Let us see what your banker says…..and how you should interpret it…..and what you should say

It is not easy being a layman today! The amount of ‘advise’ that is dumped on you is stunning. Advise on where to travel, when to travel, how to reduce weight, how to impress your girlfriend / wife / boss/ …, grow your hair, color your hair….the list is endless.

However the guy who can really get all your ATTENTION is the banker. This is because he has all your money, though theoretically you think you have all the money. So here is a guy who has seen your life bare (RBI jokes once in a while saying this is illegal, but what the….). Let us see what he says:

1. Sir It is nice for you to keep all the transactions in one place: Complete bull. You pay a very heavy price for this so called convenience. The interest rates even on Fixed deposit made online is not as good as you think it should be! They also have some small boxes which say ‘renew automatically’ – which means for exactly the same period it will be renewed. Most times this is sub optimal. Also there is nothing to say that all your transactions being at one place is convenient. Convenient is expensive. All your mutual funds can be recorded in Valueresearchonline and your portfolio can be kept there. Take your home loan from Hdfc and in case you want an overdraft (recommended) there is always SBI.

2. We have the full range of products: Complete bull. All banks may not give you the full range of services that you need. Take the Indian example Axis bank sells Axis mutual funds, Icici bank sells Icici Prudential mutual fund, SBI, Hdfc,….and the story is the same! Life insurance is again a known story – THEY CANNOT SELL ANY insurance other than their own parent companies’ product! So when Icici Prudential Life insurance has to come out with an IPO do you think  the Relationship Managers are going to tell you NOT to subscribe to that IPO? Even Hdfc will be pushing that – remember their IPO is also happening at a similar price!!

3. Our advisors are here to help you. Complete bull. A bank advisor has sales targets, not relationship targets. They have great ‘products’ meant for ‘prospects’ which are nicely couched as ‘solutions’ for ‘customers’. Actually their greatest benefit is when you keep a lot of money without doing ANYTHING in the SB or Current accounts! However nowadays (10 years) ULIP has made them more greedy. It is possible that they will ask you to keep money in a liquid account (for emergencies) and borrow money for a car. With the money that you could have bought the car, they will ask you to take an expensive ULIP. Sorry, but that is how the world works.

4. Our Advisors will give you optimal solutions: Impossible. There are advisors who will make you invest your money in a ULIP and at the same time give you a loan against shares – even using the same money to pay the premium! Get the transaction reviewed by a friend, and you will realise that you are holding a lemon!

5. We are here to help :  Of course yes! Not sure help whom? well join the gang, I am also wondering. It is surely not me!!

6. We will give you the finest rates: Impossible.: Banks which talk less, have poor customer service (they are almost anti customer) have better rates. Banks which call you a dozen times, wish you on your birthday, wedding anniversary, dog’s birthday…are likely to charge you for all the calls in some form or the other! All rates, charges, services, are negotiable. The more you move around, the better off you are. Take a simple example if you issue a Hdfc bank cheque to your Icici bank credit card it will take 2 days for the debit..but if you issue a same back cheque the debit will be immediate..simple na? Thanks to technology, keeping all the money in one place is not necessary to get the best rates.

7. The Relationship Manager is your friend. I refuse to say anything further…..correct?

I have a huge problem..when I point out to the CEO of a software company or to an entrepreneur of a tech company..he ACTUALLY TOLD ME…Subra for the convenience I am willing to keep everything in one app. I do not mind the extra cost. So I asked him ‘how much do you think it is costing you’…he said Rs. 20k…I said if I said it was 50k how would you react?

He said ‘I would be unhappy, but will bite it’. I said at what price will the shit hit the roof….and you will scream MURDER?

He said ‘Rs. 100,000’.

I said last year you paid approximately Rs. 7,50,000.

I have 2 people who are from IIM – so called the smartest cookies – who are in this category. I Know one tech entrepreneur whom I met recently …he wants a asset manager working at 0.09, but happy to pay 1.5% for an app to keep his portfolio…

some more …later on!