Product Pushing, thy name is financial literacy!

Published: January 22, 2016 at 7:35 am

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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!

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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 M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, 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. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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  1. As usual , your article is hitting nail at right place. Last one year has seen sharp rise in investor education weeks or investor information programs. Good for getting info. AMCs are happy to sponsor as they are get to comply by their obligation towards investor education. The catch is towards the end of session when they will ask for emails and then expect a good followup for advise.

  2. Sir, I am a regular reader of your posts for last one year and because of you Subra sir and Ashal sir have switchedvto direct MFs.
    There are, however, a few things in the articl that I find not agreeable. IMHO:
    1) the beurocracy needed at the regulator for such a drive would be massive – leading to usual suspects corruption, outdated courses and delays due to non-incentives.
    2) there can be conflict of interests in many things (and probably far more important in life) – schools/coaching/colleges pushing themselves, hospitals, apartments/builders. Everyone vying for our attention and purses.
    3) good Samaritans like you mentioned in your post and I mentioned earlier are far and few between. Even if they are, they are not as expressive and enterprising to devote their time and efforts for making others a better investor.
    4) most importantly, most of the people are not interested in understanding the benefits of taking the driver’s seat when their financial life is concerned. They want financial advise WITH a ready made solution (product) bundled and do not mind paying from their noses for the same (mostly the payment is hidden in the form of commissions, so they never know). People are, wonderfully, and shockingly following the Ostriches and not Bustards or Squirrels as their role models.
    I have few things in common with you – that I am a college lecturer in a private university in Jaipur and am investing for last 7-8 years in equity. I have been trying to convince my friends and colleagues to put in a small fraction of their monthly transport/entertainment expences in equity (500 to 2000 depending on their profile) AFTER getting themselves insured, no one has ever done it. May be I am not good at convincing or may be they are not interested in advise from a not so successful role model(me).
    But students have been more forthcoming and receptive of this idea and I was able to convince a few of them to actually start a SIP of 500.

    1. Good to hear about your efforts dear Mr. Khetan. It will take time and we cannot expect immediate result. Continue the good work.

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