Should you “Beware your Relationship Manager?”

Are you financially wise but financially ignorant? As per dummies; financially wise means a person is smart enough regarding spending money and financially ignorant means a person is incapable of taking right investment decisions at right time and invests in wrong instruments.

Large Institutions like banks are aware of your financial ignorance and that is where they sense the opportunity. So whenever your bank account crosses threshold limit (Different criterion followed by different banks) immediately bank appoints a Personal Banker or Relationship Manager for your account.

Bank will make you feel that you are a star and you are very soon on cloud 9. They make you feel that you have earned a lot of money and now you need Personal banker or Relationship Manger to manage your money…

These Relationship Managers are given huge targets by Banks or other institutions to be achieved through their client base. It means to generate business from clients assigned to them.

These Relationship Managers (RM’s) are paid commission on business generated according to slabs. More the business generated, more will be the commission. Secondly commission is highly skewed towards products which are very difficult to sell like insurance, Pvt Equity funds etc.

Beware of Relationship Manager as the objective of RM is to generate maximum commission for himself or herself rather being empathetic towards your hard earned money. The whole financial sector is gripped with this virus.

In case of Insurance, the banks usually tie with a particular insurance provider and sell the insurance product. Note that it is not necessary that particular insurance product is the best suitable product for you. Same goes for other financial products like Mutual Funds etc.

In nutshell the advice from RM is based on commissions he earns and targets that are set for him. At the end of the day, it’s your hard earned money & you have all right to question your RM on logic behind suggesting particular investment instruments. Don’t trust your RM blindly. Use your financial wisdom. It’s always better to do a little search and you can find lot of reliable information to make well informed financial decision.

Any kind of advice should come from person who is not biased and values your hard earned money. You are saving for your future and your future is dependent on your today’s investment decisions. Any wrong decision can spoil your future.

Again almost every year you find a different RM assigned to you who comes with different ideas about investments and money. He makes you take actions accordingly. This could be harmful to building a long term investment portfolio. Evaluate the Pros and cons before taking actions.  For a RM your investment maybe only an instrument to earn his commissions and achieve his targets but for you it’s yours and/or kids future…