Notes will help you learn to plan. By making a list of necessary purchases, you can estimate their cost and importance. Some of them may be a waste of money.

“In order to gain financial independence and ensure a decent future, you need to very strictly control the cash flows within your family and enterprise. You need to start small - create a table where all your assets and liabilities will be entered, and your daily expenses and income should also be entered.”

Venture investor Alexander Krasavin: “Distributing money among several types of expenses will allow you to control your financial expenditure and give you an understanding of which area of ​​life you need to save, and in which you need to buy something more expensive.”

What types of trust management are there in the financial market?

There are several of them, let's look at the main ones:

1. Collective management through mutual funds (mutual investment funds). The money of several investors is pooled into large pools and then invested in bonds, stocks or other assets. The funds are managed by the management company. This is the most affordable type of trust management for novice investors, since you can buy a share for at least 100 rubles. At the same time, the yield from mutual funds is often greater than interest payments on deposits.
2. Standard strategies - in this case, the management company offers the investor a choice of standard portfolios with a diverse set of assets, entry threshold and risk. Such strategies have higher returns than mutual funds, but the entry threshold is much higher - from several tens of thousands of rubles.
3. Individual strategies - this form of cooperation looks like this: the management company develops a personal strategy for each client and does not limit it in the list and structure of assets. As a rule, individual strategies are suitable only for very wealthy clients who are ready to invest hundreds of thousands and even millions of rubles.
4. Advisory trust management is a special type of management in which the manager does not manage the investor’s assets, but gives him advice on how best to manage them. The fee for the service is fixed, there are no guarantees.

Money values ​​respect

You should not judge people by their financial capabilities. Modesty in money matters will not be superfluous, so you should not tell everyone about your good financial situation or your desire to save a certain amount.

Money cannot be wasted; it must be managed carefully and judiciously. Avetis Vartanov: “Many people have the impression that it is simply impossible to save savings, so it is better to invest in things: our compatriots often buy new clothes, even when they are not needed, buy equipment, despite the fact that the old one perfectly satisfies existing needs. In my opinion, the root of this habit lies in the fact that for a long time in our country there were no effective and safe tools for working with savings.”

There are many rich people in the world, but they often do not show it while leading their usual lives. They do not have luxury housing or expensive cars, but they have confidence in the future and a sense of financial independence. This is more valuable than immediate material benefits. This is one of the foundations that allows you to form successful money management.

If you learn to keep small amounts under control, you will soon be able to manage large savings.

Advantages and disadvantages of trust management

Before seeking the services of a trustee, you need to carefully weigh all the pros and cons of such a strategy.

Advantages:

• It is not necessary to understand securities and choose when to buy them or other valuable assets and when to sell.
• The manager can buy assets that an investor with a modest starting capital cannot purchase on his own - for example, Eurobonds, the price of which starts at $1,000.
• Management companies can offer management strategies with capital protection - investors' money is invested in reliable bonds or deposits. At the same time, the client is guaranteed a return of more than 90% of the initial investment. This way, the investor will have the opportunity to receive income at a comfortable level of risk.

But trust management also has many disadvantages:

• Nobody promises income. Investments are always a risk. Management companies are not responsible for price fluctuations on the market. Money in trust management is not insured, so no one will compensate for losses.
• Management services are highly valued. For example, management fees start at 1% of income. The manager can also charge additional fees for success and for withdrawal of assets. And if there is not enough money in the investor’s account, the management company can sell the client’s securities or convert currency to get what is due.
• You can change the investment strategy only after sending a written request to the company and following a bunch of formalities. This often takes a lot of time.
• If the contract is terminated early, a partial loss of invested funds is possible.

Loans (possible, but carefully)

Often a person wants to get his favorite item instantly. If these are just regular shoes, then you should wait for your salary, but if we are talking about equipment that will bring in income, then there is no need to wait. Bank loans can solve this issue.

Venture investor Alexander Krasavin: “Don’t forget about credit cards - they help keep you on your toes and at the same time buy something, essentially, in installments. Many banks have an interest-free loan repayment period; it varies from 30 to 90 days.”

Credit should be used, but within reasonable limits. “The advantage of a credit card is that it allows you to make a one-time large purchase, the cost of which you can return within 2-3 months (depending on the conditions of your program), transferring money in parts from your salary.”

Checklist: how to choose a management company

1. Make sure that the management company has a license from the Central Bank . You can check this information in the online directory of the Bank of Russia.
2. Study the company's credit rating - for example, the rating from the Expert RA agency. It helps to understand how financially stable the management company is. A++ is the highest rating of the company's reliability.
3. Find out the profitability of the management company . We need to find out how the trustee's strategies have benefited investors over the past two to three years. On the website of any manager, financial reports are posted on it. It displays data on revenue from services, investment and commission income. If these indicators grow every year, then the company is operating efficiently.
4. Read the company rules . An organization's website usually has a section dedicated to securities management. To understand whether you can trust a company, evaluate the profitability of its strategies over past years. But keep in mind: past performance does not always guarantee future profit.
5. Read the commission policy. To do this, compare the commissions of different management companies. High tariffs may be justified if the company earns more for its customers than its competitors. Otherwise, there is no point in paying too high commissions.
6. Evaluate the convenience of communications with the management company : does it have a mobile application or website, is it possible to top up your account, withdraw money through your personal account, how to monitor the status of your asset portfolio, how quickly the support service responds, etc.

