Unless you’ve been living under a financial news rock recently, longtime TD Bank employees have gone public – citing “incredible pressure” to squeeze bank profits from customers. Yet this is nothing new in the financial sector. The banking sector mandate is to loan loads of money and sell financial products to customers, almost to the extent possible. However the pressure to do so at TD Bank has invariably gone way too far.
So this begs a question for me – what’s next for TD Bank?
It also begs another more important question – what’s next for you the customer?
First off, embarking on cultural change is not easy. Behaviours become entrenched and are not easily changed. Thousands of TD Bank employees won’t change their ways easily unless a number of enablers are place. Even then, change starts at the top.
Secondly, there always has and will always be a “sales” element to any organization. Organizations are in business to make money after all. Ideally lots of it. Usually for management but ultimately for shareholders.
Image courtesy of CBC article referenced above.
Thirdly but I think most importantly – change starts with one – as in you – the consumer. Caveat emptor. If you don’t already do so, you need to take some personal responsibility for your own personal finance welfare. This means don’t believe everything you read or hear. Fact check. Don’t accept offers on the surface. Take time to digest “the offer” and think it through. Ask questions. Ask others. Read. Reflect.
Look at your own financial needs and understand them thoroughly before you make any major investment or purchase decisions. If you don’t know what your needs are – get unbiased, fee-for-service help.
You won’t always succeed in making the best financial decisions (you will make money mistakes) but hopefully your mistakes will occur less often and be smaller over time. I can almost guarantee if you take some personal responsibility for your money behaviour you’ll come out ahead and for the better.
Takeaway
I’m not condoning the pressure tactics of TD Bank. There appears to be legitimate issues to address at this organization. Management should step up. I believe some TD Bank employees genuinely feel insecure, threatened, and very stressed about their long-term job prospects if they don’t follow party-line. That’s not a healthy work environment and something I personally wouldn’t want to be part of. However, as a customer, never forget you have the power of choice. Never forget you can vote with your wallet. Don’t forget you have an opportunity to make good financial decisions for you or your family if you do your own due diligence. Change starts with you.
What’s your take on the TD Bank mess? Are you going to wait for change or will you take some personal finance matters into your own hands?
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Caveat emptor: You use this term in your post, and I think that is what bothers me the most. I really don’t think that the regulators should allow banks to get away with that sort of standard. Consider that people these days are borrowing from banks hundreds of thousands of dollars for their mortgages, or if they happen to be debt free, they may very well have their life savings invested in the banks mutual funds, again sold to them at the bank branches. Given the crucial role that banks play in people’s lives, this is an opportune time to push for a fiduciary duty or best interest standard. In the investment world, portfolio managers (typically with the CFA charter) have to observe a fiduciary standard, and yet they seem to be able to make a profit. Why not do this at the retail bank level? Wouldn’t it be something if the bank staff (and the managers who coach them) were obligated to act in their customers’ best interests?!
RBull made comments about the left-leaning CBC and how Bruce Sellery stood up to these reports. Let me say a couple of things about that. 1. CBC was approached by TD employees through Go-Public. They didn’t go out looking for this story. It came to them. And then when it broke, they received many many more reports from other bank employees. So, I simply can’t agree that this series of reports is a result of CBC’s supposed bias. As for Bruce Sellery, frankly his stance disappointed me. I think he might actually be the one with the bias as he makes his living in delivering financial literacy, and it is to his advantage that the financial services industry is an aggressive profit-seeking world. That situation results in a market for his guidance. If on the other hand, banks had to uphold a best interest standard in every interaction with their customers, then Kerry Taylor’s scenario would be more likely, in which the staff would really get to know their clientele and recommend RESPs or RDSPs because they know that their customers want to set aside money for their children’s education, or for the care of a disabled child in the future.
Speaking of financial literacy, have you ever noticed that the banks are really gung ho about it? The reason why, in my opinion, is because that means that they can blame their customers for falling for their less than ethical sales practices. It’s on them to realize that a lot of the products and services offered are only marginally beneficial and some are actually detrimental to the customers’ financial well-being. Shameful stuff.
