{"id":22954,"date":"2009-08-22T13:45:00","date_gmt":"2009-08-22T13:45:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=316"},"modified":"2009-08-22T13:45:00","modified_gmt":"2009-08-22T13:45:00","slug":"asesoramiento-y-banca-honorarios-y-comisiones","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/asesoramiento-y-banca-honorarios-y-comisiones\/","title":{"rendered":"Advisory Services and Banking: Fees and Charges."},"content":{"rendered":"
It has been almost two years since we wrote this article on the perverse nature of charging commissions for financial services and the benefits of converting them into fees. Only in this way can we ensure the independence and integrity (though not necessarily the competitiveness) of the advice we receive. And this applies not only to financial assets but also to our entire estate.<\/p>\n

Fortunately for multi-family offices (and for their clients and the independence of their advice), the banking sector is light years away from considering such a change to its business model, and clearly prefers opacity and deception for the majority of its clients, who are incapable of even knowing or understanding the full extent of the rip-offs they face. Perhaps when they see their clients flocking to hire independent advisers whom they pay to filter the investment proposals that best suit them, the banking sector will also begin to consider that charging all-in-one, transparent and honest fees is the model to follow. If one day the banks evolve to that point, they will have just one task left: to become competent in their advisory services, for which they would need to retrain all their hordes of salespeople recruited and trained over so many years.<\/p>\n

Here is the article from November 2007; I look forward to your comments:<\/p>\n

\u00abAs everyone knows<\/span> that a fee is not the same as a commission. Etymologically, a fee honours the person receiving it, who is usually a self-employed professional, whereas a commission agent is not grants<\/span> always the best reputation. It is a burden we all bear<\/span> that banks charge all sorts of fees (small, medium, transparent, obscure and even Ali<\/span> Drool<\/span>), but\u2026 What if bank charges were levied as a fixed fee or percentage of each customer\u2019s total assets, regardless of the products and services they use?<\/div>\n

\"\"<\/a>Let\u2019s think about it. Let\u2019s think about it again. Questions arise fascinating<\/span><\/span>, isn't it? For example, quantifying this all<\/span><\/span>-in<\/span><\/span>-one<\/span><\/span> fee<\/span><\/span><\/span> It could be as simple as applying the average profit from the bank\u2019s 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\u2019s the same for everyone.<\/p>\n

This is just a light-hearted exercise, and I hope it will prompt some comments from you all, which I\u2019m sure will be very interesting and insightful. Some of you may think it\u2019s 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<\/span><\/span> 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 <\/span>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<\/span> 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 \u2018adviser\u2019 needs<\/span> sell financial products that improve their clients\u2019 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\u2014in other words, to go from a rank-and-file employee to cigarette lighter<\/span><\/span>. <\/span>I have personally met a few honest and dedicated bank managers who try to to do<\/span> 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<\/span> 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.<\/p>\n

\"\"<\/a>Some of you might say that this commercial pressure is common to most of the work we do, and that\u2019s true. But as I see it, it is infinitely<\/span><\/span> more serious to sell inappropriately<\/span><\/span> a financial investment product which, for example, consists of a collection of DVDs<\/span><\/span> that we don\u2019t 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\u2019t mess about with food.<\/p>\n

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 infinitam<\/span><\/span>entity<\/span> 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<\/span>. 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.<\/p>\n

This scenario would be far more hygienic and convenient than the current one. Many of you will think it\u2019s unfeasible or utopian; perhaps it is. But at the end of the day, it\u2019s how a family<\/span><\/span> office<\/span><\/span> any self-respecting to be<\/span><\/span>, 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<\/span> straight to the heart of the financially inexperienced customer \u2013 that is, the vast majority.<\/p>\n

\"\"<\/a>The current situation is unlikely to improve much with the MiFID<\/span><\/span><\/a>, as reported Consumerist<\/span><\/span><\/a> y Echevarri<\/span><\/span><\/a> in his interesting articles. As he rightly says Echevarri<\/span><\/span>: \u00ab\u2026it ends up protecting financial institutions rather than customers.\u00bb More or less the same kind of exploitation we see on a daily basis will continue, since, unfortunately, bank profits depend largely on it.<\/p>\n

Anyway, we just wanted to put this idea out there so that you can let us know what you think. It\u2019s always good to give some thought to to question ourselves<\/span> methods that do not have to be set in stone. Progress has always depended on this.\u00bb<\/div>","protected":false},"excerpt":{"rendered":"

Hace ya casi dos a\u00f1os que escribimos este art\u00edculo sobre la perversidad del cobro de comisiones por servicios financieros y la bondad de transformarlas en honorarios. S\u00f3lo as\u00ed nos garantizamos la independencia y honradez (que no la competencia) del asesoramiento. Y no s\u00f3lo para los activos financieros sino tambi\u00e9n para todo nuestro patrimonio. Por suerte […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-22954","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22954","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=22954"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22954\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=22954"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=22954"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=22954"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}