SIP: Misselling is easy

The easiest product to mis-sell in the markets for the past 2-3 years has been the SIP! Why do you ask?

The answer is simple. The press has been supporting and extolling the virtues of SIP – we all are guilty of this including yours truly. However SIPs work over long periods of time – the logic is you keep investing when you have cash flows and you remove when you need cash flows.

However in the past SIPs have been sold for lesser periods – say 1 year sip, or 3 year sip etc. There is nothing wrong so far. The problem now arises – the customers were told please put Rs. 25,000 in a sip, at the end of the year you will have at least Rs.  320,000  – now use  this for paying the  ULIP premium!  Vow  what a sale!

Now what has happened is that the investments made for the past 3 years also are perhaps showing negative return and the client is short of cash to pay the ULIP premium. Frankly I do not think these “advisors” have any solution. Any help from any quarter?

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