As a certified financial planner, I am often asked my opinion of banks and their services. I wish the answer was straightforward because banks are such an integral part of our financial circumstances and our economic well-being. Short of stuffing money under the mattress, they can be very handy. Everybody uses a bank or credit union to orchestrate their day-to-day money management. Despite the advertising about service excellence that banks seem to generate in their competition with each other and for our business, it is very hard to discern an unblemished favorite. So it is best to simply put them into perspective and judge their performance on that basis.

Stable Banking

A stable banking system is crucially important to any country’s economy. We need only look at the current circumstances in Greece to see what happens when the banking system becomes stressed. Canada’s banking system is often considered to be one of the world’s safest. Yet in 2009 when the world economy was taking that well remembered financial downturn, financial assistance for Canadian banks from a variety of Canadian government sources totaled $114 billion. Incredibly at the time, that worked out to $3,400 for every man, woman, and child in Canada. Not only was that 7 percent of Canada’s gross domestic product in 2009, but it was also more than many individuals actually had on deposit in banks. Interestingly, this was also 10 times the amount Canadian taxpayers spent on support of the auto industry, an industry that seemed in great disarray and jeopardy at the time. A senior economist at the Canadian Centre for Policy Analysis, David MacDonald, concluded after an in-depth study that Canada’s major lenders were in a far worse position during the downturn than previously believed. It could be that sometimes we are a little mislead by those seemingly huge profits that are announced quarterly.

Banks As Business

However, when the dust settles, we must remember banks exist not only to facilitate our economic system, but also to make a profit which they tend to do consistently. Every shareholder and there are many individuals and institutions in Canada holding bank shares, who receives a dividend or a capital gain on the shares they own will attest to this. Every credit card holder who pays upwards of 20 percent interest on their overdue balances and every account holder and investment client who complains about bank fees and services will also affirm this. Banks are clearly a two-sided coin for most people.

Money management and financial advice are two of the most profitable segments of banks and credit union activities. This business flows naturally from already established relationships with depositors. In that the client is already involved with the bank, banks have focused on generating comprehensive all-inclusive services that now not only include traditional lending, but also investments, mortgages and a multitude of other interrelated services including insurance. The complication is that despite the dialogue to the contrary, many clients get lost in the sheer size of the business.

Through Engrace Financial Solutions, we can pay attention to your personal and corporate insurance needs. Whether it is for Life, Disability or Critical Illness protection.

Do you have concerns that you may not have enough coverage for your children, family or spouse, if something happens to you? What happens to you, your income, your lifestyle, if you get sick or disabled?  Please feel free to connect with me with any questions or concerns you may have. I am here for you. Tel: 604.838.2002 | [email protected]