Agency Accounts and Investing

September 22, 2015

If you’re like most Americans, you have a job, a family, and a life that takes up a good percentage of your time and energy throughout the week. You’re great at what you do, but chances are your profession doesn’t involve expertise in investment research, analysis and management. You know that investing provides the potential to earn money for things your family needs, such as retirement income, college tuition and healthcare. With the troubled economic times of the past several years, and the recent financial crisis, it’s difficult to know who to trust when it comes to setting up and managing an investment account.

Many community banks and trust companies offer investing that can be tailored to your specific needs called an agency account. Setting up an agency account involves a simple agreement where you provide assets to be invested and agree to specific services provided by the bank’s investment experts. The extent of the services provided can vary from simple account record-keeping, to providing investment advice, to managing the account completely and making investments on your behalf. Given the economic climate, many investors are moving investment funds to local, trusted banks and financial institutions.

What can an agency account offer you and your family to help you reach your economic goals? And how does it differ from a trust?

An agency account is an investment account, and as such is NOT protected by the FDIC. The services of your investment team are provided for your benefit, and fees for those services are generally a part of the agreement. The fee amount will differ based upon your chosen financial partner and the extent of the services provided. Basically, you are paying for the luxury of having your own personal investment management team, who have the financial expertise, time and resources that you lack, hired to help you devise and manage your investment plan. Generally, your investment manager will meet with you to determine your goals, your timeline and your expectations. They will introduce factors such as risk tolerance and income tax considerations and help set up your individualized plan of action. Depending upon your agreement,they can manage the account completely or be available to help you manage the account. The flexibility afforded by an agency account is essential to making the process beneficial to a wide variety of investors.

The difference between an agency account and a trust is simply that with an agency account, the assets belong to you, the principal,and ownership of those assets does not pass to a trustee. Trusts are mostcommonly set up for estate planning, so that assets can be managed in the eventof your death as you want them to be managed. Trusts are frequently used to set up charitable donations or provide for minor children unable to manage the account themselves. Agency accounts, alternatively, are often used as a way to develop an investment strategy and carry out that strategy, with the funds owned by you, but managed (to the agreed-upon degree) by your financial partner. You can terminate the agreement or move your assets at any time.

So if you are currently considering setting up an investing plan, or you have recently come into some cash that you would like to invest, talk to Texas Gulf Bank about setting up an agency account. You may be surprised at the extent of knowledge and service available to you from the same trusted financial partners who hold your checking and savings accounts.

NOTICE: Wealth Management Department Investments include non-deposit investment products which are:

  • not bank deposits
  • not FDIC insured
  • not insured by any federal government agency
  • not guaranteed by the bank
  • may decrease in value.