I think he works at a boutique asset management firm, which is very different from a retail bank (which is where most of the problems he highlighted can be found)
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
This has been my BIGGEST issue with doing the role. The banks keep telling me to do things best for my clients. But when I do that, and dissuade them from taking a product because it isn’t suitable for their situation, I get dragged into my manager’s office and grilled like I’m in front of the KGB because I didn’t make a sale….
Retail banking is a capricious job. They have to say the customer is the priority, but anyone with brains knows that's nonsense. You can do the job as long as you're properly cynical about it. It's not for idealists.
I also work as an investment advisor in the US. There is a real push to sell products like annuities to people that shouldn't get them because the commission is over 4%. I didn't sell a single one in my first 2 years (2020 and 2021) because rates were so terrible I couldn't justify it. I'm glad to be in a position where my job isn't on the line if I choose not the sell high commission products, just my pay. My first year I only made 19k on sales. I constantly see people come in with terrible products from some other advisors who clearly only cared about the commission.
This is my main problem as someone entering the field. Every interview has been for a SALES job first and foremost instead of helping people do the best they can with their wealth.
On the Bank side you want get training, strategies or education for tax planning, investing, corporate structures. You need to go to a Wealth Management firm, ideally independent, and be ready to scratch and claw to become reputable, build a book, and a finding a good team to work with.
I had the same experience when I was looking for a first job. Unlike the other Socialists here, I love sales, and capitalism, but I don't handle making large numbers of cold calls very well. Its just not my thing. A famous adviser set off a huge scandal a few years ago by comparing financial sales with a man getting laid, but the analogy is pretty close. Its just really hard to succeed at financial cold calling, or getting laid, and not something I could handle a lot of starting out. Unfortunately, its the primary way to work up to actual financial advising, so this path was not for me, even though I have a great understanding of investing and finance, I just can't sell that in a cold call to a stranger, its just too awkward for me :(
I used to work at TD as an advisor. The sales pressure literally made me sick to my stomach sometimes. My manager don’t even pretend to give a damn about customers, and see people as prey to exploit. Handing in my resignation was one of the best days of my life
I’ve been a TD customer for 20 years in the United States. I didn’t even know they had advisors. I have direct deposit. I deposit checks into the ATM when I get checks. I have been to a branch twice to buy euros before a vacation. Other than that I’ve never been inside TD Bank.
Fiduciary Responsibility. In the US, insist that an advisor has fiduciary responsibility to you. If they are certified and affirm that, they are legally bound to act in your best interest. If they say no, be skeptical of everything else they say. If they don't have a fiduciary responsibility to you, they aren't working for you -- you are the cash cow being milked.
@@barnabusdoyle4930 If you are talking to a financial advisor who is not a fiduciary, they won't even write "financial advisor" anywhere because they would immediately get clobbered by regulators.
This is true, but even those with fiduciary duty can have significant conflicts of interest. Whole life insurance pays a huge commission per new client, for example.
@@the_expidition427 The term “Financial Advisor” is regulated by the government. Someone who presents themselves to the public as a “Financial Advisor” must be registered and must act as a fiduciary. Meaning all financial advisors are fiduciaries. What you really need to check for is competency and integrity. Unfortunately there are no easy checks for that.
I'm a CPA and it's really surprising how many jobs in Finance are more about selling a product than selling skills. I wouldn't mind being a personal financial advisor, but I feel like most companies hiring for that role are more interested in quarterly sales targets than the client's well-being. The Finance space has gotten better over the last century, but we still need to work on ensuring clients aren't being abused.
@@krellin I was a private banker. We directly get cuts when the client buy a product and there is a quarterly or annual target we have to fulfill to avoid getting grilled.
I'll never forget a bank advisor telling me to use all my credit so I "can get a better credit score and higher credit line" i was 18 so he probably thought I had no idea he was wrong. But from that day I would never trust a bank advisor again.
There is some truth to that, in that if you got a car loan, and you never had one before, it would certainly increase your credit score during the course of the loan, because for some reason, not having a car loan takes off a few points from the total score. That being said, just having a few credit cards, even with no carried balance, also boosts your score in the long term, so just managing a few credit cards so that they are occasionally used and not closed on you will get you 90 % to a good score, in a few years of no missed payments.
I'm not sure what they meant by "use all your credit", but getting too far into adulthood with no credit can create problems for you. I was afraid of credit cards when I was younger so I never applied for one, and didn't ever take out any loans until I went to purchase my home. When I applied for a mortgage, the bank checked and found that I had no credit to speak of, so the only loan that I was eligible for was a variable interest rate loan instead of being eligible for a normal fixed rate loan. I've been subjected to a 4% rate hike as interest rates have risen over the last couple of years which has caused my monthly mortgage payment to rise by over 30%. I am currently in the process of refinancing the loan to get into a fixed rate mortgage so that my expenses stabilize. This all could have been avoided if I had applied for a credit card at 18 years old and then used it to buy a tank of gas every month and then pay it off before the due date. I think that people should be educated about credit cards and taught to use them responsibly to build their credit like that, but constantly maxing a credit card out will hurt your credit more than it helps.
The fucked up thing about credit score is that not immediately paying it off and paying the interest is the best way to improve it quickly. If you use your credit card like a debit card and always pay on time your credit score will barely move because the banks will think they can’t make any interest off of you.
@sprinkle61 sure, your right, but I now realize I didn't really add context, I was Applying for my first ever credit card, he knew that. he wasn't talking about getting different types of credit. He specifically recommended that I use my credit card to the max each month. I actually asked him again to be sure because I was always told the exact opposite, and he said yes, I should be using my credit card to the max, its better he said. He was telling me that a 100% percent credit card utilization was the best thing I should do.
Thank you for all your advice. I went to Wells Fargo a few months ago, and they tried to sell me an anunity. I asked if they were a fiduciary. They said no. I said no thanks. They said , "we do have some fiduciary products", but at that point, i felt the relationship was already poisoned, and i would never trust or be confortable with anything they recommended.
Never, ever do business with Wells Fargo! They are poison. I am not surprised to hear that their sales culture has not really been reformed, even after everything that has happened in the last 10+ years.
@@aluisious I wish that was a joke...my father recently passed, so I was there to manage there, now my finances, and there were 3 checking accounts, and 3 savings accounts.
You did the right thing to avoid working with them on your financial advisory situation. Wells Fargo is known as the sketchiest big bank by a country mile, at least in the US. I started banking with them before I knew any better, and I'm currently trying to find a better bank to park my money in that I can actually trust.
Feels spooky seeing you post this since I’m interviewing for a position in Financial Advising today. The position is fiduciary, which was a non-negotiable for me. The position also isn’t entirely commission based, so I won’t have as much pressure to get as many clients as possible.
Do some research regarding fee-only financial advising firms. They act more like consulting firms insofar as they only charge you for their time, as opposed to pushing clients into funds that earn them commissions. Simply being a fiduciary doesn't mean you won't have conflicts of interest with your clients.
@@evanwheeler7687 Just FYI, fee-only can include advisors who charge an AUM percentage fee, not just advisors who charge hourly fees. Such advisors have a conflict of interest when giving advice about what accounts to invest into, since they would only make money from their own account that they manage. So for example, if you ask about how much you should invest into a 401(k), where none of the money goes to the advisor, the advisor has an incentive to say you should lower your 401(k) contributions and instead invest more heavily into an IRA (that the advisor manages on your behalf in return for an AUM fee). The advisor even has an incentive to encourage a rollover (since the bigger the IRA balance, the bigger the dollar amount of the AUM fee). The conflict of interest would be reduced if the advisor only gives advice about the allocations within that IRA account (e.g. how much of the IRA should be in stocks, how much in bonds, etc).
Thanks for linking to the CBC story. Interesting viewing. In my experience, the people most in need of qualified financial advice are those least able to afford it. It's a brutal feedback loop. I was caught up in it until about a decade ago when a career shock made me pull my head out of my ass. Been on a new track since then, got smarter about money, paid off most of my debt, and even went back to school for an accounting degree. For those struggling, financial literacy is the way forward.
I always recommend The Money Guy Show, Ben Felix, and The Plain Bagel to people curious about finance and investing. I love when you cover similar topics because it's nice hearing multiple trusted sources confirm information, and each one of you provides a little bit of nuance or perspective that adds to the conversation or aids in understanding. Great video!
I literally wrote the Plain Bagel down for one of my clients yesterday! He said he does youtube research so I was like hold on, lets give you some quality channels!
@@tonycrabtree3416 Not sure how. They have significant differences, such as the level of priority they place on 401(k) employer matches. They're also in favor of credit cards and their starter emergency fund is based on insurance deductibles rather than an arbitrary number of one thousand.
Oh fuck me. In Australia we had the highest-level investigation possible because every major bank was doing this, and had been since the '90s. They found KPI-focused advisors had systematically driven people to suicide and knowingly saddled them with debt they couldn't repay. There's an excellent book about it called Banking Bad.
It's videos like this that reinforce why I appreciate this channel. Putting the financial welfare of the viewer first, and being capable of pointing out the flaws in all sides of the financial world, not just memeing on meme stock and crypto scams but also highlighting the issues of "official" sources.
Same, though unrelated I've never particularly trusted banks anyways with the kind of fees and rates they give for checking and saving, much less investing, through them nowadays. Seems nowadays more important than knowing anything is knowing who can tell you the truth.
