Let’s think about it. Let’s think about it again. Questions arise fascinating, isn't it? For example, quantifying this all-in-one fee It could be as simple as applying the average profit from the bank’s current customer accounts as a percentage of the amount contributed by the saver or investor. In other words, for every euro the customer deposits with the bank, the bank deducts its one-off fee annually, half-yearly, quarterly or however it sees fit. Obviously, loans and mortgages would have to generate the cost of the money itself separately, with whatever margin the financial institution wishes to add, as it would not be fair for a customer who generates an asset for the bank to pay the same as one who generates a liability (or perhaps it would). But from there on, it’s the same for everyone.
This is just a light-hearted exercise, and I hope it will prompt some comments from you all, which I’m sure will be very interesting and insightful. Some of you may think it’s unfair for a casual saver to pay the same proportion as a more active investor who will be using a whole range of financial products and tools. At first glance, it may seem that way, but Let's have a look at it One more thing: what happens to a saver who neither wants nor knows how to invest their money beyond seeing it reflected in their savings account? They are easy prey for fund managers who kindly cause to invest their money in financial products that no member of their family can understand. This harassment is constant, relentless and ruthless. The money unemployed Placing money in a simple savings account or a fixed-term deposit is considered negligence on the part of the bank employee on duty, bordering on gross misconduct. This misnamed ‘adviser’ needs sell financial products that improve their clients’ operating results if they do not want to lose their job. Furthermore, they must do so exceptionally well if they hope to progress within the organisation and move from a customer-facing role to a more senior position—in other words, to go from a rank-and-file employee to cigarette lighter. I have personally met a few honest and dedicated bank managers who try to to do as little collateral damage as possible whilst barely meeting their commercial obligations, but they all feel uncomfortable with the work they do and long to one day be able to offer independent advice without the commercial pressure they feel is being exerted on them by their superiors. Obviously Only a lucky few will succeed. The rest will continue to live by the rule that has been etched into their very being: Sell or die.
Some of you might say that this commercial pressure is common to most of the work we do, and that’s true. But as I see it, it is infinitely more serious to sell inappropriately a financial investment product which, for example, consists of a collection of DVDs that we don’t need. Ethically speaking, there is no comparison: the significance and danger of negligence when it comes to our heritage is vital not only for us but also for our children. You don’t mess about with food.
In a scenario where a bank manager generated exactly the same profit for their firm, regardless of the volume of assets or the type of investment their clients made, the advice would be provided in a manner infinitamentity more appropriate and tailored to the needs and intentions of investors and savers. Even their personal relationship with them would improve substantially if, instead of selling to them, I simply provided them with a service. A service that would be worth a fixed percentage of the total amount of money customers have deposited with the bank. The professional expertise of the fund managers and the banks themselves would do the rest, and moreover, the monitoring of these fees by a competent body would be far simpler and more effective.
This scenario would be far more hygienic and convenient than the current one. Many of you will think it’s unfeasible or utopian; perhaps it is. But at the end of the day, it’s how a family office any self-respecting to be, and therefore does not have its own financial products. Obviously, the bank should continue to develop its own products, but without shove them down their throats straight to the heart of the financially inexperienced customer – that is, the vast majority.
The current situation is unlikely to improve much with the MiFID, as reported Consumerist y Echevarri in his interesting articles. As he rightly says Echevarri: «…it ends up protecting financial institutions rather than customers.» More or less the same kind of exploitation we see on a daily basis will continue, since, unfortunately, bank profits depend largely on it.
Anyway, we just wanted to put this idea out there so that you can let us know what you think. It’s always good to give some thought to to question ourselves methods that do not have to be set in stone. Progress has always depended on this.