In mid – December a new client attempted to send $250,000 from her CIBC bank account to her account at Raymond James, which we (High Rock) manage. She (who is young and relatively new to this world of managed investments) went to the branch with her father and set up the wire transfer (including an $80 transfer charge, which we would cover). They left the branch assuming that her instructions would be treated with the respect that is due any bank client. If you read the first page of the CIBC 2023 Annual Report it clearly states:
“Our strategy: Throughout 2023, we continued to focus on executing against our ambition of building a modern relationship-oriented bank that delivers superior client experience and top-tier shareholder returns while maintaining our financial strength, risk discipline and advancing our purpose-driven culture…”
In a way that only bankers might understand, our client’s transfer request was flagged as “suspicious” and “possibly fraudulent”. This was money being sent to her account (in her name) at Raymond James. I am certain that Raymond James would not be happy to hear of this level of suspicion being put on them (i.e. that they would harbour potentially fraudulent activity).
So, CIBC tried to call her and ask her a series of questions about the money that was to be transferred. Questions such as “what will this money be invested in?”, which by most people’s standards is an absolute breach of privacy and confidentiality. In this case, as we manage client money on a discretionary basis, our client honestly had no idea exactly what her money would be invested in, but CIBC had no right to ask that question. And they made her feel very intimidated and bullied by the experience.
Unable to get the answers that they wanted, CIBC “sat” on the wire transfer. They did not follow the simple instructions that a client had given to them. They sat on this money for 2 weeks.
2 weeks of free money for the bank, lending at prime (7.2%) or more, while our clients’ money sat earning nothing (which should have been sitting in her Raymond James account earning approximately 5% sitting in a HISA).
Finally, our young client and her father went to the bank branch of CIBC and demanded some answers. Again the questions! The final one asking them to waive all recourse to CIBC if this transfer should be fraudulent. Yikes!
Friends, bank’s priorities are their shareholders. The assets that they hold and safeguard (supposedly) for clients, which along with lending those client assets at significantly higher rates than they pay the clients for deposits (the “spread”), generate revenues which pay the shareholders dividends. Any reference to client service is pure “lip” service. Banks thrive on the assets on their balance sheet. They do not take well to losing them and try as best as they can to retain them. So as to be able to pay their shareholders’ dividends.
I wrote to the head of CIBC retail banking, the CEO of CIBC, the head of Raymond James and the head of Raymond James Correspondent Services who are the custodians for our client accounts. Our client’s father (with permission from his daughter) and I ended up with CIBC customer care (on a conference call), who, although apologetic, toed the company line: no compensation for the 2 weeks of no interest on $250,000 (approximately $500). They did waive the $80 wire transfer charge. Big deal, High Rock would have covered it anyway. Our client’s father, exacerbated, having had previous negative CIBC experiences, finally threw in the towel and said he didn’t have the energy for a protracted fight. Who does? And CIBC (and the other banks) know this. Arrogance.
This, by the way, is a “tip of the iceberg” thing. This is not the first time I have seen this, “shareholder first” mentality. I have worked at banks; I have seen the inside. I have first-hand experience. It is embedded in their “culture”.
Contrast this to our High Rock “client first” fiduciary responsibility. If we look after our clients properly, they will remain clients. That is good for our shareholders (Paul and me). Without clients, we have no business. This is where the arrogance of banks gets it wrong. They are so big, so well-marketed and trusted: “you’re richer than you think…”? “But if you paid less fees or interest, you might even be richer”!! is what I say to myself every time I see one of these adds on TV.
And look at the chart above, clearly the shareholders are not happy, with bank stocks down 20-30 plus % over the last year (banks take note: shareholders are selling, you are doing something wrong!).
Maybe it’s time to start thinking about the client?
Or, if they don’t (which is all about changing the culture of the banking industry), come visit High Rock! We do care about our clients!