I am with Wells Fargo Advisors and while I like my advisor OK and he has done well for me I f*ing hate Wells Fargo Bank. Their whole culture is based on ripping off their customers and it seems like every 6 months they are in the news for some sort of malfeasance. When I call and complain to my FA about the latest Wells Fargo scandal he is plainly uncomfortable and lamely tries to explain it away - probably just reading from the WFA script he’s given. My wife has her checking account with WF and we get into arguments 2 or 3 times a year about me wanting to dump them (I bank with Bank of America) and her not wanting to change.
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
Why would anyone think that other people care about their wealth? The best financial advisor is yourself. Trusting other people with you money is lazy and naïve
I wanted to be a financial advisor so bad, but when I looked into it, it just seemed like a sales job. Unfortunately so many occupations have this issue. Doctors have been incentivized to overprescribe medication, lawyers are incentivized to drag out legal proceedings so they get the most hours, and now financial advisors are incentivized to give people bad advice to keep their jobs. The sad part is if 90% of people don't fall pray to bad incentives, that still leave 10% that do, and that can cause a lot of damage.
Financial Advising or planning does indeed have a large portion of sales work. You can be the smartest fiduciary planner in the world, but if you can't convince folks to talk to you or follow your recommendations then it's worthless.
Opportunity lies where responsibility has been abdicated. That financier job may still exist somewhere, you may not be looking hard enough, or maybe you need to invent the position.
I agree. It's the economic issue of our time. We are reaching the conclusions of our economic structure. Everything is done to get as much money out of the next guy and the ones who profit most off this strategy steer the reigns of power to consolidate behind them and their regressive behavior.
Dont do it. Filled with losers. None of them are rich. Imagine taking financial advice from some jackass making 80,000 year? Its like having an obese personal trainer
All of finance is the scummiest field you could possibly involve yourself with, what'd you expect? Why'd you want to go into such a scummy field to begin with?
Being a fiduciary truly is the way to go. Like you I'm in the business and being a fiduciary has always served me well as I am not consumed with my success but the success of those I serve.
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
I fully agree with your video. I went to a large bank financial advisor after specifically stating we were interested in purchasing bonds, to lock in the higher yields of 2022, before the meeting so he could prepare. When we arrived all he presented was high dividend stock funds saying they were the same thing. I used to work in finance and they are not! When we stated we were only interested in bonds he still kept to his argument. Needless to say, he did not get our business.
I joined an insurance and investment company, Old Mutual, and during our training, we were told to have 20 appointments set up by the time training was finished (two weeks). This is a clear example of undereducated. Then I joined a bank in the same role. Direct unit trusts, which would have worked out much cheaper for clients, were discouraged, instead expensive products utilising these same unit trusts were pushed. I had to leave, the pressure to sell was too high, especially to people that actually couldn't afford it, and you knew were going to prioritise entertainment, smoking, cable TV and takeaways, resulting in cancelling their policies, and the resultant claw backs. The more senior advisors had the more lucrative clients.
My mom went into a big Canadian bank recently to talk to someone about moving her investments there. Once the guy realized she wasn't going to move her entire portfolio immediately to him he got super salty and ended the meeting. She was wanting to give him between 10-20k just to see how he performed before moving anything significant over or giving him a lot of capital. Never responded to any of her follow-up emails or calls lmao. Most don't care about making you money they only care about making their own bag.
I have clients that work at banks as advisors, its clear that senior execs at Canadian banks have severely cut the ways that advisors can make their quarterly targets and being told to basically push more products on to customers. Its a symptom for sure
2:34 It’s insane how that is legal. If I’m struggling financially or just need guidance on how to manage my money I don’t want to be sold shit. That’s not only a conflict of interest but that’s just straight up taking advantage of peoples situations to sell products they don’t need. It’s irresponsible! Like, how would I as a client be able to tell if my financial adviser is actually telling me the truth versus them just needing to sell me something to meet their sales goal. That’s terrible.
Banks literally counterfeit the deposits for all the loans they write, what'd you expect from an organization that charges you amortized interest to counterfeit money that you have to pay back? There's much deeper issues than this, this is surface level of the scam
There's an opportunity for one of the Big Five banks to say, hey, we're becoming customer-focused instead of sales-oriented, and will build a fiduciary commitment into all we do for customers. That would be the best "sales pitch" any of the Five could make, and create trust for existing and future clients, while sparing that bank's employees from these terrible quotas and other deformations of their relationship with clients. After all, what is at stake is the financial security of millions of Canadians. The sales culture is ultimately counter-productive for the Five and their bottom lines, as more Canadians move to discount brokerages, robo-advisors, and fee-based advice. Imagine a bank thinking of its customers more than its shareholders, and that's a bank that will flourish, attract the best young talent as employees, and change the history of high fees and self-dealing in our financial sector in Canada. The other Four would surely follow. As ever, thanks Richard (and Ben), for your wisdom and generosity in sharing as you do with what is approaching one million subscribers. Well-deserved.
No it almost assuredly won't. Many people would not believe them, and the other banks would just start marketing themselves as the same, immediately muddying the waters. At that point your shareholders lose their nerve and end the whole attempt within 12 months, before any proof or headway would get made actually building trust.
Banks as a whole are literally legalized scams. Don't be so naïve. Their entire purpose is to do no actual work for the most money possible, manipulate markets at scale, steal from people, and run racketeering operations. Liars and cheats, all of them
Yeah, I've learned in my 20's is that sales people suck. Not all, but I've been told completely incorrect information. Recently I was lied to twice when buying a mattress and lied to when getting a phone plan. Honestly I just can't trust sales people in most situations anymore. I will need to have the information in writing. And I think this is the same as people selling financial products. If you are in sales, you have all the inventive to lie to people and get away with what you can.
On the topic of GIC renewals, TD is the fucking worst. They renewed my GIC without my consent even though I explicitly called them and told them to deposit the funds into my account. I had to call again after they ignored my request and the GIC auto renewed. I've been moving away from TD since that issue and I'm now using one of the big online banks.
When I was a 19 year old kid who had just lost my only parent, a financial advisor at a major bank gave me legitimately ruinous financial advice that I'm still feeling the consequences of to this day. I didn't realize what had happened until it was far too late to do anything about it.
IMO no one should be investing if they don’t have the basics of financial stability established: budget, emergency fund(s), high yield savings, and a 401(k), IRA, or other retirement vehicles in index funds. Always silly when the “bros” with pennies to their name want to bet it all on some kind of wacky schemes. You don’t need an advisor until you get the basics down.
Sage advice. I'm one of the lucky ones with a financial planner who practices what he preaches, and always directs me to put funds into instruments with appropriate levels of risk that have minimal fee structures. A few years ago here in Australia, the big banks got scolded by the government due to complaints for acting in their own interests, and not their clients'. You're certainly right about the issue being worldwide.
I used to work for a Credit Union. I was customer service, so my sales numbers were very low pressure, but every annual review, there was a chart breaking down how much of a bonus I could have made if I'd sold more. I knew a few reps who would just recommend absolutely everything because of this, regardless of suitability; they wanted that bonus.
I watch you all the time, and I am one of these branch advisors ~7yrs experience. There are bad apples for sure, but most of the ~100 branch level advisors I have met are good natured. I can pick out a few that I can tell are way too focused on promotion, and the problem is it doesnt take that long to get good at one category (investments, lending, business, management) before those bad actors get promoted for their sales skills and any consequences of consistent bad advice are dust in the wind. I don’t think anyones ever going to get caught for this. Best advice I have is for every product, a disclosure signed by client that shows our A and B recommendations (product they asked for vs product we recommend), and the referenced sales points/dollars of compensation we receive for either, and a reasonability statement. That or all meetings recorded for potential coaching/compliance use. Nothing else is really going to get us where we need to go.
I am so glad I don't have to do that. I work for a multinational insurance company in the policy department, not just sales. So I can honestly advise clients that a certain policy is not a good fit for them, and look for ways to make their policy cheaper. We do not work on commission, so that makes it easier too. On the other hand, I do see shady practices too. Premiums are jacked up for existing customers when their yearly contracts are renewed, it is cheaper to end the policy after a year and start a new one. I cannot tell clients that, but I can adjust their premium if they call to complain about the premium increase. I work in The Netherlands btw.
I do manage my own portfolio but in discussions with bank employed (Canada as well) advisors, yeah, the costly mutual fund push is disappointing. Fees are so high and they seemed to lack nuance, largely sticking to a canned "low, medium, or high risk appetite" mapping to specific funds. I'd be less mad if those were low fee funds and you weren't losing much for the basic level of advice given but it's a bit offensive when a 1 or 2 step flow chart takes a couple percentage points off your returns
It's quite the same in India too. Banks RM always miss-sell life insurance products disguised as poor money back investment products with high commission.
we had a similar situation here in Australia. It got so bad that the government called a Royal Commission (RC) over it (search 2017 Australian banking royal commission if you're interested). This is *very very* bad for any industry or company that is the focus of the commission. The commissioner, often an extremely experienced judge, usually gets extremely broad powers to summon people to answer questions and that usually means they get absolutely raked over the coals over it. The RC is also open to the public and gets widely reported in the media. One of the biggest companies, AMP, got absolutely slaughtered by the commission. Many senior heads rolled and the share price dropped 20% after the release of the findings in 2018 and has since declined by 80% in value. The outcome of a RC is usually extensive findings and is also able to recommend legislation changes to prevent reoccurrence. Canada has RC's so something this entrenched should be investigated by one
We had a big scandal with this kind of stuff during the 2008 crisis in Spain. Because of the change in European regulations the banks had to capitalize big, but the Spanish regulation had particulars that very difficult. The result was unscrupulous sales people tricking the financially illiterate into putting ALL of their savings into the banks stock. When the music stopped playing it wasn’t unheard of to see people having lost 80-90% of their savings just before retirement.
