Comments on Shyam's Column: Know your financial advisor’s incentives

All IFA will leave this profession & mutual fund w...

2009-08-05T00:07:13.217+05:30

All IFA will leave this profession & mutual fund will be a property of corporate very soon & later general public will also rapidly forget about mutual fund.Just like no seller no buyer.Big big distribution houses have no accessibility in tier-2,3,4 town.But they(towns)are the real treasure.What a joke!!! every body thinking this is America. And a pavement dwellers also knows what is mutual fund.So we don't need a middleman.We don't need a Maruti dealer.From tomorrow we shall buy our Maruti cars directly from Maruti Company.

it is just sperb unlocking the forgotten truth ...

2009-07-18T00:01:27.290+05:30

it is just sperb

unlocking the forgotten truth

" bap bada na bhaiya the whole thing is that ki sabse bada rupiya'

On the removal of MF entry fee: We cannot overlook...

2009-07-17T19:28:57.224+05:30

On the removal of MF entry fee: We cannot overlook the fundamentals of this ruling or cost structure that is prevalent.

Certainly, the removal of entry load of 2.25% will help bring down the perceived upfront commission down. There is surely an advantage and benefits to the consumers.

One needs to look at the full cycle (not the upfront entry fee removal alone). And from that perspective, I do not see a huge change that is being made out of it. It is an improvement, but not the significant one.

Regarding 1% exit load: The primary purpose of exit loads is to discourage investors to remove money from funds in short term. So far, majority of the funds had this only for 1 year of less. But now SEBI has knowingly allowed the MFs to levy upto 1% exit load (irrespective of time frame). This is kind of giving free hand of MF to go ahead and do it. The SEBI guideline also instructors agents/distributors to disclose commission they receive from funds (i.e. mutual funds can still pay commission to agents/distributors). Will this come from mutual funds own pocket? How can one stop mutual funds from increasing their operating expenses and charge it under some different heading? I posted my thoughts at http://www.tipblog.in/opinion/no-entry-free-for-indian-mutual-funds-really/

Only time will tell how it evolves.

Great perspective on conflict of interest. I couldn’t agree more with you.

Manish - thanks for the link on your site. very cl...

2009-07-01T01:22:19.255+05:30

Manish - thanks for the link on your site. very clear write up about CFP. regards to IRDA rules... my opinion - they need to get better on ULIPs . and of course no rule is enough if they are not adopted in "spirit"

Vardhan - nothing like first hand experience! CNBC - frankly...i dont even want to think abt what their incentives could be:) whatever it is their adrenaline pumping race track-like commentary definetly seems to be gaining viewership... anyways i dont think the channel per se offers advice...they only provide a forum for other quote experts unquote.

K.R.Srivarahan - Excellent article...thanks for posting the link. I think the whole world needs such a reform.

Anonymous - sorry don't have a referral for Delhi

Ravi Sankara Prasad - good point on low investment returns on insurance products...this is so common but very few comprehend. A simple index stock like oNGC would have offered twice the returns p.a. over a 10 yr period + divindends on top of that

Anonymous - good one abt doctors not being free from the influence of incentives themselves. that's really sad.

Yamini - thanks

Hello Shyam i read papers not regularly but the on...

2009-06-29T11:12:46.968+05:30

Hello Shyam
i read papers not regularly but the one which i got to read this time was very informative with respect to making safe financial investments.

Dear Mr. Shyam, While your example of doctors doe...

2009-06-28T16:50:10.253+05:30

Dear Mr. Shyam,

While your example of doctors does drive home the point for having independent financial advisors, I am afraid your are off target on doctors being independent in their recommendations.

Unfortunately, most doctors are being compensated for the products / services they recommend. While healthcare companies have code of conduct policies for their dealings with doctors, these remain as mere pieces of paper and companies / their channel partners actively woo doctors with incentives.

While these comments have no relevance to your column I could not help expressing myself on these unfortunate facts.

I continue to be an avid reader of your column and look forward to the next edition

I read your article in hindu with interest. I used...

2009-06-28T12:30:49.320+05:30

I read your article in hindu with interest.
I used to think that this trend has been there from the 70's & 80's itself. However with the HNI increasing the so called Financial consultants have also mushroomed & keep recommending investments which is to their advantage. It must be an eyeopener to the all investors esp. the youth to carefully excercise discretion in advised investments.

Another area I feel worth analysis is the returns on 'investments' in Life Insurance. The youth are misled by 'insurance advisors' /'agents' to insure huge sums of money which after 20-25 years yeild as little as 6%!
Ravi sankara prasad

sir hi again from delhi...... could you plz sug...

2009-06-27T16:38:28.808+05:30

sir

hi again from delhi......

could you plz suggest me that in delhi where i get A RIGHT FINANCIAL ADVISOR regarding investments in shares/funds for lonterm as well as short term????

i will be very greatful to u?????

Financial Services Authority (FSA), UK has now pro...

2009-06-26T11:46:40.942+05:30

Financial Services Authority (FSA), UK has now proposed a ban on commission payment to financial advisors. Here is the link to the news item:

http://www.independent.co.uk/news/business/news/fsa-seeks-ban-on-commission-for-financial-advisers-1719959.html

Hi Shyam, your post makes a perfect sense about wh...

2009-06-26T07:24:27.666+05:30

Hi Shyam, your post makes a perfect sense about who actually benefits from the transaction. I had my self sold couple of ULIPs during an internship, where my manager used to brainwash us to sell the plan that gives a more cut and used to advice on the ways to sell it. I was given title as "Financial Advisor" and I myself had not planned my finance then. ULIPs as you said need more regulations.

I have one doubt that how truthful the buy/sell advices given by News Channels and Web sites. I am sure they would not be getting any benefit if I buy/sell a particular stock (after watching CNBC/seeing ICICI market research). so precisely I see no bad intentions in those advices unless they can trigger a mass buy/sell based on their advice and get profited by that.

Also the analogy of patient going to doctor and ag...

2009-06-25T23:36:44.423+05:30

Also the analogy of patient going to doctor and agents is excellent , deserves a tweet and backlink from my blog .. keep it up :)

Manish

Great one Shyam Other issue with Personal financ...

2009-06-25T23:35:19.965+05:30

Great one Shyam

Other issue with Personal finance system in India is people do not understand if they really need a Financial Planner (i am talking about CFP here) . Most of the people get some knowledge from internet and magazines and think they can do all financial plannning themselves . Recently I came up with an article on "Why do you need a Financial Planner" on my blog . May be it can be shared with readers as its related to this post . link is : http://www.jagoinvestor.com/2009/06/why-do-you-need-financial-planner.html

Another thing i wanted to ask was, accoring to IRDA rules , mutual funds agents have to disclose the commissions they get from mutual funds , I was under the impression that same rule applies with ULIP's agents .

Can you clear things here ?

Manish
http://www.jagoinvestor.com