One thing the unit linked plan vs. mutual fund (I have no clue why there should be such a debate – owners, executives, salesmen, clients – I find are fungible between the 2 businesses!!) argument has done is created a consensus:

“Fee based advisory is the cure for all evil”. This brings us to the question – what is evil you all know who is now evil, do you not?!!

We have been going to a doctor (we choose a doctor whom we can afford) and paying him a ‘fee’ based on the time that he spends with us. Therefore there should be no worry about being sold a wrong solution. Correct? LOL.

For a fee based service to succeed (it is still not a success in any part of the world for the mass market) there have to be some pre-conditions. The fee based adviser is like a doctor, so he should wear a white coat – AND NOBODY else in the market should be allowed to wear a white coat. He should not be tied to any ‘house’ for any product. A doctor who is tied to a nursing home which has a chemist shop is a deadly combination.

Now if a fee based adviser decides that his wife will be an agent for all mutual fund and tie up with a broker for insurance….it would be a case of going to a quack who is operating from an authorized dispensary! During inspection you see the doctor, post inspection the doc goes away and the quack comes in.

Will this happen? Ask yourself whether it is already happening?

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  1. Subra

    I agree for most of the part , However cant there be a combination of Fee based + Selling ? Are you saying it cant exist no matter what you do ?

    In current scenario, because of the commission based model we have in our country , a person can earn some money by selling product, It comes from the rules . Now if a person advices someone and then gives him a choice of going and buying products . lets call this assistance , Will this at some point to time in future change the intentions of advisor ?

    So should we conclude that “Fee based model along with Selling of products or Assisting in selling the products is BAD always”

    However I got the point you want to make 🙂


  2. Send me a client and I can sell a ULIP or a MF. Depends on how I speak that person will either hate ulip or hate mf. Now if I sell NOTHING, it is easier to speak the truth.

    Think of a doctor who has a pharma shop attached to him – or even worse if a pharma shop has a dispensary where they keep a doctor on a salary – you think he will say ‘Just get up in the morning and go for a walk’ You bet he will not. L OL

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  4. agree with you 100%. I had an agent who thought that ULIP is poison and MF is the best. Of course in a year 2 transactions – one every six months was a guaranteed act, and he would push a complete range of NFO forms. Many of his clients were senior citizens who were very happy when they got 20% appreciation.

    Once the upfront commission stopped, he started pushing unit linked insurance and pension to every body except me.He knew my background so he kept me out of it. All others bought unit linked endowment and pension plans!! Now he is back to selling very very low quality of mutual fund schemes! Is this because of the ‘per form’ that some mutual fund houses are paying? I do not know…

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