Should you become a mutual fund or direct selling agent?

Career Choice

I am sure you have been approached by friends from direct selling companies, mutual funds, insurance and real estate agents who tried to sell you the ‘dream’ of earning unlimited passive income. They promised that you usually need to work hard initially but once you are established, the money will follow.

Usually it would be sudden calls that you get from that friend whom you have not spoken for a long time who call you out. Then over coffee where you pour your grievances or the fact you are trying to look for a job/a better job, they started to sell you the dream of working on your own.

It sounds tempting…. should you give it a try?

I have been pulled into 2 direct selling companies and a mutual fund company by friends. In the end, I decided it was not the route for me as I really dislike selling. Yep, they have ways to counter your objections and also those of your friends…. and all ready with the standard scripts.

But they just can’t convince me. Because I hate to call friends and go out with them with an agenda. I also hate being on the receiving end of being called out only to be sold something.

Still, because I did join a few companies, I realized it is not all that bad.

There are 2 main benefits that you can get through this:

Become an agent

1. Learning new skills at a greatly subsidized cost

Let’s be honest- it is never a waste to learn some new skills that comes in handy in your life. Selling skills, persuasive talk, planning your finance/ retirement, grooming and managing your EQ. Usually direct selling, insurance or mutual funds company would hold these courses at a greatly subsidized fee. Sometimes even for free.

When I signed up to become a mutual fund agent, I have to take a course and then sit for the exam before I am allowed to sell mutual funds. There is a lot of things I have learnt through taking the course,  as well as attending seminars and speeches…. of course it was all in theory.  If at all, it has taught me how to read the statements and manage my own investments.

Also, insurance and mutual funds company usually requires you to attend a certain number of hour of courses in order to maintain your license. You can choose courses that you feel is going to help improve the skills at other areas of your life.

2. Giving it a shot- who knows, it might be for you

Personally if you ask me, I am lousy when it comes to convincing people to buy products that I am not 100% certain will bring in the desired returns. I would never do it if there is a risk that someone who trusted me could lose money, or buy a policy that he/she could not claim due to some hidden clause. I know, the terms are supposed to be explained clearly to the investor or policy holder but if you keep talking negatives… you ain’t gonna close any sales.

The only thing in life I feel I am able to hustle and sell is the importance web presence for a business. Because it is a low cost 24hours 7 days a week marketing tool for any company. And the benefits of starting a blog and building a brand name for yourself. And rather than wasting your time away by just watching television, try to build an income stream through blogging or YouTube. I can talk about this to anyone who would listen because I genuinely believe in it as it has worked for me. It is tougher to earn now but it is still possible.

But the best agents are those who are totally convinced that what they are doing brings value to the lives of others. Because of that strong conviction, they are able to thread on when dealing with rejection.

I want to share with you the benefits that these agent friends have brought to my life. For example, almost 20 years ago, my former housemate from university sold me an insurance plan that is savings cum investment link based. Meaning a part of the payment of my policy goes into coverage like medical and personal accident while another into savings, through revenue that came in from investments.

My friend was a little dishonest. When calculating my policy, she inflated my premium so that she could earn more on commission (for the first five years, an agent earns a certain percentage of the commission based on premium paid). The additional amount went into a buffer amount that has absolutely no coverage.

When I found out about this 8 years ago (through consultation with another agent friend and later confirmed by the customer service staff), I ought to be angry with her.

At first I was. But because I never claim from the policy (my company then had excellent medical coverage), the buffer amount was invested into unit trust. And the funds made a lot of money because I went in almost when the plan was initially launched. Each month, on average dollar cost basis, a small portion of my premium were being invested into the funds.

I called the insurance company to check about my cash surrender value, ie the amount they would pay me back should I surrender my policy. The amount is slightly more than the total premium I had paid so it means that technically, I am getting coverage without paying.

When I called and spoke to my agent, at first I started by stating what I found out….I could feel she was nervous on the other end. Then I ended by saying to her…”by right I would be very angry with you but it looks as if you have done me a big favour”.

The second one is my own experience in mutual funds. I did not have an upline who guided me well but I joined during the time after I left my corporate job and was deciding what to do. It was about 10 years ago. I took the exam, studied the funds and bought a few on my own.

Recently, I saw some of my funds were not making money and decided to liquidize and park back my money into FD. But you know what…in the span of almost 10 years investing in a few funds, I got returns of average of about 3.8% per annum returns which is higher than fixed deposit. Actually some of my funds were making above 5%.  I would have earned more had I monitored my accounts or are willing to respond to calls from my agent who wanted to make some suggestions.

So being a mutual fund agent is not that bad because you have helping someone to diversity their portfolio. Anyone who wants to earn interest higher than fixed deposits placed at the bank will need to take risk. No risk, no returns. And mutual funds investments require long term before you can see result but nothing is guaranteed.

Essentially everything requires investment- whether it is monetary or with time or with a combination of both.

In my current situation, I cannot afford money now but I can afford some extra time. So I invest my time in my blog such as this one. I took a chance, pouring hours writing articles like this from the depths of my soul. I have done it with other sites where it takes months and sometimes years to see results. But I could earn a little passive income doing what I love which is writing about my experience. My model requires very low upfront monetary investment but a lot of my time. Time that would be be wasted on non value added activities such as watching TV or entertainment videos.

Most people do have money but no time, they can just invest money that they can afford to risk with mutual funds. Just don’t overpromise (it is against code of conduct) and get someone to invest their entire live savings with you. An agent I knew got a stroke and passed away from it because he was so pressured managing funds from others. He had a big client who invested a substantial amount of his life savings with him. When the market crashed and all the prices went down, the customer gave the agent a very hard time. He was already very pressured and that final straw triggered his stroke that lead to his passing away.

Note: It has been 8 years and I am sure with the unit divisions, the guy would have recovered from his lost.

Conclusion:

If you genuinely believe in the product and services that you are offering is going to bring value to people, you can make it without selling your soul. A friend of mine who has been a successful financial planner (in the line for about 20 years full time)  is one of the most sincere, helpful and genuine person that I know.

But you need to constantly read and be aware of changing conditions so that you can offer the best advice to your clients/potential clients and counter any objections that they have. You need to research and come out with facts. It is definitely not short cut or get rich scheme to richness and passive income.

Eventually when you feel that the products offered in the company is not serving your customers’ best interest (ie there are other products out with different financial institution that are better in meeting specific needs), you may want to up your skills a little by taking up a certification that enables you to be a fully fledged financial planner and to be able to sell products from all companies instead of being restricted to one.

 

 

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