New research from Which? has found that only 13% of banks give suitable investment advice.
The study found that banks generally give poor advice, recommending unsuitable investment products. This is particularly problematic for elderly and potentially vulnerable customers.
The undercover investigation by Which? sent researchers into 37 banks. Only five of these gave good advice about investments.
The vast majority of bank advisers demonstrated poor understanding of the risks of investing, as well as making misleading statements about the features and costs of the products they were selling.
The researchers posed as customers who were over age 60 and inexperienced investors.
Despite this investor profile, most of the bank advisers recommended complicated and expensive investment products.
Four of the bank advisers neglected to mention that these products came with substantial exit penalties (of up to 12% of the investment) if the investor wanted to access their money within the first five years.
Nearly half (48%) of the bank advisers claimed there was no cost for their advice. Very few of the advisers were upfront about the commission the products paid them.
Which? says the worst case of failing to disclose this commission was a Yorkshire Bank adviser who recommended an investment of £50,000 resulting in commission of £4,400, or 8.8% of the money invested.
These findings confirm that investors should never, ever seek advice from a bank.
What you get from a bank is rarely going to be ‘advice’ anyway, but a product sale disguised as advice.
The lack of understanding and failure to disclose costs discovered in this investigation by Which? comes as no surprise to any Independent Financial Adviser who has first hand experience of the unsuitable recommendations often made by bank advisers.
Always seek independent financial advice from a suitably qualified and experienced IFA when considering an investment.
Photo credit: Flickr/Tim Green aka atoach
