The greatest topic for discussion in financial circles – especially the elite ones is a) financial literacy and b) financial inclusion. In this article I am about to debunk the ‘financial literacy’ joke that goes around.
First of all it must be understood that any change can come ONLY and ONLY if society wants it, and leaders are willing to do it. Like a upper caste Raja Ram Mohan Roy who spearheaded the anti Sati movement. His OWN community was against him, but he still did it. Or Jyotiba Phule working for the upliftment of women in Maharashtra.
The average investor is happy in his state of bliss and is NOT seeking to become financially literate. Or if he thinks that by passing the exams like the ones conducted by NSE he will become literate, dear dear me, he is up against shit creek.
Let us start at the basics.
1. Who should be interested in financial literacy?
OBVIOUSLY the investor. Well he is not. He is busy watching IPL and T-20 world cup.
2. Who else should be interested in financial literacy?
The regulators like RBI, SEBI, and IRDA. It will mean they will have lesser frauds, and thus lesser headache – well this is what you thought, right?
Hell NO. The more the frauds the greater the work that the regulators WILL BE CALLED to do. More branches, more people, more budget, – see the drift? The regulator is interested in increasing his ‘kingdom’ and is no hurry to reduce frauds, cheating, etc. Unless of course Narendra Modi starts a system of imposing FINES on the bureaucrats PERSONALLY ….well this will not happen.
3. The manufacturers like mutual funds, banks and insurance companies?
Well at a superficial level yes, but if every customer became a Sucheta, Debashis, then the real lucrative products will not sell. So there is a little interest in financial literacy – enough that they come AND BUY financial products (current manufacturers cover about 10% of the population) BUT not too much that he/she ask questions about why, what and whether of a product.
The brokers, the real estate industry etc. are now happy that the REGULATION is not hurting them where it should, so they do not want a very ‘informed’ customer. Imagine a customer asking a broker for a MONTHLY p&l statement where the brokerage is shown separately!
So no the manufacturers do not want it.
4. What about the intermediaries?
Well the intermediaries are of 2 types – banks and IFAs. Banks obviously have no time and are interested in selling a myriad set of products – from loans to pensions. So it is easy to see a bank asking a client to invest in a pension plan which pays 8% while at the same time sell a car loan at 14%p.a. Obviously such games will go out of the window if the customer gets educated. So banks are out.
The IFA is in a precarious position – the client does not know what is the Value Add by the IFA. So there is no element of ‘relationship’ for the client to learn from the IFA.
So who is there to ‘teach’ the common investor the tricks of the trade? WELL NOBODY.
So if a person really wants to be financially literate, he has to learn it himself.
As they say when the need arises, the Guru appears.
Reading Subramoney is a good step towards financial literacy. However you need to realize that at the back end of Subramoney is a fat man trying to improve his fitness, relaxed and having financial freedom to be arrogant, has a terrible equity bias, hates people who do not wish to help themselves. He entertains, provokes, tickles, irritates, ridicules you on financial matters. Amongst all this if YOU can educate yourself, you are welcome. If you do not wish to read, change, accept, please be my guest. As they say in Arabic – Khalli Valli……
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