Can you trust your bank?

27 Nov 2014 | COMMENTS: 0 | Author: Ryan Smith | General

For many of us, the first port of call when we have a financial question or concern is our local bank. However, despite the fact that many banks like to market themselves as a friendly personal service, they remain a business at the core – and not necessarily one with your best interests in mind.

This is not to say that they can’t be helpful in many situations, but it’s important to understand when it’s appropriate to consult your local bank, and when you’d benefit from looking further afield.

When to use a bank

“If mass hypnosis were possible, I’d use it so that every time people walked into a bank and saw the word ”advisor”, they’d see the word ”salesperson”- Martin Lewis, Moneysavingexpert.com

Practically every adult in the UK will have an account with one or more of the UK’s major high-street banks. A bank account is a cornerstone of British citizenship and an important tool in storing and managing your money on a day-to-day basis.

In addition, most banks also offer a range of products and services, including

  • Insurance
  • Personal loans
  • Mortgages
  • Credit cards

Your bank will be able to advise you on their own products and rates. They will not be able to compare the full market and find the best rates, or offer you expert financial advice. This is the key thing to remember – the role of the bank is to sell you their products, not necessarily to improve your financial situation.

There’s no reason you can’t go to your local bank to get an indicative quote on any product they offer – it might help you to get a baseline against which to compare other rates you receive. For relatively simple financial products like credit cards and personal loans, you may be able to find more attractive rates by doing a little independent research.

When to use a financial advisor

Financial advice is often most helpful when it comes to more complex financial concerns. While it’s relatively easy to find comparison tables for products like credit cards and personal loans, when it comes to insurance and retirement products – such as annuities, health insurance, business protection etc. – the rates you may be offered by various providers will depend heavily on your personal circumstances. FAs can make tailored recommendations to help you to get the best value based on your unique circumstances and priorities.

An FA can also assist you with more complex financial concerns such as investments, tax-planning and wealth management, in addition to more general savings and financial planning. Most FAs offer long-term support with regular reviews to ensure you’re on track to achieve your financial goals. Most bank advisors simply aren’t qualified to offer this level of personalised support.

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