Bank Financial Advice is Worse Than People Realize
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- Опубліковано 20 тра 2024
- Meet with PWL Capital: calendly.com/d/cpws-jyp-znp
Millions of Canadians get financial advice from Canada's big banks, but bank financial advice may be doing more harm than good.
References: zbib.org/c2f2f65a190044589449...
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Just walked into my Canadian bank and asked for financial advice. They handed me a list of CD options, a mutual fund brochure, and a t shirt that says 'I helped hit our sales target!' So... I'm feeling pretty financially savvy now
They pulled more or less the same shit on me in the US.
Is it at least a nice shirt?
Called Cdn bank at request of an older friend to see if I could pickup her statement of accts in a sealed envelope. I doubted it but called anyway and put on hold for supervisor. Then asked who friend’s advisor was. What does that have to do w/ whatever policy is? I asked what it was. They said it was more a rule then policy but did say she could make an appt with advisor to arrange for monthly stmts to be mailed. Why not over the phone? I told her to take her daughter to avoid being sold anything and just ask for the stmts.
😂😂😂😂
@@BenFelixCSIDoes PWL have nice shirts, or do they waste all their money hiring qualified CFAs?
Getting advice from the Bank is like asking a McDonalds employee what’s best for losing weight and staying healthy. Banks are in the business of issuing debt.
Banks and fast food restaurants are in the same category.
And... It's gone
Missed opportunity not putting this clip in the video.
@@BenFelixCSI Don't. Stay serious and irreproachable.
@@tyeealpha including such a clip doesn't automatically make it non credible. Patrick Boyle regularly has jokes while still giving deep financial knowledge
@@tomlxyz Yeah, maybe to you, but I respectfully disagree. It would be distracting, unnecessary, childish, trivial... I could go on. It's not the worst thing he could do, but it wouldn't feel on-brand to me at least. Cheers.
Next please
In Denmark I've stopped asking for advice in the banks. I always end up educating the employee, rather than getting anything useful from them
Imagine me, that lives in Mexico, trying to get financial advise... lmfao
Asking a retail banker for financial advice is like asking the 15 minute oil change clerk how you can reduce your lap times.
It's the same bs everywhere. Brazilian guy here. If you're lucky, you get a 100 IQ guy that has no idea that the mutual funds he pedals to the customers are rat poison. If you're out of luck, you get an 100 IQ guy that knows that you lose a lot of money on rhese funds, but doesn't care at all, it's not his money, it's yours. Stau away from any financial advisor and try to help educate your family and friends. It's a jungle out there.
Sooooo true
Same in Canada... I took an appointment because I was looking for a student line of credit and since I'm studying engineering there are banks that have special benefits for engineering students so I booked an appointment at one of those after looking at the website thoroughly so that the answers I coudn't find on the website be answered... The lady couldn't answer anything and was looking at the bank's website to answer my questions after I told her I couldn't find the information on the website and it was the reason of my visit... The appointment was a big waste of time, she couldn't answer my questions and tried to sell me products I didn't want. I now avoid financial advisers at all costs.
This is hardly exclusive to banks or to financial advice. It applies to anything from car dealers, to real estate agents, to store clerks, to lawyers, to contractors... anyone trying to sell you anything. It's not always done with malice, either, it's just that they have an incentive to sell, it's how they make money. There are exceptions, but caveat emptor is a good rule of thumb.
Idk. With wrong financial advice you can end up with nothing and never having enjoyed anything. If you get a car, house etc you at least have something for some time
@@tomlxyz No house can be better than one with a leaky roof, bad plumbing, and other hidden/unknown issues though.
I remember going into one of the largest retail banks in Germany and saying „I have 500 EUR left every month, what can I do with them?“. The advisor offered me a rip-off contract with crazy fees calling it an „investment“. But he was simply selling me products instead of giving me a financial advise. The crazy part is that he avoided the topic about ETFs completely. I asked him „What about ETFs?“ and he always changed the topic without really going into detail and answering my question. This was before I knew anything about ETFs. Imagine how many innocent citizens become victims of the so called „financial advise“ in retail banks.
This kind of counseling should be illegal, in my opinion.
