We don’t wake up with glee when we read yet another headline screaming out about excessively aggressive bank selling practices. We know there are good people working at the big banks. But we also know there are many, many more people who are being affected by banks selling practices that serve their own interests, not those of their clients.
So we read with interest a recent article and a column in the Globe and Mail. The article’s headline set the tone: Controls on sales practices at Canadian banks ‘insufficient’: watchdog
The second paragraph tells the story:
“A long-awaited report from the Financial Consumer Agency of Canada did not discover evidence of widespread misconduct. But the findings shed light on a “sharp focus on sales” within Canadian banks that makes it more likely employees will missell products or services. FCAC defines “misselling” as failing to reasonably consider a consumer’s needs, or using unclear or misleading information to make a sale.”
“Misselling” is a revealing choice of wording. What that translates into is banks selling a consumer (we call them clients or friends) not based on individual needs – instead based on profit. We always knew there was this tension between selling what’s best for the customer and what’s best for the bank’s bottom line, but this crosses the line into what we believe is irresponsible conduct.
Rob Carrick goes even further in defining this lapse in his column with this provocative headline: The Big Six banks will fleece you – if you let them
He’s even more blunt in his assessment:
“A federal agency has stripped away any remaining pretense that banks are trustworthy providers of advice, assistance, guidance, help or anything else along those lines.
“The Financial Consumer Agency of Canada said in a report issued Tuesday that the corporate culture at the Big Six banks is sharply focused on selling products and services, and that there are insufficient controls in place to protect clients from aggressive sales practices.”
He paints bank conduct in these stark terms:
“Way more time needs to be spent on teaching people bank literacy. The curriculum might look like this:
- Banks are vendors of financial products, not advisers;
- The products a bank urges you to buy may not be suitable for your needs;
- Banks work primarily for their shareholders, not their customers;
- For every product a bank sells, there is almost certainly a cheaper, more customer-friendly alternative available from an independent competitor.”
If reading this is setting off alarm bells as you recall recent transactions and products pushed on you by your bank, you owe it to yourself to take a hard look at your investments.
So what’s the alternative? There are a number of financial planners and advisors who put their clients’ needs first. That’s how you keep clients happy. That’s how we’ve retained almost 100 percent of the clients who have come into our firm – by working collaboratively with clients to design a plan that works for them both short and long-term.
If you’re looking for the right kind of attention from your financial advisors, give us a call.
Eric and Barbara Chong
1370 Don Mills Road, Suite 211, Toronto, ON M3B 3N7