Can You Trust Advice From Your Bank?
Banks are getting savvier about finding ways to sell their products. More and more Canadians are turning to online sources for financial advice, and banks are getting in on the act by engaging customers on their websites and social media channels.
One approach the banks have used for years is to conduct a survey about a topic like household debt, or budgeting, and then spin the results into a story where their subject expert makes recommendations using the banks’ products as a solution.
Unfortunately, a survey like this one doesn’t tell us much, but it does help promote and sell products for the banks.
Related: How To Make A Better Personal Budget
Can You Trust Advice From Your Bank?
The latest trend is for banks to use their expert staff to offer advice to consumers online. This is an interesting way to provide value for their customers, but it does seem dangerous to trust a bank that’s selling products to give impartial advice.
For example, there’s BMO’s adviceDirect, a new online service for self-directed investors who want more detailed advice and stock recommendations than the typical online trading account offers. Investors need a minimum of $100,000 in assets to use the account, which charges a fee of 1% per year. Will the advice be impartial, or is this a gimmick to create more trading activity within self-directed accounts?
Related: How Index Funds Compare To Equity Mutual Funds
RBC’s Advice Centre takes a canned approach to advice by telling you what they want you to hear. The site is set up to offer advice on banking, home ownership, investing and business. But it doesn’t take long to see that most of the advice on this site leads to buying RBC products and showing how RBC can help.
Fortunately, some banks and financial institutions have figured out that the best way to offer value online is to give expert, unbiased advice in an environment that makes people feel comfortable.
Here are two sites that you can trust for solid advice:
Brighter Life
Brighter Life, which is owned by Sun Life Financial, aims to share ideas with Canadians about money, health, family, work-life balance, and retirement. There’s great content posted frequently on a wide variety of topics written from different perspectives. They also have a good resource in their tools and calculators page.
Sun Life Financial sells insurance and investments, and there’s no doubt that Brighter Life is part of an overall strategy to sell more products. However, you won’t find Sun Life products and recommendations littered throughout this site. What you will find is solid financial information and advice you can trust, and it’s written in an engaging style that will keep you coming back for more.
TD Helps
What started out as a niche online community hosted by mortgage expert Farhaneh Haque, TD Helps has evolved into a diverse community with advice on home ownership, investing, planning for retirement, saving, borrowing and how to manage your money.
Related: How Much House Can I Afford?
What sets TD Helps apart from RBC’s Advice Centre is that TD’s team of experts answer questions from actual customers in an online forum. Unless the question is specific to a TD product or service, the responses I’ve read offered good advice without trying to sell you something.
While they can’t give buy and sell recommendations, you can still post your investing questions and get solid advice. I found detailed responses to questions such as, “How can I sell the 5 Nortel shares that I’m still holding in my TD Waterhouse account,” and, “I’m under pressure to invest in Nova Mobile. What’s your opinion on this stock?”
Final thoughts
You should be wary of advice you get from your bank, especially when you can see there’s a clear conflict of interest. Too often, we hear stories about commission-based advisors recommending high-fee products that are not in their clients’ best interest.
Related: Fee Only Financial Planner Vs. Commission Based Advisor
One reason we look for advice online is because it’s a more relaxing environment and there’s no pressure to buy now. Websites like Brighter Life and TD Helps, along with their parent sites, Sun Life Financial and TD Canada Trust understand that they can pull customers in with useful articles, or with an online forum full of advice.
The best way to sell a product is to build trust with your customers. We’d much rather buy from someone we know and trust, who’s not trying to sell us something every time we meet. It’s nice to know that at least some banks and financial institutions are starting to get it.
I’m not generally out looking for PF advice, but I’ve always been impressed with TD Waterhouse’s communication and general customer interaction. Looks like they’ve hit on another winner here.
@W – I was impressed with the detailed answers to a wide variety of questions and topics on TD Helps.
I really like where Sun Life has taken BrighterLife. I thought it’d be inundated with life insurance falsehoods like “life insurance can be used as an investment”, but the marketing aspect is tame.
The rest of it is ludicrous. The BMO “advice” promo would be laughable if not so potentially poisonous to a portfolio– if banks knew better, then their mutual funds would beat the average.
The WORST self-interested “research” in Canada is CREA’s “reports” on the Canadian housing market. Completely inaccurate, their index is a frankenstein designed to lie and constantly create upward momentum in prices — it’s just a gigantic shill job by a joke profession to protect their monopoly on money-stupid Canadians who can’t sell their own houses.
@Joe – BMO’s adviceDirect is not a bad idea if it’s aimed at new DIY investors who need a bit of hand holding. Probably cheaper than the mutual funds they were buying before. The problem is, it’s aimed at investors with over $100k in their portfolio, and I doubt they’ll want to pay 1% for this service.
CREA…don’t get me started 🙂
I personally don’t like dealing with the banks any more than I have to. I am fortunate to be able to work with USAA which is a private bank that only deals with military and their immediate family. Since there are no shareholders, profits are retained for financial strength or returned to the members at the end of the year.
Sometimes dealing with a bank might not be a bad idea. Yes, they could be trying the sell you something, but it might be something that could be very beneficial to you. I think the key is research. Know what you need, know what is out there, and then look for viable options. Don’t just take their word for it. I really want to check out TD Helps. It sounds like a good place to get some sound PF advice.
I certainly know that there is very, very little advice I would trust from any of the banks I keep accounts with. Most of the people there know only a minimal amount about what they are selling anyways. If they knew more they wouldn’t be in that position and would probably be trading instead (though to be fair, many of the traders are hopeless too).
So unless I meet an individual who has a proven investment/trading record that can beat my own then it seems quite unlikely I would be taking them up on their services. Yes, it requires more of my own time but luckily I like the research aspect of it all.
Saying I don’t deal with “banks” any more is ridiculous. It is almost as ridiculous as saying that ALL financial professionals are trying to steal from you… The key is for an individual to work with a person that is genuinely providing value and working for your best interest. The key is finding them.
Agree with fiscally fit. Banks seem to do a little better in small cities/towns as everyone knows each other.