dog gone
good advice or?
There are a couple of advertisements running on the boob tube these days touting your friendly banker as a source of investment advice. Come to us for a free second opinion they say. Let us advise you is the message. But can you trust these rascals?
I once worked in a bank back in my University Days. I gave out investment advice. I didn't know the first thing about investments. I had no money. I had no investments. Yet there I was in my inexpensive Sears suit(it cost me nearly $50!) pontificating on the merits of one account over the other or the importance of RRSP's or CD's as if I was an expert. Soon, I began to think of myself as a Banker and a source of sound or at least sage financial advice. I noticed that all the people that I gave advice to had more money than I did. But I was convinced that I knew about money.
Then I went back to University - the best one in Canada - The University of Guelph. Before graduating there I took courses in economics and discovered to my complete shock that I hadn't known anything about money until I got an A in those economics courses. Then I knew a bit. I learned more later in business. The Corporate Secretary who has an MBA let me in on a few more secrets and then I read her book and became actually quite intelligent on investments and business and manufacturing and things like that. I think I understand now how Bankers fit into the area of Investments and Advice.
First lets look at some investments Canadian Banks have made in the last few years. You may have heard of the Sub Prime Loan crisis. Yes they invested in those and yes they lost billions. And Enron? Sure thing -Canadian Banks were there. Teleglobe, Bancorp, BMO's natural gas trading losses the list goes on and on.
Its safe to say that Bankers have made some huge investment mistakes in the last few years and that therefore looking to them for expertise in investing might be somewhat like going to a bunch of automobile accident victims and asking them for safe driving tips. Or going to a bunch of fat people for advice on how to loose weight! Those wise advisors who got you into a portfolio with Enron and WorldCom and Nortel might just not be the folks you want to talk to. Again.
If you still want to talk to your Banker for advice remember the following:
1. You likely have more money than they do
2. You may know more about finance than they do
3. They can only sell you bank products from their bank
4. Their main interest is to earn some money from you for the bank product they sell you NOT you earning a profit
5. They normally have absolutely NO training in taxation a critical factor in investments
6. They are pleasant, well dressed and honest just not very bright when it comes to business and finance. They know banking.
Now lets not be silly about this. In fact the Banks -most of them have very good financial advisors IF you are rich and that means today having a minimum of $10,000,000 in the bank in cash and negotiable securities (not counting the house). Any less than that and you sir or miss get the B team. Somebody like I was 40 years ago knowing nothing that would make you any serious money. I work for the Bank - I am here to help you!
What on earth is that god awful shrieking-clanging noise????
Oh - its the Bullshit alarm again.
Typical Bankers at a staff party- a friendly bunch indeed!
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