There are many people in the financial services business whose main job is to sell financial products. What they have been called has changed over the years….but largely the job is:
1. looking for a good product
2. tying up with the manufacturer of the product (a company which wants money or wants to lend money)
3. find the customer
4. make the customer buy the product and
5. collect the commission from the person for whom you sold
Now if the guy has to earn a decent living doing this, it is difficult.
What all should a guy look for in a product?
Is it good for the manufacturer (hey he is the boss!), does it make money for the distributor (he has to live, right?) AND:
a) is it a pull product (do people come and say …’I want to make a FD in…..’) or
b) is is a push product (Sir, you should buy ULIP…you need it) or a
c) semi-pull and semi-push product (mutual funds)
d) is it a show off asset (easier to get referrals unlike the earlier 3)
e) MOST MOST MOST imp: will the distributor get blamed if something goes wrong. If no, great. If yes, is the commission big enough for the distributor to do it for 4-5 years….so that he can make some money!!!
So when a finance company comes to him and says …”Will you sell my FD schemes”. He puts it through the test:
Is it a pull product: Yes of course. All of my father’s friends, friend’s fathers, ….etc will all invest. My full social circle loves to keep FDs, so all of them will.
Is it good for the deposit keeper: Yes of course. He is getting 13% p.a. for 5 years. What more can the muppet want ? (sorry Greg Smith too attractive a word to be left unused)
Is it good for the distributor: Of course yes! a 3-5 year FD gives a commission of 5% + some year end gifts, not bad.
Most important: If something goes wrong, will people blame ME? Of course not. It is a company in existence for so many years, many FIIs have invested in it…they have licenses to do more business….HOW THE HELL CAN PEOPLE BLAME ME????
Is there a question you as a depositor should have asked?
” I the company is borrowing at 13% from me, and paying about 2% brokerage (annualised, say) then spending say 1% on admin….whom are they lending to at 19-20%p.a. ?”
If things go wrong….blame yourself for not asking the right questions….
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