Previously, senior citizens (or anyone) could keep their money in the bank and be left alone.

After the repeal of Glass Steagall, banks went crazy harassing their high net worth customers (mostly senior citizens) to move their money over to the investment banking arm, where financial advisers could advise them on their money. Since seniors grew up during a time when banks were trustworthy, many of them fell into this trap and agreed.

However, these so-called “advisers” were really salespeople peddling high-risk, high-profit (to the bank, that is) products which would put the customers’ savings at grave risk. These “trusted advisers” actually had no fiduciary duty to their clients and felt free to advise them to buy the products that gave them the biggest kickbacks, rather than products which were actually good for the customer.

And that is the system we have today.

This set-up is hugely profitable for the banks, and whenever anyone suggests that financial advisers should actually act in the best interest of their clients (like doctors or lawyers are required to do), the banking industry fights it tooth and nail. They don’t want to act in the best interest of their customers. They want to swindle them.

And they are succeeding. I’ve seen some of the products peddled by these financial advisers. As one example, an adviser at a bank (whose client was paying him an annual management fee for advice) was pushing a complex, high-risk, fixed-income unit investment trust that had layers and layers of fees (totaling 4.5%/year!) and that offered LESS interest than a simple FDIC-insured CD after all of these fees. This high-risk product was guaranteed to do worse than a simple CD! And yet, the “expert” financial adviser sold it to his clients as a “great investment”.

So that’s what we have gotten with the repeal of Glass-Steagall. Our parents and grandparents are not safe going into the bank anymore. Thanks Bill Clinton.