You'd be excused for thinking mutual fund mis-selling happens only India and not in the US and UK because they are developing countries. But you'd be WRONG!
It's the same everywhere. AMCs handsomely compensate distributors to hawk funds.
thetimes.co.uk/article/advice…
It's the same everywhere. AMCs handsomely compensate distributors to hawk funds.
thetimes.co.uk/article/advice…
Foreign trips. Expensive gifts are the norm. I can't even count the amount of money that is paid by AMCs to distributors in the name of "Investor Education. SEBI said you can't do this. So now AMCs pay them as" marketing expenses".
So if an AMC pays a distributor for shoving funds down an investor's small intestine, he gets an all expense paid trip to Thailand and a relaxing Thai massage. This is also, in the industry parlance know as "investor education"
The incentives here are fundamentally misaligned. What's good for the investor isn't for the AMC and vice versa. Index funds = good for the investor but bad for the AMCs bottom line. Same with ETFs as well.
But on the other hand, financial products are always sold and not bought. If there is no hard sell the industry won't expand. Expanding mutual fund penetration isn't possible without mis-selling.
The only way financial inclusion can be achieved is through mis-selling. Not the rampant kind but the subtle "sell some greed but not overtly" kind. Why do you think insurance products are so popular? Incentives and rampant mis-selling.
If mutual funds are mis-sold like insurance, I'm pretty sure the AUM can grow to 100 lakh crores in no time. But people are kidding themselves and bushitting you if they say this can be done while simultaneously protecting investors interests. It ain't possible , honey
Financial inclusion and protection of investor interests are mutually exclusive! Polar opposites, in fact. Both aren't possible!
Coming back to the Thai massage. Today if you are paying ~1% extra, you are most likely sponsoring Thai massages of your distributor. Very few distributors do advice! Everything else is product pushing.
Unless you figure out what you are paying for, you always be a schmuck and the AMCs and product pushers will pillage you and plunder you and denude you
Wake up and smell the bullshit sprinkled with rose water and confetti.
Wake up and smell the bullshit sprinkled with rose water and confetti.
Oh and good morning!
