It may seem incongruous that even with the abundance of financial advice at our fingertips – all the online advice available from bloggers, finfluencers, AI and robo advisers – millions of investors eschew the DIY route and choose instead to rely on our local in-branch bank advisers to plan and execute their retirement saving strategies.
This likely stems from the fact that Canadians have an extraordinarily high level of trust in our banks. A recent Abacus Data study cites that 70 percent of us are satisfied with our bank (usually one of the Big Five: BMO, CIBC, RBC, Scotiabank or TD) and that 66 percent of us – and an eye-popping 84 percent of those over 60 – say that they have been with one bank for more than a decade and show little or no inclination to switch to a competitor.
And this monogamous banking relationship only grows deeper as we pass through every age and stage of life: as youngsters, we open a savings account for our allowance or odd-job money, and later, we rely on the same institution to borrow for a car loan or a mortgage and set up a credit card. Whether it’s force of habit, convenience, to avoid the hassle of keeping track of multiple accounts or even just because we prefer dealing with a human being, we tend to stay loyal to one bank ‘til death do us part. We trust our banks to look after our best interests almost as much as we trust our doctors or lawyers.
The Big Five capitalize on this dogged loyalty – it’s one of the reasons why, during an era of high inflation and a struggling economy, these powerful institutions reported soaring profits in the first quarter of 2026.
But a recent joint study by the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) suggests that banks may be putting profits over their clients’ best interests. Does this mean that the long-term relationship is on the rocks?
Aggressive Sales Culture
The OSC-CIRO report, revealingly titled Sales Culture Concerns at Five of Canada’s Bank-Affiliated Dealers, surveyed 2,863 representatives from all five bank-affiliated mutual fund dealers in Ontario, in order to get a better understanding of the knowledge of the the dealers and also the sales environment in which they operate. The more alarming findings include the following:
- 25% of representatives reported that they “sometimes” recommend products or services that are not in their clients’ best interests.
- 32% of reps stated that their compensation is driven more by sales volume than quality of advice.
- 40% of reps indicated that performance tracking tools (scorecards) directly influence their product recommendations to clients.
- 94% of reps reported that they are only able to offer clients their own bank’s mutual funds
These disconcerting revelations suggest that the banks have created a culture of aggressive sales that compromises the notion that advisers are acting in the best interests of their clients. Instead of doling out sound financial advice, and directing clients to the best-performing funds out there, an alarmingly high number of bank advisers are instead pushing the bank’s own products to hit aggressive sales targets – regardless of whether they meet the client’s financial goals.
“Across Canada, the impact this sales-driven culture has on a client’s retirement portfolios is real,” says Anthony Quinn, president of the seniors’ lobby group CARP (a ZoomerMedia partner), noting that it disproportionately affects older clients who have been loyal to the same banks for 50 or even 60-plus years. For example, if an adviser pushes a client into an inappropriate or underperforming investment for 25 years, it could end up costing them thousands of dollars in lost returns. “Underperformance compounds and savings evaporate,” says Quinn.
Incentive-Driven Advice
Quinn points to the root of the problem: the banks have set up a system that thrives on a lack of competition. “TD might offer a category-leading mutual fund. However, an adviser working at an RBC branch cannot recommend that TD fund to their clients,” says Quinn. Ultimately, there’s no incentive for the adviser to develop a fulsome financial plan that uses all the investment products available in order to put the client on a path to long-term prosperity. Driven by sales quotas, the adviser’s motivation becomes, “How many units of the bank’s mutual funds can I sell this month?”
Which brings to mind an axiom made famous by the late Charlie Munger: “Show me the incentive, and I will show you the outcome.” That’s how the legendary U.S. investor and architect of Warren Buffett’s powerhouse Berkshire Hathaway investing firm pinpointed the role financial compensation plays in driving human behaviour.
Investors, of course, aren’t beholden to in-branch advisers exclusively. If you meet the requirements to become an “accredited investor” – having more than $1 million in financial assets or a $200,000 yearly income – the bank will often direct you to their wealth management arm, where you’ll receive comprehensive financial planning and access to a wider spectrum of private-market investments (like hedge funds or startups) that aren’t usually available to the general public. Or, you can go the the non-bank route and find an independent advisor who isn’t tied to a a financial institution and can offer investing products à la carte. Many older investors, however, either don’t meet the wealth threshold, have a limited knowledge of alternatives or are wary of the perceived risk of investing with anyone who’s not connected to their banks.
Bank Transparency
The Canadian Bankers Association (CBA), the trade association that has represented the industry since 1891, downplays the OSC-CIRO study’s findings. “Our members are committed to providing needs-based advice that helps clients reach their financial goals. Banks and their employees prioritize consumer and investor protection measures and strive to put customer interests at the centre of all product and service recommendations,” wrote CBA representative Nathalie Bergeron in an email to Zoomer. Noting that the banks continue to work towards “ensuring that seniors, indeed all Canadians, receive transparent, fair, high-quality financial service from their banks,” Bergeron added that the CBA would “welcome the opportunity for further dialogue with CARP’s leadership should they wish to engage with us.”
This isn’t just an issue for older Canadians. Industry commentators are concerned that the banks can no longer ignore the issue. At a CARP Seniors’ Day event held in October, Ben Felix, chief investment officer and portfolio manager at PWL Capital and host of the YouTube series Common Sense Investing, agreed that high-pressure sales tactics hurt investors: “One of the reasons that our banks are so strong and so profitable is because of this issue where they’re selling products that are really good for the bank … and maybe not the best thing for the consumers.”
At the same event, Richard Coffin, an investment analyst and portfolio manager at Watson Di Primio Steel Investment Management, and creator of the YouTube channel The Plain Bagel, suggested that aggressive sales quotas create a conflict of interest between banks and customers. “They’re promoting to their advisers to get clients to not just open a TFSA, but also to open a line of credit and a credit card – because those are very profitable for the institution,” Coffin says. “It’s not just inappropriate or inefficient investments – at times you’re having explicitly bad advice.”
A Front-Page Issue
Besides publicizing the issue in a prolonged media blitz, which centred around a Day of Action at the Queen’s Park legislature in November, CARP has also met with federal and provincial regulators and urged the Ontario government to step in and shut down the sales-culture problem. The group has also publicly called on the OSC to commit to addressing the sales-culture issue and challenged the Canadian Bankers Association to commit to stronger, enforceable standards for investment advice.
Despite co-authoring the report, the OSC urges caution before Canadians jump to any hasty conclusions about the banks behaving badly. “It’s important not to lean too heavily into anecdote,” says Matthew Onyeaju, senior vice president, registration, inspections and examinations at the OSC. And while he admits that the reported instances from the survey are “frankly concerning,” he says it’s “a little bit too early to signal the alarm” that the banks are not acting in the best interests of their clients.
The OSC says it plans to undertake “a formal review” based on the findings of the report, but Quinn isn’t hopeful that meaningful action or bank policy shifts will come any time soon. In an effort to keep pressure on the banks, CARP has filed a complaint with the federal government’s Competition Bureau, citing that the absence of competition in the investment advice market is particularly harmful to seniors.And until there’s corrective action taken – whether it comes from the federal and provincial governments, the OSC or the banks – Quinn will continue to make this issue headline news. “We will press regulators, policymakers and financial institutions to put clients – not sales targets – at the centre of investment advice,” he says, “and to restore trust in banks for seniors and all Canadians.”
