Personal Finance

Is bank loyalty important these days?

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  • Feb 26th, 2010 11:17 pm
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OracerO wrote:
Apr 20th, 2009 10:07 am
Yes.

Well for me it did.

I got pre-approved for a LOC at TD based on my relationship with the bank. I called my financial advisor, hung up, she called me back a hour later and i got it.

And i didnt get pinged for checking my credit.
Sorry to break it to you, but from what I've heard of TD's practices they pre-approve anyone with a pulse for a LOC (or at least they did up until the Great Reckoning.) If you got pre-approved with a good rate, however, then you got something extra :)
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Jul 1, 2007
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Doesn't the OP work for TD?

While every customer service interaction is different at every bank and every branch of every bank, generally having more services with one bank and a "relationship" is beneficial to the customer. For one, you're not just a number. There are other potential perks, depending on how you negotiate and how strong your relationship, such as waived checking account fees, getting credit applications done and approved almost on command, better GIC bonuses.

[QUOTE]In my experience, banks seem to work much harder to earn your business than to keep your business, so no, I don't believe loyalty/maintainig relationships is beneficial. For example, most bank promotions are for new customers and exclude existing ones. [/QUOTE]

It's common business practice to spend money (take a loss) to get clientele, such as offering GIC rates that lose the branch money or paying fees, offering other incentives for mortgage transfer ins, all to get the volume. At some point though the bank has to make money off you, because it's not a not-for-profit organization, it's a business. I guarantee you, if you have decent credit there is ALWAYS another bank out there that will promise you the moon to get your mortgage transferred to them and if you have $1 million there is always another bank out there who will offer some ridiculous rate on a GIC that loses them money.

[QUOTE]100k is a joke for those really use a bank for savings. Can you retire with 100k? Of course not... so your retirement fund is not insured.

These days, you need around 500k to retire... you then have to put it in a few banks anyway. [/QUOTE]

First of all, see the many other threads on CDIC coverage in this forum. Second, no one can retire simply by stuffing money into deposit accounts, you need to invest for the long term.
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Feb 24, 2007
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Thalo wrote:
Apr 22nd, 2009 2:07 am
There are other potential perks, depending on how you negotiate and how strong your relationship, such as waived checking account fees, getting credit applications done and approved almost on command, better GIC bonuses.
So the perks are them reducing fees and offering better rates probably comparable to what the most competitive banks offer already, in effect making you no better off then had you just actively moved your money to the lowest fee and best rate banks in the first place. In other words, wasting your time building a relationship is dumb for those smart enough to know which banks are offering the best deals.
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Feb 4, 2008
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Banks will always have a place in a person's financial life.

I don't think that bank loyalty goes as far these days as it may have in the past. The banks are very profit driven and don't have the time or the inclination to service their customers like they should.

Last month I helped a couple refinance their home and free up a much needed $400 a month without extending the amortization period of their mortgage. It would have only taken 15 minutes for their "personal" banker to look at their mortgage, two loans, unsecured loc and credit card to realize that they were paying more than they needed. All of this lending was done by the same rep.

I agree that banks need to make money, but they will still make money by helping the customer out.

Needless to say the bank lost a customer.

Our little community here is very financially astute but a majority of people either have to be educated and monitor their own finances or deal with someone who will always be thinking about their best interests.
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Jan 20, 2009
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sslinn wrote:
Apr 22nd, 2009 9:20 am
Banks will always have a place in a person's financial life.

I don't think that bank loyalty goes as far these days as it may have in the past. The banks are very profit driven and don't have the time or the inclination to service their customers like they should.

Last month I helped a couple refinance their home and free up a much needed $400 a month without extending the amortization period of their mortgage. It would have only taken 15 minutes for their "personal" banker to look at their mortgage, two loans, unsecured loc and credit card to realize that they were paying more than they needed. All of this lending was done by the same rep.

I agree that banks need to make money, but they will still make money by helping the customer out.

Needless to say the bank lost a customer.

