There has been a big buzz in the media recently about sales pressure in bank branches to upsell their clients’ additional credit cards, lines of credit, or bank accounts with higher fees etc. Some bank employees have spoken out claiming their job is dependent on their ability to meet sales targets and push the wrong products to meet targets, and keep their jobs. The media coverage and discussion has prompted me to share my thoughts from inside the financial industry.
This year marks my 25th anniversary in financial services and this is not news to me. I have long been aware of bank branch employees complaining about these sales targets. A single bank, or financial institution cannot be singled out here. This type of thing can happen in different financial institutions in different ways.
To be fair, we should also recognize this type of sales pressure happens in a number of different industries. It is not unique to the financial industry. Sales targets are a reality in many businesses as sales budgets are implemented for profits. Employees on the front line can be left feeling like they have a conflict between doing what’s best for the client and doing what they need to do for their job.
As a financial planner, this is one reason I’m happy to have an independent practice, but being an entrepreneur isn’t for everyone. While I endorse the benefits of an independent financial planner, let me be clear, this post is not for self-promotion purposes. In fact, I believe it’s important for the industry as a whole that all people who choose a career in the financial industry can, and should be able to do what’s right regardless of what structure they choose to work in; as an employee or self-employed.
I believe doing the right thing is the cornerstone of all good business and genuine growth. When you do the right thing by your clients, and have some basic business sense, everything else falls into place. In the financial industry, we are not in the business of selling products. We are in the business of providing financial solutions to resolve a problem that exists for our clients, or to meet the needs of the financial goals our clients have. Period. If you do a good job for one client, then two, then three, word spreads and over time you build a thriving business. Make no mistake, this takes hard work, patience and time.
Nationally, it’s no secret we need to improve financial literacy in Canada. We need to educate people and make sure advisors on the front line are offering the best advice possible. What we are seeing in this recent media frenzy are sales targets in certain institutions getting in the way of that, which is bad.
In order to truly help Canadians improve their financial situations we need to make sure individuals and institutions offering advice are doing so with the clients’ best interests in mind at all times. It’s common sense. This shouldn’t even be a question. We need to have this support from the highest level in Canadian financial institutions.
Having spent a number of years in corporate management in a Canadian Financial Institution I believe upper management in many businesses want to do what’s best for their clients. Unfortunately, this message can be the quieter sibling to the boisterous and almighty sales target who takes centre stage. As a result clients can get hurt in the process.
Amidst the negative media for the banks, it’s important to keep a big picture perspective and look at the strength and stability of our Canadian financial system. I don’t hate the banks but I do I dislike sales tactics and I think something needs to change for certain.
At a high level, I think we have a strong financial sector in Canada which is important for our economy. Personally I invest in a variety of Canadian banks and financial institutions in my investment funds and there's a good chance you probably do too. Across Canada, these bank and financial company investments are cornerstones in many investors’ retirement savings plans.
Lastly, it’s important not to paint everyone with the same brush. You can’t assume that every personal banker or teller is automatically pushing the wrong products on all of their clients. Some are, but there will be some who aren’t. There will be bank advisors who have offered good advice to their clients over the years and will continue to do so.
The backlash against bank sales practices affects all of us in the financial industry even if we don’t work for a bank. It affects the reputation of the industry as a whole. We need to acknowledge the problem at the highest levels, work to resolve it, and remember not all advisors are the same. While there are certainly issues in pockets of the industry, there are also many companies working on improved compliance and client experiences, improved financial literacy and knowledgeable advisors working very hard for their clients, offering good advice and doing what’s right for their clients every day.
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Stephanie Farrow, B.A., CFP., Stephanie has 25 years experience in the financial services industry, a diploma in Financial Planning from the Canadian Institute of Financial Planning and a Certified Financial Planner designation. Stephanie has been writing financial planning columns for local business magazine Elgin This Month since 2010. Stephanie and her husband Ken Farrow own Farrow Financial Services Inc. About our Farrow Financial Team.