Investment Advise – Are you getting the right one

During the course of my meetings with my clients, I do come across interesting situations. The client , ( Mr A) has a bank account with a leading private sector bank and is one of the premium customers of the bank. Being a premium customer, he has a dedicated Relationship Manager (RM). The RM is the one-stop person who will help , guide ( in making investments and choosing the right product) and resolve the issues , if any.
Mr. A had a balance in few lakhs in his account , which prompted his RM to guide him to make an investment . In the past the RM had invested his monies majorly in NFO’s of mutual funds, which at current levels have not exceeded the Benchmark return.
Now, in one of my meeting with Mr.A, he had also invited the RM , as he had advised him to invest in a Savings Plan , exclusively for the Bank customers. On further questioning, it turned out to be an insurance product of one of the group companies and being sold in the grab of a savings plan. ( Do ask yourself , Is this is cheating ).

Mr. A has sufficient insurance and there was this product which was being sold as a Savings plan. And this was being sold by the RM, who is supposed to guide his client to make the most appropriate investment decision. And what we observe, is the RM guiding the client to make the investment, based on the bank’s target for the month , as against the clients needs.

There are many such cases and there will be many more cases , when dealing with RM’s. ( Let me also state that not all RM’s display the above traits. However, I have also not come across any RM’s who have not displayed the above traits)

Is there a way out?

Absolutely . Find an adviser who charges a fair fee for the advise and suggests investment advise based on the clients need and requirement. Moreover, he should be transparent and also declare his incentive on any product recommendations. Be willing to pay a fee. This would ensure that a wrong product is not bought, which has greater implications in the long run.

Happy Investing

Insurance – Saving Product – A sale gimmick ?

Only the other day, I received a call from the customer service team of a leading insurance company . The caller ( lets say Mr.X) , for a change , was cordial with a pleasant accent . X said that we have an excellent saving product. You only have to invest Rs. 30,000 per year , only for 3 years . And then after 10 years the amount will be redeemed at a return of 10-15% . Do let me know , when can I send my representative.
For the uninitiated this proposition sounds fantastic. One invests only Rs. 30,000 and that too for only 3 years and then one gets a return of 10-15%. Fantastic.

Have you noticed that nowhere in the conversation is the word “ Insurance “ mentioned. The pitch is “ savings products”. Is this cheating or a sales pitch ?

Moreover, there is also no mention about the upfront charges as in Premium allocation charge; policy administration charge; fund management charges. What about surrender charges ??? Did I say surrender charges . Lord save us .

Well financial products are sold and not bought. Buyers beware. Ask the right questions.

If one does not understand, ask , ask and ask .