Who will stop the mis-selling ?
Majority of us have
experienced mis-selling at least once in our lifetime. Whether you admit or
not but it is true. It is surprising fact that not only illiterate but also
well educated people also victim of this trend. Now the question arises that
how we can stop it. Before find the measure to check mis-selling, first we
should find the reason behind this problem.
Who is responsible for
mis-selling? Majority of people’s opinion believe that agent and financial institution
like bank, insurance companies are responsible for this. The market regulator
is also very serious about this and many steps has been already taken like ban
on entry load in mutual fund, distinction between advisor and distribution, emphasis
on honest and ethics based advice. Many financial forum advocate for ethics
based advice. There are so many online websites are available regarding
financial planning, investment product but still the problem is exist.
It is very unfortunate
situation that the investor does not spent much time to get right advice and
easily trap in false unrealistic false return promises. Investor should also
alert before investing in any investment product regardless investment amount.
After all, every penny comes from your hard work. I urge to all investor that
they should be vigilant before any investment. It is wrong to accuse only one
side for particular problem. Market regulator is doing well to regulate the
financial institution and distributor agent but a lot of work still has not
done.
During my meeting with
investor, I have clearly observed that they do not give much importance to make
financial plan. They easily rely on their bank relationship manager, agent or
their close relative for the investment. After doing useless and wrong
investment they only repent and accused to financial institution and
distributor. I mean before taking any purchase decision like booking holiday
package, purchase clothes, electronic products, you spend so much time for
product details. But, when we invest in any financial product we sign the forms
with close eye and even not read the prospectus. In more than 90% cases we trust
on our agents or relative. You should keep in mind that these people or
institutions prefer sell high commission products. They also have their sales
target and search like you people to achieve their target. Due to this
mis-selling your dreams and financial commitments remain incomplete. I wonder,
when I ask about insurance sum assured to the clients around 90% of them had no
idea about sum assured amount after taking insurance policy.
After reading the above
paragraph, you would think that I am only talking about problem where is the
solution? According to me, If you remember and follow some points during
investment then there would be no chance to be victim of mis-selling.
· First, do your own research
or homework before meeting any agent or adviser.
·
List your doubt and ask
them to your agent or adviser during meet.
·
Check the agent’s background
like experience, qualification, business card proof and knowledge.
·
Be clear about your short
term, medium term or long term financial goal and examine your risk appetite.
·
Discuss about proper
asset allocation with your financial adviser.
· Don’t rely on only one
agent or friend, keep updated yourself about financial world.
·
Before investing in any
product be clear about your investment period and product risk.
·
It would be better if you
prepare financial plan with the help of qualified certified financial planner.
·
Always read offer
documents and fill the form yourself.
· After making the
investment, keep your certificate or statement carefully and read properly.
For more detail about any other query related investment,
you can contact me through my email.
Regards,
Arvind Trivedi
Certified Financial Planner
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