I used to work for TD in the US, it was my first job after college and this was shortly after the Wellsfargo scandal. I had studied the Wells scandal for a project in school and had gotten very familiar with Wells and their culture. I went to training for TD and the similarities was so blatant that I started looking for a new job right away.
As as canadian, I've witnessed some of this bad advice. For the last 20 years i only use only the no fee banks and do my own index investment. But sadly i have a friend who is financially illiterate and struggling financially and he's locked into some really bad investments from his bank advisor.( over a dozen high fee funds that largely all have the risk exposure and way too many bonds for his young age). He also pays high bank account fees (with dismal saving account interest rates) and doesn't trust the "free" banks because his advisor told him they are risky despite them all being fdic insured.
That’s why I left that sort of thing. I’m a bad salesmen and it didn’t feel great. Instead I write stock options…… sh*t that’s not much better is it…..
You have to look at their pay, and figure what quality of employee it attracts. I think it is Chase that starts employees off at $48k-65k with experience....in 2024.... that's just pathetic.
@@pisceanbeauty2503 It's not about the quality of the employee, it's about how naïve it is to believe you can trust literally anyone in the world to make/save you money
I had a savings account with a major bank. The rate was low, but they told me it was adjustable, so when interest rates went up it'd be good. Well rates went up but my account interest didn't. I didn't notice this for most of a year, and when I went to them they said "well its adjustable, but you have to come in to talk to us and adjust it." So like lol I have to follow every single rate change and go to the bank every time it ticks up. "Adjustable"
The key is to ask your financial advisor to sign a contract saying that they will act as your fiduciary. If they won't sign it, they're not the person for you. This step is not needed if your FA is already a fiduciary (e.g., a CFP).
It’s so short sighted, too. If banks built up webs of trust with their clients, working to make them wealthier and more secure, those clients would be loyal to the death. Instead, they think like investment banks. Quarterly returns and no understanding of long term repercussions on their brand. Sad 😢 for everyone
I’m glad you brought up physicians as an example of people who don’t have a financial incentive to provide care. Many larger regional or national healthcare systems in the States offer physician compensation packages that are, indeed, based on production. In RBRVS models, physicians are given a base salary or guarantee plus a “cut” of whatever revenue they generate. This model does encourage physicians to see more patients, but it often results in unethical and noncompliant billing practices.
I remember CBC’s investigation on Canadian banks selling practices in 2017 and one bank employee said he thought “this was not a bank but a flea market” or something like that.
Advisor and CFP here. Best thing I ever did was leave the bank world and go to the independent side. It wasn't just the best thing for my clients but also the best thing for my own sanity. Working in a bank is just miserable. Unless you've ever worked in one, you'll never understand. For example, in the bank, you're not allowed to discuss anything related to taxes. You'll be fired on the spot. Not joking. Wouldn't you think taxes are a big part of your finances? But anyway, been independent for six years now and I love my job now and love helping my clients. My practice is super transparent, nothing to hide and that's how I think it should be. Best decision I ever made was to quit the bank, drop my brokerage license and just work with clients under the Fiduciary model.
Worked for Wells around the 2008 timeline. We were pressured that EVERY customer that you talked to needed something. Thus, why there were so many lawsuits for crazy stuff. If you didn't sign them up or pressure them, you got fired. Banking is shady and these days I use a credit union and NEVER go into banks.
I have been a financial planner of all ranks since 2014. You are 100% correct, the sales culture and pressure of the business is a massive conflict of interest that I have been voicing concern for, for a number of years. It actually handicaps newcomers, who are forced to learn and develop the incorrect client acquisition method. Also, banks and insurers make money off the high attrition rate for new financial advisors. They know that most products sold by newbies do not stay on the books, and so when those are cancelled, they force the ex-planner to pay those commissions back, WITH INTEREST. I call it the third revenue stream that the public isn't aware of.
From the USA and about to be a fully registered financial advisor. totally agree that financial advisors in this country are undereducated and the “barn doors” are kept wide open. I personally work off a salary right now for a guy who works commissions etc so I am learning a ton and the right way. But so many of my peers just jumped into sales roles and are selling mismatched products for commissions bc their boss told them too. We need way more regulation: not in the suitability dept but how these companies run! You shouldn’t add more paperwork to discourage corruption for every product: that’s punishing the everyday advisor no matter how ethical they are. You should be cracking down on what B/D’s in America can incentivize and buy in bulk. They shouldn’t be a Costco storehouse needing to move product they should be an intermediary between advisors, custodians, and products. End bulk purchasing!
There is a mountain of difference between "did not find widespread mis-selling" and "found that mis-selling was not widespread". The former applies if the investigator did not look.
Hey Richard, thank you SO MUCH for the resources. I've been really trying to get serious about my finances but trying to find reputable advice, even at my credit union (whose current president used to work for a bank that was partly responsible for the 2008 financial crash) I don't necessarily trust the options available. Genuinely appreciate the links! Have a good weekend.
Nice video; thanks for bringing it up. I would only add that it is also up to the financial institutions internal audit departments to avoid this kind of situations. Supposedly, they are independent and, most of the time, report directly to the board and CEO; also, taking advantage of new technology, regulatory filings should be more extensive, and watchdogs should have better tools to analyze potential breaches of trust from financial institutions, as long as there is an incentive as strong as the current one, this will continue to be an issue and should be closely monitored, especially in today's world of highly advanced "financial gymnastics". However, I also think that few things beat responsible self-education, so thanks for helping with that.
Hey Richard, thanks for sharing your insight on the matter. I was recently approached and sold on the job of advisor, and felt like the focus emphasized the compensation of the advisor. I decided to register to get the licenses required to become an advisor, as I had a big switch in mentality recently and thought I'd try changing career (worked as a BI/quant for the past 8-9 years). I think I share your view that an advisor can help bring a lot of value, but rather than just when their strategy becomes more complicated, you can still add value so long as you're able to help your clients achieve their life goals (which would be very different from an absolute return goal). While some instruments may yield higher returns on average, that disregards the characteristic of non-normality exhibited by some instrument (although you could argue that risk-adjusted returns could be used to reflect that), and that's where I think an advisor could bring value. What is your take on this? P.S.: I have passed all CFA exams (recently), and hold the FRM title, but unlike you, I do not have practical experience when it comes to client advising.
I was a private banker, and I will say the private banking/wealth management industry reward dishonesty as long as you are street smart about it. Wealth management is especially bad if you have compassion because you are taking money from moms and pops whose life can really be affected by it. In private banking at least you act like Robin Hood except you steal from the rich for the rich (bank shareholders). The quality of people they hire is sometimes mind boggling too, like 2.0 GPAs from a non-target, this I can see why some investment bankers feel a certain way towards their private banking/wealth management peers. With that said, I would still say this is probably the most “relaxed” “finance” job you can have while earning decent money IF you are not smart enough for asset management but have a network of high net worth investors that completely trust you.
This was part of the reason I left the industry. I was set up with my own advisory firm and as an RIA, acted as a fiduciary… although I was able to act totally ethically, I was competing for business with people who were not acting ethically.
Hmmm I wonder which of these REGISTERED PROFESSIONALS, who I specifically do business with the goal of making the most of my money, is less likely to outright scam me out of that same money. This is all fine, this is a very robust and honest financial system.
In Australia, we had a Royal Commission into the banking and financial services sector which highlighted these issues. we've since increased regulations and it is significantly harder to become a financial advisor now than it was 10 years ago. since the royal commission banks have pretty much fully left the financial advice industry because it is too costly due to regulation and licensing and there's not enough profit when they can't just sell their own products. it's not perfect, but now an advisor does have proper fiduciary requirements and all advice needs to be in the best interest of the clients. just like your video outlined, it used to be a sales role, now it's a proper profession, commissions are now illegal and only fully licensed fiduciary advisors are allowed to call themselves financial advisors, the label is very highly regulated. the issue is, it now costs on average 5-6k to produce a comprehensive SOA (Statement of Advice). for the average person, this is too expensive and so they're not getting advice or they're getting it from dodgy people online.
I left my job as a financial advisor for a bank because I felt it was deeply unethical that I was pressured to sell annuities to clients who were not suited for them, particularly when CDs offered a similar rate of return for shorter durations and smaller surrender penalties for early redemptions. I left the “sell side” of the industry and never looked back.
my grandma was a "victim" of financial advisor from her bank, they saw she had a decent amount of money in her account and called her repeatedly to sell her their banks own mutual fund with a 2% fee (which is ABSURD when the average mutual fund fee is around 0.5-0.6), the fund contained a bunch of small cap tech companies and we know these companies are doing now...
