The TD news doesn’t surprise me, and it shouldn’t surprise you either.
When CBC recently dropped the bombshell that employees were being pressured to sell unnecessary products to customers, all I could do is roll my eyes. It wasn’t news to me – that pressure has been a feature of the financial and banking industry for as long as I’ve been a part of it.
My journey in financial services
When I joined the financial services industry 25 years ago, I was full of energy and idealism. In my first five years, in the credit union environment, I soon discovered that I loved helping people with their finances.
But my entrepreneurial spirit urged me to spread my wings. When I heard that being an investment advisor provided the opportunity to be of service, plus tremendous potential if I was willing to put in the work, it seemed like the perfect combination. Continued learning, a greater challenge, and unlimited impact. Sign me up!
Next step? I applied to a bank-owned brokerage firm where my parents were clients.
I interviewed well. The firm was impressed with my professional accomplishments over the past five years, rising from teller to multi-branch manager at the tender age of 28. They liked the idea that I had a business degree in marketing. They asked me to do a raft of intelligence and psychographic tests, which I completed in record time.
Next, the second interview. Where I got the bad news. I would not be welcomed into their rookie investment advisor program.
The reason? The psychographic test suggested I was not “sales driven.”
I found another firm that hired me, but ultimately discovered that viewing potential clients as people to be sold to, rather than advised, was deeply embedded in the culture and structure of the industry. True, clients would be given advice. But in the end, earning a living required that I sell stuff. The stuff they wanted me to.
Going on my own
So, in 2000, I went independent. No more conflicts of interest, and sales targets. And I started a fee-only financial planning firm at a time when Canadians didn't understand the value of paying for independent, objective, holistic financial planning advice. Almost nobody was doing it. It was a time when friends and colleagues frequently asked me “Why should I pay for financial advice when I can get it for free from my current advisor or local bank branch?”
Fast forward 17 years. Canadians are much wiser. Independent fee-only Financial Planning is considered an invaluable process and a viable occupation. It's viable as a career now, because consumers are willing to pay for it.
And banks? They have to sell even harder than they did 25 years ago. Here are three reasons why:
- Far more competition – from credit unions, independent wealth management firms, virtual banks, and financial technology platforms such as robo-advisors. Do a little googling of “blockchain” and you’ll quickly realize that the basic foundation of banking is being challenged.
- “You never call, you never visit” – Sounds like a complaining family member, but in fact it’s the refrain of your bank manager. ATMs and online banking free consumers from the drudgery of visiting the branch. So there are fewer opportunities for bank staff to “offer” banking solutions to their customer base. It also makes it harder for them to build meaningful relationships with customers, so the pitch becomes more selling than problem-solving.
- It’s generational – Historically Canadians maintained their relationship with their bank for a lifetime. It set the banks up to be the solid, profitable businesses that they are today. What got them here won’t get them there though. Today, Millennials, GenX and GenY and many Boomers put value ahead of loyalty when choosing financial products. It’s easier to make a change than ever before. That leads to a more aggressive bank sales culture, since everyone’s business is up for grabs.
Moral of the story
Canadians can be proud of their banks. The World Economic Forum has singled out Canadian banks as one of the soundest in the world for the past nine years in a row.
But! Remember, when you talk to any bank employee, that banks are not impartial, and they do have an agenda. While it is easy to see a bank as a solid, safe, unbiased authority, the real story is more nuanced.
Keep that in mind, particularly when you are making a banking or investment decision!
This information of a general nature and should not be considered specific advice, as each reader's personal financial situation is unique and fact specific. Please contact your financial advisor or Caring for Clients prior to implementing or acting upon any of the information contained herein.