TD Canada “Trust”?

Good Day Everyone,

I don’t usually do 2 posts a week, but I found this story too compelling not to write about. As many of you may have heard, some TD Bank employees admitted to advising clients to invest into funds that were not suitable due to sales pressure from management.  Some employees also said they have increased customer’s lines of credits without telling the customer (which is illegal).

The result of this article coming out has caused TD bank stock to drop more than 5% in a single day. When I saw the stock move, I had to re-read this article again to make sure I didn’t miss anything. I also combed through the comment section (as I do) to kind of get a general pulse the public has towards the article (and some laughs as always). So for this post I’ll share my 5 thoughts that I came away with after reading this article.

  • TD can’t possibly be the only one – The funniest comments I read on this article are the ones where people claim they’re moving their money from TD to another big banks. These people are delusional if they think TD is the only financial institution that this has ever happened at. My parents bank at BMO, and I do my investments and mortgage from there as well. I’ve had nothing but good experiences with them, but that doesn’t mean that I believe that BMO acts more ethically than TD as a whole. It wouldn’t surprise me if “suddenly” employees from the other banks start sending CBC anonymous tips about how they’ve done the same thing. If you own Canadian bank stocks in your portfolio and your time horizon is short term, beware of possible headline risk coming to a CBC article near you.
  • Always check your bank statements – If you don’t check your bank statements to see if there are any erroneous charges, that’s as much your fault as it is TD’s. There’s a lack of accountability all around in this story, but the only one you can control your own. If you are a victim in this story, you should look in the mirror before pointing your finger at others.
  • Every business has targets – I’ve worked for several for-profit businesses, and every single one of them had sales and profit targets. I’ve seen people get fired and laid off when those targets were missed. Despite the fact that banks will hire anyone to be tellers, sales is a very specialized skill and it definitely isn’t for everyone. What these anonymous employees did to their customers was wrong, both ethically and legally. Using the banks’ high targets as an excuse to justify their actions is a weak excuse at best. I hope they find out who these employees are so that they (and any managers that encouraged this behavior) can be dealt with accordingly.
  • There are discount banks – If you’re capable of doing your own banking online, there are many discount online banking options for you. I use PC Financial myself and I never have to deal with tellers and their up-selling. So instead of complaining about sales pressure, do something about it.
  • Make sure someone who is giving you financial advice is unbiased and competent – I always encourage people who don’t know how to invest to seek advice. However, I never understood why people choose to use the advisors at the bank branch when their interests are so obviously not in alignment with their own. Sure they are convenient and their services appear to be “free” but they can only sell you their own branded products which are the farthest thing from free. I talk about fees enough on this blog. I’d like to share a story with you that Future Mrs. Options2riches and I experienced at a Scotiabank not too long ago.  As I mentioned previously, her current work place gives her a 5% RRSP which is deposited directly into her own RRSP account. Before she could get started on the program, we had to go to the bank and open the account. While the advisor was doing the paperwork process, all she could talk about were mutual funds nonstop even after multiple “no thank you’s.” There wasn’t much talk about her investment objectives or risk tolerance, she just assumed that since my fiancé was young, that she should be aggressive (and buy the costliest, riskiest, and most actively managed funds).  I realize that being an advisor is a sales job, but you don’t have to be annoying about it. All that said, no matter what kind of advisor you go to (fee based or commission based), make sure they are able to help you understand how the product they’re selling you actually helps you reach your goals and at what cost.

Bottom Line:  Usually in whistle-blower type stories, it’s usually innocent employees coming out to discuss their employer’s wrong doing. This time anonymous employees admitted their own wrong doing due to sales pressure and TD takes the PR hit? What a strange world we live in. I know my opinion about this story is not the popular one. How dare I shift the blame an accountability from the big corporation to employees and victims? There’s nothing we can do to prevent unscrupulous employees from altering our accounts, but all we have to do is spend a couple minutes every other day to check our accounts to make sure everything is in order. So stop reading and go check!

Have a Great Day


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