Before reading this article, hope you have read the first one – “Decoding Financial Advisers – Part 1“. We covered few scenarios on the usual suggestions made by the financial planners/advisers. In this article we cover the few more such scenarios.
| • “The number you have called is not responding to your call” • “I’ve sent several mails but not received a satisfactory revert on my query. The agent was so prompt initially. Now I am not getting any service from him.” |
• The adviser should always attend to your call/email and handle the anxiety of the customer if the investment value comes down. • He would typically answer your call or email in case he is knowledgeable and takes responsibility of the product sold by him. • The performance might be the responsibility of the company, but suggestion was of the adviser. • All the customer needs is a response and an assurance so that he won’t panic. He won’t throw tantrums at all if he is attended. |
| • “Sir, in the last 3 years this plan has given a return of 200%. • So this is best the plan available in the market and I am sure you get similar returns even now. • You just need to invest for three years and see the results” |
• “Alice in Wonderland” type product. Immediately a warning bell should trigger off in your entire body. If it is a market linked product, then the returns will not always be phenomenal. There will be rainy and shiny days both. • IF it is a non market linked product then beware of ponzy schemes offered along with the product which is being sold to you. |
| • “Sir, I am in the share market since last 10 years. • I can tell you every movement of the market. I can time the market and save your investment. |
• Nobody can time the market. It is a risky affair. If companies could time the market then they would have guaranteed in black and white. |
| • “Sir, You are the chief decision maker of the house, what is the need for discussion with Madam. • These homemakers are not aware of the markets and other ground realities of finances. • Just do it now/today, If not, you can miss a lifetime opportunity” |
• By all possible means, you might be the prime decision maker and also possibly in many cases, your spouse might not understand the realities of financial markets. • But, by all means, discussing with your spouse is extremely important. She is emotionally attached and will be very important motivator in each step of your life. • She might not understand as much as you do, but with all possibilities will point one very important point which might not have struck you at the times of discussion. • Typically, advisers pressurize you to take decisions on the spot not leaving a chance to miss business. • A prudent adviser would always be prepared to answer any queries of yours in presence of your spouse. • He would allow you to take decisions at your pace. Of course, he might be very right to hurry up a bit in deciding as it is typical sales technique or the market might be favorable for investments. |
| • “Sir, think of long term, you must manage to pay premiums because investment is very important in life” | • Absolutely right, Investments are very important in life. But at what cost? Does he ask you if you have liabilities like credit card debts, personal loans and other immediate expenses. • If yes, then he has to chalk out a plan to get you out of the immediate debts while keeping some assets aside. • If he is asking you to invest upfront without paying off debts, then an alarm must trigger. |
| • My adviser doesn’t have Answers to Questions or Concerns | • Your adviser must provide you all answers for questions that come across your mind. • Not necessary that he will have answers upfront, but he must figure out the ground reality and provide you with the facts. |
| • “Sir, you give me cash and I will get the policy issued upfront. You will get benefit of today’s market” | • Never give cash or issue cheque favoring your adviser. I have personally seen many irregularities when cash has been handed over to the adviser. • Make payments only to the company directly |
Another important aspect is to know about investors right to information:
• Go through the illustrations carefully. Illustrations give complete details and bifurcation of returns and charges. IRDA does not allow illustrations with returns more than 6% and 10%. And remember these are non guaranteed return and for illustrative purposes only.
• You have all the rights to know about the account value directly through the company or through the adviser if you are not in a position to check it yourself.
• The adviser must keep you abreast of all changes that are taking place in terms of policies and also the market scenario.
• He should remind you of the payments due and provide all services related to withdrawals.
• Always fill the form yourself or get the form filled in front of you.
• Never sign a blank form or cheque.
• Read important points mentioned in the brochures, if not complete brochure.
• Check about surrender charges in specific if you have a short term horizon of withdrawing money.
• It is your hard earned money. only you,your family must decide where to invest your hard earned money. you have all rights to know about the status of your investment at any given point of time.
• If your adviser has earned commission out of your policy, you have all the rights to get all information and future services from him.
• In case you have invested in ULIPs/Mutual Funds, be ready to see your account swing from positive to negative and vice-versa.
• But the golden point is Equity has surpassed all investment returns if you remain invested for long term.
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Author of this article is Jayant Bhat and has been posted under ‘Guest Posts‘ series. If you are interested in writing a guest article on this blog, feel free to get in touch with me.
Venkat says
With all good intension of becoming a very good advisor, I created all the tools to advice the investor. We are not still ready to have good FA’s. Indians in general hate Term Plans. Emotion hijacks logic and most if not all of the insurance plans of all types are sold to the costumer. We have to go a long way to get into the world of financial advisors doing what they meant to do advising the customer.
Shilpa says
Good series of articles Mohan. Thanks to Jayant.
Mohan says
Good to hear that. Yes, all thanks to Jayant 🙂
Reshma says
Nice articles Mr. Jayant. Thanks for sharing some great conversational kind of information through these two.
Mohan says
Glad you liked these articles, will try to get things of this sort more often!
lostworld says
Valid points. Always wondered how financial advisers merrily claim they know where profit lies..Markets are always unpredictable , varying due to several int-ext factors. As long as one keeps ones eyes,ears open while investing & doesn’t get carried away,its a safe bet. Otherwise best to scout and rely entirely on someone trustworthy.
Mohan says
well said! yes, though we rely on someone, it is good to keep ourselves educated about the good and bad in the system to make a wise decision.