I think a lot of banks do still have commissions for credit card referrals, although not checking accounts. Referrals for new accounts and other banking products are generally included in a teller's goals for the year, but they're not compensated specifically for them (other than on credit cards).
Very useful post for a broad range of borrowers. It reminds of the valuable, but often neglected maxim to always view a transaction from the other party’s vantage before proceeding. So much friction and delay can be avoided if as little as one hour is spent scrutinizing your approach from your counterparty’s angle first.
Hmm. I just got finished recommending your column to someone a few weeks ago because you didn't go in for the usual nonsense.
I have always wondered why bankers don't get paid via a percentage basis per transaction. It seems to me that it would help better align their interests with their customers instead of the poor sucker whose deal you may have ruined utterly in your "Bonus" section.
The only other thing which occurs to me is the obvious problem in rules #8-#10. These are entirely subjective and fraught with problems. You are assuming that all things are equal, but we know that is not the case. A person may appear rude-and in fact they maybe-but denying a loan to Sheldon Cooper simply because you don't like him is discrimination. Besides, he's more likely to pay promptly because that's how he's wired than the high school prom king whom you may like better.
And on a more obvious and trotted out note, racism and all the other horsemen appear when people make these kind of judgments. Perhaps the answer is to bank far away from your home lenders with actual bankers, like the Germans or the Swiss. It may well be that distance makes more things possible. After all, they don't need the warm fuzzies in order to make loans.
Thanks for reading and for the feedback. On the question of commissions, I neglected to mention this, but the other reason why banks don't set up their lenders on a commission structure is that it incentivizes bad loans. If your lender is compensated primarily based on booking loans (i.e. a commission per booked transaction), it skews their motivation towards growth only rather than quality of the loans. Lenders are part of the risk management apparatus for the bank, and not only charged with booking new business. A lender who is not mindful of the risks on loans, which may be the case if they are motivated primarily by growth, poses a risk to the bank as a whole (I'm going to edit this into the piece - thanks again for the comment).
I imagine that you aren't trying to be purposefully pedantic, so I'll be clear and state that all the banks usual guardrails should apply and this would simply dovetail-ie: become apart of total comp. If the loans fails, subject them to clawbacks or whatever penalty the institution decides. Hopefully, everybody understands by now that "skin in the game" results in better outcomes.
For the general public in a city, town whatever, the broader the tax base, hopefully the lower the taxes. Of course, a tax and spend local government might find ways to waste the funds, but at least they aren't coming out of the local tax base.
Great article. Brings back memories from my Lending days.
I never knew you want pictures of construction and upgrades. Also some other good points. I’ll keep that in mind if I’m in the market again.
It was my understanding that tellers get commissions for every checking account they open for every credit card they sign up a person for.
I think a lot of banks do still have commissions for credit card referrals, although not checking accounts. Referrals for new accounts and other banking products are generally included in a teller's goals for the year, but they're not compensated specifically for them (other than on credit cards).
Very useful post for a broad range of borrowers. It reminds of the valuable, but often neglected maxim to always view a transaction from the other party’s vantage before proceeding. So much friction and delay can be avoided if as little as one hour is spent scrutinizing your approach from your counterparty’s angle first.
Hmm. I just got finished recommending your column to someone a few weeks ago because you didn't go in for the usual nonsense.
I have always wondered why bankers don't get paid via a percentage basis per transaction. It seems to me that it would help better align their interests with their customers instead of the poor sucker whose deal you may have ruined utterly in your "Bonus" section.
The only other thing which occurs to me is the obvious problem in rules #8-#10. These are entirely subjective and fraught with problems. You are assuming that all things are equal, but we know that is not the case. A person may appear rude-and in fact they maybe-but denying a loan to Sheldon Cooper simply because you don't like him is discrimination. Besides, he's more likely to pay promptly because that's how he's wired than the high school prom king whom you may like better.
And on a more obvious and trotted out note, racism and all the other horsemen appear when people make these kind of judgments. Perhaps the answer is to bank far away from your home lenders with actual bankers, like the Germans or the Swiss. It may well be that distance makes more things possible. After all, they don't need the warm fuzzies in order to make loans.
But other than that, nice column again.
Thanks for reading and for the feedback. On the question of commissions, I neglected to mention this, but the other reason why banks don't set up their lenders on a commission structure is that it incentivizes bad loans. If your lender is compensated primarily based on booking loans (i.e. a commission per booked transaction), it skews their motivation towards growth only rather than quality of the loans. Lenders are part of the risk management apparatus for the bank, and not only charged with booking new business. A lender who is not mindful of the risks on loans, which may be the case if they are motivated primarily by growth, poses a risk to the bank as a whole (I'm going to edit this into the piece - thanks again for the comment).
I imagine that you aren't trying to be purposefully pedantic, so I'll be clear and state that all the banks usual guardrails should apply and this would simply dovetail-ie: become apart of total comp. If the loans fails, subject them to clawbacks or whatever penalty the institution decides. Hopefully, everybody understands by now that "skin in the game" results in better outcomes.
For the general public in a city, town whatever, the broader the tax base, hopefully the lower the taxes. Of course, a tax and spend local government might find ways to waste the funds, but at least they aren't coming out of the local tax base.