In my country, we have retirement schemes that we pay into that are locked into financial institutions until retirement. The default institutions are big banks and they offer terrible returns and sky high fees. But people never get around to changing to a proper financial institution (and banks do a majority of marketing). Over the long run, they will be stealing a huge chunk of people's retirement because they don't prioritise the customer. If you ever ask their advisers, they will say that their retirement scheme is superior, even though half of it is invested in depreciating cash.
Love your insight, you just state facts and leave it to the viewer to make up their mind with the information given. You are one of the few that I believe genuinely have a RUclips channel to better inform your audience. Thank you.
Those Canadian mutual fund fees are insane. I work at a bank in the Netherlands and almost all mutual funds offered by us have an annual fee below 1% nowadays, with some large cap global equity funds having a fee structure as low as 0.15%
Advisor here: ask your prospective advsior a lot of questions. Hardball questions. You should be satisfied with the answers. They should welcome those questions. If they're annoyed, leave.
Agree. It is difficult for customers to know who is good and who isn’t. Definitely should be asking for compensation structure as they will show a bank’s priorities.
As a registered representative I have been horrified by some of the interviews I've had and how they expect us to mislead people Agree with the medical doctor analogy
Speaking of conflicts of interests and banks, they now promote Donor Advised Funds (DAFs) to high wealth clients as a way to activate their philanthropy and giving. But banks don’t want to have these assets under management drawn down, which makes potential recipients (charities) suffer and the individual not achieve their giving goals. Great topic for a video btw. Love the channel and the decent info!
I was a FA at a private management place, the bank ofmy client offered him 9$ per month bank account for unlimited operations with an insurance.. the problem was he had the account for free for the same perks already. He had been a client since 1960 of the bank. That bank branch advisor wanted a sell at the cost of the client interest.
My dad was a victim of this. His bank had him buy an expensive and unnecessary life insurance by telling him this was by far the best available investment opportunity.
I’m a bit biased because I started my career as a branch advisor. But I am glad that the company I was with at the time decided to force every advisor to be a fiduciary, give us access to the same products that they use on the private bank side (before it was limited to annuities and other mutual funds), have a quarter compliance call, and most importantly raised the pay so we were not so reliant of sales. This is my experience so I’m not gonna say this is for everyone or every institution but I am glad at least my company at the time did something about bad advisors.
Common practice in any service based industry, at least in America. Auto repair is a prime example, there's a constant pressure on mechanics and service advisors to upsell as much as possible. I was just a low level mechanic at a few different dealerships, doing mostly tires, oil, and brakes, but I always told by service managers, service advisors, and other mechanics that I wasn't recommending enough additional stuff, even though I was working constantly with close to zero downtime. I only really recommended things that I found during my inspections, or services that were necessary based on a specific manufacturer determined service interval, but the guys who made the most money were the ones who had no qualms writing up thousands of dollars worth of completely unnecessary work on every single car that came into their bay. It's especially bad at large corporate dealership networks like Autonation, because if you don't want to be paid flat rate, AKA fully commission with no base pay, you CAN be paid hourly but you're looking at close to minimum wage. Every incentive is present for you to fully commit to being a scumbag, and that's the culture top to bottom. If you have your car serviced at an Autonation dealer, I recommend you look elsewhere.
Former advisor and I've worked with hundreds or maybe thousands of them in roles I've had since then in the U.S. I personally did not experience any of the negative incentives that you speak of at my small broker dealer but I've seen that a lot with advisors I've worked with. It's probably the exception rather than the rule, and certainly not specific to bank advisors, but I think getting a second opinion is always a good idea. Here in the U.S. it's insurance, annuity, and REIT products that offer super high commissions and often create incentives to place people in them when they shouldn't be. There's also a very common sales pitch for fee-based advisors that their incentives are aligned with their clients because "I make money when you make money." True, but they still make money when you lose money so not exactly genuine.
Well, this is depressing. I left the mortgage industry because I felt pressured to put clients into loans that they didn’t need, yet enjoyed the small bit of financial coaching I did. Currently halfway into my S65 course to be an IAR, and now I feel I’ll be doing the same thing. Almost seems worse than mortgage loans.
As a fiduciary and CFP® practitioner, it baffles me that there isn't more stringent regulation on advisors being a fiduciary. There is no reason for an advisor to not be a fiduciary other than commissions and money for the institution.
Honestly the analogy with the health professional is much more real than most realize in that, they are making recommendations to their patients based not on the patients needs or situation but rather on which pharmaceutical company is scratching their back and what can make them the most money… Again , not every single doctor is like that just like not every financial advisor is like that (:
As a Wells Fargo employee, I’ve never been harped on for trying to help customers the best that I can even if I miss a sell. Ever since that scandal came out they’ve really been trying to repair their image. Every other financial advisor/banker I know works in the peoples best interest and does it because they want to help people actually achieve their financial goals. Sucks that greedy people ruin it for the rest of us
Worked as financial advisor in a Canadian bank fifteen years ago just fresh out of school. This is crazy how true this video is. Starting from the cashiers to the branch manager, everyone has sales targets. Some advisors sold stuffs the client didn't need cause they wanted to keep their job, but I met a lot of people who did it for the money and didn't give a shit about what would happen to the client. Pretty fucked up place to work if you asked me.
As a former investment adviser, I've got to say, it often feels like you're at a crossroads: either meet the bank's goals or risk getting fired if you don't hit the monthly targets. It´s a global issue.
I’m new to Canada and have already had an RBC advisor and a former RBC employee (elsewhere) each try to get me to commit fraud on apps since coming here.
There was a legendary investor( without any specialized education) here in Sweden and when asked how he achieved his success he said: " I went to the bank and talked to an advisor and then did exactly the opposite that he suggested".
This is why I was so frustrated in trying to break into the industry. Every position available to me is sales and I want to be the advisor role actually helping people in their situations and providing advice, not shilling products most of which I don't believe in. And being self-sponsored is a huge ordeal and costs a lot more money than I even have. You pretty much have to be sponsored by someone else because it's not feasible for an individual to do it for themselves.
There is a reason why after 2008 many banks in the US no longer calls their Financial Advisors bankers nor bankers Advisors. It is to make a differentiation between people that have fiduciary duty and don’t. Also there is a distinction between financial advisors at a retail bank branch, wealth management, private wealth management, and private bank. I see many banks that now bought self directed brokerage firms and have their salespeople in retail bank branches to get people to open an account and they are also called an “advisor” just because they got proper registration but they actually have no clue what they are talking about since their job is based on sales quota instead of an advisor at Wealth Management level or above where their compensation is based on long term relationship with their client and is able to manage all aspect of their client’s finances.
Glad you’re looking into financial advisors, which i believe should be looked into more closely and investigating but yes banks are shady, I’ve heard horror stories and as for me, I was placed into a mutual funds with mixture of cds and index funds with high expense ratio compared to just placing it into an index fund. Next should be how to find non biased financial advisors, which to me sounds like an oxymoron with reading all this type of negative news.
Was a former RBC employee. I would always fight back against forcing clients into mutual funds. I would offer them either the safe option (cashable GICs or tell them to go the ETF route). That being said I was berated for never making sales LOL
Thanks Bagel for increasing our financial literacy. I wouldn't trust banks for that.
He works at a bank so ...
I think he works at a boutique asset management firm, which is very different from a retail bank (which is where most of the problems he highlighted can be found)
@@sublimeadebut he turning his revenue to come from youtube so he has no incentive to push the opposite
Banks make huge amounts of money from financial illiteracy. That's what credit cards are for.
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
This has been my BIGGEST issue with doing the role. The banks keep telling me to do things best for my clients. But when I do that, and dissuade them from taking a product because it isn’t suitable for their situation, I get dragged into my manager’s office and grilled like I’m in front of the KGB because I didn’t make a sale….
That’s why I can’t work as an FA for anybody else. Going self-employed seems like the way to go.
@@tonyh1345 You can't work as an FA if you're not certified.
Retail banking is a capricious job. They have to say the customer is the priority, but anyone with brains knows that's nonsense. You can do the job as long as you're properly cynical about it. It's not for idealists.
@@aluisious Not for academics*
@@tonyh1345 does it make it harder for clients to find you if you aren't backed by a bank or it's equivalents?
I work in a bank in Wealth Management and I agree. We're really just salesmen forced to shove crap products to clients just to hit financial targets
Are you even certified?
@@aluisious Does a person need to appeal to authority to spot a golden foil turd
I also work as an investment advisor in the US. There is a real push to sell products like annuities to people that shouldn't get them because the commission is over 4%. I didn't sell a single one in my first 2 years (2020 and 2021) because rates were so terrible I couldn't justify it. I'm glad to be in a position where my job isn't on the line if I choose not the sell high commission products, just my pay. My first year I only made 19k on sales. I constantly see people come in with terrible products from some other advisors who clearly only cared about the commission.
@@aluisious yes, for all products available in my country
This is my main problem as someone entering the field. Every interview has been for a SALES job first and foremost instead of helping people do the best they can with their wealth.
On the Bank side you want get training, strategies or education for tax planning, investing, corporate structures. You need to go to a Wealth Management firm, ideally independent, and be ready to scratch and claw to become reputable, build a book, and a finding a good team to work with.
Yes, we do live under capitalism moving ever rightward, unfortunately.
Try aiming for analyst jobs, or the energy sector, many principles that apply to the energy markets, applies to the financial market too
That's capitalism. Baby. Please the shareholders. Not the customers or employees.
