Sharing Daily Discoveries About Personal Finance And Business Topics

Understanding What Your Bank Gets From You Too

financial planning

I had an interesting situation today where I was actually out with another person in an effort to find a birthday gift for another. However, he had an appoint with his bank as apparently his financial planner wanted to speak with him. So, he decided to bring me along. Even before we arrived I was suggesting that they probably want to convince him to lock in some funds with the bank through investments. While I didn’t say anything in the actual meeting, I was literally there for the entire conversation.

For the most part it seemed pretty straight forward as expected. Since he has tens of thousands of dollars available the financial planner was suggesting that he lock in various funds into investments that would be tied up for like three years. These were safe and guaranteed investments. He didn’t seem too pressured at all and was level headed such as saying he wanted to make sure he always had X amount of funds free and did not want to invest in anything that has a risk of losing money. Eventually, he did agree to invest some funds into three year terms.

He ask me what I thought after and my response was that it seemed alright if you simply always want to play it safe. At the same time the banks really love it from a business point of view since it gives them more funds to say loan to others to then generate even more interest off them. His response was of course as he understands that they must be gaining something to be offering him these services. To him, if they both didn’t gain something then there was no need for the business relationship.

While that may seem like such a small detail, it’s important to think of things like a bank as a business and what they get from you as opposed to thinking they are like an overgrown piggy bank in your room that is simply keeping your money for you. Like in this case it makes you think more where instead of investing into something blindly you should think and research a bit on how much they gain from the transaction too. You never know as similar to a retail store, if there is one item that you know where the product is marked up by like 500% then most likely they are recommending it because they gain more from it as opposes to it being the best option for you.




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