Let us compare a part of the BFSI and the Medical Industry…they are comparable in some ways and not comparable in some ways.

The Medical industry is driven by the patient who decides. So let us say a person has a slight stomach ache. He ignores it for a day or two. Then if the pain is unbearable he goes to a chemist (not very qualified, but could be experienced) and asks him ‘do you have a tablet for stomach ache?’ and there pops out a medicine. Now if it gets worse..he goes to a doctor. If the doctor does not understand he refers him to a specialist. And the doctor could a) prescribe him a medicine and EVEN SAY from which shop to buy or b) give him a medicine – and the client will not even know what the medicine is.

Now imagine a Mutual fund. NO investor or a potential investor has ANY PAIN of not investing. Yes ocassionally he hears about somebody getting good returns…but really, no pressing pain or the need to invest. The Potential Investor can a) visit some blogs and learn on his own b) go to an agent and ask for money to be invested. However if he has made a mistake or if his agent has made a mistake he may not know for a very long time. End of story.

Now see the Regulations. In the Medical Profession.

There is no law that a person has to go to a doctor AT ALL.

There is no law that the Chemist cannot suggest a cure (it is up to the client to decide)

There is no law that the doctor has to ONLY prescribe a medicine. He can treat with own medicine, diet and life style changes.

There is no fees prescribed.

The doctor can prescribe any combination of medicine, by any manufacturer, and there are no price restrictions..

There is no method of monitoring if the doctors get any benefit for prescribing any medicine.

Now look at the situation in the Life Insurance Industry: 

The salesman comes to your house and sells you a life insurance. You have no ability to understand what you need so he sells you a product which he loves to sell. The product that he tries to sell to you is a brilliant product:

a) it makes money for the agent

b) the product makes money for the manufacturer

c) puts a lot of money in the hands of the manufacturer so that the manufacturer can buy all government bonds, equities, etc.

d) the manufacturer has a brilliantly opaque balance sheet and a LOT OF SHIT can be hidden in that so that the countries problems can be hidden under the carpet for 30 years.

e) the owner of the product recently got a product in which he got 3% cagr over a 10 year period. You would have got that in a savings bank account. Kudos.

Now look at the situation in the Mutual fund industry

There cannot be a salesman at all! When the potential investor decides to invest…he will go to the nearest shop…oops aka the distributor..or whatever he is likely to be called..and ask him ‘where to invest’. The shop keeper will say “sir this is a difficult product to understand so please to to some nice well qualified man/woman sitting in a nice airconditioned office and who will

a) do a detailed needs analysis (which we are incompetent to do)

b) prescribe which mutual funds to invest in

c) he is not supposed to do that…but his wife could be a distributor (arms length) so I may lose the business

d) the person doing the analysis can only prescribe the medicine (yes prescriptions will be tracked by the software)…

I hope I have confused you enough about medicine, bfsi, etc….

Its time we got some sensible regulations please.



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