I was happy that the spat between SEBI and IRDA would highlight the skewed incentive structure of the ULIPs. But I am having second thoughts.
The real issue should not be the distribution cost (read commissions) but should be a fair customer experience. Let me explain with a few examples.
The fizz water is sold by stars like Ranbir Kapoor, Amir Khan, SRK, etc. The cost of a bottle of coke would not be more than a Rupee. So if it is being sold at Rs 10/- per bottle, then the Agent( SRK, AK, RK, etc) is pocketing 80-90%. Isn’t that too much? Also read this, Good For You Products Are Not in Demand
The difference, to my mind, is instead of calling them Agents, we call them Brand Ambassadors!!
The distribution costs is an important element of all industries in some way or the other. The 4 P’s of Marketing, as we all know, is the combination of product, price, place (distribution), and promotion. Distribution is all about getting the product to the customer and involves costs as per the needs of the industry.
So, the question is, Why are we making such noise about the incentive structure of the Agents?
The answer is that the low skill levels of the Agents result in a lot of mis-selling and thereby a low customer experience.
Conclusions:
That’s why, let me revisit my opinion on this issue. Instead of cribbing over the incentives structure, we should press hard for enhancing the knowledge, skills of the financial advisors and ensuring that they provide a satisfactory customer experience to deserve what they get as commissions.
Let me take an example. I refused a kick back from an Agent because that Agent was providing me a lot of value in terms of professional advice and service.
What about you? Would you care for how much the Agent is getting, or would you prefer to worry about how much the Agent is helping you with your money matters?
Somewhere along the way, we need to take responsibility for ourselves rather than cribbing about commissions, mis-selling, etc. What do you think?
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sir
dear all !
welcome
this very very idea looks very good on paper, but practical implementation looks very difficult. why because
1. IRDA introduced policy benefit illustration 8 years ago, this is not a new development.
we all saw what customers understand from it !
2.policy bond also consists of policy proposal form along with illustration.
3. FREELOOK period ! how many clients reviewed it with agent ?
I personally believe as long as financially illiterate policy holders,understands what regulators are dooing for them, agents mis selling continues.
thanks for this good work !