I had the same experience when I was looking for a first job. Unlike the other Socialists here, I love sales, and capitalism, but I don't handle making large numbers of cold calls very well. Its just not my thing. A famous adviser set off a huge scandal a few years ago by comparing financial sales with a man getting laid, but the analogy is pretty close. Its just really hard to succeed at financial cold calling, or getting laid, and not something I could handle a lot of starting out. Unfortunately, its the primary way to work up to actual financial advising, so this path was not for me, even though I have a great understanding of investing and finance, I just can't sell that in a cold call to a stranger, its just too awkward for me :(
I used to work at TD as an advisor. The sales pressure literally made me sick to my stomach sometimes. My manager don’t even pretend to give a damn about customers, and see people as prey to exploit. Handing in my resignation was one of the best days of my life
What do you do now ?
I’ve been a TD customer for 20 years in the United States. I didn’t even know they had advisors. I have direct deposit. I deposit checks into the ATM when I get checks. I have been to a branch twice to buy euros before a vacation. Other than that I’ve never been inside TD Bank.
Fiduciary Responsibility. In the US, insist that an advisor has fiduciary responsibility to you. If they are certified and affirm that, they are legally bound to act in your best interest. If they say no, be skeptical of everything else they say. If they don't have a fiduciary responsibility to you, they aren't working for you -- you are the cash cow being milked.
I would say that if you are talking to a financial advisor who is not fiduciary, find a new financial advisor
@@barnabusdoyle4930 If you are talking to a financial advisor who is not a fiduciary, they won't even write "financial advisor" anywhere because they would immediately get clobbered by regulators.
This is true, but even those with fiduciary duty can have significant conflicts of interest.
Whole life insurance pays a huge commission per new client, for example.
@@barnabusdoyle4930 Saving this
@@the_expidition427 The term “Financial Advisor” is regulated by the government. Someone who presents themselves to the public as a “Financial Advisor” must be registered and must act as a fiduciary. Meaning all financial advisors are fiduciaries. What you really need to check for is competency and integrity. Unfortunately there are no easy checks for that.
I'm a CPA and it's really surprising how many jobs in Finance are more about selling a product than selling skills. I wouldn't mind being a personal financial advisor, but I feel like most companies hiring for that role are more interested in quarterly sales targets than the client's well-being.
The Finance space has gotten better over the last century, but we still need to work on ensuring clients aren't being abused.
It's all about the incentives: Look at that before anything else.
you dont know what their incentives are, how many people do you think are familiar with inner details of how these funds work...
@@krellin It's not that complicated. If you're not paying them for their services they're making money from what they're selling you.
@@davec8921 and yet so many people fall for it
@@krellin I was a private banker. We directly get cuts when the client buy a product and there is a quarterly or annual target we have to fulfill to avoid getting grilled.
@@wallstreetzoomer i know i'm in fintech too, but my point was that average person doesnt know or maybe even care...
I'll never forget a bank advisor telling me to use all my credit so I "can get a better credit score and higher credit line" i was 18 so he probably thought I had no idea he was wrong. But from that day I would never trust a bank advisor again.
Seems weird he do that... that seems to also screw the bank over too because they're misrepresenting the risk on your account.
There is some truth to that, in that if you got a car loan, and you never had one before, it would certainly increase your credit score during the course of the loan, because for some reason, not having a car loan takes off a few points from the total score. That being said, just having a few credit cards, even with no carried balance, also boosts your score in the long term, so just managing a few credit cards so that they are occasionally used and not closed on you will get you 90 % to a good score, in a few years of no missed payments.
I'm not sure what they meant by "use all your credit", but getting too far into adulthood with no credit can create problems for you. I was afraid of credit cards when I was younger so I never applied for one, and didn't ever take out any loans until I went to purchase my home. When I applied for a mortgage, the bank checked and found that I had no credit to speak of, so the only loan that I was eligible for was a variable interest rate loan instead of being eligible for a normal fixed rate loan. I've been subjected to a 4% rate hike as interest rates have risen over the last couple of years which has caused my monthly mortgage payment to rise by over 30%. I am currently in the process of refinancing the loan to get into a fixed rate mortgage so that my expenses stabilize. This all could have been avoided if I had applied for a credit card at 18 years old and then used it to buy a tank of gas every month and then pay it off before the due date. I think that people should be educated about credit cards and taught to use them responsibly to build their credit like that, but constantly maxing a credit card out will hurt your credit more than it helps.
The fucked up thing about credit score is that not immediately paying it off and paying the interest is the best way to improve it quickly. If you use your credit card like a debit card and always pay on time your credit score will barely move because the banks will think they can’t make any interest off of you.
@sprinkle61 sure, your right, but I now realize I didn't really add context, I was Applying for my first ever credit card, he knew that. he wasn't talking about getting different types of credit. He specifically recommended that I use my credit card to the max each month. I actually asked him again to be sure because I was always told the exact opposite, and he said yes, I should be using my credit card to the max, its better he said. He was telling me that a 100% percent credit card utilization was the best thing I should do.
Thank you for all your advice. I went to Wells Fargo a few months ago, and they tried to sell me an anunity. I asked if they were a fiduciary. They said no. I said no thanks. They said , "we do have some fiduciary products", but at that point, i felt the relationship was already poisoned, and i would never trust or be confortable with anything they recommended.
Never, ever do business with Wells Fargo! They are poison. I am not surprised to hear that their sales culture has not really been reformed, even after everything that has happened in the last 10+ years.
You probably have 3 credit cards and a checking account you don't know about opened in your name already.
@@aluisious I wish that was a joke...my father recently passed, so I was there to manage there, now my finances, and there were 3 checking accounts, and 3 savings accounts.
@@goodlight4113how do you find out about that if you want to check?
You did the right thing to avoid working with them on your financial advisory situation. Wells Fargo is known as the sketchiest big bank by a country mile, at least in the US.
I started banking with them before I knew any better, and I'm currently trying to find a better bank to park my money in that I can actually trust.
Feels spooky seeing you post this since I’m interviewing for a position in Financial Advising today. The position is fiduciary, which was a non-negotiable for me. The position also isn’t entirely commission based, so I won’t have as much pressure to get as many clients as possible.
Do some research regarding fee-only financial advising firms. They act more like consulting firms insofar as they only charge you for their time, as opposed to pushing clients into funds that earn them commissions. Simply being a fiduciary doesn't mean you won't have conflicts of interest with your clients.
@@evanwheeler7687 Just FYI, fee-only can include advisors who charge an AUM percentage fee, not just advisors who charge hourly fees. Such advisors have a conflict of interest when giving advice about what accounts to invest into, since they would only make money from their own account that they manage.
So for example, if you ask about how much you should invest into a 401(k), where none of the money goes to the advisor, the advisor has an incentive to say you should lower your 401(k) contributions and instead invest more heavily into an IRA (that the advisor manages on your behalf in return for an AUM fee). The advisor even has an incentive to encourage a rollover (since the bigger the IRA balance, the bigger the dollar amount of the AUM fee).
The conflict of interest would be reduced if the advisor only gives advice about the allocations within that IRA account (e.g. how much of the IRA should be in stocks, how much in bonds, etc).
Thanks for linking to the CBC story. Interesting viewing.
In my experience, the people most in need of qualified financial advice are those least able to afford it. It's a brutal feedback loop. I was caught up in it until about a decade ago when a career shock made me pull my head out of my ass. Been on a new track since then, got smarter about money, paid off most of my debt, and even went back to school for an accounting degree.
For those struggling, financial literacy is the way forward.
I always recommend The Money Guy Show, Ben Felix, and The Plain Bagel to people curious about finance and investing. I love when you cover similar topics because it's nice hearing multiple trusted sources confirm information, and each one of you provides a little bit of nuance or perspective that adds to the conversation or aids in understanding. Great video!
I literally wrote the Plain Bagel down for one of my clients yesterday! He said he does youtube research so I was like hold on, lets give you some quality channels!
Money guys are just Ramsey wannabes with their FOO.
@@tonycrabtree3416 I disagree, the Baby Steps and FOO differ significantly, as do their thoughts on housing and debt
@@tonycrabtree3416 Not sure how.
They have significant differences, such as the level of priority they place on 401(k) employer matches. They're also in favor of credit cards and their starter emergency fund is based on insurance deductibles rather than an arbitrary number of one thousand.
@@tonycrabtree3416 so what? it works and they dont tell people they can live off of 8% of their Investments
Oh fuck me. In Australia we had the highest-level investigation possible because every major bank was doing this, and had been since the '90s. They found KPI-focused advisors had systematically driven people to suicide and knowingly saddled them with debt they couldn't repay. There's an excellent book about it called Banking Bad.
Yikes
It's videos like this that reinforce why I appreciate this channel. Putting the financial welfare of the viewer first, and being capable of pointing out the flaws in all sides of the financial world, not just memeing on meme stock and crypto scams but also highlighting the issues of "official" sources.
Just seeing the title I am reminded of the Wells Fargo fiasco from years ago.
There's a reason I don't go their for financial advice.
Same, though unrelated I've never particularly trusted banks anyways with the kind of fees and rates they give for checking and saving, much less investing, through them nowadays. Seems nowadays more important than knowing anything is knowing who can tell you the truth.
