Ladies and Gentlemen,
You are financing the greatest heist in American history. Of epic proportions. Currently, $8.6 trillion dollars is sitting in the top 5 US banks. Let me remind you – these banks were actually rewarded for their malfeasance in 2008. They actually grew bigger with our government’s blessing.
And, in the wake of all of that, they are still designed to do one thing…. sell you the most profitable products they can (for them), whenever they can.
This is not a drill. This is not a test. The status quo has already failed us.
Here’s the list of how much each one of the top five US banks are holding in 2018:
I’m not here to make you feel bad about yourself or scare you. I’m just here to tell you the truth. Let’s look at the facts.
Maybe, you like earning no interest on your money and paying a ton of fees for anything you need. But, at least these banks will be responsible stewards of your money. They’ll never need a bailout.
Or, maybe you like their awesome customer service and premier banker cubicles and the fact that you can trust your advisor at one of the Too Big To Fail Banks. Your person is the one person who isn’t like those other people at the bank. I know. I’ve heard it a million times now, and shown hundreds of people where the bodies are buried.
Here’s how that actually works. They only screw you a little most days. Here and there. Maybe it’s a bond, or some sexy closed-end fund with a great story. Not enough to kill you, because they need you for later. It’s a bit like American Pyscho, but maybe you like dark comedies.
Maybe you like that Lynch and BS are actually on the business card they hand you. You like irony, I suppose.
These banks are amazing — at selling products, to you. It’s been a very very good business for a very long time now. That’s why they’re not afraid of giving you their absolute best advice day in and day out, because they really do value you. Except, we know that’s not true, don’t we?
With the DOL fiduciary rule now defunct and the SEC considering a ‘best interests’ standard for brokers, the blurring of the lines between sales and advice in financial services has worsened.
There was a time that investors knew the function of a broker-dealer was solely to facilitate transactions of financial products. The broker was a salesperson and was in the business of earning a commission, which might or might not be in their best interest.
Today, however, brokers aren’t called brokers. Most have trust-building titles such as “wealth manager”, “financial advisor” or “private banker.” If they have been very successful, they might even be called a “Managing Director.”
Inside the firm, though, they are called something different: Producers.
These producers — your advisor — your premier banker — almost every single product they touch is tainted. Good people are incentivized every day to do bad things. That’s just the way it is with the status quo we are witnessing. Accepting the truth is the first step in your recovery.
Here’s the thing. Why is this happening?
All of this is happening for a couple of reasons. One obvious reason is it would hurt the banks’ (record) profits to actually become a full-time fiduciary. You know, someone who’s 100% responsible for the advice they give you about your money.
They’d have to stop all the double-talk and get less cute about what is “suitable” instead of what’s the right thing to do by you. They want to continue to bury those conflicts on page 239 of the 400 page in the small print brochure they handed you when you opened that “savings” CD annuity — or in the mail shortly after your broker called with that “great idea that just came across my desk.”
Can you imagine? You’re sick and your doctor says, “I think you should take this pill” (because I get a bigger kickback) and you go to the pharmacist and they hand you the pills without any warnings. None. Just some 500-page pamphlet and them mumbling something about a small chance of rectal bleeding.
It would be “bad for the consumer” to expect banks to become fiduciaries is what industry groups have said to the politicians casting their votes while cashing that polite contribution.
But when it comes to politics, we’re not always dealing with normal people. The brokerage industry is powerful and its lobbying groups play the game fiercely. The Council of Economic Advisors (CEA) estimates that the current suitability standard costs U.S. households some $17 billion in excess fees and adverse performance. A combination of ten independent studies estimates that the true cost is likely between $8.5 billion and $33 billion! There is a lot of money on the line, so the opposition to new rules should not come as a shock.
Heck, I tried to tell you in 2011. Seven years later your advisor didn’t get the memo apparently.
Your advisor. Maybe before the year 2000 they could say, “I work at this big bank because this is the best place to be, with the most access.” Before the internet killed all of it. Google anything you want. The world is a meritocracy full of truth bombs.
Maybe before 2008, they could almost say it was the safest place to be with a straight face.
