When my HNI friends and super HNI friends are bulldozed by their RMs from banks that do not let them sleep..I need to tell them the following:

• Sebi regulates fees for mutual funds – and is very investor friendly
• Irda regulates fees for ULIP – and the product is very unnecessary

so banks do not like to sell straight forward products with regulated fees. What do they do?

either they create ‘wrap products’ or ‘structured products’ – here the client understands the 10 great features and the 2 risk factors.

What is hidden beautifully is the ‘risk factors’ which are sold as enablers. The clincher of course is the dinner in a 5* hotel and the pressure of ‘It is closing today’ and ‘Sir you are now a HNI, and you should not be doing a SIP – that is for your driver’ kinda pitch.

Sale to ego and pride works. Almost always.

So they come with a product with a upfront fee (banned by sebi for mutual funds), a management fee (Sebi restricts this for mutual funds), with a lock in (Sebi does not allow a lock in, and it regulates exit load),

So a product with a higher minimum (sir you are a HNI so this product is for Rs. 40L) and not some sip with a minimum of Rs. 500.

With a lock in (sir we are going to invest in start ups too, so we need time) of say 8 years (so they make a 2.5% p.a. IMMATERIAL of what you make).

With a higher management fee (sir it is only 2.8% p.a. bu we are waiving 0.3% for you as you are our Platinum customer

and you do not get very good returns (obviously like in Gambling the House makes more money than the players)…

read on…

http://www.livemint.com/Companies/Ia5rsCqyO0xPy3TgPlKA9N/The-collapse-of-Franklin-Templetons-PE-strategy.html