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Banks can be harmful, too (Part 2)

on Sun, 09/01/2013 - 09:45

There was a first article on Banks can be harmful, too from this blog.

As an independent financial advisor, the good thing is I meet lots of wholesalers (both from insurance companies and investment institutions) from time to time. On top of all the news articles, economic outlook we all get from all the news sources and internet, I get different viewpoints and investment strategies from numerous fund managers or investment managing teams. 

So I was chatting with a wholesaler from a bank-branded asset management company, and the wholesaler enlightened me quite a bit. 
The points are as follows:
Simplicity (and only simplicity) is king
- most personal bankers (even the mutual funds licensed) recommend GIC for customers because it is the most easier vehicle to sell, people know it, they don't have to explain what it is. However, does it mean it is best to customers? Not necessarily. 
Risk control is important than clients
- with an average of advisors' turnover about a year and a half, the branch normally doesn't encourage any advisors to sell "standalone" funds nor build their own portfolio, but only fund of funds, then the branch would not need to go through compliance to explain why clients are holding what they are holding. 
Economic viewpoints way behind
- lots of banks (branches) have a sister company on the investment side and those sister companies release economic viewpoints, studies and researches from time to time. Believe it or not, lots of bankers do not follow those viewpoints because they are way behind on all those papers. Not to mention the "suggested fund list" seldomly get updated, lots of bankers themselves know only solutions and products within their own banks. 
In conclusion, I found bankers take advantage of the general mass are comfortable with "big names"; technology is delivering too much information that is sometimes hard for customers to follow; most people take what banks say as they believe the bankers know much more; banks' advertisements create the bubble that they work with clients (note that bankers are employees of the banks, they get paid by the banks). 
I have a client who was a senior executive at a bank before she retired. She got screwed up by an internal banker (who was supposed to be an expert in retirement planning) on her stock options and deferral options on her company plan. After a good 10 years she finally got everything sorted out and figured things out correctly (she had to file amendments to the CRA and get taxed on what she had errors on, plus she was over-contributed to her RRSP due to the error had been continued for all those years), it was very painful just to listen to her on how she dealt with the whole thing...
Lastly, I would like to share this testimonial with you all :)
This is a client who told me that he was relectant to let me manage his investments in the beginning because he had always dealt with banks, and now he had transferred all his assets to me :)
You can find more of these here.


pirater un compte facebook's picture

Wonderful, what a web site it is! This weblog presents helpful facts to us, keep it up. 

trufinancial's picture

Thanks a lot, let me know if there is anything you are interested in know and we will try to address it on our next posts :)

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