This is a true conversation which happened to a friend

RM: Hello Sir Am I speaking to Mr. M C ?

MC: Yes

RM: Sir I am your RM from M….brokerage firm

MC: Yes

RM: Sir I see you have some Gold in your portfolio…Gold is not going to do well…s..blah…blah…blah…

MC: Please see properly I do not have any Gold in my portfolio…

RM : Sir this Goldman…

MC: Arre that is Goldman Sachs Nifty…..

RM: Sir Nifty is very high at 6200 – it is time to sell…

MC: But have you seen me ever sell?

RM: Exactly sir, you MUST SELL..I see you have bought the units at 5400, it is time to book profits…

What an amazing conversation! And so typical of a salesman.

The problem is MC is a very thoughtful long term investor with a small exposure to equity, but does not panic when the market goes down. Nor does he get excited when it goes up. He is a terrible client for the RM, and the RM keeps wondering how to make him trade!

Typical of a sales person to sell what they have. Exactly why? Hey their lives depend on that.

Recently met a lady who sells a lot of life insurance (apart from many other products) – and she was hard selling a short payment endowment plan. Obvious pitch?

Sir 9% return……

I said technically possible because of YOUR 40% commission (that number has not changed much especially in a 20 year product, no clue where the tweaking happens). She said of course possible..I have sold many products ….

So I said. Here I put in Rs. 5L as a premium, only Rs. 3L gets invested. She insisted that the commission was 15%. I said, fine, there are other costs….

So assuming 4L gets invested, the 10 year G sec is yielding about 8.5%, so assuming that you have a 2% Asset Management charge, at best you can give me about 6.5%.

She said: Yes sir.

So, I continued, In the second year assuming you get a 5% commission, only Rs. 95,000 gets invested. Now on this I get 8.5% – assuming interest rates do not fall. So again 6.5% FOR THE REST OF THE 18 YEARS.

Now from this you will deduct Mortality charges…

Yes sir…so my yield goes down even further, right?

By now she was panicking. She said ‘Sir Nobody has asked me such questions before, shall I get my Boss – the MANAGER at ……of india?

I said No girl, relax.

What I just did is a Reverse Engineering of the product, or breaking it threadbare to tell you why you cannot pay me 9% interest.

Most people will not do this. If you call 100 people 25 will give you an appointment. Our of that about 40% of the people will buy.

When you meet them tell them:

Sir this is a LIMITED PAY (only 5 years Sir!) and only Rs. 100,000 per year. On an investment of Rs. 5L (low voice) you will get Rs. 10 LAKHS (high voice) – and say ‘Sir it is GUARANTEED’

Client will ask “Is it a ULIP?”

As long as you say NO, THEY will buy it. Simple.

Sir my boss told me to tell all the clients ‘You will get 9% return’ – how is that true?

I said ‘No darling, that is not true. One way to make it true is to keep saying 9% – and it must be 9% of the Sum assured, and then, that number can be tweaked’.

Sir but the readers of your blog will not buy, correct?

No darling not true. Why do you think READING, and thinking are connected? Fallacy.

I know caustic mis sellers who sell this product while at the same time talking eloquently about mis-selling. It works.


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  1. My take away from today’s article –

    I know caustic mis sellers who sell this product while at the same time talking eloquently about mis-selling. It works.

    Really Mera Bharat Mahan. 🙂



  2. “Why do you think READING, and thinking are connected?”


    I keep ranting learning from your blog everywhere I go and just yesterday I met with my close friend who had baby recently and first thing he did is to buy LIC to secure baby’s future! I was speechless with face-palm.


  3. might not be 100% related, but wanted to share…

    got a call last week from an unknown number.
    ABC: Am I speaking to Mr XYZ?
    XYZ: Speaking
    ABC: Sir, I’m calling you about an issue with your credit card
    XYZ: Who is this?
    ABC: I’m ABC & I’m calling you about an issue with your credit card
    XYZ: I don’t have a credit card
    ABC: Oh! (a long pause)
    XYZ: Hello! (then realized that line is dead)

    I wonder what was the plan – but I do smell a rat. Perhaps a typical phishing exercise, but happened to me for the 1st time…

  4. @param

    I too used to get similar calls claiming I have an ICICI Credit card even though I never applied for one! 😮

    They wanted to sell me some ULIP claiming that my ICICI Credit card track record is good and that’s why they are offering me this SPECIAL plan with VERY GOOD (lol…) returns.

    Definitely it looks like a phishing exercise because 3-4 out of 10 people will have ICICI Credit card (no matter how’s their track record…LOL).

  5. Though it’s true that insurance or any other financial product is sold using the technique narrated above, I feel all the blame should be castigated on the Agents. These are unemployed youth, needy women, part time workers to earn some extra money and they are given very little information about the financial products in general and asked to say certain things only to the prospects like the medical representative. There is another category who know everything but wilfully want to canvass the business. This is so called professional/highly prouductive/laptop, tie and glossy presentations flashing agents. There are bankers etc. etc. The policies of the manufacturers of the financial products, regulations regarding distribution of these products and absolute absence of identifying and incentivising the genuine distributors is the crux of the problem. It is correct and welcome on your part to educate your readers and public in general but for this mess in the market only the agents should not be held responsible.

  6. @DB DESAI

    Agree with your point that these Agents are job needy people. But what they do is not only unethical but also disastrous to the financial life of the people whom they sale. Why ruin anybody’s financial life for few quick (sometimes extra) bucks? There are other jobs too.

    And yes, all the blame should not be castigated to agents but also the lobby who designs such plans. But it’s agents who give final push to such schemes.

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