For the small investors, who often are not financially savvy and also don’t have the risk appetite, investments in shares or mutual funds are not an option. Many of them just love the small savings schemes run by the Post Office that caters to their needs and permits them save even small amounts over decades to fund their long-term financial goals.
And invariably the investor relies and trust the ubiquitous ‘Agent’ to manage his affairs and ease the transactions.
I was visiting my home town after a while and one of the pending chores was to settle the matured ‘National Savings Certificates’ belonging to my mother. It was early morning and I was not looking forward to the visit as the counters tend to be swamped by the ‘Agents’ who handle multiple clients and have established a ‘working relationship’ with the post office staff.
To my surprise I found the place to be very quiet and got though my work in a jiffy. The postal staff meticulously checked the details, my mother’s authorization letter and finally gave me the cash. She also cautioned me that higher value transactions were no longer settled by cash and would be released only through an a/c payee cheque.
As I was leaving and wondering what had changed, I ran into my old ‘Agent’. He knew that I was now abroad and so had stopped doing his annual follow-up with me around January to enquire whether I wanted to make any investments to save ‘Income Tax’. He was not much occupied so we settled to have a cup of Tea near the Post Office.
Business had thinned for him – his salaried clients had other options to invest in to save tax, the interest rates in small savings were not that very attractive and in fact many of his clients just did not have enough surplus savings to invest. Another segment was interested in opting for Chit Funds and Private Company deposits while some eyed the ‘real estate’ option and Gold. It did seem to be tough times given such multiple options vying for the meagre surplus available with the average investor.
And then he mentioned another sad reason for the dwindling business – an ‘Agent’ had taken advantage of the trust reposed by his aged clients who found it difficult to attend to their transactions personally. He had taken the due authorizations and swindled their funds. The news had hit the newspapers and as a result many old timers were in state of shock. It had been a sacred relationship and a fiduciary responsibility as the ‘Agent’ willy-nilly became an integral part of the family’s financial planning and helped them chalk the milestones of owning a home, ensuring higher education of the children, enabling them to bear the wedding expenses of their children and finally holding on to a ‘saving nest’ to address their post retirement life needs.
Things were mending and eventually he expected to straddle this difficult period but in the interim the slump had his cash flows badly and impacted his life. Many ‘Agents’ had been home makers who had entered the vocation and then built a network of clients. Even they found it difficult to switch to any other job after having spent decades in the trade. They were not quite convinced about learning to promote investments in insurance, shares and mutual funds as an alternative.Finally they were not keen to adopt to modern communication means like email and social media and so lost out when the wealth moved on from the older generation to their younger children who were financially literate and saw most of the small saving schemes as being ‘old-fashioned’.
The results were quite apparent when I saw the nearly deserted ‘waiting room’ that used to be bustling with activity and laughter in the olden days that now seem to be part of a bygone era.