Charlie Weston: If you want bad advice, call to your local bank
HAD a call from your bank lately suggesting you are in need of some financial advice?
If you have had such a phone call then be afraid, be very afraid.
It might be tempting to go into the bank and discuss your finances. Let's face it, who would turn up their nose at free financial advice in this economic environment?
There is also an element of flattery about being asked to sit down and have a cup of tea and biscuits with the bank manger.
But you should run a mile if you are inclined to accept such an invitation. Yes, you may get tea, biscuits and half-an-hour with the bank manager but one thing you won't get is financial advice. Instead, what you will get is totally one-sided information about the bank's financial products.
The bank will certainly review your financial situation, but it will only be in order to see what it is you have not bought so that they can flog it to you.
Hardly any mortgages are being issued, while loans to small businesses are as rare as repentant bankers, so banks have to go back to making their money by flogging Tom and Theresa Taxpayer pensions, income protection, life assurance and savings products.
The bottom line is that they are not offering proper advice because they can only ever advise on their own products.
They are not independent in any way and the bank officials only get paid when they sell you their pension or life assurance. Also, banks are prone to charge more than you will get if you first scour the market for the best value.
Right now the hard sell is around pensions as self-employed people who have some spare cash will be inclined to offset their tax bill by putting a lump sum into a pension.
The test of whether or not you are getting good advice is if you go into a bank with €10,000 to invest.
Suppose it emerges that you also owe €10,000 on the credit card? In most banks you will probably be talked into investing the money in a new product that will produce fat fees and commissions for the bank and its official.
But if you got truly independent advice you would be told to pay off the €10,000 on your credit card.
The only way to be sure you will get impartial advice is to seek out a financial adviser who is prepared to operate on a fee-only basis -- that is without commissions.
If you want bad advice, then pop into your local bank.
- Charlie Weston
Irish Independent
