Banks and building societies have taken a bit of a battering recently, but you may still feel a certain loyalty towards your local branch. However, when it comes to getting help with your finances, can you trust the advice they give you?
Following the banking crisis, the revelations of staggering bonuses, and collapse of several smaller financial institutions, public opinion of the banking sector has hit an all time low.
While the days where you could be on first name terms with your bank manager are now long gone, there are still thousands of staff in branches up and down the UK who are there to offer help and advice on your finances.
However, though branch staff aren't on the receiving end of the massive bonus payments that have been hitting the headlines, you still need to be careful when listening to the advice they give.
Here's what you need to take into account when you discuss your finances with your bank.
Banks don't deserve your loyalty
The notion of customer loyalty and rewards for longstanding customers no longer exist in the banking world.
In fact stick with the same bank for years and you are likely to find that your benefits dwindle while new customers are offered more attractive deals than those available to ‘loyal’ existing customers.
As a result you need to take a pragmatic approach to banking and drop any sense of bank being ‘your’ bank, even if you find the staff in branch polite and helpful. After all is this really worth compromising you finances for?
Banks exist to make a profit
At all stages it is important to remember that banks exist to make a profit from their customers.
While this isn’t necessarily an issue as all businesses need to make money, this fact should be at the back of your mind whenever you have dealings with a bank.
You need to continually ask yourself if the products and advice being offered will benefit your individual finances, whether you could get a better deal elsewhere and, if you have to pay for them, whether they represent good value for money.
Banks offer a limited range
Although a customer advisor at a local bank may make sensible financial suggestions, they will only have access to the bank's own products.
This means that while a certain product they recommend may be useful for your finances - a 0% balance transfer credit card for example - the deal they are able to offer you may not be the best of its type.
It's quite possible that you could get a cheaper or more attractive product from one of the bank’s rivals, which of course the staff in branch may not know exists or will not want to promote.
So, instead of signing up to products offered by a member of staff in branch on the spot, make a note of their suggestions and take the time to compare them with what else is on offer.
If you find that the product the customer advisor recomended is a competitive one there is nothing to stop you getting it at a later date.
Banks want to sell you their products
It may be worthwhile accepting an invitation from your bank to review your finances with an advisor, especially if you don’t feel confident doing it yourself.
The financial advisor you see may be able to suggest products, opportunities and ways to improve your finances that you had not considered, and is likely to have details of your spending habits ready to hand.
However, you will need to approach the review in the knowledge that not only will the advisor be looking to help you improve your financial situation, they will also be under pressure to sell the bank's products wherever possible.
Customer advisors are set strict targets based on the number of products they sell to customers and how long those customers keep those products, so you need to make sure you’re not pressurised or pushed into taking a product that you don’t need or want.
That doesn’t mean you shouldn’t take note of their recommendations, go away to do your own research and compare what they offer with what else is out there.
For example, you may be recommended to take a life insurance policy of a certain amount, you can then use this information and the figures they give you to shop around for the cheapest quote for the cover you need.
Where can you to turn for financial help?
If you can't trust your usual bank you may be wondering who you can turn to when it comes to getting assistance with your finances.
Firstly, if you are able to, the best way to keep on top of your money is to actively manage it yourself.
You know more about your current circumstances and future plans than any financial advisor or industry expert and this makes you the best person to assess what you should be doing with your money.
While it is sensible to listen to advice and suggestions from a bank or other financial company, you should only use these as a general guide and make your own decisions.
For more help getting started try following our Action Plan: How to take control of your finances.
Secondly, if you have more complex financial circumstances you might benefit from independent financial advice in which case you should consider speaking to an IFA that offers whole of market advice.
An IFA should be able to compare all the different financial products on offer and recommend several choices that best suit your finances.
However, pick the wrong IFA and you could simply be presented with a list of products that pay them the most commission, so you need to choose carefully. Read our guide 5 Step Plan to Finding an IFA You Can Trust with Your Money to find out more.
If you have a question about managing your money, want to sound out ideas, or could do with a second opinion why not ask the money.co.uk community who will be able to share their knowledge and experience with you.
Of course, you can also get the latest financial news, guides and deals straight to your inbox by signing up to the money.co.uk newsletter.