In Poland, it is illegal. Banks are considered public trust entities and need to offer products with the customers’ interest primarily in their mind.
Recently, one of the biggest insurance companies (they’re also considered public trust entities) was punished because they offered insurance policies with additional financial products that were not clear to understand for customers and there was a high chance of them being misunderstood by the potential investors.
What banks ussually do here is if you ask about ETFs - they will sell you on "their product" that invests in ETFs and charge you fee like any other crazy investment product. They literally take your money - buy etf with your money with minimal fees and then charge you their crazy fees.
Ben Felix video? I click no matter what
In Canada, the term "financial adviser" (with an "e") is regulated and limited to fiduciary professionals. The banks employ "financial advisors" (with an "o") to provide misleading sales pitches to customers who believe they're being provided impartial advice. You couldn't make up a slimier story if you were trying to make a joke about how mendacious these banks are!
That’s dumb
Wait until you hear about the new CFP designation in Ontario.
This feels like a loophole that needs to be closed. An alternative spelling shouldn't change the meaning of a word.
I don't think being that misleading would be legal where I live
Thanks for this knowledge. I had no idea, and I'm sure most people don't either.
I use a building society here in the UK, they claim to be a mutual society. They're not a bank, plc company. So some yrs ago when they said I could get free financial advice and offered me an appointment, I went along. But it turned out all they wanted was to try and sell me products I didn't need or want. They just tryed to sell me insurance policies. No real financial advice, no useful advice at all
I remember when I was closing down my bank account.
Right next to me was a guy opening a bank account (apparently neither warranted a separate office), so I got to hear all the details. The man was an unskilled worker, lived with his parents in his thirties, had a high school diploma, made about 40% of the national median income, and was trying to open an account with this bank, because his existing debit card with his current bank was just swallowed by an ATM.
The bank clerk convinced him to get a credit card. The only reason he was unable to, because it turned out he's on a list for owing his previous bank money......
The main investing advice given by bank advisors is to buy investment products that have high fees and pay big commissions. Those commissions slowly convert the investor's retirement savings into the advisor's retirement savings. In investing, you get what you don't pay for.
If you’re not paying a fee for your advice you are being sold something. Bankers don’t work for free and good advice usually comes at a cost.
The thing is... In your daily/primary bank, you are already paying, a LOT, in different fees...
Not false, except that the advice you pay for will also be garbage, and they'll still try to sell you something. Educating yourself on what you are buying is still the best option.
@@KasperPlougmann well yeah you pay for the product/service of bank accounts. Expecting that for free would be like expecting Spotify for free. Nothing is free unfortunately
Ben gives his advice for free.
@@gepardtilly false, he gets compensated by UA-cam, UA-cam earns money from you. But even more important, he also sells his financial services and this is just a way to gain customers.
Ive received bad advice from:
banks, insurance companies, asset managers, private wealth managers and and and.
The moral of this story is to remember who all these professionals are working for. Essentially, they are salesmen, with one job, to sell their services and products to us.
Folks love no 'up front' cost and a seeming deal, but this is the reason that individuals charging for their time and expertise are more trustworthy than individuals charging and percentage fees. The problem, of course, is that we can't afford them.
Dont get me started on wealth mangers It sounds good on the pitch but obvious sucks your money via fees regardless of performance. my mom left morgan stanley because she wasnt in the fund scam and nobody would take her account without now I advise her on it. Now all she complains about is how many taxes to pay 😂
"You can pause your mortgage payments during COVID. "We'Re HeRe tO hElP" Meanwhile, interest continues accruing.
I don't consider these people to be financial advisors, I call them sales persons. A true financial advisor has training and knowledge in personal finance. They give advice tailored to the individuals needs, not what gets the advisor a fat commission.
Imagine… walking into a selling business only to be sold what the business is selling!
Walking into a bank to get financial advice is like walking into an auto shop to get advice on vehicle maintenance; the people with money will get experience and the people with the experience will get the money
I was told the same thing several years ago at a bank. When I told them I would think about it and study up before deciding they kept emailing me for follow-ups to the point that it became pushy and made me suspicious so I declined and went my own route, and your channel was a big help.
