It’s earnings season for the banks, and report cards are coming out. Margins continue to shrink. Banks are beginning to move to an online model, attracting millennials, and possibly you could see less brick and mortar buildings in the future. Wells Fargo has been busy trying to rebuild their brand for the past two years after their public scandal (bank branches were pushed to open new accounts even if the customer declined). There are many other headlines in the banking and brokerage sector as there continues to be a shift in how investment services are delivered.
As for first-quarter earnings in 2019, Goldman Sachs missed their numbers, as first-quarter profits fell sharply with slowed trading and underwriting. Citigroup posted a 2% gain, mostly coming from consumer banking. Bank of America earnings came in better than expected, with loans and deposits growing on the consumer bank side, and trading revenue was a weak spot. Wells Fargo topped earnings estimates for the quarter, yet loans dropped by 1% and projected a weaker profit outlook going forward.
Next time you walk into a bank or visit your financial representative at a brokerage company, think about earnings numbers. These places are essentially stores that have products and services to sell to you. Can an employee at one of these financial service businesses be a trusted financial mentor with your best interest? Or, are they instead in a position to sell you something to create commissions and profits, while walking the line of suitability in meeting your financial goals? How do you know? Is there a bias created from this sales model? Whom will you trust with your nest egg?
As a Registered Investment Advisory (RIA) Firm, we follow the fiduciary standard. We do not practice the art of selling products. We have a purely client-centered service model with fee-only financial planning and investment management services. Creating a road map to retirement can be complicated, and finding a mentor to get you there is critical. You’ll need someone that you can check in with regularly and make mid-course adjustments as life changes. This doesn’t mean buying a new investment product or being sold an annuity because of a life change. It means adjusting your savings or spending rates, or making changes to your investment allocation or risk level, and using low-cost investment vehicles to get you there. Take great care with your money and find a mentor. Bank earnings will come and go, but your retirement savings must last your lifetime.