The tax free savings account market continues to be a great unknown for many Canadians and the big banks apparently aren’t helping.
Recently, I asked readers if they were among the six million Canadians with the savings accounts known as TFSAs, and if they truly understood the value those accounts represented – and the flexibility they offered investors.
“The pitiful reality is Canadians aren’t taking advantage of this potential windfall,” I wrote. “Canadians have been convinced that TSFAs can’t be self-directed; that the only investment options are bank-sponsored funds that, frankly, aren’t doing investors any good or helping the technology sector, which would help our economy.”
And I suggested that your financial adviser’s interests may not align with yours. They may wish to place your TFSA money in financial products that benefit them the most, rather than looking after your interests first.
I also suggested:
- Start thinking of this TFSA money as your equity fund and use it for higher-risk investments. Remember, if the risk works, the reward is tax free.
- Consider investing in our country’s future. If Canadians don’t believe in their own technological future, nobody else will. We have some of the sharpest brains inventing groundbreaking technology. It will wither on the vine if we don’t invest in it. By helping out, we can create successful businesses with jobs and growth potential.
I planned in this column to provide some options for investing in technology, but then I read a very disturbing article in the April 2 Vancouver Province. It’s a version of a story that was reported across the country.
“Over the past few weeks, employees from all five of Canada’s chartered banks have broken their silence on pressures they face to meet sales targets at the expense of customer experience,” the Province reported.
“In nearly 1,000 emails and anonymous interviews, employees from RBC, BMO, CIBC, TD and Scotiabank have come forward with their stories of feeling pressured to up-sell, trick and lie to customers to meet unrealistic sales targets and ultimately keep their jobs.”
This very damning report is evidence that the customer is being duped.
Bank advertising is typically warm and fuzzy emotion-inducing propaganda. Is it designed to cover up shenanigans in the backrooms?
Similarly, if you visit a bank, you’ll find pleasant surroundings with comfortable seating, free coffee and reading materials. The staff are trained to be very congenial and helpful, giving you the feeling of caring and competence. Is this too part of the grand plan to cover up ugly parts of bank operations?
Most people seem immune to the kind of negative reports that have detailed pressure sales at Canadian banks. I think most believe this conduct is only directed at corporate customers and that the experience they get at the local branch is the real bank.
But perhaps it’s time to reconsider if your financial adviser’s interests do align with yours. Do your homework. Look with a critical eye at your service providers. After all, it is your money.
Joe Batty is an accountant with a specialty in new asset management. Joe has more than 40 years of experience in finance and accounting.
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