Nithin Kamath, the founder of Zerodha, shared a disturbing incident where a 40-year-old woman seeking to invest in Mutual Funds was allegedly mis-sold an insurance product by bank staff. In a post on X, Kamath narrated how the woman, despite insisting on index mutual funds, was coerced into investing in a regular plan of index funds.
Key Points:
- Initial Request for Mutual Funds: The woman visited her bank to invest in mutual funds, but the bank manager allegedly pushed her towards an insurance product.
- Persistence for Index Mutual Funds: After researching, the woman insisted on index mutual funds in her second visit, but the manager reportedly displayed reluctance and rudeness, eventually getting her to invest in a regular plan of index funds.
- Lifetime Trail Commission: Kamath highlighted that even though the commissions on index funds are lower than insurance products, the bank earns a trail commission for a lifetime, despite allegedly steering the customer away from the initially sought investment.
- Mis-Selling Practices: Kamath emphasized that despite the popularity of direct mutual fund platforms, some investors are still pressured into purchasing high-commission insurance products, raising concerns about mis-selling practices in banks.
- Commission Discrepancy: Commissions on certain insurance products can start as high as 50% of the first-year premium and then reduce to 2% or lower. Kamath stressed that insurance should primarily serve its purpose, such as health and term coverage.
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER