- Many financial institutions will say they can do everything, but they really only do a few things well.
- Banks offer many products and services, but consider using them for what they are good at: banking.
- Banks are good at checking and savings accounts, certificates and deposits, and consumer loans.
There’s a funny skit Saturday Night Live did in the seventies that featured Gildna Radner, Chevy Chase, and Dan Akroyd. Dan Akroyd holds up this product called New Shimmer and says it’s a dessert topping and Gildna Radnor says, no, it’s a floor cleaner. Then Chevy Chase comes on and says “No, it’s both,” and we all laugh because of course, it wouldn’t work that way!
Similarly, when you are out there looking at banks, insurance companies, and financial institutions, they’ll say they do everything. But in reality, each of them only do a few things well. I want to focus on banks.
You can go in to a bank and they will have insurance, security investments and so forth. But what they’re really known for and good at are a couple of things:
- Checking and savings accounts.
- Short term investments, typically in the form of certificates and deposits.
- Consumer loans like auto loans and personal loans, not necessarily home loans. Today, a lot of mortgage loans get sold on the secondary market, so you may start off working with your bank, but it usually ends up outside of the bank.
Primarily, banks are great at banking. If you need insurance, go to an insurance company. If you want to invest, go to a wealth management company. You want to use institutions that are known for what they do, not a dual product that could end up doing both things poorly. So, use those financial institutions, banks in particular, for what they are really good at and you won’t go wrong.
Until next time, enjoy!