POSTED BY July 27, 2011 1:34 am COMMENTS (4)ON
Following story about mis-selling appeared in Personal FN weekly newsletter, sister concern of Equitymaster:
The other day, I walked into IEGD Bank (name changed) to get an account statement. As I was waiting my turn, an employee walks up to me and starts chatting with me about my investments. It was a friendly chat, it seemed like this employee was on the sales team but was genuinely looking to provide me with only something that I might require.
I am a financial advisor myself, but didn’t mention this to the salesperson, out of curiosity to see what they might try to sell me.
The conversation was very simple, with questions such as ‘Do you invest in equity?’, ‘Do you have any long term investments for your children?’ and ‘Are you adequately insured?’ From the tone of the questions it was obvious what the salesperson was leading up to.
Then came the inevitable sales pitch:
‘Madam, we have a product that is ideal for you. It is a short term investment plan where you will also get life insurance cover. All you have to do is invest 1 lakh for 3 years, and after 10-15 years your money will have given excellent returns.’
‘This sounds like a ULIP – is it?’
‘Ma’am, it is a short term investment plan that also has life cover’.
Notice how my direct question was answered with an incorrect and indirect response.
The honest answer would have been ‘Yes ma’am, it is a ULIP, and it is not a short term product, but a very long term product with high charges’.
But with all the heat on ULIPs these days, advisors have been told not to use the foul four letter word, and to call it an Investment Plan instead. Short term, at that.
I indicated that I wasn’t interested and stood up to leave. That’s when the advisor pulled out the last and most desperate tool in his belt. ‘This product is managed personally by Mr. Xyz Abc! It is an excellent product ma’am!’
The person that the advisor named is in fact the Chairman of a well known housing finance company, a sister concern of the bank in question. He certainly does not manage ULIP portfolios and I wonder how he would react, knowing that his name was being used this way.
I was amazed and disgusted. Sometimes people really say anything, with no qualms, to cheat you out of your money.’
I invite forum members views on such a blatant lie and mis-selling from a reputed bank. simply i can say BEWARE and “Your best defence is educate yourself”