I am with Wells Fargo Advisors and while I like my advisor OK and he has done well for me I f*ing hate Wells Fargo Bank.
Their whole culture is based on ripping off their customers and it seems like every 6 months they are in the news for some sort of malfeasance.
When I call and complain to my FA about the latest Wells Fargo scandal he is plainly uncomfortable and lamely tries to explain it away - probably just reading from the WFA script he’s given. My wife has her checking account with WF and we get into arguments 2 or 3 times a year about me wanting to dump them (I bank with Bank of America) and her not wanting to change.
Wells Fargo was second only to Credit Suisse when it came to financial scandals.
Which one? There have been a few
Bank advisors are most often there to move product, not to provide an investment relationship.
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
Why would anyone think that other people care about their wealth? The best financial advisor is yourself. Trusting other people with you money is lazy and naïve
I think unfair to tarnish all but there are definitely some conflict of interest
I wanted to be a financial advisor so bad, but when I looked into it, it just seemed like a sales job. Unfortunately so many occupations have this issue. Doctors have been incentivized to overprescribe medication, lawyers are incentivized to drag out legal proceedings so they get the most hours, and now financial advisors are incentivized to give people bad advice to keep their jobs. The sad part is if 90% of people don't fall pray to bad incentives, that still leave 10% that do, and that can cause a lot of damage.
Financial Advising or planning does indeed have a large portion of sales work.
You can be the smartest fiduciary planner in the world, but if you can't convince folks to talk to you or follow your recommendations then it's worthless.
Opportunity lies where responsibility has been abdicated. That financier job may still exist somewhere, you may not be looking hard enough, or maybe you need to invent the position.
I agree. It's the economic issue of our time. We are reaching the conclusions of our economic structure. Everything is done to get as much money out of the next guy and the ones who profit most off this strategy steer the reigns of power to consolidate behind them and their regressive behavior.
As someone who is trying to get into this field, this is very disheartening
Work for a fee-only financial advisory firm instead.
@@evanwheeler7687but those can be extremely competitive
Dont do it. Filled with losers. None of them are rich. Imagine taking financial advice from some jackass making 80,000 year? Its like having an obese personal trainer
All of finance is the scummiest field you could possibly involve yourself with, what'd you expect? Why'd you want to go into such a scummy field to begin with?
@@xraceboyex There's a lot of value you can deliver to clients by giving them good advice and helping them understand their financial situation
This is the exact reason why I work in a fee based firm without in house products and not in bank
Being a fiduciary truly is the way to go. Like you I'm in the business and being a fiduciary has always served me well as I am not consumed with my success but the success of those I serve.
If the poor have the bad habit of getting pay day loans, then the middle class have the bad habit of listening to non-fudiciary financial advisor's advice.
I fully agree with your video. I went to a large bank financial advisor after specifically stating we were interested in purchasing bonds, to lock in the higher yields of 2022, before the meeting so he could prepare. When we arrived all he presented was high dividend stock funds saying they were the same thing. I used to work in finance and they are not! When we stated we were only interested in bonds he still kept to his argument. Needless to say, he did not get our business.
I joined an insurance and investment company, Old Mutual, and during our training, we were told to have 20 appointments set up by the time training was finished (two weeks). This is a clear example of undereducated.
Then I joined a bank in the same role. Direct unit trusts, which would have worked out much cheaper for clients, were discouraged, instead expensive products utilising these same unit trusts were pushed.
I had to leave, the pressure to sell was too high, especially to people that actually couldn't afford it, and you knew were going to prioritise entertainment, smoking, cable TV and takeaways, resulting in cancelling their policies, and the resultant claw backs. The more senior advisors had the more lucrative clients.
My mom went into a big Canadian bank recently to talk to someone about moving her investments there. Once the guy realized she wasn't going to move her entire portfolio immediately to him he got super salty and ended the meeting. She was wanting to give him between 10-20k just to see how he performed before moving anything significant over or giving him a lot of capital. Never responded to any of her follow-up emails or calls lmao. Most don't care about making you money they only care about making their own bag.
I have clients that work at banks as advisors, its clear that senior execs at Canadian banks have severely cut the ways that advisors can make their quarterly targets and being told to basically push more products on to customers. Its a symptom for sure
Just look at the people working at the bank and the reason for the curroption becomes clear
2:34 It’s insane how that is legal. If I’m struggling financially or just need guidance on how to manage my money I don’t want to be sold shit. That’s not only a conflict of interest but that’s just straight up taking advantage of peoples situations to sell products they don’t need. It’s irresponsible! Like, how would I as a client be able to tell if my financial adviser is actually telling me the truth versus them just needing to sell me something to meet their sales goal. That’s terrible.
Banks literally counterfeit the deposits for all the loans they write, what'd you expect from an organization that charges you amortized interest to counterfeit money that you have to pay back? There's much deeper issues than this, this is surface level of the scam
Short friday at work, pay day, and a plain bagel video
its gonna be a good day 🎉
🎉
That looks like my day today lol
There's an opportunity for one of the Big Five banks to say, hey, we're becoming customer-focused instead of sales-oriented, and will build a fiduciary commitment into all we do for customers. That would be the best "sales pitch" any of the Five could make, and create trust for existing and future clients, while sparing that bank's employees from these terrible quotas and other deformations of their relationship with clients. After all, what is at stake is the financial security of millions of Canadians.
The sales culture is ultimately counter-productive for the Five and their bottom lines, as more Canadians move to discount brokerages, robo-advisors, and fee-based advice. Imagine a bank thinking of its customers more than its shareholders, and that's a bank that will flourish, attract the best young talent as employees, and change the history of high fees and self-dealing in our financial sector in Canada. The other Four would surely follow.
As ever, thanks Richard (and Ben), for your wisdom and generosity in sharing as you do with what is approaching one million subscribers. Well-deserved.
No it almost assuredly won't. Many people would not believe them, and the other banks would just start marketing themselves as the same, immediately muddying the waters. At that point your shareholders lose their nerve and end the whole attempt within 12 months, before any proof or headway would get made actually building trust.
Banks as a whole are literally legalized scams. Don't be so naïve. Their entire purpose is to do no actual work for the most money possible, manipulate markets at scale, steal from people, and run racketeering operations. Liars and cheats, all of them
No, they have to worry about shareholders and profits before any kind of quality service to regular - degular ppl.
Yeah, I've learned in my 20's is that sales people suck. Not all, but I've been told completely incorrect information. Recently I was lied to twice when buying a mattress and lied to when getting a phone plan.
Honestly I just can't trust sales people in most situations anymore. I will need to have the information in writing. And I think this is the same as people selling financial products. If you are in sales, you have all the inventive to lie to people and get away with what you can.
On the topic of GIC renewals, TD is the fucking worst. They renewed my GIC without my consent even though I explicitly called them and told them to deposit the funds into my account. I had to call again after they ignored my request and the GIC auto renewed.
I've been moving away from TD since that issue and I'm now using one of the big online banks.
When I was a 19 year old kid who had just lost my only parent, a financial advisor at a major bank gave me legitimately ruinous financial advice that I'm still feeling the consequences of to this day. I didn't realize what had happened until it was far too late to do anything about it.
Well what kind of advice was it
IMO no one should be investing if they don’t have the basics of financial stability established: budget, emergency fund(s), high yield savings, and a 401(k), IRA, or other retirement vehicles in index funds. Always silly when the “bros” with pennies to their name want to bet it all on some kind of wacky schemes. You don’t need an advisor until you get the basics down.
Sage advice. I'm one of the lucky ones with a financial planner who practices what he preaches, and always directs me to put funds into instruments with appropriate levels of risk that have minimal fee structures. A few years ago here in Australia, the big banks got scolded by the government due to complaints for acting in their own interests, and not their clients'. You're certainly right about the issue being worldwide.
I used to work for a Credit Union. I was customer service, so my sales numbers were very low pressure, but every annual review, there was a chart breaking down how much of a bonus I could have made if I'd sold more. I knew a few reps who would just recommend absolutely everything because of this, regardless of suitability; they wanted that bonus.
I watch you all the time, and I am one of these branch advisors ~7yrs experience. There are bad apples for sure, but most of the ~100 branch level advisors I have met are good natured. I can pick out a few that I can tell are way too focused on promotion, and the problem is it doesnt take that long to get good at one category (investments, lending, business, management) before those bad actors get promoted for their sales skills and any consequences of consistent bad advice are dust in the wind. I don’t think anyones ever going to get caught for this. Best advice I have is for every product, a disclosure signed by client that shows our A and B recommendations (product they asked for vs product we recommend), and the referenced sales points/dollars of compensation we receive for either, and a reasonability statement. That or all meetings recorded for potential coaching/compliance use. Nothing else is really going to get us where we need to go.
It drives me nuts when an advisor steers someone whos making very little money into an RRSP.
I am so glad I don't have to do that. I work for a multinational insurance company in the policy department, not just sales. So I can honestly advise clients that a certain policy is not a good fit for them, and look for ways to make their policy cheaper. We do not work on commission, so that makes it easier too. On the other hand, I do see shady practices too. Premiums are jacked up for existing customers when their yearly contracts are renewed, it is cheaper to end the policy after a year and start a new one. I cannot tell clients that, but I can adjust their premium if they call to complain about the premium increase. I work in The Netherlands btw.
