Ask your bank Relationship manager these questions before investing

Ask Your Bank Relationship Manager These Questions before Investing

Have you ever wondered how to respond to Relationship Managers when they offer you the financial products, especially which you are totally UNAWARE of?

The objective of this post is to inform you about their most common recommendations and for you to ask them the important questions regarding these products, so that they may not be able to hide ANY useful information from you.

You sure already know that a Relationship Manager provides you with bank-related products, especially if you operate their premium accounts or any other banking privileges.

He’s the one you go to if you have any questions relating to any of their banking products. But have you ever wondered how much useful advice will he be willing to reveal to you? There are times that he can provide you with more than just bank product advice. He can provide investment advice for you. Like other professionals, he may not tell you everything you need to know about a particular procedure because he has the best interest of his organization in mind.

You may need to push to get certain vital information from him. If you want the best

questions to ask him before deciding to invest in their products when he pushes them to you, here are something to do/ask

Long Term Profitability Products

Being an intelligent investor you must understand that Investing is a Long Term Game. Therefore, you should look for long term returns of any investment vehicle suggested to you by your Relationship Manager.

It is a common practice by the Relationship Managers that they endorse the fund based on one- or two- years of the return period. You must keep below points in your mind while dealing with such offers:

  • Put your focus on Equity Investment products with 5-year to 7- years or even longer-term returns. If your relationship manager suggests any such product, you should ask questions on the foundation of their improved performance.
  • Ask the Relationship manager about the historical performance of their suggested funds. Such as, how long the fund has been in existence? This information will give you a key insight into the scheme. We recommend you to look for the funds which have consistently outperformed in the market over the medium and longer terms (3, 5 and 10 years). Also, look whether the company has been able to retain a good Fund Manager for a Long time; if Yes, it means the company is active and performing well in its investment strategy!
  • Consider the funds that have a higher ALPHA. Alpha measures whether the fund has outperformed its predicted returns or whether the fund is outperforming its index or not! For more details on alpha, you can read this post on Tools to select a rewarding fund.

Assess the Funds Rightly

Relationship managers usually have a chart that can help you compare a couple of mutual funds. They can advise you on the most suitable one for you and your financial goal.

Before agreeing with them, ask the ones in the same class. Prior to your asking, you can do a little research to have a basic idea. Thankfully, SEBI has mandated that Asset Management Companies (AMCs) pick up the equity funds that are under ten key categories with exceptions for Index Funds, ELSS and some others.

Multi-Cap, Small Cap, Mid Cap, Large Cap, Mid Cap, Focused Funds, and a lot more fall under Equity Funds. While there are some funds that don’t fall into the same category, you should make sure your relationship manager compares funds that fall into the same class.

As an example, mid-cap funds invest in mid-cap stocks and small-cap only do small-cap stocks. Therefore, they can’t be compared.

Small-cap funds are usually unpredictable and riskier to take on than mid-cap funds are. The returns on each will also be different. As a matter of fact, using category average that the mutual fund websites such as AMFI or Value Research Online, which provide the best option when comparing returns on a fund.

Most Relationship Managers try to confuse you with a list of schemes with different classes on the same list. You need to be aware of these and pick out the one that fits your financial goals.

New Funds Offer (NFO) Recommendations

Many a time, a Relationship Manager may present New Fund Offers to you in the most attractive way.

Now you are entering into a new fund, which has NO track record so far!!

You are only aware of some sugarcoated promises of the New Fund made by your Relationship Manager.

Now, what will you do when you encounter such offers made by your relationship managers?
Dont Fall Prey For New Fund OffersWe can tell you in advance that NFO deals will sound irresistible when it is presented to you by your Relationship Manager, and many people will fall into its prey!! We have written some NFO reviews in our Blog, have a look at them at:

So, what should be your wise step?

Well, our advice is to avoid risking your money in NFOs. When you invest, your primary focus should be to achieve all your Financial Goals. Not to experiment with your money in the banking products for the benefit of your bank.

You can straightforwardly ask your Relationship Manager about the current funds which have good past performance and track record.

It’s left to you to ask the necessary questions about the current funds that have similar objectives and performance records. You can do without NFOs of Mutual Funds sometimes. Entering into a new fund that you hardly know anything about just because it ‘promises’ to be a good venture doesn’t seem like a good choice when you have similar fund structures on the ground with established performance records. Don’t fall prey for New Fund Offers just because they appear good. You need to dig into this and a good option is asking your RM straight up for track records.

Average Expense Ratio

If you don’t ask your RM any question, you should at least remember to ask how the mutual fund investment would be on the expense ratio. Although rare, whenever there are two funds in the same category with similar performance, you should pick the fund with the lower expense ratio. However, not in all cases.

The reason why relationship managers refrain from discussing expense ratio is that it may have a direct negative impact on the commission his bank receives if he by chance switches to a fund that has a lower expense ratio. But if you ask the direct question, show your interest and he will have no other option than to answer.

Frequent Portfolio Revamp

Frequent Portfolio revamping is very attractive to first-time investors who have no idea how asset allocation and portfolio composition work.

