The Canadian Banking Scandal: The Most Disturbing Fact That Has Not Been Mentioned... Yet
I can write a book on all this. Having been in the banking sector for over 20 years, I have seen this activity going on all the time. So bankers are trying to upsell by lying to their clients. Tellers, mortgage salespeople, investment sales people and branch managers are doing it every day. Good employees going on burnout because they can't handle the pressure of having their managers ask them about their sales numbers 4 times a day.
But we have not heard the most disturbing practise the banks use to generate profits. The advisor, whether it be in a branch or the bank's investment firm (Nesbitt Burns, RBC Dominion Securities, ScotiaMcLeod...) get paid more money for certain products that they sell and less for others. This easily leads to a conflict of interest, somethings that I have been preaching for years. It's incredible to watch salespeople gloating after the fact that they sold mutual funds to an 83 year old .
It's all about reaching objectives
Let's say a banker has to sell $5million of GIC's per year and $10million dollars of mutual funds. If they are at 130% of their GIC objectives and at 70% of their mutual fund objectives, guess what product will be pushed to the next client that comes to their office.
This is by far the most damage that can be done to a client's life savings. Furthermore, Most clients will not even know that they are paying incredibly high fees for these investments.
Seek out an independent financial planner that is not paid based on the product that he or she recommends. You will end up paying far less for your investments and you will not feel that you have been "sold to". It's time to stop the rip-off!!