When you want to invest money, or even when you do not want to invest money it is your banker who knows about it.
Right? In most cases yes.
So you go to a bank and are wondering what to do…and there appears a Relationship manager. He comes and tells you the following:
It is convenient to invest through a bank (true, but convenience comes at a price)
We will do all the documentation, your KYC (know your customer forms), ulip forms, etc.
(this continues your amazing financial illiteracy longer)
We will give you a full range of products (income fund yielding 9% p.a. and a car loan where we charge you 14% – amazing range of products)
We think you should not have so much in savings account and fixed deposits but have it in a mutual fund (you think they are doing all this in YOUR interest, after all which bank does not like CASA?)
All this is told to you in the nice environment of a bank.
Ha have you heard of the word ‘uberrimae fidei’ – do you know what it means?
Here – this is what it means:
A legal agreement requiring the highest standard good faith. “Uberrimae fidei” or “uberrima fides” is Latin for “utmost good faith.” Insurance contracts are the most common type of uberrimae fidei contract.
Why only Insurance contract? so that the insurance company can reject your claim saying ‘Your husband did not disclose the diabetes that he had’.
Sadly however in a banking transaction there is no uberrimae fidei – the banker NEED NOT TELL YOU THE TRUTH. This is sad because we belong to a generation that BELIEVED(S) THE BANKER. We thought a banker will not cheat – ask your parent if you want. Most of us believed that when a banker offered a product it was capital guaranteed. Right? hmm
So here you are scared of investing, scarred by a family friend or own parent’s investing mistakes. You think your RM has your interest at heart (cannot blame you we are all created to trust our service providers unless proven other wise – my fruit vendor has NEVER cheated me in so many years – I just tell him ‘achha nahi tha, and he gives me a free replacement, no questions asked), You believe since you do not lie, he will also not lie.
So you see – the trap is very well set. Sadly we all walk into it.
When the returns do not come, you start panicking…and there is NOTHING that you can do. Sad. You are reminded of another Latin word : Caveat Emptor in banks.
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