I do manage my own portfolio but in discussions with bank employed (Canada as well) advisors, yeah, the costly mutual fund push is disappointing. Fees are so high and they seemed to lack nuance, largely sticking to a canned "low, medium, or high risk appetite" mapping to specific funds. I'd be less mad if those were low fee funds and you weren't losing much for the basic level of advice given but it's a bit offensive when a 1 or 2 step flow chart takes a couple percentage points off your returns
It's quite the same in India too. Banks RM always miss-sell life insurance products disguised as poor money back investment products with high commission.
I’ve been following for so long now, that after hearing you say “As always”, I’m mouthing “Be safe out there”. 😂
we had a similar situation here in Australia. It got so bad that the government called a Royal Commission (RC) over it (search 2017 Australian banking royal commission if you're interested). This is *very very* bad for any industry or company that is the focus of the commission. The commissioner, often an extremely experienced judge, usually gets extremely broad powers to summon people to answer questions and that usually means they get absolutely raked over the coals over it. The RC is also open to the public and gets widely reported in the media. One of the biggest companies, AMP, got absolutely slaughtered by the commission. Many senior heads rolled and the share price dropped 20% after the release of the findings in 2018 and has since declined by 80% in value. The outcome of a RC is usually extensive findings and is also able to recommend legislation changes to prevent reoccurrence. Canada has RC's so something this entrenched should be investigated by one
We had a big scandal with this kind of stuff during the 2008 crisis in Spain.
Because of the change in European regulations the banks had to capitalize big, but the Spanish regulation had particulars that very difficult.
The result was unscrupulous sales people tricking the financially illiterate into putting ALL of their savings into the banks stock.
When the music stopped playing it wasn’t unheard of to see people having lost 80-90% of their savings just before retirement.
I used to work for TD in the US, it was my first job after college and this was shortly after the Wellsfargo scandal. I had studied the Wells scandal for a project in school and had gotten very familiar with Wells and their culture. I went to training for TD and the similarities was so blatant that I started looking for a new job right away.
As as canadian, I've witnessed some of this bad advice. For the last 20 years i only use only the no fee banks and do my own index investment. But sadly i have a friend who is financially illiterate and struggling financially and he's locked into some really bad investments from his bank advisor.( over a dozen high fee funds that largely all have the risk exposure and way too many bonds for his young age). He also pays high bank account fees (with dismal saving account interest rates) and doesn't trust the "free" banks because his advisor told him they are risky despite them all being fdic insured.
That’s why I left that sort of thing. I’m a bad salesmen and it didn’t feel great. Instead I write stock options…… sh*t that’s not much better is it…..
You have to look at their pay, and figure what quality of employee it attracts. I think it is Chase that starts employees off at $48k-65k with experience....in 2024.... that's just pathetic.
It’s not about the quality of employee, but what they are required to do.
@@pisceanbeauty2503 It's not about the quality of the employee, it's about how naïve it is to believe you can trust literally anyone in the world to make/save you money
I had a savings account with a major bank. The rate was low, but they told me it was adjustable, so when interest rates went up it'd be good. Well rates went up but my account interest didn't. I didn't notice this for most of a year, and when I went to them they said "well its adjustable, but you have to come in to talk to us and adjust it." So like lol I have to follow every single rate change and go to the bank every time it ticks up. "Adjustable"
I can guarantee that when rates go down you do not need to go to the bank for the rates to be adjusted.
@@jamesodell3064 exactly. Highway robbery.
The key is to ask your financial advisor to sign a contract saying that they will act as your fiduciary. If they won't sign it, they're not the person for you.
This step is not needed if your FA is already a fiduciary (e.g., a CFP).
It’s so short sighted, too. If banks built up webs of trust with their clients, working to make them wealthier and more secure, those clients would be loyal to the death. Instead, they think like investment banks. Quarterly returns and no understanding of long term repercussions on their brand. Sad 😢 for everyone
I’m glad you brought up physicians as an example of people who don’t have a financial incentive to provide care. Many larger regional or national healthcare systems in the States offer physician compensation packages that are, indeed, based on production. In RBRVS models, physicians are given a base salary or guarantee plus a “cut” of whatever revenue they generate. This model does encourage physicians to see more patients, but it often results in unethical and noncompliant billing practices.
I remember CBC’s investigation on Canadian banks selling practices in 2017 and one bank employee said he thought “this was not a bank but a flea market” or something like that.
Advisor and CFP here. Best thing I ever did was leave the bank world and go to the independent side. It wasn't just the best thing for my clients but also the best thing for my own sanity. Working in a bank is just miserable. Unless you've ever worked in one, you'll never understand. For example, in the bank, you're not allowed to discuss anything related to taxes. You'll be fired on the spot. Not joking. Wouldn't you think taxes are a big part of your finances?
But anyway, been independent for six years now and I love my job now and love helping my clients. My practice is super transparent, nothing to hide and that's how I think it should be. Best decision I ever made was to quit the bank, drop my brokerage license and just work with clients under the Fiduciary model.
Studying for CFP. Thanks for the insight!
Worked for Wells around the 2008 timeline. We were pressured that EVERY customer that you talked to needed something. Thus, why there were so many lawsuits for crazy stuff. If you didn't sign them up or pressure them, you got fired. Banking is shady and these days I use a credit union and NEVER go into banks.
I have been a financial planner of all ranks since 2014. You are 100% correct, the sales culture and pressure of the business is a massive conflict of interest that I have been voicing concern for, for a number of years. It actually handicaps newcomers, who are forced to learn and develop the incorrect client acquisition method.
Also, banks and insurers make money off the high attrition rate for new financial advisors. They know that most products sold by newbies do not stay on the books, and so when those are cancelled, they force the ex-planner to pay those commissions back, WITH INTEREST. I call it the third revenue stream that the public isn't aware of.
Bagel,
I’m entering the financial advisor space and greatly appreciate this video! Keep up the great work
I find the hardest thing to get a straight answer on is the fees... all the fees in exacts
From the USA and about to be a fully registered financial advisor. totally agree that financial advisors in this country are undereducated and the “barn doors” are kept wide open. I personally work off a salary right now for a guy who works commissions etc so I am learning a ton and the right way. But so many of my peers just jumped into sales roles and are selling mismatched products for commissions bc their boss told them too. We need way more regulation: not in the suitability dept but how these companies run! You shouldn’t add more paperwork to discourage corruption for every product: that’s punishing the everyday advisor no matter how ethical they are. You should be cracking down on what B/D’s in America can incentivize and buy in bulk. They shouldn’t be a Costco storehouse needing to move product they should be an intermediary between advisors, custodians, and products. End bulk purchasing!
There is a mountain of difference between "did not find widespread mis-selling" and "found that mis-selling was not widespread". The former applies if the investigator did not look.
Hey Richard, thank you SO MUCH for the resources. I've been really trying to get serious about my finances but trying to find reputable advice, even at my credit union (whose current president used to work for a bank that was partly responsible for the 2008 financial crash) I don't necessarily trust the options available. Genuinely appreciate the links!
Have a good weekend.
Studying for my CFP now, so glad to hear that there is a value. 🎉👌🏾
This channel is an oasis of reliable information in the desert that is finance. And to think we have access to it entirely for free
Nice video; thanks for bringing it up. I would only add that it is also up to the financial institutions internal audit departments to avoid this kind of situations. Supposedly, they are independent and, most of the time, report directly to the board and CEO; also, taking advantage of new technology, regulatory filings should be more extensive, and watchdogs should have better tools to analyze potential breaches of trust from financial institutions, as long as there is an incentive as strong as the current one, this will continue to be an issue and should be closely monitored, especially in today's world of highly advanced "financial gymnastics". However, I also think that few things beat responsible self-education, so thanks for helping with that.
Hey Richard,
thanks for sharing your insight on the matter. I was recently approached and sold on the job of advisor, and felt like the focus emphasized the compensation of the advisor. I decided to register to get the licenses required to become an advisor, as I had a big switch in mentality recently and thought I'd try changing career (worked as a BI/quant for the past 8-9 years). I think I share your view that an advisor can help bring a lot of value, but rather than just when their strategy becomes more complicated, you can still add value so long as you're able to help your clients achieve their life goals (which would be very different from an absolute return goal). While some instruments may yield higher returns on average, that disregards the characteristic of non-normality exhibited by some instrument (although you could argue that risk-adjusted returns could be used to reflect that), and that's where I think an advisor could bring value. What is your take on this?
P.S.: I have passed all CFA exams (recently), and hold the FRM title, but unlike you, I do not have practical experience when it comes to client advising.
I was a private banker, and I will say the private banking/wealth management industry reward dishonesty as long as you are street smart about it. Wealth management is especially bad if you have compassion because you are taking money from moms and pops whose life can really be affected by it. In private banking at least you act like Robin Hood except you steal from the rich for the rich (bank shareholders). The quality of people they hire is sometimes mind boggling too, like 2.0 GPAs from a non-target, this I can see why some investment bankers feel a certain way towards their private banking/wealth management peers.
With that said, I would still say this is probably the most “relaxed” “finance” job you can have while earning decent money IF you are not smart enough for asset management but have a network of high net worth investors that completely trust you.
This was part of the reason I left the industry. I was set up with my own advisory firm and as an RIA, acted as a fiduciary… although I was able to act totally ethically, I was competing for business with people who were not acting ethically.
