What is bad about capitalism or advertising or even mutual funds…is actually branding, and mis-selling.

Ok, let me call it MIS-BUYING.

We have all seen the Lux ad where a beautiful woman – from say Waheeda Rehman to Deepika have shown us how we can look beautiful by using Lux. That’s what the ad has done to our psychological needs. Well the truth is, it does not.

When I see a Luxury car ad, or a Premium Whiskey it says “it can make friends”. Well, if you are a rich man and do end up buying the Luxury car, you realize that it does not do anything for you. Funnily, it is the people who do not promise us anything who give us great pleasure. We were driving in Ladakh when we stopped by a house for food. The lady there said she will make decent food for us. She made GREAT food. No branding, no boasting, no promise, no nothing. We had zero expectation and got great satisfaction.

We can buy all the luxury soap, cars and whiskey – but if you are not surrounded by friends, you are really unable to enjoy it. So advertising builds up our expectation.

See what the mutual fund industry does – “see our results..look at the charts…(when the charts look good) or “see our processes” – and then they disappoint people. How do you convince people to buy a US $ 50K watch? On emotions. How do yous convince a guy to buy a car costing US $ 3 MIllion? BRANDING. Another tragedy in the BFSI space.

Why do people travel? well if it just to click a few pictures, tick off their boxes, yes they are successful. However, if you are going to “connect with cultures” and “broaden the mind” and improve the relationship with your spouse….then you fall flat. That’s just wrong branding. You see a photo of a grandfather and grandson in an ad. You pick up the phone and your Grandson in NY says ” will call you later”. Exactly why sex in the mind is a super hit but in real life it is not so great.

We are mis-sold to and we mis-buy. We think that if we go to Taj with our spouse our relationship will improve. The spouse mutters something like “I know you wish I was dead” or something lik that…and this was just the first day of a 12 day trip!!

Even a mutual fund adviser saying “I will teach you to be happy with the money that you are earning, pay taxes honestly, meet your reasonable goals and sleep peacefully” – it is much better than saying “I will get you 19% return”. Icici Pru discovery and Franklin India Blue chip have both underperformed the Ultra short bond fund for the past 5 years..well if you know that the fund managers are good, and they will turn it around..you have to do nothing. Once you choose good fund managers just giving them time to change their strategy is also important. However you might find a Mirae or Invesco which might have a better fund. You really need to either have a strategy or say ” we will buy and hold. When you tell the client “18%” and the 5 year return is say 6.5% pa for a 5 year period, where do you hide ? After all neither an advertiser nor a mutual fund can promise a “great return”. Just telling the client that there are times when debt could give better return, or that debt is more for capital preservation, getting people to invest more – these are the things that an adviser should do.

Promising higher returns, saying ” we will get the Retirement corpus ready at age 60 are nice goals, but it is not for the wealth managers to PROMISE those numbers. If you promise, it is a mis-selling deed for sure. In fact, it is even worse. It is mis-buying because the client thinks “this is a done deal”. Actually it is not.