Im a health care professional and one of my patients, who's in their 70s, was instructed by a cibc advisor to sell covered calls. Literally makes no sense since she doesn't even own any shares to begin with.
Stuff like this is so common.
Damn, that’s cold. Won’t be investing in CIBC now 😅
That's a complicated financial instrument that only should be recommended to the most savvy investment clients.
I swear that alot of bank "investment advisors" got their education on Wall Street Bets.
But then she was sold the shares, so... perfect!
Isn't that specific financial advise that you need a certification for? Like, that type of advice seems like it would be illegal to give at a bank.
I agree but many Canadian investors may not see this video. For them, getting financial advice from a bank will provide better returns than keeping money in a cookie jar or in a low-interest savings account. PWL will provide better results, but bank financial advice is better than no advice.
This is the truth.
Greetings from Italy, Mr. Rip brought me here!
I appreciate all the great advice you've given me over the last decade mate! It's amazing that you've found a medium to share your advice even wider.
That's one of the reasons I left my job at a bank in my country...Employees are forced to sale products so the bank can pocket high commissions. And the worst part: most employees don't even closely understand how these products work! They rely on the ignorance of the client and manipulation.
When I finished University and wanted to start investing I was sold a mutual fund with a 9% front-end load. No wonder the guy paid for a round of golf. It didn't take long for me to figure out I was being ripped off. Years later I took the Canadian Securities Course and now manage my money. I now buy asset allocation funds, dividend-paying stocks, and strip bonds. My fees are low and my returns are decent. Now that I am retired, I may hand over my money to an advisor who recommends low-cost ETFs or just put all my money in asset allocation funds and move away from individual stocks. Time will tell.
Isn't an asset allocation fund more appropriate if you're at the stage of retirement?
Yes.
Great video Ben. More people need to hear this.
If they're looking for sales positions, they will deliberately avoid candidates with finance backgrounds.
It's the same in the U.S., and sorely in need of regulation. The number of very intelligent people I've seen sweet talked into misleading annuities (equity-indexed annuities as a way to earn stock market returns while never losing money...) and high-fee asset management (1-1.5% AUM + 0.6-0.8% fund ERs + front load fees) is sickening.
While it'd be best if people had better financial education, I think the reality is that it can be complicated and not everyone is okay with 100% self-managing their finances. The positioning banks do to make themselves appear trustworthy only to sell highly opaque, convoluted products really needs more scrutiny.
Another banger. Thanks for the great videos Ben.
Great video, appreciating the somewhat sensitive admission re selling actively managed mutual funds. My own experience with a bank was a sales pitch like "admittedly passive management has done well recently, but there are volatile times ahead so our sparkly wonderful 2.8% TER mutual fund is a better idea".
The advisor at my bank recommended heavily investing in my banks shares... Yeah I went and got an independent advisor. That independent advisor recommended indexes, but in funds and with loans from the bank paying him the highest kickbacks.
This is a fairly timely video. We hired a financial services firm and realized how much our bank was charging us in fees and bad advice. The cost was steep but the savings and knowledge from our financial advisor was well worth it.
You'll have the same issue if you ask your insurance agent about life insurance. Almost all of them want to sell you highly profitable whole life policies rather than the almost always more appropriate but less profitable term life policies.
Finally you are making a video man. Please make more videos. I learn lots from you🎉
I moved to Canada in 2017 as a student. Didn't know anything. I walked into a TD and asked for advice and ended up with a high fee mutual fund. It took me a year or so to figure out I should get out of it.
Best disclosure of all time! good work!
100% agree!
Thanks as always for some great content
Great Video - as a retired Cdn Banker I fully agree with your comments and findings - it is all quota based. Banks are like casinos, easy to get into but hard to get out of. Re money management, most of Canada's largest money managers are owned by the banks. The few independent managers have to compete against giants. I purposely choose a independent manager for this very reason.
Any tips for finding appropriate independent wealth advisors?
After my studies I started at the largest bank of my country in Europe as a retail investment advisor. I was shocked about the mindset of many colleagues who were considered "succesful". They sold financial products as if they were selling shoes, just convince them and don't worry about the consequences to the client. I saw many occurrences of clients losing life savings or worse because of this type of commercially-driven advice. After 1.5 year when it became clear to me that nobody wanted to do anything about it, I quit.
