A few days ago I did a post saying types of clients / Ifa…..continuing that.

Type 3 of clients:

They visit an IFA ask for details. Very intelligently they collect all that they think they should know. Then they go and do it by themselves.

Great. So it goes like this:

Should I invest in equities or in debt schemes?

IFA: equity of course, you have a lot of money in debt instruments already.

Potential client: hmmm

IFA: given your risk profile you need to have much more in equity than you currently have.

PC: but equity is volatile, is it not?

IFA: yes sir/ madam but you are only 33 years of age and you have another 30 years to invest, so equity makes sense.

PC: but if I invest with you how much will u charge me as a fee?

IFa: sir I will charge you Rs. 10,000 and I will want you to invest through me.

Oh.

then the client vanishes. Completely.

Then one day client surfaces with a sheepish grin. Hey he has saved Rs. 10,000 is it not?

Ifa: so you did not invest at all?

non client: of course i did. I invested in an equity fund, one debt fund, 3 balanced funds and one pension plan from a life insurance company.

Ifa; wow that is fantastic. How much did you invest?

non client: about Rs. 35 lakhs.

Ifa: but I had told you that if you invest more than Rs. 10L i will not charge you the Rs. 10k fees…

non client: yes but the bank also did not charge me any fees.

Ifa: Which insurance policy did you buy?

non client: I bought a term insurance policy – and this is better …I even get back the premium that I paid.

Ifa: That is excellent, which company did you buy it from?

non client: I bought it from LIC, because they have the best claim settlement ratio.

Ifa: I think this is brilliant, you choose the mutual funds, bought it direct (without my help), bought term insurance (directly with the banks help), you have really saved Rs. 10,000 of fees. Congrats.

 

 

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  1. So finally did the non-client buy a pension plan or a “term plan with money back”? Is this a true story?

    I understand the sarcasm all over the story though… Humans, basically are very poor at judging their loss/expense unless it is explicit. An explicit payment of Rs. 10,000/- was unbearable to the non-client, but an implicit loss of atleast ten times as much, accompanied with his foolish actions was taken in stride!

  2. last few blog posts have been really cribbing about not getting any $ for “expert advice”

    ifa could have simply resorted to a 2-letter reply that starts with N and ends with O or a 5-letter reply that starts with S and ends with Y

  3. LuckyOye I would not know I heard this rant from an IFA whom I met while training. I have seen an IFA make a client LOSE Rs. 300,000 because the client did not listen to him. This was spotted by another IFA 🙂 It is funny when the money involved is not yours.
    I have no clue about what happened in the end…I guess he did buy the ROP policy.

    moronbuffet – hang over of an IFA class training perhaps. I over identify with my students…

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