Why Your Bank Is the Last Place You Should Go for Investment Advice
Banks started out as simply an institution that accepts deposits and produced loans for potential homeowners and businesses. Over the years, as we all know, they have been using those deposits to invest money for themselves. As an additional stream of revenue, they sell investment products and services to individuals. Many individuals take the advice their financial institutions give them verbatim, believing the professionals know more than the individual. Unfortunately, this is very rarely the case.
Even with just mild research, looking on careerbuilder or monster, you can see what major financial institutions are looking for in a “Personal Banker.” Chase, Citi, JP Morgan, 5/3 Bank, and many others all have two things in common in their “job requirements” section. They all explicitly state that they want individuals with sales experience, preferably phone sales with Verizon or AT T.; Secondly, they don’t care if the individual has any experience or competence with the basics of finance to start. What do those two things mean? Well, its important to remember that banks are businesses. Them wanting experienced sales staff makes sense. Depositors come in the bank, maybe that salesperson can sell them a life insurance policy or even a cd.
Here’s the kicker. Finance can be extraordinarily complicated depending on the individuals set of circumstances. While speaking with an HR individual from Chase, they stated that their company prefers individuals with experience in the investment world work as an analyst within their firm. They would rather those individuals not work directly with the general public, since they can charge more for their services by having them work with high net worth clientele. Also, those individuals will not push unnecessary products onto individual consumers who wouldn’t benefit as greatly from those products. While the perfect candidate for Personal Banker who has a few years of sales experience at Verizon is used to pushing any and all products onto everyone who walks through the door. Here’s a perfect example. Note how it says nothing about financial experience.
While you walk into your bank, being harassed by the late Verizon or AT T; employee to buy a cd with 1.2%, the real financial professionals are finding tremendous value plays for their high net worth clients in an office. While your personal banker may not have had any semblance of a financial background before starting with the company, they were trained extensively on the perks of their financial institution’s products. They were trained to tell you why their product is better than their competitors down the street. Unfortunately, since they don’t have real financial understanding, they can’t tell you why the construction sector is a bad investment during a recession. Why consumer staples are an okay idea, but not consumer discretionary. They don’t understand yet why high growth mid and small cap companies are a perfect storm to destroy your retirement portfolio, while mid to large cap value stocks are a remedy to the destruction your portfolio suffered during 2008.
Sadly, many people rely on their banks to help them gain some wisdom into the financial world. The banks rely on that type of logic to sell consumers products that will offer them little return, while allowing the bank to leverage those funds in the meantime to increase their balance sheets.
There are several platforms to invest in like Immobilien Dusseldorf. But for you to become successful on it, you have to take advice from professionals. Make sure to have a mentor who will guide you all the way to success.
So who should you get your investment advice from? Make sure whomever you speak to about any type of investment has at least a CFP. Even better than that would be a CFA. It isn’t terribly hard to gain a Series 7, or Series 63, or even a Series 66. The individual just needs to be a good test taker. A CFP, and especially a CFA comes with much more esteem, and is much harder to come by. While they may cost more for financial advice, it is at least someone you know has an in-depth understanding of the financial realm.