How to optimise on help from financial agents
Agents who sell financial products are often criticised for wrongdoings. But they can be of immense help. We tell you how to make the best use of their services.
You can hate them or love them but cannot ignore them. You may have heard numerous stories of financial advisors cheating people by recommending products that pay high commissions and duping them of their money. But you still end up dealing with them for the sheer convenience, the ease with which you can call them any time during day or night for advice or help in documentation.
"In India, investors still prefer personal interface while buying financial products such as insurance. Often, they are unaware of the nuances of financial products. The advisor explains the products and the terms and conditions in a manner they can understand," says Madhivanan Balkrishnan, executive director, ICICI Prudential Life Insurance.
Experts say one must exercise caution while choosing one's agent. But how can one know whether the agent one is dealing with is reliable?
"If the agent is from your social network, the tendency to rely on him is high," says Suresh Agarwal, executive vice president at Kotak Life Insurance. An agent who has spent several years selling financial products and made a profession out of it will serve you better, say experts.
In today's competitive world, selling a product is not easy. To sell you a product, an agent has to spend a lot of time, and despite all his efforts, the deal may not happen. Unlike banks, agents do not have access to a large database of customers.
So, an agent who has spent several years in the business will not want to lose customers and will try to provide good service. "For an agent, acquiring a customer is critical," says Vijay Mantri, chief executive officer, Pramerica Asset Management Company. He will try to build a long-term relationship and be wary of losing even a single customer, he says.
"Agents are the best way to reach out to retail investors. They are spread across the country, sometimes in places where big players find it difficult to reach," says Hintungshu Debnath, head, sales and marketing, Tata Asset Management Company.
In today's fast-changing world, the needs of customers keep evolving.
SPECIAL: Why financial planning is important
"A customer may have different needs at different points in time. An agent has the flexibility to serve them," says Pramerica's Mantri. A customer may want to redeem his investment or switch/buy another product or policy. All these need documentation, which an agent is well-equipped to do. He even fills up forms to avoid errors that may delay the process.
The agent may help you file claims as well. "Agents facilitate claim settlement in the event of the demise of the policyholder. In such cases, he hand-holds the policyholder's family during its hour of need and provides help," says ICICI Prudential Life's Balkrishnan.
Also, in mutual funds, competent advisors keep themselves updated on various products in the market and the performance of various companies and can be a one-stop guide for meeting your financial goals.
While nobody becomes an agent to do charity, some do advise you without charging anything. "Financial literacy is limited in India, even in cities. People do not like to discuss money matters with strangers. Nor do they want to incur the cost of taking the service of a financial advisor. Here, agents play a crucial role and guide investors on various products," says Prabhash Chandra, national sales head, Escorts Asset Management Company.
You can also take help from your agent for services such as getting your residential address changed in companies' records, redemption of mutual fund units, purchase of more units, nomination, change in bank details and getting an account statement.
"We assess a person's risk profile and offer several financial and non-financial services without charging a single paisa. We do not get any commission for helping clients make changes in nominations, bank account details, and so on. We do this to build trust," says Narendra Baliga, an independent financial advisor who distributes mutual fund products to retail investors.
Mis-selling and Churning
Agents are often accused of mis-selling. However, this is not limited to agents, as even bank representatives can mis-sell products, say experts. The most common charge against mutual fund advisers is churning, a practice in which an agent tells his client to sell the existing product and buy another to gain an upfront commission from the transaction.
"If I advise my clients to churn portfolio and he finds out that I am misguiding him, I will lose that client as well as run the risk of losing other clients referred by him. I may lose on future referrals as well. I will not want to take such a risk," says Baliga, who distributes mutual fund products.
"In India, investors still prefer personal interface while buying financial products such as insurance. Often, they are unaware of the nuances of financial products. The advisor explains the products and the terms and conditions in a manner they can understand," says Madhivanan Balkrishnan, executive director, ICICI Prudential Life Insurance.
Experts say one must exercise caution while choosing one's agent. But how can one know whether the agent one is dealing with is reliable?
What They Offer
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In today's competitive world, selling a product is not easy. To sell you a product, an agent has to spend a lot of time, and despite all his efforts, the deal may not happen. Unlike banks, agents do not have access to a large database of customers.
So, an agent who has spent several years in the business will not want to lose customers and will try to provide good service. "For an agent, acquiring a customer is critical," says Vijay Mantri, chief executive officer, Pramerica Asset Management Company. He will try to build a long-term relationship and be wary of losing even a single customer, he says.
"Agents are the best way to reach out to retail investors. They are spread across the country, sometimes in places where big players find it difficult to reach," says Hintungshu Debnath, head, sales and marketing, Tata Asset Management Company.
In today's fast-changing world, the needs of customers keep evolving.
SPECIAL: Why financial planning is important
"A customer may have different needs at different points in time. An agent has the flexibility to serve them," says Pramerica's Mantri. A customer may want to redeem his investment or switch/buy another product or policy. All these need documentation, which an agent is well-equipped to do. He even fills up forms to avoid errors that may delay the process.
The agent may help you file claims as well. "Agents facilitate claim settlement in the event of the demise of the policyholder. In such cases, he hand-holds the policyholder's family during its hour of need and provides help," says ICICI Prudential Life's Balkrishnan.
Also, in mutual funds, competent advisors keep themselves updated on various products in the market and the performance of various companies and can be a one-stop guide for meeting your financial goals.
"People do not like to discuss money matters with strangers. Nor do they want to pay a financial advisor. So, agents play a crucial role." Prabhash Chandra National Sales Head, Escorts Asset Management Company |
You can also take help from your agent for services such as getting your residential address changed in companies' records, redemption of mutual fund units, purchase of more units, nomination, change in bank details and getting an account statement.
"We assess a person's risk profile and offer several financial and non-financial services without charging a single paisa. We do not get any commission for helping clients make changes in nominations, bank account details, and so on. We do this to build trust," says Narendra Baliga, an independent financial advisor who distributes mutual fund products to retail investors.
Mis-selling and Churning
Agents are often accused of mis-selling. However, this is not limited to agents, as even bank representatives can mis-sell products, say experts. The most common charge against mutual fund advisers is churning, a practice in which an agent tells his client to sell the existing product and buy another to gain an upfront commission from the transaction.
"If I advise my clients to churn portfolio and he finds out that I am misguiding him, I will lose that client as well as run the risk of losing other clients referred by him. I may lose on future referrals as well. I will not want to take such a risk," says Baliga, who distributes mutual fund products.
