“No Ullu Banaoying”…Avoid from being mis-sold!

Don’t give a chance to be mis-sold and let anyone fool you with wrong financial advice or product. Bad financial advice can have future repercussions that last for years. When you make bad investment choices now, it can affect your ability to purchase a home or save for retirement in the future.

Here are certain ways which can help you save from befooled or being mis-sold:

Consider the goals / requirements before buying any product:  Understand your need/ requirement before buying a product. It should not be any product “Just Like That” with primary objective to save. Invest in sync with your goals.

For example: If you require regular monthly income , investing in a product which has a long lock in period and gives cumulative returns  will not help.

Do your own Due Diligence/ Research: If you were buying a new car, you’d do some research to find out which car meets your needs and shop around for the best deal available. Well financial products, like cars, are one of life’s big purchases so it pays to do some research and make some comparisons to ensure you’re getting something right for you.

Read fine prints or offer documents: It is very boring to do so, however to get away with “Ifs and Buts” it is important. Sometimes there may be hidden clauses, extra fees or other surprises buried within the small print, so it’s well worth taking some time to give it a read though.

Fill up the forms yourself: Try and instill the habit of filling up the application form everytime you enter into a new contract. It reduces the chances of errors . Never sign Blank forms, Fill up all the details carefully and insist for a copy of form after the same is submitted with the organisation.

In recent past lot of Regular premium paying  Unit Linked Insurance plans were sold in place of single premium investment.

Don’t hide any material facts: Even if the advisor says it is not required to be disclosed, insist on disclosing each and every fact. It helps at the time of claims settlement.

Last week, a client told my executive who was there to pick up health insurance proposal, “The health insurance policy issuance takes minutes, why are you asking so many questions…I am not going to hospital immediately after taking this policy.”

I would like to share here, I have seen lot of claims being rejected on the basis of non- disclosure of material facts, Lot of people are being advised not to mention as the chances of proposal being rejected are high. Please,  the point here is not issuance but claims if the need arises.

Don’t sign blank cheques: This point should ideally not have been part of this post, as this is a common precaution. But I seriously feel there is huge number of investors, who are still signing blank cheques and handing them over at times to the strangers as well who pretend to be representatives of  some xyz organisation.

One of our  investor received a call from IRDA (No IRDA will not call you and ask you to claim your unclaimed bonus for policy which was closed 10 years back) for unclaimed bonus  of Rs.3 lacs which can be claimed only if he buys a new policy for 1 lac premium. He gave the blank cheque as the representative mentioned that this is informal settlement and the bonus will be credited to his account in 7 working days. After 15 days, he received some Club membership Welcome Kit for Rs.35000 and the balance is not traceable. He visited the address mentioned of the kit to trace them , but the address and club is also fake.

This is just one instance , there are many Bunty Bablis waiting in the wings.

Investment opportunity is Now or Never: Only thing Permanent is the change. If one opportunity closes down, another will open. But only criteria of choosing a product is non availability in future may land you in mess. Taking decisions in jiffy can prove wrong  at times. Good and better opportunities will keep on coming , only need is to identify them and understand if they are compatible with your goals.

The Onus of being prevented from being Mis-sold lies 100% on us investors.

Here, the only prevention we can do is before entering into any contract and not after. Do not be upset about making a mistake, since you cannot change that now.

“Its no use crying over spilled milk.” 

If you are on verge of making some investments or will do so in future, Please share your feedback if this post helped you to take atleast one precaution and saved you from being mis-sold.

About the Author: Gurleen Kaur is a Financial Consultant and devotes her time to her company www.hareepatti.com. She has done her Bachelors in Finance and Investment Analysis(BFIA) from College of Business Studies(CBS, Delhi) and MBA from IMT, Ghaziabad. She will be a Certified Financial Planner soon. She can be Contacted at gurleen@hareepatti.greatestdesignever.com