This almost happened to my Grandmother a few years ago. They tried to get her to move her money into something. Luckily she wasn’t super gullible and asked me about before she did it. I was so pissed when I saw what they were trying to move her into at her age.
A rare video where we learn a bit more about Ben's lore. While I wouldn't wish the job of selling expensive mutual funds on my worst enemy, I do agree that having that background is a valuable perspective. If for no other reason than to underline the importance of improving financial literacy for the average person.
Ben you are doing such commendable and honest service to us, looking after us like a modern day Jack Bogle
Was once in a call to negotiate a loan before the publicly announced date that interest rates would go up. At one point they asked "Would you like it to be a variable rate? Its lower than a fixed rate" and without thinking I said "Ha! I would have to be insane to say yes to that", and I guess because it was natural they laughed too and were like "Yea for sure". Then there was a long pause, where neither of us said anything, and they started talking about the next thing.
Then interest rates went up 6% a month later on the announced schedule.
Yeah, still remember CIBC 'advisor' telling me I should invest in bonds at the end of 2020. Very professional and knowledgeable indeed...
Ben Felix video? Take my like!
I totally agree with you. My previous wealth advisor gave me terrible advice. Good thing I changed bank😅
This needs to be played on a loudspeaker so that everyone hears! Valuable information for people not aware.
I only bank on Ben felix releasing banger after banger
Every time a bank employee learns that i have some wealth im being strong armed to have the bank manage my investments for me at im sure a very high fee.
I have gotten the strong armed treatment for ther financial advisor service from the company who i have my mutual funds in. What i told them is, "Iif i want your advice i will ask for it, until then leave me the hell alone!!!"
Great job Ben :-)
Id argue most firms entire goal is to sell you something
Financial advisors are salespeople, not really advisors. They are trying to sell a product and get sales commission. They want to sell you products that give them a higher commission even if it's not in your best interest or its a bad investment.
This is so infuriating. Ive been working in banking for a few years and I'm disgusted by the industry
Don't trust banks's advice; remember Wells Fargo.
Very important video.
Right after the crash in 2008, I was looking to buy my first property in Queensland. The account manager at my local ANZ branch was adamant that I could not have picked a worse time to invest into real estate and it would be safer for me to keep the mutual funds. In 2018, I decided to sell my property and get something closer to my work. An (different) account manager advised me that it would be unwise to liquidate my investments to fund the purchase because real estate price in the area was "expected to drop due to low demand". If I have listened to them both times, I wouldn't be able to afford a home at the moment. Realtors are blood sucking vampire and bank people are drones on a script.
Cibc forced my parents to do the wood gundy structured coupons... we have no idea how it works and the person barely went over any risks associated with that. Just had some fancy graphs all printed out, had them sign papers, and out he went. I'm trying to help them gain confidence and financial literacy to make decisions on their own or at least parse out advice that caters to them and not the sales person.
Ben trying to subdue his laughter throughout the video. I'm here for it....
🎯
Curious - what quantitative metrics are used (if any) at PWL to evaluate the advice that you give?
What prevents banks from doing the same?
I went to TD bank to pay off my house when that was paid off, I was completely debts free. Completely.
Right after I paid the TD advisor told me I should think about a new house and a new car, which I replied I don't want any debts anymore.
He told me I was thinking like an European which doesn't work as a Canadian, that the economy in canada must keep rolling, therefore as a Canadian I should keep supporting the economy by buying.
I just left. 😅
Respect
I had purchased $55000 of a certain mutual fund over a period of a few years, times got tough and I stopped investing for a number of years after that. When I was able to invest again I started doing some research and discovered I was a sucker! It was a hard leason to learn but glad I did.
In terms of high fee overly managed vs. normally managed mutuals, what would say is would be a good cost in terms of either outright $ or as a percentage of the fund?
be careful out there
Incentives, incentives, incentives. Unfortunately funds where the manager only gets compensated for beating an index during an entire economic cycle are rare. The same goes for publicly traded companies where the C-suite and board's compensation are highly focused on long duration deep out of the money call options.
