Product Pushing, thy name is financial literacy!

Published: January 22, 2016 at 7:35 am

Last Updated on

May I request you to ask yourself when was the first time you encountered phrases like financial literacy, investor education, financial awareness etc.(If you have not, good for you!)? Then ask yourself who are the people who use these terms frequently and how many among them are product pushers?

The product here being mutual funds, financial planning services and maybe even insurance products. Subra once said, a financial planner talking about ‘how useful a financial planner is’ = conflict of interest!

Conflict of interest, a concept that the financial services industry does not understand well, or perhaps chooses not to: “I can get commissions from the AMC and still only think of the clients interests”! Right!

The typical rant about financial literacy is all about increasing the visibility of a business. Most of the people who talk about financial literacy and beating inflation etc. are product pushers.

Did you know a small portion of mutual fund expense ratio is allocated to ‘investor education’!  A product manufacturer educating investors is conflict of interest.

Did you know that the typical investor awareness program organized by distributors comes from this fund?

The mutual fund industry makes it sound like a national crisis that equity participation is low. Equity investing is a choice. If people want to be happy with their fixed income products, what do we care … unless we have a different product to sell!

Financial literacy is important no doubt. If there is a syllabus for learning money management, I think the first item should be to: size up the guy who talks about financial literacy. What is their angle? Why are they doing it?

The second item should be to have a basic idea of what the regulator says about investment advisers. Ask the guy to first clarify how legal his business is, and then advise you about financial literacy.

If we want to learn more about personal finance or money management, let us learn it from investors like Ashal Jauhari and Kirti Desai of Bemoneyaware who have no product to sell.

If we must learn financial literacy, then let us learn it from people who don’t sell anything, who don’t care about how we manage money. It is so much easier to trust such people.

After all, Whose money is it anyway?!

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
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