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Insurance companies keen to grab client details of independent financial advisors

Insurance agencies are providing incentives to IFAs to get your contact details—everything from emails to cell phone numbers

You trust them with your money, you have faith in them as they will guide you to the right financial path, you believe in them as they are completely independent and loyal to their clients. These of course are your independent financial advisors (IFAs). However, we now learn that some of these IFAs are being wooed by insurance companies to part with your contact details.
 
Companies like Reliance, HDFC Life Insurance, SBI Life Insurance, Aviva Life insurance, Birla Sun Life Insurance and other insurance majors are understood to be inducing IFAs with incentives to get contact details of clients. These are either meant to locate new customers for unit-linked insurance plans (ULIPs) or, simply to poach customers from other insurers.
 
An IFA gets paid for his co-operation in providing other details of a competitor’s clients to an insurance company. All your details, right from your telephone numbers to email IDs, even residential addresses, are also provided to the insurance company.

This is all part of a desperate attempt by insurance companies to keep selling ULIPs after a very public brawl between the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) brought ULIPs sales down to a trickle. Thanks to that imbroglio, many ULIP customers are worried about their investments and are having second thoughts of continuing with premium payments for a product plagued by high default rates. Insurers are trying to reach out to existing and potential customers to dispel doubts and fears.
 
Secondly, insurance companies need to find other ways to bring in new customers. It is not clear whether they can launch new ULIP products before the courts pick the winner of the SEBI-IRDA fight; so they have to sell more to their existing customer base and need to interact with them directly. Or they have to incentivise IFAs to lure investors from other insurance companies.
 
“Insurance companies have often come to us to either sell their ULIPs or ask for our contact list in order to create a greater database to sell them directly to the clients,” said a certified financial planner who wished to remain anonymous. He calls this “a routine affair.”

These deals are obviously not done transparently. “There is no paper trail or a black-and-white agreement,” says Neeraj Bahal, a certified financial planner (CFP), from Fasttrack Investments. Usually, an executive from an insurance company would meet an IFA and tell him about a chance for him to make some money by parting with his clients’ details for a fee. Depending on the deal, the IFA will either part with the data which the insurer uses to contact a potential customer; or, in some cases, the insurance executive will actually accompany the IFA to client meetings to sell a product. This enhances the credibility of the insurance product being sold.
 
We learn that many IFAs who sold mutual fund products are tempted by the kickbacks from insurance companies after their business was hit by SEBI's ban on entry loads. "Since mutual fund commissions were dwindling and distributors were affected, it created an opportunity for the sales of ULIPs,” said Harish Mohan, managing director, Time Financials (Chennai).

Some distributors have a different perspective. Jayant Vidwans, president of the Society of Financial Planners said, "Sharing of data with various organisations is not wrong.”
 
Not all IFAs are jumping in to grab the money. “If he is a serious advisor then he shouldn’t be selling his clients’ details. He shouldn’t do that as this is his bread and butter,” says Sumeet Vaid, founder and managing director, Freedom Financial Planners.
 
The function of an IFA is to provide the best possible financial option for his clients. However, when an IFA’s conduct is influenced by incentives, he becomes just like any other insurance agent and clients’ interests are compromised.

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COMMENTS

Srikanth Matrubai

7 years ago

What more can you expect from these Insurance companies who continue to milk the investors money dry, especially when they are backed by a "rubber stamp' IRDA chairman??

The IRDA chairman is more interested in protecting the interests of the Insurance companies rather than the investors

hskharbanda

7 years ago

Its not so common thing,as I hv never been approached by any ins co for data sharing.But at the same time ifa's who are no more interested in distribution of mf,can only be lured by this.Serious ppl are not going to entertain ins ppl.

naveen mishra

7 years ago

Yes it is true that insurance companies are luring IFA of mutual funds companies to share their data with them.

VIUPL SHAH

7 years ago

Realy this is shocking news. aisa agent and company ko to hamesha ke band kar dena jaruri hai, taki aur koi company aisa kuch kare nahi

vijay

7 years ago

Insurance Co. bashing has been the new story (after Ipl) in print & electronoc media for the last few months. Be it commissions on Ulips, Regulatory fights etc. & so now its data collections. Weird you have nothing to write about now that u are writing about things which have been prevalent for ages in all industries in some form or other. Grow up & write responsibly.

Manoj

7 years ago

Seriously, are you guys living in the same planet as we are living? What's this sanctimonious take on the data collection drive by the insurance companies? Every body and their uncles are doing this from a long long time. Data from banks, housing finance companies, credit cards etc., are on sale from a very long time and if you have woken up just now to write this piece of STORY, then I sort of pity you guys!!!

And I dont get this holier than thou attitude when it comes to insurance agents/advisors and mutual fund distributors. Aren't colas, Pepsi or Coke, bad for health? Isn't eating junk food like KFC chicken or McDonald's burger bad for health? Doing insane stunts on two wheelers which may cause life threatening accidents? Last time I checked, all these categories were advertised on national media and they were advertised big time. Does it mean they are wrong???

I think you should seriously rethink on your strategy of writing on insurance and mutual fund advisors. You have milked your cow dry, any more weaning will be pointless!

MJ

7 years ago

Shocking story. It's disgusting that top rung companies are resorting to such malpractices.

Completely agree with what Sumeet has to say. I am amazed with Jayant Vidwans' (president of the Society of Financial Planners) view that it is okay to share data. Being a CFP myself, it is shameful to hear fellow planners agree with this malpractice.

Selling your client's data for short-term personal gains shows complete lack of ethics and client's privacy.

CFPs should be the first people to condone such actions and not support them and bring disrepute to the profession.

Hemant Beniwal

7 years ago

Ganda hai par dhanda hai ye.....

http://www.tflindia.in/2010/04/why-ban-on-ulip.html

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