In Swiss for example, 29% of advisor/managers beat the market. Out of them, 20% are banking advisors/managers, 80% independent ones. Bankers usually push their own structured products, which are expensive.
How do people NOT know this already?
Hey! UA-cam recommended me this video on my feed and its really well presented! Kudos to the work that you're doing 😊
Btw I could help you edit your videos and also make highly engaging shorts out of them.
Can you post a list of the sources in the video? Great work!
I love your new wig ❤
I may be misunderstanding something about your model of risk factors for investing. I believe you said that the lower the price, the more "value risk" is involved. Does that mean that if you are given a stock that it has infinite risk? What if you borrow the money to buy a stock, does it have negative risk? If you pay infinity for a stock does it have asymptotically zero risk? Likewise if the profits of a company have a negative trajectory does that mean that it has a negative risk factor for growth?
I really like the diversification free lunch idea, but I'm really having trouble with understanding the risk factors.
I will say that I have not read the underlying sources that you have provided, and maybe that would help.
investment advice is so subjective. As you’ve mentioned before, the outcome does not matter, so how are PWL employees evaluated objectively?
It really isn't. As Ben mentioned in the video, advising clients to invest in mutual funds instead of paying off high interest credit card debt is not just subjective. It is plain bad advice. The way PWL employees are separate from bank employees as Ben explained was that they do not have the same intense conflict of interest and they are credentialed.
I like bank dividends though.
The only financial advice I take is from Ben Felix.
That’s not good.
I went to RBC not so long ago, was recommended to get an RBC mutual fund instead of one offered by ishares that had a much smaller MER and a better preformance. I knew rhat made no sense and now I think I'm breaking up, just need to decide if I'm going to use RBC DI or WS.
Picking a good independant financial adviser is also a challenge... There are a lot of horrible ones out there... I'm graduating from an engineering degree in Canada and we had a conference with an independant financial firm and his whole presentation was basically telling new engineering graduates that investing was very complicated and that they shouldn't bother learning about it and trust him and give them their money to let him manage it. It was a big red flag for me... And halfway in his presentation I raised my hand when he asked who managed their investments and I said I invested in all in one etfs and he started saying that index funds were bad investment vehicles because there are too many of them and picking one is too hard and that an actively managed portfolio is better. All in all I was shocked because most people in the room knew nothing in investing and they probably fell for his tactics... He was just fishing for clients really.
On another note, I heard doctors and lawyers were amongst the worst investors... I don't know if there are any studies backing this up or analyzing people from which profession were worse investors but I think it would make for an interesting video!
That’s true. Independent is not inherently good.
@@BenFelixCSI But getting a good adviser from a bank is nearly impossible so...
Let's say educating yourself first is crucial! It helps filtering the good ones from the bad ones haha
Ditto most Financial Advisors in my experience... present company excepted (maybe..)
What about the advisors at the banks investment divisions ? Any investigation on these ?
Hey Ben, how do you feel about the services of private wealth managers at Bulge bracket/IB banks?
In my experience, they are distribution channels for the bank's products. A lot of the same issues as described in this video, except with fancier suits.
Walked into a bank, asked for Ben Felix and am still waiting :)
In America, I feel credit unions are the best option for banking services.
100%
I work as a client advisor in Wealth Management. It‘s true that it‘s mostly about revenues and thus fees usually are in the range of 0.8-2%/year. But: Most people lack the financial education or the will/motivation to do their own research and invest for themselves. Getting 4%/year by an expensive diversified portfolio is better than keeping everything in cash or doing uninformed risky investments. Plus there is the psychological factor of having someone to talk with in turbulent times. Which usually prevents people from selling low or doing other behavioural mistakes.
Yes, there is certainly a role for advice.
Pretty much exactly my experience too. I had money to invest and the RBC financial advisor 'advised' me to put it in a mutual fund that was mostly invested in RBC stock! Good for RBC as they essentially charged me for investing in their stock. That's not my only experience like that. It's terrible but you really can't trust any advice you get from a bank and I wouldn't trust them at all nowadays.
This guy rules.
There is negligible profit to be made by banks advising the mass market retail customer to invest in index funds, save in tax-reduced products, reduce certain debt.
