TD Bank has been in the news a couple of times over the last week for somewhat unscrupulous tactics where customers are involved. The issue is staff has a conflict of interest, with sales targets driving customer interactions and product recommendations. Think about that for a second – when suggesting financial products and services, including products you haven’t asked for, they’re juggling sales targets they must reach against your financial well being. This isn’t limited to financial advisors at banks, who I’ve referred to as salespeople before, but includes tellers.
Banks are managing staff performance based on sales. The behaviour they’re reinforcing is one where sales trump all. If you want to remain employed, you have to hit a sales target. We aren’t talking about supersizing your fries at Wendy’s, when they suggest an additional product. We’re talking about investments and line of credits they push, among other products, which may not be ideal for your situation. Aggressive sales targets will lead to aggressive sales behaviour. It sounds like an oversimplification, but that which you reward is that which you reinforce.
The two articles in question have the following headlines and are both fairly interesting, fairly indicative reads:
‘We do it because our jobs are at stake’: TD bank employees admit to breaking the law for fear of being fired
‘I will do anything I can to make my goal’: TD teller says customers pay price for ‘unrealistic’ sales targets
My caution around large financial institutions isn’t new and I’ve been fairly wary for years. For investment advisors to have a ‘suitability standard’ instead of a ‘fiduciary standard’, for instance, bakes in all sorts of issues. They don’t have to suggest the best product for you, merely one that is suitable. So if the product they’re suggesting is higher cost, with no additional benefit over an alternative? No problem! The product is suitable.
Both interesting reads, and while TD has been singled out, this practice occurs in banks across the country, both north and south of our lovely Canadian border. It is highly unlikely that they are the only offender. People who work in banks aren’t intentionally harmful, but the context in which they work promotes consumer adverse behaviour. Listen to suggested product pitches with a healthy dose of scepticism. Educate yourself before you get taken for a ride.
Forbes on the difference between the fiduciary standard and the suitability standard.
An additional article from CBC’s Go Public on RBC promoting products that, after returns, barely kept up with inflation. You can’t control market returns, but you can keep your fees down so you get as much of the pie as possible. More evidence of salespeople at banks pushing products without fiduciary duty.