And now? Which of those big five on that list did not get a lovely taxpayer injection of capital after 2008? So, what’s your advisor’s reason now?
Ask them. Why? Why on earth are you still working at this pain and suffering factory as my advisor?
I’ll answer it for you. They are either too dumb, too blind, too greedy or, too lazy to make your life better as a client. It’s that simple. Let that simmer for a bit. I hope it burns, frankly. I hope you look at your advisor in that big bank completely differently now. I hope that same burn stings their eyes every single day for the rest of their working lives if they continue to maintain that status quo. Print out this article and hand it to them. Tell them to call me when they’re ready to take the blue pill.
Now, let’s not forget — they’re not alone in this mess. It takes two to tango. And every dollar that’s in that bank has on its dancing shoes. Doing the shuffle. Yes, you have been lied to over and over again each and every time you deposit money into your account or talk to your bank advisor. It’s been a damned lie each and every time. And — you’ve been funding it.
All of it. You are continuing to fund it every day you continue to leave your money there.
Personally – I don’t know about you – I’d rather just have them take half of my money, throw it in a pile with some lighter fluid and let me light the match.
Watching it burn quickly would be more entertaining than us pretending this (insert any product they are pushing this month) is something your bank advisor actually thinks is right for you. I’d probably even post it on Instagram with a smiley face.
At least we’d all know the deal and get some ‘likes’ out of the spectacle.
Now, look, I understand. Maybe the bailouts weren’t enough to sway you to move your money because everybody was doing it way back in 2008. Okay, fine. I get it. It’s called Stockholm Syndrome. I understand.
But, you need to ask yourself, now that the wall is no longer crumbling down and you are free to unbuckle your seatbelt and move around the cabin…
Why on earth are you helping rebuild the same failed Wall (Street)? Why on earth of you participating in these shenanigans?
Let me remind you — this is just one bank. Wells Fargo. Here’s just a brief look since 2015(!)
September 2016: The fake account scandal
September 2016: Improperly repossessing service members’ cars
December 2016: Wells Fargo fails its ‘living will’ test
March 2017: More fake accounts
March 2017: Flunked community lending test
August 2017: Lawsuit over overcharging small business retailers
March 2018: Wealth management investigation emerges
Ethan Wolff-Mann has the whole list and story behind each and every one. Grab some popcorn, because it’s a long list.
And, that’s just the tip of the iceberg. You know this. You have to know this by now. Yes, your bank has been on a similar list. Many times now. I don’t even need to try to find it anymore because I know it’s true. So do you.
Fixing Scandal (also) in 2008. Or, any of the other “neither admitted or denied” fines issued in record amounts, that amount to a rounding error during any given quarter — over and over again. Right?
Or, maybe you just don’t care. So maybe, I’m too optimistic — but finally, maybe, you’ll let your voice be heard. Maybe you’ll tell a friend too. Maybe you’ll take your money off the gangplank.
Heuristics And You
‘Heuristic’ is such a great word. In Greek, Heuristic means to find or discover. In English, it’s “any approach to problem-solving, learning, or discovery that employs a practical method, not guaranteed to be optimal, perfect, logical, or rational, but instead sufficient for reaching an immediate goal.”
Heuristics can be mental shortcuts that ease the cognitive load of making a decision — which given the glacial pace at which any change is happening you could probably use to help you decide what to do next.
Examples that employ heuristics include using a rule of thumb, an educated guess, an intuitive judgment, a guesstimate, or even just good ole’ common sense. The most simple is trial and error. Bolts on screws. Try and try until you find the right size.
You’ve tried that with the big banks. Screwed again and again. Somehow you’re expecting different results? I’ve already told you — they are all the same.
So, rather than bog you down in some complex framework to heuristically help you find your way, I’m going to give you one question to ask. You will need only one. It’s simple even.
Are you a fiduciary 100% of the time?
Ask your advisor. If they say yes, ask them to put it in writing and sign it. Congratulations – welcome to the 21st century.
If they say no, or “sometimes”, or “we are here and here we aren’t but…” you’re wasting your time – and continuing to fund the greatest heist in banking history. Begin your search and do not stop until you find someone who answers affirmatively.
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