Finally, let me comment that I am a bank employee. I worked briefly at a retail branch but have spent most of my financial services career as an investment representative in the discount brokerage world. I like that much better because advice is not part of the package and the sales pressure is not as intense as in retail banking, but it’s been moving more and more in that direction, too. Personally, I’ll observe that despite my stellar scores from clients with respect to the service I provide, because I am not (and will never be) aggressive with respect to selling other products and services, I have never been rewarded by management for my performance. The question to ask in terms of a business’s culture or ethos is, “What gets rewarded?” Does exemplary ethical conduct get rewarded? Or is it sales revenue and the customer be damned?
By the way, one of my children, a lawyer, says that many law firms are just the same, looking for any opportunity to bill their clients, even if the work done is unnecessary.
A bit of a rant…sorry about that.
Nothing wrong with your rant. You are entitled to your opinion.
I’m not anti-bank by any means. I’m a shareholder of many of them and I want them to strive for that reason and many more. I put that buyer beware disclaimer but I feel strongly that people/customers in any industry should do their own due diligence as much as possible. People, including myself, make mistakes. I’m far from perfect. However, I think most adults should at least attempt to realize if they are being hustled or pressured into a sale.
I mean really, if you have credit card debt, and can’t pay it off – and the bank is asking if you want more credit – is that something you really need? Is it that difficult to figure out? Maybe it is for some Canadians. I don’t know, I can’t speak for them. But like your lawyer offspring noted, in any industry, people are looking to sell you something you don’t need. It’s ultimately up to the consumer to make an informed decision. Unfortunately some people (not all) (who do banking or otherwise) don’t want to put any effort into their decisions.
I’m not wired this way but some are.
“Given the crucial role that banks play in people’s lives, this is an opportune time to push for a fiduciary duty or best interest standard.”
Absolutely and I would stand by that 110%. 🙂
My university student daughter, who has a student credit card with a limit of $1000 and no perks with it, had to go into TD to do a transaction at a teller recently. She came home with a fancy credit card which they signed her up for, cost was $30 a month, fee refundable with a minimum balance in your savings account.
I was surprised and not impressed, but she was so excited about being treated as a proper adult. I looked into the details and right on their site they say that a minimum income of $60,000 is required for that card. She earns max of $15,000 at her part time job.
Wow, that is bad. I wouldn’t be impressed either. That’s not feeling / being treated like a proper adult unless most adults enjoy being taken advantage of. I get the desire to push products and make sales, grow the lending book, but I think your daughter’s case study is not very good.
Yes, many people would have just kept the credit card, which was clearly a poor product for her. We discussed it and she decided herself to cancel it. She is a math major so can easily weigh the true costs of things.
That’s good. Math will serve her well in the future 😉
Sounds like a good idea to go with something more appropriate. I also wonder if they were treating her fairly since the charges for that card are $120 annually.
RBull, I realized from your comment that I described what happened slightly wrong. She came home from the bank with something that cost $30 a month; it was some fancy banking package which included the credit card, so it was a lot more costly than $120 a year potentially.
She is now back on a regular Visa, I think it is now a non-student one, but they switched it out and sent it to the branch, difficult to get to for a busy student.
Thanks for the explanation Barbara. I thought maybe it was a banking package, which you confirmed.
Good that with your help she’s set up with something more sensible now.
It’s al the banks…..See this article: “‘We are all doing it’: Employees at Canada’s 5 big banks speak out about pressure to dupe customers”
http://www.cbc.ca/news/business/banks-upselling-go-public-1.4023575
Yup. Thanks for sharing. It’s unfortunate some TD Bank employees feel threatened. There are sales and quotas to meet but then there’s extreme pressure and that’s not healthy.
Important but likely overblown. Particularly considering the source- heavily left leaning publicly funded CBC that thinks Mansbridge is worth ~$800+k/yr and over $500K/yr in his upcoming retirement plus $$$$ for guest appearances and his own show. However I have little doubt there is some abuse by some over zealous staff and managers and ambitious executives.
