A recent CBC article exposed part of the reason why Canada’s banks can post billions in profit each quarter. They set hugely aggressive sales goals for front-line employees.
Toronto-Dominion Bank (TSX: TD) was highlighted in the report, but it’s hardly alone. Even my credit union hits me with similar sales pitches every time I step inside a branch, and credit unions are supposed to be a kinder and gentler version of banking.
How can you avoid falling for high-pressure sales tactics?
The first key is to question everything. Any good salesperson knows the way to a sale is to highlight a product’s pluses and minimize its minuses. The easy way to counter that is to ask pointed questions. When pitched a new bank account, specifically ask about the fees and compare it to what you’re currently paying. Do the same thing with overdraft or anything else you might be offered.
Wealth management services can be particularly tricky, but ultimately an expensive mutual fund offered by a bank will usually underperform an ETF, primarily because of the fees. Don’t let greed or a bank rep’s grand promises trick you into thinking otherwise.
The final key is to make sure to never say yes to something inside the branch. Take your time, do a little research – the internet makes this incredibly easy – and make up your mind in due time. Make sure to check out competing products. There’s no rule that says you must have your chequing account, credit cards, and investments at one place.
