Have you ever faced a moral dilemma at your workplace? You know, forced to do something which is wrong? To lie or offer half truths to someone who has come to you for advice? I did all this and more. Every day of the 15 months I worked as a personal banker in a leading private sector bank, I was in a moral quandary.
When I joined the bank, it was like a dream come true. The bank was fast expanding and was considered one of the best in the industry. We went through an intensive training programme which helped us realise the immense responsibility that the job of a financial advisor involved. The instructor stressed on how we should be able to win the trust of our customers and honestly advise them on how to best manage their hard earned money. “Your advisory function should be intended at investing the client’s money in a manner that suits his financial goals and needs,” he told us.
With such awe inspiring values, I started my career. Little did I know that within a month, these values would be subjected to a harsh reality check. The branch manager was very forthright. He told us to aggressively sell insurance policies and mutual funds. By hook or by crook. “Your focus should be on generating business by selling as many policies and mutual funds as possible,” he said. We were not to be concerned whether the customer required insurance or whether the equity fund being sold was performing well. Our entire sales strategy was to revolve around three simple words: sell, sell, sell.
Finding potential customers was not a problem. We were encouraged to peek into the bank accounts of customers and target those with a fat balance. The higher the bank balance, the bigger the insurance policy offered. Close to 50% of the premium paid on these policies in the first year goes into the commissions. There could not be a better product to fleece your customers.
Of course, not all forms of insurance were to be hawked with the same fervour. Customers were not to be told about term insurance, which gives a high life cover at a very low cost. Even if the customer was interested in term plans, we were asked to dissuade him and sell him a Ulip which brought in a fatter commission.
The whole system reeked of subterfuge and deceit. It debunked every principle, every value that I had imbibed - as a student, as a professional and as a human being. My advice to the customer was not to be defined by his needs but by my monthly target. How could I palm off an unsuitable investment to someone who had placed his trust in me? It made me miserable. My dream was turning into a nightmare.
I was struggling. Most of my colleagues had no qualms in meeting their monthly targets in the manner dictated by the branch manager. I was often taken to task. That’s when I decided to join the crowd. It was fruitless to think about the customer’s financial goals and investment needs when I had my own to fulfil. Besides, I reasoned that if I don’t sell him an insurance policy, someone else will. It was a warped logic but at least it helped me cope with my moral dilemma.
I would target NRIs with huge bank balances and desperately looking to invest in India. Another easy target were IT professionals, especially those who had just returned from an overseas assignment. They were flush with money, their knowledge of financial instruments was poor and come February they were in a mad rush to save taxes. It is easy to trick them into the worst of insurance plans.
Businessmen, especially property dealers, were sitting ducks when it came to selling Ulips. The very thought of taxfree income from stocks led them to pour money into these plans without batting an eyelid. Property dealers tend to treat all investments as real estate. The overriding concern is in how many years will the plan double their money. Tell them a time frame, show them supportive data, and they will believe anything you say. Try selling them term insurance plans and they think you are out to cheat them of their money.
Then there are couples with young children. The branch manager told me to play on the parents’ emotions while pitching child plans. I don’t remember when I last sold a policy as a true insurance product.
If a person buys an insurance policy he doesn’t need, he may let it lapse by not paying the premium. Insurance agents hate this if it happens in the first year itself (especially if the premium is paid quarterly) because they don’t get the hefty commission on the first year’s premium. So we told customers that the first year’s premium had to be paid at one go though subsequent premiums could be paid quarterly.
Mutual funds was another opportunity at earning commissions. My colleagues sold newly launched funds because they offered a fatter cut. In some cases, they even got investors to exit from their existing funds and deploy the proceeds in new funds. They said the new fund was cheap because its NAV was only Rs 10 while the old fund had an NAV of Rs 50-60. The reasoning was ridiculous but investors lapped it up, liquidating faithful wealth creators in favour of untested upstarts.
To ensure that our customers didn’t stop after a one-time investment, we pushed systematic investment plans. Plus, we got a commission for every new SIP. I remember a customer who wanted to make two SIPs of Rs 5,000 each. A glib colleague convinced him to make 10 SIPs of Rs 1,000 each. “This would diversify your investment across 10 funds,” he told the customer. What he didn’t tell the investor was that these multiple SIPs would overdiversify the portfolio while fattening his commission.
(The author has quit banking.)