More awareness is certainly a good thing, if it causes all of the banks etc to review their practices and operate ethically, although thankfully for shareholders they should always look for ways to scrupulously grow their business. And more importantly to me, this could encourage customers (consumers) to pay much more attention to their own finances, so our government “might” stop the drift to a nanny state.
It’s not difficult or complicated to review your bank, credit card, mortgage etc statements to understand and verify all transactions, charges and services, and look at all options. When I see reporters from said media refer to experts saying this is complicated and time consuming, I laugh. It seems far more time and effort by many is put into social media and all the latest technology than it is into the most rudimentary of arithmetic and reading of their own financial statements. How do you not notice a change in your credit card limit, your overdraft protection limit, different/higher bank service charges, mutual funds that are essentially the same as another but charge an extra 1% and not question it or take even stronger action?
Spending some time learning more about their own financial planning and investments would benefit many bank customers and society. Complacency and little competition is why we have some of the highest investment and bank charges in the world. As an investor it’s not a bad place to be though, at least for now.
You said: “It’s not difficult or complicated to review your bank, credit card, mortgage etc statements to understand and verify all transactions, charges and services, and look at all options.”
I say: Very true. Just like it’s not difficult to eat well – but people don’t.
I think for the most part, people are lazy. They don’t want to put any effort into anything. They are busy, tired, overworked, overwhelmed and stressed about what’s happening right now vs. what might happen in 10 years. They also don’t read. I see this at work with emails all the time. They simply don’t read and ask questions until the 11th hour on things. It’s annoying but that’s the adult environment we live in now. I’ll deal with it or figure it out later mentality. It’s simply not smart. These people wouldn’t have been eaten by lions and bears hundreds of years ago easily 🙁
Good points. I agree with them all.
My wife has to listen to me commenting regularly about how lazy many people have become in most areas of their lives. The only thing that seems to get any exercise are peoples thumbs for texting and jaws from talking and eating. People pay to have anything and everything done for them now. I can’t imagine where we’ll be 25 years from now.
I think you meant “would have been eaten”!
I watched the National last night and fortunately Bruce Sellery stood up to the CBC report making lots of very good points in spite of the almost comically biased ones from CBC.
My wife and I watched the movie Idiocracy last night. The U.S. election reminded us of this movie. It’s silly but we absolutely believe this is where society at large is headed!
https://www.youtube.com/watch?v=BBvIweCIgwk
Check out the trailer. 😉
The CBC and other other media outlets can be biased. We all have our biases to some degree. I like Bruce. He gave me a copy of his book and I need to post a review of it on my site this spring. I might reach out to him for an interview. Very energetic guy…
Mark, that movie looks funny. Not on Netflix, where did you watch it?
Certainly relevant today, when “experts” are denigrated.
Ha. Pretty silly movie but mindless fun. We watched it on our Android topbox.
Thanks for the chuckle at that trailer.
I follow way too many Canadian blogs. Nelson wrote about the banks, you are writing about the banks, R2R wrote an analysis recently.And I posted my ground breaking article about which top 5 canadian banks are great for long-term investors 😉
In general, it is normal that banks are pressuring employees to deliver more results. This is bad for employees, and good for the company ( unless of course it leads to bad behavior like it did for WFC)
I personally find the financials behind Canadian banks to be better than those of US banks..I am positively surprised how Canada avoided a US style mortgage fiasco in 2008 and also today, as energy prices are low.
You at least follow the best one, ahem, MOA 🙂
Kidding aside most CDN banks have and will likely always make money – this is the business they are in. I don’t condone the pressure tactics and fear-mongering with staff but the desire to sell their products and market their services I have no problem with. Other big banks, U.S. included, are no different.
Since I’ve become a DIY Investor, I no longer blindly trust any business that also sells product at the same time. There’s is a conflict of interest that cannot be denied. As suggested, we have to take full responsibility for the decisions we make. Do your homework! Also my experience with TD in setting up my online account was nothing short of a nightmare. Staff are not accountable for their actions/inactions including management. The way businesses operate today, I feel very discouraged about the future. Don’t get me started. lol
Do your homework indeed. Banks are not different than other companies really – they are trying to make money. This was the point of my post. I don’t blame them for wanting to make a boatload of cash for their shareholders – it’s the way most publicly owned companies work!
