Reminder: Don’t Take Your Financial Advice from Banks

Canada’s five largest banks are true behemoths. They combine to have a market value of approximately $467.5 billion. Add in National Bank of Canada and Canada’s six largest financial institutions are worth approximately $500 billion.

To put that into perspective, Canada’s largest banks are worth more than economies like Belgium, Norway, and South Africa produce in an entire year. They are incredibly impressive.

You don’t dominate by making foolish decisions. Canada’s banks have done a fantastic job encouraging Canadians to borrow excessively while simultaneously convincing many of us to invest in overpriced mutual funds.

While this is incredibly good news for the average investor, the big problem becomes when Canada’s banks start teaching regular folks about financial literacy.

Not all this advice is necessarily bad, of course. Many bank-sponsored financial literacy programs are filled with solid guidance on how to avoid credit card debt or increase savings. And banks are usually a huge fan of paying back larger loans early.

But at the same time, I’ve seen a lot of dubious advice from these sources. Many recommend credit card balance transfers to get out of debt. Or they recommend their own wealth professionals to help with investing despite those folks only offering expensive mutual funds.

These solutions are, at best, double-edged swords that may not be an ideal outcome.

Ultimately, it comes down to this. Banks do care about financial literacy. But they care much more about growing their customer base. Remember this the next time a bank offers to give tips on how to grow your money.