Who offers favorable terms of cooperation - review of the TOP 5 service companies

We invite you to familiarize yourself with the five top investment companies that offer trust management services on favorable terms.

1) Alpari

Alpari is one of the largest Forex brokers in the world, operating in the market for more than 17 years. The company's reliability is confirmed by a customer base of more than 1 million people from all over the world. Alpari has 3 international licenses and, according to Interfax, is considered the No. 1 broker.

Some advantages of Alpari:

• 63 financial instruments;
• maximum leverage (1:1000);
• fast and convenient deposit/withdrawal of funds;
• availability of mobile and web platforms;
• own investment academy.

On the company’s website, those interested will find a lot of useful information: analytics, training materials, reviews.

2) InstaForex

The company was founded back in 2007. InstaForex Group provides its clients with a full range of services.

More than 2 million traders use the organization’s services; more than 1 thousand accounts are opened in its divisions every day.

Company advantages:

• large selection of financial instruments;
• choice of leverage from 1:1 to 1:1000;
• the ability to trade in one click;
• the most modern Forex services;
• training programs and webinars.

For many years in a row, InstaForex Group of Companies has been recognized as the best Forex broker in Asia; it has numerous certificates and diplomas from prestigious specialized exhibitions.

3) Opening Broker

Otkritie Broker is a member of the Otkritie Financial Group, which has been providing brokerage services since 1995. The company has more than 72 thousand clients. As of the end of 2015, the total volume of transactions on the Moscow Exchange amounted to more than 18 trillion rubles.

The company’s reliability since 2010 is confirmed by the maximum AA+ rating. The company has a wide branch network - 37 branches throughout the country.

4) Zerich

ZERICH Capital Management JSC operates in the investment market and is a member of the National Association of Stock Market Participants.

The company offers its clients a full range of brokerage services and trust management. ZERICH Capital Management has been assigned an AA+ reliability rating.

Distinctive features of the company:

• conservative approach to risk management;
• strategic focus on maintaining a high level of reliability;
• no debt load;
• stable dynamics of the client base.

5) Rick

The Ricom financial group has been operating on the stock market since 1994. Ricom includes 3 companies: investment, management and consulting.

This structure allows us to offer clients a wide range of consulting, brokerage and trust management services throughout the Russian Federation and the international market.

Company strengths:

• the most modern IT support;
• work format - “financial boutique”;
• current financial products;
• professional team.

What should be in a trust agreement?

The contract is concluded for a period of up to 5 years. Most often it is standard, that is, clients join a standard agreement and sign an application. The contract states:

• information about the investor, as well as his assets;
• duration of the agreement;
• powers of the parties;
• asset management strategy;
• commission amount;
• sanctions for violation of contract terms.

When the investor signs the agreement, he can open an account and fund it. Most clients of management companies use IIS, since such an account allows you to additionally receive a tax deduction.

Setting goals

It’s easier to accumulate savings if you have a specific goal, or better yet several. We are not talking about a specific amount, but about certain benefits that a person will receive when using them. This could be buying a home, a car, a trip abroad, a comfortable old age, or educating a child.

Venture investor Alexander Krasavin says: “You shouldn’t keep all your savings in one monetary unit. Try to save money not only in rubles, but also in euros and dollars. You can also add here a more stable currency, for example, pounds.”

What is the best amount to start investing with?

Now what I'm doing is helping non-professional investors manage their savings on their own through investing in bonds. Let me give you one example. At the end of 2014, one of our clients invested money in ruble bonds.

In mid-2015, he sold them, bought US dollars and invested the currency in Eurobonds. According to our estimates, the return on investment was more than 50% per annum.

If you decide to invest, it is best to start with an amount that you would hate to lose

Of course, if you have learned to cook well, this does not mean that you need to completely stop going to restaurants, but no one has canceled breakfast or dinner with your own hands, especially considering that it is you who will ultimately have to eat (in the case of investments, take risks) , no matter what famous chefs prepare these dishes.

Dumping “bad” assets onto the client

This is a special case of underestimation of management results. If a company, while managing its own funds, has acquired unsuccessful assets, then there is a temptation to “throw” them onto the client. Naturally, in a “legal” way: not directly, but through a “layer”. This, for example, happens with bonds for which a default is expected, but the client does not yet know this, but the company is already aware (especially if it was the organizer of the placement of these bonds and knows the economic situation of the borrower well).

Using client funds to manipulate stock prices (front-running)

The first option: buy low-liquidity shares, “accelerate” their value, drawing great growth potential in your analytical reviews, and resell them to clients’ portfolios at a significantly higher price.

The second (softer) option: buy shares and use client funds to “accelerate” their value.

The ability of employees to manage personal portfolios also creates a wide range of conflicts of interest, such as the temptation to use information about client transactions for personal gain.