SBI launches wealth management, startup bank

Bengaluru, Jan 14 (IANS) The State Bank of India (SBI) on Thursday launched its first exclusive startup bank branch SBI InCube and wealth management services SBI Exclusif.

“Introducing wealth management has been one of the bank’s top strategic priorities, as we have a number of High Net worth Individuals (HNI),” the bank’s chairman, Arundathi Bhattacharya, said.

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  1. Be extremely wary of these “wealth management” companies or other similar investment products sold by the high street banks. With the liberalisation of these markets in the last decade, many banks and insurance companies are now allowed to offer complex financial products (often linked to stock markets) to gullible customers. The customers are totally unaware of the inherent market risks associated with such products and the person selling them does not make it obvious either – they only paint rosy pictures until you fall into their trap.

    These banks do not have to spend much on marketing, sales or advertisement for these products to find “bakras”, as the treasure trove already exists in their banking database. They know which customer holds how much money and accordingly they lay these traps the next time you visit them to extend your fixed deposits. People from older generations (those who are between 50 and 80) were grown up in a time in India where the bank managers and doctors were revered like gods. But almost all of the bank managers today and a lot of doctors have sold their souls for monetary interests. They carry out their fiduciary/ethical duties in a most questionable manner. They take advantage of these willingly trusting customers and conveniently mislead them during taking big financial decisions. I have personally come across many people (mainly the gulf-retirees) falling prey to such organised white collar scams. Many have ruined their retirement prospects just because of these crooked bank managers. One of my close relatives used to bank with a prominent private sector bank (for legal reasons, let me call it XXXX bank). This relative was tactfully lured into investing in one of their products which in hindsight proved to be a massively disastrous decision. He wasn’t fully made aware of the obligations but now he has to pay lakhs and lakhs each year for the next foreseeable future but this person, being retired, has no income. If he stops paying into it, he will lose a substantial amount he has paid already into the product. Classic “Bisi tuppa bayalli…”. Just read how HSBC financially ruined Suchitra Kishnamurthy. I think recently that case got settled just because she had good contacts.

    The root cause of this problem is the lack of financial knowledge among the populace and lax regulatory framework in India. You can’t fight these people because they have unlimited resources and good connections to fight their position. Today’s financial world is so complex (a convoluted paper-ponzi) that it’s almost impossible to get a simple understanding of it for an average person. The people selling these dubious products make it even more difficult to understand them and they do not carry out their fiduciary duties in a satisfactory manner. They hide a lot of associated risks from the customer at the time of signing. Their motive is corrupted by the commission they get out of their sales. Once they sell the products you can not even talk to them. They ask you to contact some other team for grievances.. that too you have to talk to a faceless entity over the phone. If you confront these managers, they seem to be offended and their ego gets hurt because they still think they are the respected people in town.

    Another breed of vultures who take advantage of you when you are on holiday back-home for example are these distant relatives or family friends who are a total failure in their own life but would like to make a living out of such scams. They wait until you visit your native (when you want to have some peaceful days) and there they are with their file and a glint in their teeth. You are forced to oblige to cluelessly investing in one of their products just because they are your relatives and they will feel bad if you don’t. The fun part in this case is they absolutely haven’t got a clue what they are talking about. You knowingly end up parting with your money because for some reason you are not allowed to upset your family relations.

    In my personal opinion, for an average Joe, it is best to stick with the fixed deposits in a nationalised bank. The returns you get may not outperform the inflation rates however you will have peace of mind at night. Once your money lands at stock market through one of these ponzi products you have lost control of it. You are at the mercy of the speculators. The people who actually make money from stock market are far less than those who lose. But using creative statistical charts and confusing talks these agents and bank managers always try to pull wool over your eyes while selling their products. Be extremely careful. Also, they never mention beforehand how much money they deduct on a quarterly/yearly basis from your fund for “admin fees”, “fund management fees” etc. And this money goes out regardless of whether your fund is making any money or not. If you confront them they will ask you to go through some 100-page small print document to understand where you had bent over during the time of signing.

    So, personally, I would stay well out of such products or companies. A few may make money but most are guaranteed to lose. Nobody can predict market that easily, especially not with the volatility you are seeing globally now. Why allow someone else lose your money for you and on top of that pay them salary to do it? If you really want to invest in markets, directly buy a few blue chip stocks or high quality bonds for the long term. The dividends and coupon you receive should make up for the interest you would have earned in bank deposits. If the capital appreciates, even better. It’s always better to lose your money through your own personal decisions than those made by someone else such as the fund managers. That way you will learn a few lessons. With the latter case you not only lose your money, you don’t even know why you lost it.

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