I am planning to do a series of articles on how clients get ripped off, this is the first part.

The manufacturer – distributor – client is a very funny relationship. It is a tussle where everyone wants to win (as usual) and who ultimately wins is difficult to know except over a long period of time. A high asset management charge looks like a victory for the manufacturer but if there is good fund management skills, the client is not at too much of a loss.

Today let me concentrate on education. I meet many 23-28 year old men and women who are extremely disoriented towards their education and their careers. Those who have done a D-grade MBA (A, B, C are already absorbed by the financial services industry ranging from J P Morgan, Citi at the top end to xyz at the bottom end!) wonder whether they should have spent their parents hard earned Rs. 10 lakhs on this degree.

Then there are those who have done their graduation and taken up a Rs. 10,000 p.m. job. There are typically two factors which drive them (like all of us) – Fear (if  I do not do some MBA program I will never get promoted) and Greed (my salary will go up from Rs. 1,20,000 to Rs. 400,000). So they join a part-time MBA program (it is cheaper also you see) from a D, E or F grade college. This costs anything from Rs. 1 lakh to Rs. 3 lakhs.

What happens to those kids who cannot afford Rs. 200,000 for a part time course? Well the correspondence alternative is ONLY Rs. 25,000. Not bad is it not? So one more avenue has been opened up.

Cannot afford this also?

No problem, you can do a  Certificate course. This prepares you for a career in financial planning, insurance selling, mutual funds, nursing, interior decoration, etc. So after a basic degree, then a part-time MBA (and a huge feeling of insecurity) you join the Certificate course!. In its full form it costs Rs. 50,000 (assuming you do not buy through discounted scheme). However various combinations of buying is possible – like registering with the board and paying fees for the exam but buying the study material online (cost comes to about Rs. 11,000), ..and then an annual fee (indexed to inflation I guess) of Rs. 5000.

All these products are available on the net. No salesman ever called on them (perhaps been bombarded on email and phone but not physically pushed!).

What created the sale? an Unscrupulous (life insurance!!) salesman? No. An unscrupulous relationship manager from a bank? No. No. NO. NO.

Just fear and greed. And the (everybody knows it) knowledge that 8% growth will create jobs – one bank branch means 8-10 MBAs to sell something or the other.

So stop blaming the agent. Just people’ s greed, fear and lack of knowledge (what course to do and why) and parents insecurity (everybody HAS to do an MBA, do you not know?), …and this feeds 10,000 MBA colleges. Long live the customer.