Consumers have many reasons for lacking confidence in the global financial services industry. First off, there was the economic meltdown of 2008.
That’s when ordinary folks were hammered, with many losing their homes. But in many countries, the banks enjoyed huge government bailouts.
Then there are those whopping bonuses—$18.8 billion by Canada’s Bix Six banks in 2021.
Let’s not even talk about their multibillion-dollar profits or those damning CBC News stories by consumer reporter Erica Johnson showing how bank employees are pressured to sell their institution’s mutual funds.
So perhaps it’s not surprising that a poll last year showed that four in 10 Canadians felt that they’ve felt misled by advice from a bank or financial institution.
Commissioned by Coast Capital and conducted by Angus Reid Forum, it reported that 55 percent of respondents and 68 percent of Generation Zs and millennials felt that their financial institution “gives them standardized, non-personal solutions”.
Daryl Hosein, vice president of treasury at Coast Capital, told the Straight by phone that the financial-services sector is “really only second to last to the social-media industry” in terms of trust.
“It highlights some of the opportunities for us to provide advice—not just the advice, but really, how we build those relationships and how we garner that feeling of trust,” Hosein said, “because I think when you say ‘trust’, that can mean many things to many people.”
To him, trust is integrally related to building a relationship based on interactions in which people feel that their adviser is actually looking out for the client’s best interest. That, he added, is linked to an “investment of time in the relationship”, especially up front.
“We have something that we use that we call the ‘money chat’, where we try to understand the goals and priorities of our members and people that we’re speaking to from a number of different perspectives,” Hosein explained.
This money chat has four broad components, beginning with a discussion about how people are covering the basics of budgeting and managing day-to-day expenses.
“The second area would be on saving and how our members are working on putting money away—you know, becoming an avid investor and building those habits,” he said.
The third component of the money chat is examining borrowing. This includes talking about how to manage overall debt to ensure that it’s being utilized to help the person achieve their goals. Finally, there’s the focus on planning in a way that protects things that are most important.
“This now leads into discussions on making sure you’re adequately insured and that we’re thinking about your long-term prospects and not just the day-to-day,” Hosein said. “I think that for our teams to provide solid advice, this is a really good building block.”
These money chats can be done in person or digitally, he noted.
“That, combined with a discussion of goals, helps us really gather a useful picture that becomes the basis of the relationship,” Hosein said.
He recognizes that we’re in tough times with the return of inflation. So, he stressed the importance of focusing on core elements within people’s control when setting financial and personal goals. That, he said, can help folks resist the temptation to simply react to current market conditions.
“If someone wanted to become a doctor or a plumber or any type of thing that requires work, you have to make a decision to do that—and then you have to work at it over time and put in habits that are durable,” Hosein said. “There is unfortunately no quick fix to this.”