I am planning to do a series of articles on how clients get ripped off, this is the first part.

The manufacturer – distributor – client is a very funny relationship. It is a tussle where everyone wants to win (as usual) and who ultimately wins is difficult to know except over a long period of time. A high asset management charge looks like a victory for the manufacturer but if there is good fund management skills, the client is not at too much of a loss.

Today let me concentrate on education. I meet many 23-28 year old men and women who are extremely disoriented towards their education and their careers. Those who have done a D-grade MBA (A, B, C are already absorbed by the financial services industry ranging from J P Morgan, Citi at the top end to xyz at the bottom end!) wonder whether they should have spent their parents hard earned Rs. 10 lakhs on this degree.

Then there are those who have done their graduation and taken up a Rs. 10,000 p.m. job. There are typically two factors which drive them (like all of us) – Fear (if  I do not do some MBA program I will never get promoted) and Greed (my salary will go up from Rs. 1,20,000 to Rs. 400,000). So they join a part-time MBA program (it is cheaper also you see) from a D, E or F grade college. This costs anything from Rs. 1 lakh to Rs. 3 lakhs.

What happens to those kids who cannot afford Rs. 200,000 for a part time course? Well the correspondence alternative is ONLY Rs. 25,000. Not bad is it not? So one more avenue has been opened up.

Cannot afford this also?

No problem, you can do a  Certificate course. This prepares you for a career in financial planning, insurance selling, mutual funds, nursing, interior decoration, etc. So after a basic degree, then a part-time MBA (and a huge feeling of insecurity) you join the Certificate course!. In its full form it costs Rs. 50,000 (assuming you do not buy through discounted scheme). However various combinations of buying is possible – like registering with the board and paying fees for the exam but buying the study material online (cost comes to about Rs. 11,000), ..and then an annual fee (indexed to inflation I guess) of Rs. 5000.

All these products are available on the net. No salesman ever called on them (perhaps been bombarded on email and phone but not physically pushed!).

What created the sale? an Unscrupulous (life insurance!!) salesman? No. An unscrupulous relationship manager from a bank? No. No. NO. NO.

Just fear and greed. And the (everybody knows it) knowledge that 8% growth will create jobs – one bank branch means 8-10 MBAs to sell something or the other.

So stop blaming the agent. Just people’ s greed, fear and lack of knowledge (what course to do and why) and parents insecurity (everybody HAS to do an MBA, do you not know?), …and this feeds 10,000 MBA colleges. Long live the customer.

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  1. Now its an MBA may be but few years back it was Medicine and Engineering …………..
    Wonder if there are parents who really ask their children to pursue whatever they like?
    May be everyone’s succumbing to pressure ( self created)

  2. And then there is the marriage market.. Sorry, ‘market’ may sound incredulous to some, but that’s what it is. If you are not an MBA, no prospective bride / family, is interested in you. There are other considerations like MBA may get more in return (dowry) than a simple Graduate.

  3. You are a Realist! Btw, just wondering if you will consider mentoring kids who are just out of college and want “real” education.
    Say, for example, I am a 22 yr old kid just out of college and want to intern with you for 6 months/1 year. I will take no salary or whatever you give, and work for you for 1 year.

    And what will you teach in 6 months/1 year?

  4. MBA or any such course is glamourised and looked upon as a job oriented one. the last generation courses on arts and commerce and literature has been looked down upon now a days ..

  5. Ranjan

    learning happens by asking (Plato, not original)- also Kathoupanishad – where Nachiketa asks Yama many questions. L O L.

    So they can mail me, visit my website,…what I do is too unstructured for them to understand. I do writing, reading, lecturing, training, listening to music, dreaming,…they will get confused. I also do not delegate sensibly. I delegate form filling, filing,…no learning will happen. No real purpose will be served. Of course a lot of answers could be available on my blog. They can still ask 🙂

    According to a friend who teaches in an A grade MBA school, students in the first month learn how to sleep with their eyes open – even nodding once in a while :). MBAs working on jobs which pay < 10k a month is happening in Mumbai at least. So there is no ROI on a Rs. 8 lakh fee course. Sad, but true.

  6. This problem of getting higher education only to get a high paying job has been created by our own corporate that has pressurized our family members to force their own to pursue MBA or any such in demand course program.
    While in overseas I met with many professionals who did not have any professional degrees but had strong product knowledge, this amazes me that how they laughed over an IIM & IIT graduate who was working under them with focused on too many things yielding no result. Well this does not mean that all IIT/IIMs are alike, but this begs a question why we dont check our selection process in India where half of the selection of staff is done based on the recommendation of manager, or rest of them have to compete with their educational degrees to get the job.
    Nobody cares about knowledge one has! It only matters when you actually perform after you get job.
    This atmosphere is directing many talents into those areas which are lucrative and deviating from where their actual talent lies.
    Fear and Greed is truly the best term used for it.
    Some write about this, some make movie on this!

  7. subra,
    Mind blowing article,hats off,this could be the mecca of all the articles.
    I could relate to this article because, i am one of the MBA which u have mentioned, not from A B C D grade but from Z grade institute.
    What is amazing is that i completed my CA INTER(first attempt) and switched to MBA.
    I am still struggling with my CA FINAL,I am already 33,luckily i have established good individual tax practice for my bread and butter.
    One personal question subra, does CA have any value if i complete at this age.
    you have guided Ranjan,so u have to guide me also.
    No partiality plz…..LOL

  8. Msp,

    a degree is useful or not depending on what you wish to do with it. After passing my CA I did not bother to get the membership of ANY other institute INSPITE of passing their exams (did not do the required training at all). So if you do not wish to sign a b/sheet how does it matter? However even in I Tax you cannot represent in a tribunal. So it largely depends upon you. Frankly I think filing IT return will quickly be computerised and they may even allow a mass filing by corporates. Then what happens to your practice? If the railways, ONgc, armed forces, – are allowed to collect info from their employees and filed electronically, the amount of paper saved will be HUGE.

  9. Hemant

    No I am saying something worse. I am saying spend a lavish amount of time in finding a competent and honest planner. It is like asking them to Santa Claus – according a friend in the brokerage business. If you want to do it yourself, LEARN. If you want to use a financial planner, LEARN how to see if he is doing a good job. Even if you trust you need to verify. Not trusting is bad, not verifying is WORSE.

  10. Subra,

    ” Even if you trust you need to verify. Not trusting is bad, not verifying is WORSE” . – This reminds me of Metallica’s song – Sad But True.

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