December 4, 2008, 6:00 am

A Banker’s Perspective On The Banking Industry

by: The Financial Blogger    Category: Banks and You
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How can you do business without trust? And how can you trust banks that created the mess we are living in? And for the most important part; how can you tell the truth to an financial adviser and take his advices without having a second thought? “Is he trying to sell me or find me a solution?”. When I have car problems and I have to go see a mechanic to solve my problem. Even though my car runs well after, I still feel that I got ripped off.

I guess it must be the same feeling for most people when they go see their banker ;-). I have already discussed the fact that there are three types of financial advisers: The Clown, The Car Salesman and The Financial Planner. Unfortunately, we have more and more car salesmen and clowns than anything else.

The truth about banking is that we are living under pressure of getting our numbers, making our sales, and offering X number of product to X clients. We are measured essentially on these criterion. This is how we get a bonus at the end of the year.

Which such incentives, I would say that 50% of the bankers in the industry are shifting their banking practices to sale practices. They look at their bonus sheet every week and try to reach their objectives through financial product selling instead of giving the proper financial advices.

Can you blame them? Wouldn’t you change you way of doing things if you could earn 40% of your based income in bonus in the end of the year? Sadly, it is tempting for several individuals.

Are you discouraged yet? Wait. There is still hope at the end of the tunnel! On one side, we have banks increasing their conformity rules and reinforcing their good practices. A bank is like a child who wants it all; they want to make money, but they also want to be legit 😉

While they don’t push people to act on the verge of ethic, they created a system pushing their bankers working their way through their bonuses. I can see some great modifications in bonus policies (such as increasing the part of the bonus related to good behaviors instead of numbers) which lead me to think that we can still have faith in our financial adviser.

There is also the other 50% of bankers which believe good financial advices worth much more than any quick sales. I am already getting the benefit of this practice with my clients. When you are really trying to help people, when you are telling them what you would really do if you were them, they know it. While I feel better at night, they feel better too!

If you are seeking a good financial adviser, I suggest you read the following series on how to find a good financial adviser:

How to find a good financial advisor part 1

How to find a good financial advisor part 2

How to find a good financial advisor part 3

How to find a good financial advisor part 4

How to find a good financial adviser part 5

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