Our little community here is very financially astute but a majority of people either have to be educated and monitor their own finances or deal with someone who will always be thinking about their best interests.
+1. Also the turnover rate for the account managers are getting higher; you build a "relationship" with one, then the next one comes along and you start all over again. Doesn't matter if you've banked with the same bank for X years.
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casey5 wrote:
Apr 22nd, 2009 9:25 am
+1. Also the turnover rate for the account managers are getting higher; you build a "relationship" with one, then the next one comes along and you start all over again. Doesn't matter if you've banked with the same bank for X years.
I agree. I used to only bank with TD, but now I opened an account with RBC to build relationship with them and possibly CIBC as well since I have a credit card with them already
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casey5 wrote:
Apr 22nd, 2009 9:25 am
+1. Also the turnover rate for the account managers are getting higher; you build a "relationship" with one, then the next one comes along and you start all over again. Doesn't matter if you've banked with the same bank for X years.
Totally agree, though if you bank with their senior managers which do have longer tenure and because you bank with their senior managers means you are worth something to them.

They work far harder for new money/clients. Just how the compensation is setup.
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Thalo wrote:
Apr 22nd, 2009 2:07 am
It's common business practice to spend money (take a loss) to get clientele, such as offering GIC rates that lose the branch money or paying fees, offering other incentives for mortgage transfer ins, all to get the volume. At some point though the bank has to make money off you, because it's not a not-for-profit organization, it's a business. I guarantee you, if you have decent credit there is ALWAYS another bank out there that will promise you the moon to get your mortgage transferred to them and if you have $1 million there is always another bank out there who will offer some ridiculous rate on a GIC that loses them money.
I totally agree, but that doesn't change the fact that as a customer you get more benefits from starting new relationships than from being loyal thus negating the importance of loyalty.
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MoreMiles wrote:
Apr 20th, 2009 8:06 am
100k is a joke for those really use a bank for savings. Can you retire with 100k? Of course not... so your retirement fund is not insured.

These days, you need around 500k to retire... you then have to put it in a few banks anyway.
No. you can be in the same bank and be insured for upto $400k.

I am with TD, you can have GIC's in 3 different plans, each covering $100K plust $100 K in a savings account. At .3% interest you are not missing much by keeping it in a chequing account. Check out the CDIC website, it spells it out nicely.
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Aug 28, 2007
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A relationship with any consumer organization only matters if the relationship is with someone that has the power to make decisions or the authority to take certain actions.

Most Canadian banks have already or are in the process of regionalizing or nationalizing their decision making. You apply for anything and the local branch submits your application to someone in a major centre to make the decision based only on numerical criteria not a personal relationship with you.

A branch manager these days doesn't have much authority or dollar limit to approve anything. So a relationship with a teller, account manager or branch manager is only useful up to their limit. They can clear a cheque early or some other low risk dollar value transactions based on the local relationship. However, as already pointed out these people are rarely in these positions for more than a few months before they disappear. They almost defy you to have a relationship with anyone at your branch.

Consolidated record keeping is one benefit, but not one I particularly value.

You must weigh those minor benefits against all the negative risks of associating with one institution, you're putting all your financial eggs in one basket. When Murphy strikes... and he will... especially when you need some unusual service, you're hooped. If you have accounts and business at multiple institutions you can insulate yourself from the crisis in one area spreading to other areas of your financial life.

So I concur with most of the other posters that a relationship at a bank is not particularly useful or valuable.
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Jan 20, 2009
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evoviii wrote:
Apr 22nd, 2009 10:48 am
Totally agree, though if you bank with their senior managers which do have longer tenure and because you bank with their senior managers means you are worth something to them.

They work far harder for new money/clients. Just how the compensation is setup.
Well, in my situation, I've had 3 senior account managers for professionals in 5 years with RBC, 4 Imperial Service advisors in 8 years with CIBC (before that we were with their regular banking section and lost count of the senior account managers), and 3 (or was it 5) financial service managers with BMO in about 12+ years.. I've lost count. In our experience, the only bank that appreciated our loyalty was and still is BMO.

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