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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  1. P.V.R. Somanadha Sarma

    good post. Especially the last para regarding the question to be asked by depositor is enlightning

  2. Subra Sir, You have put the reality in words…..
    Let me explain you the incident i happen to see and hear.
    Couple of years back, i went one XYZ brokerage company, for ELSS tax Funds. There was some meeting going on. i could hear the meeting as i was sitting next to the room.

    The presenter was just focusing on branch target. Propose Ulip, show them how it is better than MF. If people are not interest in ULIP and are already owning good MF, ask them to churn. Meaning stop existing or sell existing on and go for new…

    If nothing works ask them to go for company FD’s. They were also planning to have drawing competion for kids…. condition parents should join the kids. when kids are enganded we can go ahead and propose child plan…….

  3. @wealthucreate,

    ING Vyasa did that in bangalore a couple of months back. They had organized a drawing competition for kids and were having a presentation on ULIPs for parents. When i asked the IRR of the product they did not bother to approach me after that.

  4. “When i asked the IRR of the product they did not bother to approach me after that”
    that was because those morons noted ‘IR’ instead of ‘IRR’ & went to google to find the definition, but could not relate how your query is related to railways!!!

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