Barefoot Investor: Time we banned Commbank from the classroom
COMMBANK chief Matt Comyn may be sorry, but as parents, it’s high time for us to tell the bank to keep their fraud out of our children’s lives, writes Scott Pape.
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COMMBANK chief Matt Comyn is sorry ...
He’s sorry his insurance guys ripped off terminally ill parents who took out life insurance
with the bank.
He’s sorry his financial advisers ripped off retirees for millions of dollars with fraudulent advice.
He’s sorry the bank ripped off dead customers, by charging advice fees for
no service.
And now he’s sorry that his bank teller staff scammed school kids’ Dollarmites accounts.
You’ve got to hand it to the CBA, their fraud has a kind of … circle of life to it, right?
This week we learned that thousands of children’s Dollarmites accounts were fraudulently manipulated by CBA staff, so they could earn bonuses and meet aggressive sales targets.
Hang on a minute.
Why would the bank link sales incentives to those cute-looking little Dollarmite accounts?
Because their Dollarmites program is easily the most successful marketing campaign in Australian history.
In fact, one analyst has suggested Dollarmites was worth an astounding $10 billion to the bank.
How? Simple. The CBA pays schools a token kickback for signing up students. Yet it’s chicken feed for acquiring a long-term customer. Especially when Choice magazine says that 35 per cent of those Dollarmites end up staying with the CBA.
For well over a decade, I’ve been calling out the Dollarmites program.
Having Australia’s largest issuer of credit cards teaching kids about money, is like having Ronald McDonald teaching kids about nutrition.
Besides, the Dollarmite Youthsaver account terms and conditions are rubbish.
Parents would be better off saving for their kids in a high-interest online savings account, and throwing their edu-marketing in the bin.
Look, I’ve dedicated my life to delivering independent financial education, and I can tell you that kids don’t learn much from the Dollarmites cute cartoon mascots like Cred, who rides a skateboard and is “a real cool dude”.
Rather, it’s when Cred morphs into a credit card, and is mailed out to fresh-faced 18-year-old cool dudes, that their real education begins.
There are well over 500,000 kids who are unwittingly enrolled into the CBA’s marketing database.
As parents, it’s time for us to tell the Commbank that their sleazy circle of life has to stop right now.
It’s time to ban Commbank from our classrooms.
Sorry, not sorry.
Tread Your Own Path!
LIVING THE LOTTO LIFE
MARCIE ASKS: Recently you quoted research showing that lottery winners can end up no happier three years after their win.
I just want to say that it is not always like that.
Fourteen years ago, my parents (aged 70 at the time) won $10.55 million in a lottery.
They paid off their farm (which was about to be foreclosed on by the bank), paid off their five children’s mortgages ($300,000 each), gave $45,000 to each to their 14 grandchildren, and spent the remainder on childcare freeholds.
Fast forward 14 years and the only sad thing is that Dad passed away two years ago after a brilliant 70 years and an even more brilliant final 12 years after the lottery win.
My brother now runs the farm, and the rest of us still reap the rewards of the childcare freeholds.
We are all as happy as can be!
BAREFOOT REPLIES: As the lotto ad says, “Wouldn’t it be nice?”
I’m afraid the overwhelming majority of people who gamble are losers (even the winners).
I’ve always agreed with writer Ambrose Bierce, who said that the lottery is a “tax on people who are bad at math”.
Still, hats off to your parents.
They beat the odds twice: they won the lotto, and they didn’t screw up their lives!
SON MUST BENEFIT
KYLIE ASKS: My four-year-old son has cerebral palsy due to negligence at his birth; I sued the hospital and won $6 million.
The lawyers gave us three days to made a decision as to where to invest the money. We were given two options: NAB or Perpetual.
Both made presentations that we admittedly didn’t really understand.
His money is now in a trust fund with Perpetual and we pay around $70,000 a year in fees (I think).
They told us that it will cost around $1 million in fees over my son’s lifetime.
I do not know how to help him or even what our legal rights are.
I have been told by people there’s the possibility that, if we were to try and move away from Perpetual, they might get lawyers to sue us, using our son’s money! Where do I turn to get the best advice for him?
BAREFOOT REPLIES: I’m so sorry this has happened to your family.
Let’s get this clear: you have your son’s best interests at heart. Perpetual have their best interests at heart.
What your lawyers should have done is advise you to employ a totally independent fee-for-service financial adviser to guide you in choosing the best provider for what is a very important service.
Obviously there are ongoing costs involved in professionally administering an intensive disability trust for the rest of your son’s life. Yet what concerns me is that you don’t have a handle on what your son is actually being charged.
So, I’d suggest you gather up all your paperwork and see a lawyer who specialises in disability trusts.
Ask them to do three things:
First, have them calculate all the fees your son is being charged annually.
Second, have them compare these costs against three other reputable trustee services.
Third, and most importantly, have them analyse whether you received appropriate advice in order to make an informed decision on behalf of your son.
I will personally do whatever I can to ensure the heads of Perpetual give your case the careful consideration it deserves.
INTERESTING TALK
MELANIE ASKS: A couple of day ago I finished reading your book, and immediately phoned my bank (Suncorp).
My husband and I have had our home loan with them for close to 10 years.
I told them I was currently paying 5.02 per cent and would like them to reduce the rate.
The woman I spoke to said the bank would review it, and after a few minutes on hold she came back and said my new rate was 4.02 per cent.
I must admit I had a little cry — not sure why … proud … angry … happy!
I will be phoning them every six months from now on. (I have also bought three more copies of your book and given them to my nieces.)
BAREFOOT REPLIES: Let me channel my inner Oprah: You go, girl!
Even better, like “O” I can give you the equivalent of a free car:
If you’ve got a $300,000 mortgage, with 15 years left on the clock, that five-minute telephone call has saved you $27,618.
A few taps on the MoneySmart mortgage switch calculator suggests that, if you maintain the same minimum repayments as your current loan, you’ll save $36,908 over the life of your loan and be debt free 15 months earlier!
If you’ve got a burning money question, or you want to win a fight with your hubby, go to barefootinvestor.com and ask a question
The Barefoot Investor holds an Australian Financial Services Licence (302081).
This is general advice only. It should not replace individual, independent,
personal financial advice.
Originally published as Barefoot Investor: Time we banned Commbank from the classroom
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