Big banks make money cross selling.
Remember the last time you talked to someone at the bank? Were you asked to:
- Open a line of credit on your home (or refinance your mortgage)?
- Open a new credit card account?
- Roll over your 401k?
- Consider a "no risk" annuity for your investments?
You didn’t go there to get investment advice. You went there to deposit a check or get money.
Banks are in the business of making money. But you might not know the bank has a legal duty, a fiduciary duty, to put shareholders’ interests before clients’ interests. Wells Fargo is one of two banks in the US that is so profitable it earns a Morningstar "wide moat" status, meaning it will likely make more money than competitors (for 20 years or more).
If you are a shareholder (and own the stock), then Wells Fargo is a great business. That’s why Warren Buffet owns shares of it. He owns it because Wells Fargo is one of the best in the business at cross selling.
But Wells Fargo might not be such a great business for you as an investment client. Remember, if shareholder’s interests are first, clients’ interests are not.
Just last week Wells Fargo got caught in illegal activities that were a direct result of putting shareholders’ interests before clients’ interests. Employees secretly created millions of unauthorized bank and credit card accounts without client permission. They did this under pressure from their CEO. 5,300 employees were fired because they unethically tried to meet high sales targets.
Can you imagine the pressure on those employees?
Every publicly traded company is required by law to put shareholders’ interests first. Bank of America, Raymond James, Morgan Stanley and others MUST put shareholders’ interests first.
Now imagine the lengths these companies will go to make money advising investment clients. You see, in addition to putting shareholders’ interest first there are other conflicts. Banks can be paid by clients, but also mutual funds and insurance companies, and can profit from proprietary trading.
These banks are not like George Bailey’s bank in It’s a Wonderful Life (a favorite movie of mine).
The more you learn about these conflict of interests, the more you realize it doesn’t make sense for serious investors (and your friends and family) to invest with a bank (or insurance company but we will talk about that on a later date). What would it be like if you could work with an advisor who would always put your interests first?
That’s how we operate. Very simple. Global View. Working for you. Not Shareholders. Not investment companies. Just for you. Our goal is to make you worry-free. The first piece of that is to get rid of conflicts of interest.
Your friends and family are STARVING for good financial planning advice and they won’t get it from the banks.
Our services are not for everyone (and some folks just want to "do it yourself"). But we believe EVERYONE DESERVES to know what they own, and to know what conflicts of interest they face.
To make this really easy, we created a truly no-obligation process so your friend can feel comfortable that they will not have any ongoing obligation. Setting the Path is a two session process for which we charge $485 with no ongoing obligation. Period. Should your friend hire us for ongoing advisory services we will waive the fee.
To schedule a Setting the Path session for a friend or family member (or to just tell me what you think of this blog) you can email me directly, ken@globalviewinv.com or Erin, erin@globalviewinv.com. Erin schedules our Setting the Path meetings with our team of advisors and is probably better than I am at deciding which advisor is the best fit!
