As you know from last week, I started my career at the bank (the green one). I started where many other employees start, on the phones. You also know that I left said bank. Today, I'm going to let you know why.
In the beginning, it was a service-oriented position, assisting customers with bill payments, opening new accounts and occasionally making some investments. Over the course of the year and a bit I was there, the job slowly transitioned to full-on sales, with quotas and accountability. I had issues with trying to sell someone in overdraft a new credit card or trying to sell an investment to someone with a balance on their line of credit. It just didn't make sense to me. So I decided one day that I wasn't going to sell products to people who didn't need them. Instead, I educated my customers and tried to save them a ton. WARNING: Math content ahead!
There were 2 products that they were really pushing us to sell (yes, I said pushing, there were incentives): the unlimited chequing account and a 5-year GIC. At the time, their unlimited chequing account was $12.99 a month. This allowed you to take comfort in using your debit card as much as you want without incurring more charges. They also would waive those fees if you kept a monthly minimum of $3,000 in the account. The 5-year GIC was a nice, safe place to put your money and gain a little interest in return. At the time (May 2007), comparable GIC rates were about 4.10%.
Let's say for argument's sake, you invest $3,000 into said 5-year GIC. At 4.10%, your first year return is $123 ($3,000 X .041). Of course, this would compound each year and at the end of 5 years, you would have $3,667. Now, if this was in a non-registered account, you would need to pay tax on the $667 of growth, but that's for another day. Similarly, let's say that, instead of investing in the GIC, you keep the $3,000 in your account waiving the fee. That's $12.99 in monthly savings, or $155.88 a year. Suppose we treat that like an investment; you invested $3,000 in yourself and saved $155.88. That's a 5.196% return annually. Over 5 years that is $779.40 in return if the form of not paying for the account. Oh right, you still had to pay for the account if you invest in the GIC, my mistake. You then lost $112 over 5 years (account fee less investment return = $779 - $667).
I started telling people this over the phone and my sales dropped. Management saw this and listened to a few of my calls. I was warned not to continue and was written up for my actions. I was written up for helping people save money! Within a month, I was gone. There was no way I could morally go into work every day and hinder people financially.
Thus, I educated my self with a CFP. I work for a fantastic firm who believes in people before profits. I only put clients into products that are right for them regardless of the compensation I receive. I help people live the lifestyle they want now and in the future. I DON'T get written up for doing the right thing anymore.
Kenneth Coombs CFP CHS RRC
Ken has 13 years experience in the financial services industry, is a Registered Retirement Consultant and a Certified Financial Planner. Ken has written financial planning columns and has been a guest on financial radio and podcast programs.