Keep ranting if you want Moe. The blog doesn’t mind. It approved your comment 😉
It seems that within seconds of the news there were a couple of legal firms advertising for clients. While the behaviour of some of the banks employees is serious, I worry more about impending legal actions. This morning’s news headline is that all the banks do it (no surprise to most).
No doubt there will be lawsuits. The lawyers want in on some action and have to put food on the table too!
As a long term buyer/holder of equity here’s how I look at it. Fundamentally, what makes TD any different today than it was a week ago? Granted, they will take a short term beating over this (buy on dips people!) but ultimately this little market chatter won’t take the bank down. In the long run the value of TD shares will go up like every other large cap (at least, that’s the theory!). I’ll leave you all with Seinsei W. Buffett’s words of wisdom. “Be fearful when others are greedy. Be greedy when others are fearful.” Now might not be a bad time to be greedy My humble thoughts.
To answer your question – nothing 🙂 I like being greedy with dividend paying stocks. I own a bunch of TD and trying to diversify outside CDN financials.
How is your portfolio coming along Max?
What’s new? I expect all the banks push their customers to buy their products and generate as many fees as possible, but one does not have to accept what they offer. Ok, many will fall prey and many will just assume the banks know best. Will many switch, probably not and hopefully they’ll be more cautious when considering bank products.
As an investor, one might be rubbing their hands together. TD has always been too expensive, at least IMO to buy. This may offer an opportunity to finally get some TD at a reasonable price. Set a buy price and cross your fingers. 2 years from now or maybe less this will be OLD news.
This is where I struggle a bit Cannew. I don’t condone the pressure tactics and forcefulness of TD, if that is really what is going on, but buyer must beware. If you’re not smart enough to know you should not accept more credit then you already have then that’s a literacy issue.
Honestly, I think it is a bit overblown till some kind of investigation is done beyond simply what a few people have reported. And I would have similar thoughts to Dave M; where similar things probably happen in other banks as well. For example, my fiance had her BMO VISA card limit increased without her consent during the summer after a visit to the branch. Should it have happened? No. Does it mean it is happening at every BMO? Probably not. I am also somewhat suspect of the timing of the original article to have occurred the same week as TDs earnings release, did they intentionally wait to see the latest report, or was that just the coincidence of the timing. Either way, they reported some good earnings, and now there is a 5-6% discount 🙂
It might be overblown, I don’t really know. I can only infer in what I read about and what the TD employees are saying.
As a customer however, you don’t need to put with this or tolerate the pushes. You can use such an opportunity to get informed and vote with your wallet. This is not a knock against TD per se but rather how you can treat any business.
I found the timing interesting as well but hard to say where all the motivation may lead. I’m a shareholder and I suspect most of Canada is, indirectly via ETFs and pensions. We all want TD to succeed but management has to step up.
I thought about pulling all my business from TD after reading about this in order to ” vote with your wallet” as you say. But then I thought, where am I going to go? Many commentators have said the banks are all the same. The only reason they provide a service is to generate sales. My search continues…any thoughts on the safety of non-bank brokerages?
Hey Dave,
From what I’ve heard, beyond the big-5 brokerages, Questrade is good (they have free ETF purchases) and Virtual Brokers is apparently very good as well. You’ll see their ranking in the article below:
http://www.theglobeandmail.com/globe-investor/investor-education/annual-online-brokerage-ranking-carrick/article33238778/
I meant to add….ensure whomever you go with…is a member of CIPF. If your brokerage sells stocks, bonds and other securities, it should be a member of IIROC and if it’s a member of IIROC, it has to be part of CIPF.
http://www.theglobeandmail.com/globe-investor/investment-ideas/what-protection-do-you-have-if-your-broker-goes-broke/article19783968/
Cheers,
Mark