Savings are a liability for a bank and consumer debt is an asset for them.
Therefore *do the exact opposite to bank advice* and you'll do great.
Ben is one of the smartest finfluencers on youtube, but I find this video very ironic. Of course a bank employee’s job is to sell bank products/services. Just as Ben’s job is to sell PWL Capital products/services. The problem is when customers expect to get advice and education from the same people. Customers should get educated before walking into the bank branch - either from schools (which need to add financial literacy to their job) or their parents or youtube. Also, there should be a regulation that bank employees are not allowed to educate, but are allowed to sell with accurate info. Just as I would not expect a Ford salesperson to tell me that Toyota cars are better I would not expect a bank employee to tell me to avoid fully managed mutual funds.
You touched on it in your comment. PWL sells advice, not products.
I work at an insurance company and thank god every morning that I don’t have to be anywhere NEAR the whole life sales team
I like term life, I REALLY like liability and fire insurance, but whole/universal/annuities are just ick
You should do a quick episode on how these insurance products are usually super bad investments who’s only upside is it FORCES you to “save”
I am working on a paper on "infinite banking" that covers a lot these issues. I'll make a video when it's done.
@@BenFelixCSI OMG I almost stand up and shout at people every time I hear the term "Infinite banking".
Where is the banking center of Canada and how big is the finance industry there?
Hey Ben, can you make a video about Synthetic/Swap UCITS ETFs and their risk/performance ?
I probably won't do a video on UCITS products since they're not relevant in Canada, and I'm not an expert on them. I will do a video on something similar in Canada though. Maybe that will be useful to you.
I got an interview from a local securities brokerage once (they were looking for an intern equity analyst), during the interview I told them my disgust of high fees when it comes to investing, they replied by telling me that charging fees to client is the way the firm itself makes money (you could imagine the awkwardness afterwards). Add to that, they still use conventional FAs and TAs instead of economic models, so yeah, lol
It's the same all over the world.
Hey Ben. Great video. How is PWL different from WFG? How do PWL advisors earn a good living if they are not incentivized to sell higher returning accounts?
PWL offers fee-based advice. That means we charge clients directly as opposed to being paid commissions by financial products. My understanding of WFG is that they are largely focused on generating commissions by selling mutual funds and insurance.
PWL still charges fees, though they tend to be lower than what someone would pay for a high-fee mutual fund. Our fee revenue is used to pay our team of financial planners and portfolio managers a salary.
when will a video on investor "return gaps" be made?? you've hinted at the surprising findings several times but not made full discussions about it yet.............behavioral/emotional videos like the buy vs rent are my favorite
ua-cam.com/video/IVJkTspjDUo/v-deo.htmlsi=K2sSzqhBB-JBnqPE
Awesome advice and great video. One main issue is that if you’re not able to DIY your finances great firms like PWL will only look at you if you have lots of money. Like in your example seeking advice with your first job at least the banks would take you as a customer, I wonder how a young person with little savings would be seen by professional financial advisors, probably unlikely to get a meeting
PWL currently has no minimum. We do assess client fit case by case.
For the young person you describe, an hourly-fee financial planner could be part of a solution. Easy to use online "robo-advisors" or asset allocation ETFs could also help.
Thanks for the reply and good advice, I guess it’s a matter of getting this type of financial advice to someone just starting out before the banks get them as a long term customer.
Who goes to banks for stocks?
If you want access to non-sales based culture your best bet is to use a Credit Union. Please understand that your typical non-regulated or non-FINRA member is held to "accountable" to "not" sales goals. This I believe only applies to US based institutions. I do not know how Canadian Institutions work.
Lol, next you will be telling me that you cant trust politicians!
I always wonder when my bank gives me a lousy interest rate but wants to manage my money-if they are good with money, why is my interest rate lousy?
what is the minimum saving to have saved up for PWL capital to manage your money?
We don’t have a formal minimum. We assess fit case by case.
How about insurance companies such as State Farm, All State, and Prudential?
Same shit different pile!
They pitched HK index at it's very top to my mother. I was with her and persuaded out and invested in S&P instead. You know what happened next.