Manage Your Money – Who can you Trust?

Manage Your Money

It’s a weekday and you walk into the bank to deposit a cheque. As you hand over the cheque to your relationship manager (let’s call him Chetan), he asks you if you have any specific purpose for which you need to utilize the funds. You tell him that the amount of 10 lakhs is an inheritance amount and you had not planned anything in particular for it.

You could look at a fixed deposit maybe. Chetan tells you that there are much better and equally safe investment avenues which you could look at. The idea seems fine and you ask Chetan for more details upon which he wants to call in his branch manager who has better knowledge on the topic.

You are happy to be taken to the branch manager’s cabin and treated like an esteemed customer. He asks you to opt for some equity linked debenture product which is capital protected and will give you greater returns than fixed deposits for sure.

1.  Unfortunately though he doesn’t have a brochure for it. You aren’t very sure but your relationship manager asks you to trust him and go for the investment. You tell him that you need at least a week time to think it over.

The manager though, informs you that the fund is open for subscription for just one more day

2.  While you are still pondering over it, the manager explains how the fund works. Your understanding of such things is limited, and though you don’t understand it fully, the idea and its presentation seems impressive enough. Finally after the persuasion of both the bankers, you decide to go for the 3 year lock-in product.

3. It’s been 3 years since you made your investment, and the time has come for its maturity. By your estimate, the fund must have earned close to 40% return over the 3 year period. Finally the redemption proceeds come to your account and initial payout is only 10 lakhs.

4. You get a feeling; the interest has not yet been paid out and you go back to the bank to enquire about the money. Your NEW relationship manager Shipra checks it up for you and informs that this is what was due to you. Shocked and surprised you ask her how it is possible. She tells you that the fund had a precondition which was subject to market conditions, and in your case it didn’t get fulfilled. You weren’t informed of it by Chetan you tell her, and ask to meet the branch manager immediately.

She takes you to the branch manager who is also different from the person you met earlier and after listening to the case, he agrees that you have been misinformed by the salesperson. However, the person making the error has left the bank and nothing can be done about it.

5. Understandably you are livid because of this, and fight with the branch manager, but to no avail. His only advice to you “Forget the past sir and let’s look at how to recover this mistake. We have a great portfolio management service which will trade in the market and recover your amount in no time. I think you should go for it without further ado. It’s the best option for you. Trust me.”

6. It’s not uncommon to come across a scenario like this and lots of people would have been affected by some form of mis-selling from financial institutions like banks, brokerage firms etc. The reason for this is largely the greed of the top management and the desire to generate more profits.

If a bank/brokerage is paying a salary of X to an employee in a sales based role, they expect at least 5 to 6 times of that to be generated as revenue for the bank. The ways of doing it is to get more deposits and loans and earn on the differential, or to sell products which earn certain commission for them.

Common examples are insurance and mutual funds of various kinds, portfolio management products, debentures, trading accounts etc. The pressure on individuals is so high, that they are forced to find clients who are ready to buy just what they want to sell. These people are not managing your money, they are trying to make money for themselves.

Now these are by no means bad products, but the question is does an individual always know what he wants and what he is getting into? Let’s look at the story above and try to understand where the errors happened. Should you trust Chetan and the bank manager to Manage Your Money? Can you trust these people with your hard earned money?

Tip to Manage Your Money

Here is how you should react to the about points in an informed manner

1. When being detailed on a product, ask for some form of written literature on it, a booklet, brochure or a mailer. Whatever is being told to you, ask it to be sent in writing. This might sound rude, but it’s always better to safeguard yourself than worry about others. It would give a proof in case something goes wrong in the future. Verbal hear say has little relevance legally.

2. Do not opt for something just because of the pressure, or because it is open for a limited period of time. You could miss out on an investment idea maybe, but there should be something good in the future also. Besides, most good ideas are repeated or imitated by others in the future.

3. A common strategy of technical sales staff is to convince or confuse. Either they convince you that you require what they are selling to you, or they use jargons to an extent you are confused and then are hesitant to ask more questions at the risk of sounding ignorant. But, please never hold back in seeking information as it is your hard earned money and you deserve to know what is being done with it.

4. Once invested, do not let it go, keep monitoring your investments from time to time, in order to know what is going on, and to stay in touch with your advisor.

5. Haven’t we all experienced this at some point of time? Individuals in the financial services industry change their jobs rather quickly, and you better be wary of who you trust, as a lot of so called ‘advisors’ have very short term focus and are just interested in selling you a product and getting the brokerage without feeling the need to foster a long term relationship with you.

6. For heaven’s sake, please do not repeat your mistakes. Make sure you read and understand about the product and its relevance for yffou before investing in it. Usually the introduction to a senior person could be an indication of bigger bait to catch the fish.

Conclusion – Manage Your Money

To sum up, it is very important to be sure who you can trust to manage your money. You need a person who is trustworthy and well educated in this field. A good financial planner will sell you ideas and not just products.

Your goals would have a co relation with the investment you are opting for, and he would try to educate you at least a little bit. Remember knowledge has no substitute and you need to have one trustworthy individual you can interact with. So be cautious and don’t look for quick fix solutions, rather for honest and relevant advice to make your money work for you.


About the Author

Ravi is a business leader looking for ways to let out his creativity. His interests include watching sports, listening to music and playing games apart from writing. His philosophy in life is "give everything your best shot and live with no regrets".

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