Buying a financial product: using an agent
There are many people who prefer buying mutual funds, medical and life insurance and many financial products through an agent. Normal reasons why people use an agent are as follows:
- He helps with filling up the form
- He knows what is happening in the industry and will be able to give some useful advice
- He will co-ordinate with the fund house or the insurance company – and most clients find that pretty painful.
- He will handle the claim if it comes to such a situation
- He is authorised and qualified so he must be adding some value in the transaction
- His services are FREE!! HA HA
- He might actually share his commission, will he not?
- He chases, comes home, does all the paper work, reminds…what more can I want? LOL
All this is perhaps true, but let us look at the risks:
- He might give a sub optimal product based on his limited understanding
- Most agents do not understand insurance – medical, life or even simple risks
- The agent may go out of business soon – and you will again be looking for a new guy/gal
- The agent may die before you do…:-)
- If the agent switches loyalty, he may not service the older products he has sold…
- He may fight with the main company – and put your product in a jeopardy!
so be careful in buying a financial product…
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