THE BLOG

Watch Your Statements - Some Banks Are Adding Account Fees

05/08/2015 05:11 EDT | Updated 05/08/2016 05:59 EDT
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There's an old saying that goes "Pigs get fat, hogs get slaughtered." When I saw what was happening today at the Royal Bank of Canada (RBC) I'm wondering if the hogs will eventually be slaughtered or is our country's biggest pig just going to keep getting fatter?

In case you're unaware of today's headlines, starting June 1, RBC will be introducing supplementary account fees. Why? Because they can. And few, if any will do anything about it.

Do they need to? You tell me. In 2014 RBC had another record profit year netting $9 Billion. On a year over year basis (2013 - 2014), executive compensation has increased 35 per cent (though the increase "shrinks" to 15.7 per cent if you ignore its chief executive's pension value adjustment). Forgive me, but I'm not seeing the need to introduce new fees other than to take more advantage of an apathetic client base.

When I went to the RBC website to see how they were presenting this, I was surprised with the nice spin they put on this increase. If you're interested, read it and see what you think of their explanation. I think their marketing department worked overtime on this.

Now, just to be upfront, I'm a shareholder of RBC and am extremely pleased by their performance, but I'm also a parent and advisor. As a shareholder I want them to take advantage of account holders and generate as much revenue as possible, but as a parent and advisor I want them to be fair. I don't think this next volley of fees is necessary or fair.

If RBC is having trouble staying profitable then it only makes sense that they do something to shore up their bottom line, but based on their 2014 financials this certainly isn't the case. As a matter of fact, their first quarterly results from 2015 showed another record ($2.456 billion in net income).

As of today, only RBC and BMO are implementing new fees, but I'm certain that within the next month you'll see the rest of the major banks doing the same thing. If you're not with RBC or BMO right now and you think you're safe, don't be so sure. Watch for the announcements, and more importantly, watch your statements!

In the last few years of examining our clients' bank statements, we've seen clients banking fees go up as much as 400 per cent. That's crazy, yet few clients have been willing to change banks because of the "hassle" factor. This is exactly what the banks are counting on. They know clients will likely not do anything other than complain about the new fees, then dutifully pay them.

As I've mentioned in the past, you do have a choice, but you have to actually follow through. There are a number of alternatives out there but nothing can happen until you're willing to take control. If Canadians aren't willing to lead the hogs to slaughter then they themselves will die -- financially -- a death from a thousand cuts.