Are the wealthy the easiest to sell to?

 I am fascinated by perspective.  The way you see things can alter your perception.

Credit Suisse have been reported about focusing on the wealthy.

Whilst the headlines relate to Credit Suisse, its really not about Credit Suisse in isolation, its about the way in which the banks seek profit from their customers.

If you are wealthy you are a target of the private banks. Here's what Chief Executive Officer Tidjane Thiam said “part of the thinking in the investment bank is to shrink, to be able to focus on really the most value-creating businesses.” What does that mean? Value creating? It means profit. In a capitalist system, there is nothing wrong with profit, but the value add must be for the customer, not the bank.  Lets assume the investment markets make 10% and the bank makes for its wealthy customers say, 15%.  The bank then shares the extra 5% it has made with the wealthy customer for value added services.  In my opinion, that's a great value add. Is this the way the system works? Actually no; sorry to disappoint.

The bank makes money whether markets rise or fall. The wealthy customer benefits from market increases, but when they make losses, the bank still profits from fees and costs.  Its always a win win for the banks. Its never always a win win for the wealthy customer. The scales of "value" are very much tilted in favour of the banks.

When you go to the bank, they make you feel important.  (Its a tactic to get hold of your money, but please don't tell anyone, its a secret!) A range of services are packaged together which can make it difficult to know if you are benefiting from "value" or not.

So what can you do to stop falling prey to the advances of the bank?

As the banks are focused on share price and profitability, perhaps you can take a leaf out of their book. Be critical of the numbers and get independent assessment. Do not get close to individuals in the bank who make you feel important because thats another tactic to blur your decision making.

If the numbers do stack up over time, then have a great relationship with the bank.  If the numbers don't stack up, you can move elsewhere without feeling guilty or embarrassed. As far as the banks are concerned, its about profit, so treat them as they treat you.