If the financial services industry a.k.a banking industry is convinced that people will come back in hordes, they are mistaken.
There is too much theory (SIP works, averaging has always worked, asset allocation, …), too much data (meaningless illustrations), too much hype (did you know that 89% of Indians do not even know what is a financial plan)…..
Over selling of equity mutual funds, and underselling of direct equity.
Direct equity is sold only by brokers – and they cater only and ONLY to TRADERS. The real investor has been killed, or maimed and left to die by the wayside…
BUT NO RETURNS to the retail investor.
In a country with such a huge middle class, 200 banks having no clue what to do except service the government, this is a scary situation. Our mutual funds and life insurance businesses have to boom right? Well it is not doing too badly, but ask the investor. Most of them feel they have been cheated. Roundly.
The common man is not convinced that the Harshad Mehta scam, Ketan scam, Hometrade, NSEL – were properly investigated. The chances are people who lost faith will stay away for 10 years.
And sadly, there is no evidence that there cannot be another scam in the next 6 months. And today there is NO SHOCK element left!
The worst thing happening today in the US markets is people are not being told about the risk in a gilt portfolio. When Interest rates in the US start going up the common man in bond funds is going to get decimated.
In the US as in India, the biggest problem is soon going to be the “Educational Loan Scam” given to people who are just not capable of earning ENOUGH to repay the loan.
The BFSI space is crowded with tons of incompetent organisations (and obviously people!) .
Given all this mutual fund industry profitability is awesome for the top 10 fund houses despite poor performance. Income funds are refusing to reduce their asset management charges….
Life insurance companies regularly talk to customers and make sure that they do not surrender poorly priced policies…
For a lot of people OUTSIDE the bfsi space, clearly the distrust on the financial services industry is TOTAL….
However the number of people in the MBA schools wanting to get into the BFSI space is huge…
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