Has your mutual fund agent, adviser, wealth manager, or whatever he calls himself, asked you to ‘switch’ from one scheme to another? A friend recently WhatsApped me, asking if it was okay to ‘switch’ schemes in the same fund house. Her mutual fund agent advised her to move from an under-performing fund to an out-performing one. He also told her that he does not earn any commission on the ‘switch’. He then moved her from a large-cap fund of the fund house to a similar scheme of the same fund house. I asked her to check with him again: did he earn any commission on the ‘switch’? Ask for a commission statement. She called back furious. Yes, he does earn from the ‘switch’ and no, he had not shown the statement before she insisted that he disclose it. She was surprised to see what he was earning.
Expense Account, Mint
I wonder why the Reserve Bank of India (RBI) has got its head buried in sand over the extent of lies that bankers tell their customers in their attempt to hit them with inappropriate financial products to earn their bonuses and meet their targets. And I wonder how banks can calmly tell angry customers who protest that the products recommended and promises made by their staff (relationship managers) are not the responsibility of the bank. “The person who sold this to you has moved from our bank, what can we do?” is the most commonly heard excuse to the customer. I recently met an artist at a do. As I tanked up about art, a subject I know nothing about, she reciprocated by asking me questions about financial products. Her story turned out to be the story that I hear over and over again. The average story goes like this: The trusted bank sends its “relationship manager” who knows how much money there is in the account. He usually comes with an insurance company guy. They both sell inappropriate products by lying about product features and what they will return. And when the customer complains some years later, the bank coolly talks about that person having moved on. “And can we sell what you bought and put you in something new now?” And hit the customer with another harmful product.