I recently discussed the problems of Credit Suisse and Silicon Valley Bank.
A few months ago these banks were selling their wealth management services to new customers.
Potential customers were unaware of the risks.
So…” Should you be concerned about going direct to national wealth managers and banks?”
I am certainly not an expert in predicting whether any UK bank could fail and clearly, I don’t want any UK bank to fail for obvious reasons. However, customers do need to assess the risks better than they do at present.
Credit Suisse and Silicon Valley Bank wanted you to go direct. So do many other institutions. In such a manner they control the conversation. They have prepared any answer to your questions that promotes their services. In truth, if you go direct, you will say YES to them. Why? Their marketing and sales are excellent.
In the UK most national financial institutions are deemed to offer ‘restricted’ advice which allows them to sell their own products and services. Could you ever imagine a wealth adviser at Silicon Valley Bank suggesting they should try the wealth advisers at Credit Suisse? Never. Would the salesperson at St James Place recommend you use another firm such as Casenove or Brewin Dolphin…perhaps Rathbones or Rothschilds? Unlikely. Why? They want to sell their own products and services.
Sadly customers that go direct to these types of national institutions end up judging who to use with their ’emotional hat’ rather than their ‘scientific hat’. Customers don’t know enough about the risks and are unable to see through the layers of rhetoric. With so many national institutions competing for your business, customers tend to rely on gut feel and pick someone they like.
Customers would have chosen an employee at Credit Suisse or Silicon Valley Bank because they were’ nice’ Why, because it’s so hard to be discerning and to carry out authentic due diligence. The default is ‘niceness’.
It is so important for all investors to reign in their emotions by making gut feel decisions on who to employ to manage their money. Instead, they need a much more pragmatic and scientific assessment. And if you do not have the time, energy or competence to carry out due diligence before you employ a firm to manage your money, you need a finanical bodyguard to do it for you.
Welcome to our world.