I had a very interesting call from a tele-caller recently. The conversation went like this:
He asked me, “Sir, do you trade in stocks?”
I replied, “No, I do not trade in stocks.”
He asked, “Will you be interested?”
I replied, “No, I do not trade in stocks.” (On both occasions, I had emphasized on the word “trade”.)
The guy was not one to take the clue. He, however, was also not one to give up. Since he understood my answers as someone who may not like stocks, he probably assumed I was risk-averse. So, he followed up with another question.
He asked, “Sir, we also are in insurance sector. Do you invest in insurance?”
I coolly replied, “I do not invest in insurance.”
I understood that he has not got the message. So I repeated, “I do not trade in stocks and do not invest in insurance.”
Incidentally, he still did not get the message.
It is important for most to know what to do with what products or services. In both the above cases, I do use the products offered, but for completely different reasons. I invest in stocks and buy insurance as protection against certain risks.
Unfortunately, most of the sellers – they come in various different names – tele-callers, relationship managers, advisors, distributors – do not do justice to their duty, which is to help customers satisfy their needs. In stead, in most cases, these sellers work to satisfy their own needs.
Investing in stocks is a good idea as it can help an investor create wealth for oneself. But trading in stocks is hazardous for a novice, a common person, a layperson. But it can make lots of money for the broker.
Same is the case with investment products from insurance companies. In most cases, when an insurance product is pushed by a seller, it invariably serves the needs of the seller (who gets high commissions) and not the buyer (who gets inappropriate / lousy product).
It is important for a buyer to know what one is getting into. The words “caveat emptor” (meaning “buyer-beware”) should be remembered at all times. In both the cases, I could have shown interest in the proposition had the seller told me the benefits that I was looking for. Serving the customer needs should be the main motto of the organizations. Many chief executives claim to have “customer first” as their primary objective or core philosophy. But the behaviour of the people on the front lines is exactly opposite. To a great extent the fault lies with the training, orientation and incentivisation of the sales teams.
This means that when someone mentions that they only do “need-based” selling; it is a good idea to ask “whose need?”
“Buyer-beware” is always a good idea. If I am signing the cheque and the application form, I must take the responsibility of my decision and action. It doesn’t help to pass on the blame on someone else, be it the advisor in-between, the service (or product) provider or the regulator. The loss or pain will not be shared by anyone. In that case, it would help to be careful.
This does not suggest that all the sellers are bad. I cannot generalize like this. I have been a salesperson all my life. It would be unfair for me to say that ‘sales’ is always a bad and unethical job, but there are always some bad sheep in the flock. The buyer has the responsibility to safeguard one’s own interests.
Happy investing and insuring!