There are many lies that we love to tell you. When I saw we I mean the bfsi players, their employees, the agents, and of course our ‘associations’ and our ‘regulators’. Let me break a few for you:

  1. Go to a Registered Agent only:

This is an advice that all of us love giving. However, do remember it does not mean he will NOT cheat you. He can put his interest ahead of yours, sell you inappropriate products, tell you falsehoods, make misleading statements. However, it protects you in case of fraud, cheating by taking the chek in his name, etc. Be careful going to a registered agent is nice, but is not SUFFICIENT.

2. Find out if the products being offered to you are appropriate for you:

Sadly there is no service by any 3rd party to tell you one simple answer: “this product is toxic, do not touch”. I do say that on my blog but I find friends who do things and then tell me “I did not ask you because I was sure you would say no”. A friend recently lost a few million in FnO. From where people get such confidence I do not know. Sadly there is nothing to prevent a salesman putting his interest before yours.

3. Understand how you will pay for the services and how else (if at all) the agent is being compensated

In my mind either you know it or you do not know it. There is no way how a dishonest IFA cannot hide the real compensation from you. So if you trust your IFA you can believe what he/she says. If you do not trust, there is no point in even asking. The industry is still wondering what to call an agent, a broker, a consultant, an adviser – largely all these are covered in the Christian name of ‘agent’. Agent as in the Contract Act! So the agent is compensated by the principal.

4. Ask the IFA about his professional experience and other credentials

Well there is an alphabet soup of ‘degrees’ that financial salesmen flaunt – Consultant, Certified consultant, Certified advisor, ..BE, MBA, ACA, ICWA, CFA, CFP, ….GO search. I do not think the degree matters. Now does experience matter? Again there is a problem – an LIC agent with 30 years experience cannot see beyond LIC. You need some body well educated, having a good knowledge of the banking and finance space, risk, excel, markets, personal finance, etc. Not easy to search and find such a person.

5. Ask the IFA if he has had any brush with the regulator

And then hope that he tells you the truth. Well, I know one child molester (in the US) who came to India and works in an American firm. Imagine nobody ran his profile by the child abusers web page — it appears there very much. However, he has lost 20kg, changed the hair style,  – and now many people cannot recognise him. Those who do are told “a few friends did it”. Well to hear the truth about a cheat is tough man!

well there are more…but for the day..this is all…



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