What should one look for in an advisor-distributor or what the Americans call broker-dealer?
Well let us look at what one should be careful if a distributor is a person whom you do not know?
1. Do some kind of a back ground check if he approaches you.
2. If he has been recommended by a friend, make sure your friend, colleague, relative, sibling, parent have some experience of dealing with him
3. Make the cheques in the name of the FUND HOUSE and make sure you write YOUR NAME and scheme name BEHIND the cheque also so that the fund house knows that this is your application….not somebody else’s.
4. For many readers point no. 3 is redundant (or that is what they feel) because today a fund house does not accept 3rd party cheques. Correct? Wrong. For a fraudulent distributor generating a letter authorising the fund house to use it for a 3rd party transaction is not difficult.
5. As soon as you get the statement (in good quality colour letterhead of the fund house) call the fund house to check the amount invested or that day’s Assets under Management – preferably by calling the help line of the FUND HOUSE or the fund house itself.
6. Make sure that your distributor’s name appears only as a distributor and not as a second holder (i recently heard of such frauds!!).
7. Once in 5-6 months call the fund house and check your balance – maybe even do a Rs. 5k transaction – just like that!
8. Get a H Pin number and see your fund amount from time to time.
9. NEVER ACCEPT A statement issued by the distributor even if he is a big distributor (remember the Citibank Gurgaon case? LOL)
I am sick of hearing sob stories…..and ‘helping’ people for free. Seriously thinking of staring a paid program called ‘PYA’. The full form is of course …Protect your a*&( !!
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