Hmmm I wonder which of these REGISTERED PROFESSIONALS, who I specifically do business with the goal of making the most of my money, is less likely to outright scam me out of that same money.
This is all fine, this is a very robust and honest financial system.
In Australia, we had a Royal Commission into the banking and financial services sector which highlighted these issues. we've since increased regulations and it is significantly harder to become a financial advisor now than it was 10 years ago. since the royal commission banks have pretty much fully left the financial advice industry because it is too costly due to regulation and licensing and there's not enough profit when they can't just sell their own products.
it's not perfect, but now an advisor does have proper fiduciary requirements and all advice needs to be in the best interest of the clients. just like your video outlined, it used to be a sales role, now it's a proper profession, commissions are now illegal and only fully licensed fiduciary advisors are allowed to call themselves financial advisors, the label is very highly regulated. the issue is, it now costs on average 5-6k to produce a comprehensive SOA (Statement of Advice). for the average person, this is too expensive and so they're not getting advice or they're getting it from dodgy people online.
I left my job as a financial advisor for a bank because I felt it was deeply unethical that I was pressured to sell annuities to clients who were not suited for them, particularly when CDs offered a similar rate of return for shorter durations and smaller surrender penalties for early redemptions. I left the “sell side” of the industry and never looked back.
I was just trying to figure this out myself, perfect timing thank you.
my grandma was a "victim" of financial advisor from her bank, they saw she had a decent amount of money in her account and called her repeatedly to sell her their banks own mutual fund with a 2% fee (which is ABSURD when the average mutual fund fee is around 0.5-0.6), the fund contained a bunch of small cap tech companies and we know these companies are doing now...
In my country, we have retirement schemes that we pay into that are locked into financial institutions until retirement. The default institutions are big banks and they offer terrible returns and sky high fees. But people never get around to changing to a proper financial institution (and banks do a majority of marketing).
Over the long run, they will be stealing a huge chunk of people's retirement because they don't prioritise the customer.
If you ever ask their advisers, they will say that their retirement scheme is superior, even though half of it is invested in depreciating cash.
Love your insight, you just state facts and leave it to the viewer to make up their mind with the information given. You are one of the few that I believe genuinely have a RUclips channel to better inform your audience. Thank you.
Those Canadian mutual fund fees are insane. I work at a bank in the Netherlands and almost all mutual funds offered by us have an annual fee below 1% nowadays, with some large cap global equity funds having a fee structure as low as 0.15%
Thanks, Richard. I imagine it could be a bit uncomfortable to make this video, but we appreciate the pointers.
Advisor here: ask your prospective advsior a lot of questions. Hardball questions. You should be satisfied with the answers. They should welcome those questions. If they're annoyed, leave.
Agree. It is difficult for customers to know who is good and who isn’t. Definitely should be asking for compensation structure as they will show a bank’s priorities.
As a registered representative I have been horrified by some of the interviews I've had and how they expect us to mislead people
Agree with the medical doctor analogy
Speaking of conflicts of interests and banks, they now promote Donor Advised Funds (DAFs) to high wealth clients as a way to activate their philanthropy and giving. But banks don’t want to have these assets under management drawn down, which makes potential recipients (charities) suffer and the individual not achieve their giving goals. Great topic for a video btw. Love the channel and the decent info!
I was a FA at a private management place, the bank ofmy client offered him 9$ per month bank account for unlimited operations with an insurance.. the problem was he had the account for free for the same perks already. He had been a client since 1960 of the bank. That bank branch advisor wanted a sell at the cost of the client interest.
My dad was a victim of this. His bank had him buy an expensive and unnecessary life insurance by telling him this was by far the best available investment opportunity.
I’m a bit biased because I started my career as a branch advisor. But I am glad that the company I was with at the time decided to force every advisor to be a fiduciary, give us access to the same products that they use on the private bank side (before it was limited to annuities and other mutual funds), have a quarter compliance call, and most importantly raised the pay so we were not so reliant of sales. This is my experience so I’m not gonna say this is for everyone or every institution but I am glad at least my company at the time did something about bad advisors.
Common practice in any service based industry, at least in America. Auto repair is a prime example, there's a constant pressure on mechanics and service advisors to upsell as much as possible. I was just a low level mechanic at a few different dealerships, doing mostly tires, oil, and brakes, but I always told by service managers, service advisors, and other mechanics that I wasn't recommending enough additional stuff, even though I was working constantly with close to zero downtime. I only really recommended things that I found during my inspections, or services that were necessary based on a specific manufacturer determined service interval, but the guys who made the most money were the ones who had no qualms writing up thousands of dollars worth of completely unnecessary work on every single car that came into their bay. It's especially bad at large corporate dealership networks like Autonation, because if you don't want to be paid flat rate, AKA fully commission with no base pay, you CAN be paid hourly but you're looking at close to minimum wage. Every incentive is present for you to fully commit to being a scumbag, and that's the culture top to bottom. If you have your car serviced at an Autonation dealer, I recommend you look elsewhere.
Thank you for shining the spotlight on Banksters committing offenses of the usuary
Former advisor and I've worked with hundreds or maybe thousands of them in roles I've had since then in the U.S. I personally did not experience any of the negative incentives that you speak of at my small broker dealer but I've seen that a lot with advisors I've worked with. It's probably the exception rather than the rule, and certainly not specific to bank advisors, but I think getting a second opinion is always a good idea. Here in the U.S. it's insurance, annuity, and REIT products that offer super high commissions and often create incentives to place people in them when they shouldn't be. There's also a very common sales pitch for fee-based advisors that their incentives are aligned with their clients because "I make money when you make money." True, but they still make money when you lose money so not exactly genuine.
Well, this is depressing. I left the mortgage industry because I felt pressured to put clients into loans that they didn’t need, yet enjoyed the small bit of financial coaching I did. Currently halfway into my S65 course to be an IAR, and now I feel I’ll be doing the same thing. Almost seems worse than mortgage loans.
Thank you!
So many Meet Kevin's out there... You've got to keep your head on a swivel.
As a fiduciary and CFP® practitioner, it baffles me that there isn't more stringent regulation on advisors being a fiduciary. There is no reason for an advisor to not be a fiduciary other than commissions and money for the institution.
Honestly the analogy with the health professional is much more real than most realize in that, they are making recommendations to their patients based not on the patients needs or situation but rather on which pharmaceutical company is scratching their back and what can make them the most money… Again , not every single doctor is like that just like not every financial advisor is like that (:
It's great to hear you collaborate the story from Marketplace
As a Wells Fargo employee, I’ve never been harped on for trying to help customers the best that I can even if I miss a sell. Ever since that scandal came out they’ve really been trying to repair their image. Every other financial advisor/banker I know works in the peoples best interest and does it because they want to help people actually achieve their financial goals. Sucks that greedy people ruin it for the rest of us
Worked as financial advisor in a Canadian bank fifteen years ago just fresh out of school. This is crazy how true this video is. Starting from the cashiers to the branch manager, everyone has sales targets. Some advisors sold stuffs the client didn't need cause they wanted to keep their job, but I met a lot of people who did it for the money and didn't give a shit about what would happen to the client. Pretty fucked up place to work if you asked me.
for my fellow American viewers, a GIC is essentially a CD. it stands for Guaranteed Investment Certificate.
As a former investment adviser, I've got to say, it often feels like you're at a crossroads: either meet the bank's goals or risk getting fired if you don't hit the monthly targets. It´s a global issue.
I’m new to Canada and have already had an RBC advisor and a former RBC employee (elsewhere) each try to get me to commit fraud on apps since coming here.
There was a legendary investor( without any specialized education) here in Sweden and when asked how he achieved his success he said: " I went to the bank and talked to an advisor and then did exactly the opposite that he suggested".
This is why I was so frustrated in trying to break into the industry. Every position available to me is sales and I want to be the advisor role actually helping people in their situations and providing advice, not shilling products most of which I don't believe in. And being self-sponsored is a huge ordeal and costs a lot more money than I even have. You pretty much have to be sponsored by someone else because it's not feasible for an individual to do it for themselves.
I did it my self, but it was a tough process.
There is a reason why after 2008 many banks in the US no longer calls their Financial Advisors bankers nor bankers Advisors. It is to make a differentiation between people that have fiduciary duty and don’t. Also there is a distinction between financial advisors at a retail bank branch, wealth management, private wealth management, and private bank. I see many banks that now bought self directed brokerage firms and have their salespeople in retail bank branches to get people to open an account and they are also called an “advisor” just because they got proper registration but they actually have no clue what they are talking about since their job is based on sales quota instead of an advisor at Wealth Management level or above where their compensation is based on long term relationship with their client and is able to manage all aspect of their client’s finances.
Babe, bake wake up the plain bagel just posted
Glad you’re looking into financial advisors, which i believe should be looked into more closely and investigating but yes banks are shady, I’ve heard horror stories and as for me, I was placed into a mutual funds with mixture of cds and index funds with high expense ratio compared to just placing it into an index fund. Next should be how to find non biased financial advisors, which to me sounds like an oxymoron with reading all this type of negative news.
Was a former RBC employee. I would always fight back against forcing clients into mutual funds. I would offer them either the safe option (cashable GICs or tell them to go the ETF route). That being said I was berated for never making sales LOL