Let’s talk about the worst kind of people.
Okay, I’m being facetious. Who I am about to discuss are technically not the “worst.” Not when we consider people who allow their children to hold pro-life posters outside shopping malls for school credit, or those who take their flavourless gum and stick it underneath the armchairs that you lean on at the movies. I swear though, the demarcation between those people and these people, however, are gray.
I won't beat around the bush: Financial advisors of brick and mortar banking institutions bother me.
You know the ones.
You walk into your local branch, needing to open a second savings account (or something or other), and notice that you are being shuffled off to a small, yet airy, cubicle. The man sitting behind the desk looks about your age. Well-dressed, conventionally handsome, with an air of confidence that emits trustworthiness. After a quick bout of chit-chat, he does the deed. But wait — we’re not done yet. Have you thought about retirement? If not, you should. Take this pamphlet. Let me explain what mutual funds are. I have time – we can set this up now.
A helpful advisor morphs into a used car salesman. A five-minute task morphs into twenty minutes of polite head-shaking. An conversation about one thing morphs into an exhaustive discussion about something else.
This has not been my only interaction with financial advisors.
Last year, I casually posted on my Facebook profile a CBC article about a man who felt betrayed after trusting RBC Dominion Securities employees with his retirement savings only to discover that his investments were earning far below the market average due to the cut that RBC was taking. A relatively new financial advisor with TD Bank passionately commented on my post, articulating that he had his clients’ best interests at heart and that, “active management is alive and well and can offer value for the higher fees incurred.”
When I had asked him whether or not he had unilateral discretion to recommend financial products that were not offered by TD Bank and indicated that financial advisors often have competitive sales targets, his response was confusing at best:
“You’re right Jen there are sales targets because businesses do exist to make money. On an institutional level TD has been in transition since well before the CBC Go Public article. Upper management rolled out a new Mantra in early 2006 of Holistic Advice, and Advice in Moments that Matter stressing the importance of delivering on customer needs and following our “Noble Purpose” as financial advisors.
Personally, I speak to my clients about all opportunities that are available. This is a bit of a grey area as there is a responsibility both to the client and the shareholder and encouraging clients to move their business to OFIs is detrimental to the institution they currently work with. I personally never recommend robo-advisors because as someone in the financial service industry I am comfortably say that they are not all they’re chalked up to be, and lower fees are not strictly better than higher fees, the mindset should be “Value for Fees” and you should look at return net of fees both in bull and bear markets.”
Of course, I hold no personal animosity towards this gentleman. In fact, the little I do remember about him (he used to live in the basement of a house that had been divided into apartments of which I used to live in the attic with two other twenty-somethings about seven years ago), he was very nice during the one or two times we both drank on the communal porch, watching the passersby on our street in the heart of Chinatown.
The obvious problem is the institutions themselves and the false narratives that are perpetuated. Language of “Noble Purpose” emits an aura one is akin to experience while attending Sunday Service. Of course, there is almost no overriding similarities between for-profit banking institutions and organized religion. So, why become a purveyor of such language?
There is nothing noble about misguiding well-intentioned workers striving to earn a living while making the world a better place. I have no doubt that this gentleman believes that the service he is providing is of use to his clients. In fact, I would go so far as to assume that most of his clients are content with his services. Instead, however, we see the difficulties of this arrangement when we take a few steps back and appreciate the design of the financial ecosystem in its entirety.
The relationship between education and for-profit entities has always remained nebulous at best and an earthquake of information manipulation at worst. There are two camps of thinking: Those who believe that creators are capable of creating work that is scrubbed of their personal orientations, and those who are of the opinion that it impossible to wipe away a creator’s fingerprints off their work. I fall in the second camp.
Unfolding the logic of which the second orientation relies upon, it is impossible for a creator to be “neutral” in the conventional sense of the word. Whether your identity is tethered to a particular sexual orientation, economic philosophy, or racial or ethnic background, the motivation for your work is shaped by the lens in which you view your role in the world. For banking institutions, the prevailing objective is underscored by a zero-sum game: More customers for me means less for you. Beholden to shareholders, the priorities of financial institutions become skewed. While these interests may not always clash with those of their workers and customers – i.e. providing general financial literacy – it is well-documented that upon occasion sometimes they, in fact, do. I need only highlight the historical attempts of bank workers who attempted to unionize or when TD cut jobs despite reaching profits of $2 billion within the same year. When it comes to the bottom line, corporations are accountable to someone – and that someone is not their customers.
Education is simply too important to leave unbridled in the private market. As the disgruntled gentleman on my Facebook so poignantly indicated, advising customers about financial products remains limited. A financial advisor will help you select the most appropriate financial product that they offer – but not necessarily the most appropriate financial product on the market.
The commodification of knowledge, in this case receiving financial literacy in exchange for using their products, is unsettling. When for-profit organizations drive the narrative of an entire industry, we need to preserve the fragility of independent thought and notions of public, common good. “What about free financial literacy seminars that financial institutions sponsor?” you ask. To that I say this: You cannot bite the hand that feeds. This is true in the capitalist labour market and I have no reason to believe that this isn’t true elsewhere. Would a bank sponsoring a financial literacy seminar permit an educator to outright recommend another organization, such as a non-profit credit union, or discuss the disadvantages of that sponsor's products?
Financial advisors are misguided at best and eager purveyors of misleading uneducated customers at worst. Again, this goes back to their true Northstar: maximizing profit while minimizing loss. For financial advisors, this is an unconscious orientation but an orientation nonetheless. Their utilitarian function is to serve as foot soldiers for the institutions that do not prioritize our interests - and theirs included.
But perhaps I’m being too cynical. Of course, they too have families and rely on the income from their occupation. They must perpetuate (and oftentimes willingly) an economic system in which harms working people, which includes themselves. It must be difficult to be enslaved to a corporation that, through leveraging such a system, amasses $2 billion worth of profit and then eliminates their employment in the same year (or in RBC's case: replacing staff with temporary foreign workers). The irony is apparent and it is unfortunate.