This isn’t just my experience; it’s a widespread issue that’s evident in the data. Take HDFC Bank, the country’s largest private bank, for example. In 2023-24, the attrition rate for employees under 30 was 34.7%. Most relationship managers fall into this age group, as they’re typically fresh MBAs, graduates, or individuals with only a few years of experience. Similarly, at Kotak Mahindra Bank, the turnover rate among junior employees under 30 was 49.5%.
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This trend extends across private banks, driven by the intense pressure relationship managers face to sell financial products. Gone are the days when banks focused solely on raising deposits and issuing loans. Now, every banking group owns a mutual fund, an insurance company, and a stock brokerage, pushing relationship managers to pitch a wide array of products—new mutual funds, unit-linked insurance plans (Ulips), and structured products, alongside the traditional ones. Occasionally, they’re also tasked with promoting fixed deposits.
And the competition is fierce on this front, from mutual fund and insurance agents, from standalone stock brokerages, wealth management firms, non-banking finance companies and fintech companies, and from relationship managers at other banks—all vying for the same customers. In fact, over the years, even public sector banks have become aggressive when it comes to selling financial products.
So, where does that leave the relationship manager? Under a lot of pressure. And she is happy to jump as and when any other financial firm offers more money or a slightly better profile.
Of course, given the competition and the target pressure, misselling of financial products has become the order of the day. I still remember my first relationship manager tried to sell me a Ulip which had a premium allocation charge of 60% in the first year. So, if I had chosen to invest ₹1 lakh in that Ulip, only ₹40,000 would actually have gotten invested.
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My father was sold a pension plan maturing in 15 years right before he retired from his public sector job. Further, I know quite a few senior citizens who have walked into a bank wanting to park their money into a fixed deposit and have been sold a Ulip on the premise that it was a fixed deposit like product.
Of course, there are many who have burnt their fingers by investing in structured products on the recommendation of their relationship managers. And in recent years, relationship managers, and not just relationship managers, have tried to pass off Ulips as equity mutual funds.
Now, why is this misselling successful? It’s because of information asymmetry that exists: The supplier of the financial product, that is the relationship manager, knows slightly more than many individuals looking to invest. It’s like when I used to teach finance to business school students. I was usually one chapter in the book ahead of them. Of course, the students didn’t know that, like many consumers of financial products don’t know that the knowledge of relationship managers when it comes to giving proper investing/financial advice is next to non-existent. They are in the business of selling whatever their bosses have asked them to sell at that point of time.
This also raises a rather interesting point. What leads those looking to invest their money trust a fresh MBA/graduate or even one with very little experience? Is it the good demeanour of relationship managers? Or their ability to speak well? Or just trusting human nature? Or a combination of all these things? Whatever it is, it is worth remembering that taking investment advice from the inexperienced is the worst thing you can possibly do, for the simple reason that they haven’t seen different investment cycles and they have an incentive to mis-sell. (Of course, this isn’t to say that experienced professionals don’t mis-sell, but that’s a topic for another day.)
Most junior level relationship managers would have only gotten into their jobs post 2020. And we all know how stock prices have gone through the roof after that. So, the current generation of relationship managers haven’t really seen a bear market. They have no idea of what happens when stock prices crash. And given that diversification as an investment strategy is something they have possibly no idea about or no interest in.
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So, the next time you go to your relationship manager do remember these points. As far as I am concerned I will have to train my new relationship manager all over again to not call/email/WhatsApp me because there is no real service of value that they can possibly offer. Of course, this will take 18 months, and then six months later, she will quit.
Vivek Kaul is the author of Bad Money.