Any Relationship Manager may advise that you redeem some current monies from the portfolio you have and substitute it with some other funds. It isn’t at all times that the fund you are replacing is similar to your intended portfolio composition.

In some cases, it may go ahead to complicate your total asset allocation. Frequent portfolio churn may need extra attention. Ask questions about why your Relationship Manager is suggesting a particular portfolio composition and how its fund is not the same as the one you already have or know about.

The Most Common Recommendation – ULIP

In regards to investments and general banking services, one popular aspect Relationship Managers always talk about and preach to clients is the Unit Linked Insurance Plans (ULIPs). They bring it to you in a way that they would appear like a terrific vehicle that contains insurance cover as well as the equity investment growth. They’ll paint ULIPs in the best light possible.
Policy Cancellation - ULIPHowever, you have to be cautious and ask about the term cover cost and the insurance benefits they cover. In fact, there are a lot of questions that should be asked. Ask for more clarity on the various charges imposed on your monetary investments before its deployment into the market. On the condition that you find out that the charges are a lot higher than what a regular equity mutual fund’s expense ratio will be, then you need to inquire deeper into why he sees it has a better choice to opt for a wholesome plan of life cover while you’re investing for growth in equity mutual fund.

Also, make sure to question the convertible asset timeline of the ULIPs because there are some policies that have relatively longer terms like a fifteen to the twenty-year timeline for maturity.

You don’t want to lock up your money in an investment service longer for fifteen years. Do you?

What will happen if you lock your money in ULIP for 15 long years? Can you figure out!

Below are the potential losses, which you will face with your long-term investment with ULIP:

  • There is a fixed lock-in period of at least 5 years in most of the “PROMOTED” ULIP products. So, if you get to know that your ULIP policy is not performing well; you CANNOT cancel the policy. And, if you do, you will suffer a heavy penalty, according to the TERMS AND CONDITION OF THE POLICY
  • Whereas with mutual funds, you can cancel and re-choose new and better performing funds anytime, based on your needs.
  • You have to pay your premiums regularly. There is no chance of missing out on any premium in ULIPs, otherwise, you will face a heavy penalty! Sometimes emergency situations happen in life, such as accidental death, critical illness, job loss, etc.In such alarming situations, it would be difficult for you to pay your annual premiums in your tough years.With ULIPs, you can’t skip your premium due to heavy penalties or even the chance of losing out your ULIP policy. Whereas, with Mutual Fund you can easily skip 2-3 of your SIP and restart it next time, without any additional penalty.
  • You will lose a lot of money due to the lower returns of ULIP, which are in the range between merely 5%-6%. The longer you are invested, the more you have to pay just to beat the rate of inflation, which is also 6%. And as a result, you will gain NOTHING!Whereas with Mutual Funds, you will get an average return in the range of 12%-15%. Where not only you will beat the rate of inflation, but you will get benefitted by higher returns in Mutual Funds.

Pay Your Regular Premiums Regularly

Private Equity Funds, AIFs and PMS.

Another funding scheme Relationship Managers may offer you besides their popular recommendation of NFO and ULIPs, are Alternate Investment Funds (AIF), PMS funds and some private equity funds.

The investors usually give an initial allocation that’s high. For AIF, the least possible amount of investment will be Rs. 1 Crore. You need to find out about the available allocation proportion on this fund in relation to the overall portfolio.

Ask about the investment’s allocation percentage on a product, especially if it’s highly skewed. Ask about the yearly maintenance charges and added charges associated with the funding like the initial setup fee.

Make sure your Relationship Manager provides you with the fund performance, net of all these charges. Question why the cost of premature withdrawals and exit clauses are the way they are, especially for the purpose of emergency.


There’s no bank that doesn’t offer its best interest rates for their products like auto loans and home loans. Because it is what they do best, your Relationship Manager may have offered you seemingly better rates for a home loan and attempted to talk you into getting the balance transfer of your current loan from a different bank.

Of course, you may be considering it but always try to find out the real terms and conditions like the period of the offered rate, the charges connected to opening a balance transfer. You also need to ask about the penalty that comes from your other bank for commencing balance transfer and try to weigh your options.

Make sure your Relationship Manager explains and educates you on the analysis of cost-benefit, considerable factors and any other useful information that aids any decision you make concerning switching and initiating bank transfers.

On one path, a Relationship Manager is a good route to use whenever you have a bank or investment-related inquiries because it is usually very convenient. He provides you with every relevant information you’ll need to thrive –as long as you ask.

Your alertness, curiosity, and prudence are required when dealing with these professionals. Everyone is working towards their best interest, it’s therefore to your advantage if you inquire thoroughly as to why they suggest the options they suggest to you and the best possible way to go about it.


I hope this post has helped you to make an informed investment decision and not to blindly believe the recommendations of your Relationship Manager.

If you have any such experience with your Relationship Manager, you can share it in the comment section.

Also, if you have any specific query based on the points discussed in this post, feel free to ask them in the comment below.

To make your personalized Financial Plan, you can register for the free consultation call by clicking the link below:


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