The investment advice given by bank salespersons is like standup comedy

Dhirendra Kumar of Valueresearch does not mince words here:

To begin with, please watch this YouTube video of a standup comedy performance. Listen closely to the part where the comic narrates how, in his pre-comic life, he was working with a bank. ‘I used to work in bank as an investment consultant. I used to tell jokes only, but nobody knew. Even I didn’t know that these were jokes. My bank told me, you go to really rich people… and tell them, sir, you earned all this money. Well done. But you don’t know how to manage it. I, on the other hand…’ But let me not spoil it for you. Find the video at the end of this article.

It’s funny, as good standup comedy should be. Except that if you happen to have had an experience similar to Mr Anand’s ex-clients, then it’s really not funny at all. One of the reasons is that in the comedy routine, the client is framed as a very rich man and the investment advisor as a bumbling idiot. That’s good for some laughs, but obviously very far from reality. From what I’ve observed, banks’ investment consultants tend to target those who are least likely to summon up the knowledge and the resources to figure out what’s being done to them and then complain about it.


We have all kinds of rules for financial intermediaries and yet financial advisors always act in their own interest. Whether it is insurance or mutual funds or stocks, behaviour is always guided by the incentives that exist for the salesperson. There’s a huge pile of regulations in every area, and yet, none of it is effective in preventing bad advice.

The reason is simple–there is not a single financial product where the interest of the salesperson is aligned to that of the saver/investor. Take any example. The seller (organisation and person) benefits from the sale itself, while the saver-investor benefits if the choice of financial product turns out to be correct, which happens over years. As the comic in the video above confesses, by the time the customer figures out what happened to the money, the salesperson is with some other bank. As long as we have a system where the seller can make the sale and take the commission, nothing is going to change.

With regulators not really caring, it is all upto investors to figure what is happening.

Why is financial industry like this? Why is to easier to fool people in financial world than the real world (barring housing may be)? People seem to be doing more homework and are comfortable buying real goods than financial ones. This is ironical itself as a bad real good can be discarded but a bad financial product leads to loss in the very savings which helps buy the real goods! The financial industry on the other hand exploits this ignorance and indifference really well..


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