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Traditional banks and savings banks find it increasingly difficult to balance the conflict of interest between their own benefits and the needs of customers. That doesn’t bode well for investors.
Things could have been very simple: the child receives his first money as an apprentice and wants to take out a savings plan (the parents are generous and give up allowances and rent, so there is something left). There is no problem with one of the many online banking providers, says the boy.
Parents, however, still shaped by World Savings Day and the belief that fair advice will be given if you visit the local bank branch, recommend personal contact. To start with: that was a mistake.
There is a kind of general investment recommendation of sorts: Anyone dealing with financial investing for the first time as a teenager or young adult should choose a straightforward product that is probably a bit of fun, that can be quickly liquidated in an emergency, and that is not very expensive to administer. .
Passive funds as the best investment option
Government bonds and passbooks do not generate interest income, so they are not a pleasure. Actively managed equity funds have a high management cost and are therefore too expensive. That’s why investment experts often recommend an ETF, a publicly traded fund.
ETFs are actually stupid products. They stubbornly replicate a stock index by pooling corresponding stocks into a fund according to market values and the weight of a company in an index.
The adjustments are made automatically by the computer: if, for example, a company like Wirecard is removed from the index, Delivery Hero automatically replaces it in the ETF.
Banking advisor wants to sell three expensive contracts
Thus, one might assume that the local savings bank advisor would recommend exactly that to his young client. But it doesn’t. The man goes to the flip chart and writes “€ 250” on it.
Three arrows lead from this monthly savings amount to the proposed investment strategy: a Riester contract is recommended, a private pension plan is promoted, the remainder must be invested in an actively managed equity fund.
- Of the Riester contract: For a 17-year-old who wants to study after completing her vocational training, this is a highly questionable recommendation. There is government funding, but after two or three years, the contract must first be non-contributory because the student doesn’t earn anything for a while. After three to five years of study, the world is likely to look different. If you later want to terminate the contract, there is at best a minimal advantage to the buyback and most state premiums must be refunded.
- Private pension policy: The same applies here as for the Riestern. In addition, there is another argument that the friendly employee of the savings bank deliberately refuses the investment beginner. Young adults want and occasionally need quick access to their savings. At some point they may want to furnish their student room, finance additional training, a trip or their own car, in the worst case they will have to overcome a period of no income. If you then put your money into two long-term contracts, you’ll only come out at a loss. For the needs of young adults, this borders on physical harm.
- The actively managed equity fund: Recommending a capital fund for the comparatively small remainder of the amount of savings is also not fair. Although the stock market is developing very positively right now, actively managed funds cost not only custody and transaction fees, but money for management as well. Advanced investors who believe in the expertise of their fund managers are often well served. But a beginner who might want to clear the deposit again soon?
Clients no longer receive fair advice
Three contracts, three commissions for the bank, which, of course, the customer must pay in the end. In this case from an apprentice. The employee of the savings bank advised with his recommendation in his own interest. He wanted to use the naivety of his young client to his advantage.
These commission transactions are becoming increasingly important to banks in times of zero interest. In return, however, they refrain from advising young (and probably older) clients fairly and retaining them for the long term. Because if young people after a few years realize that they have been exploited, they will delete the Sparkasse from their address book. Correctly.
The matter was stopped only because the apprentice was a minor and therefore had to be accompanied by her parents. Even then, the man didn’t want to sell an ETF savings plan. Savings banks had none of that, he lamented.
The reference to the Sparkassen website, which advertises exactly those savings plans, didn’t convince him either. The exasperated parents and the apprentice gave up. You have opened a free online escrow account with which wealth accumulation now begins.
Bank and savings bank branches are making a living
Rather than relying on a genuinely friendly bank advisor (“We do, yes?”), The young woman will in the future invest her money in an online service provider. Traditional banks, increasingly unable to balance the conflict of interest between their own interests and those of their clients, are digging their livelihoods.
Post Scriptum – Sparkassenmann Mail: “If you give me the opportunity to convince you and your daughter of our products, I promise you fair advice.”
Because right now? And why only for those customers who are suspicious?
Ursula Weidenfeld is a Berlin-based business journalist. Produces the podcast together with t-online.de and the Leibniz Association “Knowledge of the soundtrack”.
