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Should I Use The Investment Services At My Bank? What You Need To Know

Should I use the investment services at my bank? It’s a common question most bank account holders ask themselves. To answer this question, we are sharing with you essential information on whether it’s a good call to invest or not to invest at your bank.

should I use the investment services at my bank

Traditionally, we see a bank as a platform or a place where we can save up. It is where we safe-keep our hard-earned money, and also, it’s somewhere where we can grow our funds.

Over the years, however, many if not all banks started offering investment services to their clients. This is on top of the standard consumer banking services they offer.

Primarily, the banks’ in-house investment services may be targeted at high-net-worth individuals, which means, if you are just a newbie in investing, most likely, your bank will not try to get in touch with you and offer such services.


However, that does not mean you cannot take advantage of these services — of course, you still can. It’s just that it’s going to be a personal initiative and not the other way around.

Banking rather banks have indeed grown from what it was before to what it is now. Well, with them providing almost anything and everything finance-wise, it’s safe to say that they’re like a one-stop financial services shop.

Today more than ever, banking customers are pushed to use banks in all their financial needs — which includes investing. They are pushed to use their banks’ in-house financial advisors in order to get a bigger share of their wallets, according to an article by Forbes.

Furthermore, on this day and age, “tellers and bank employees are trained to cross-sell and fill their daily quota of ‘hits’ by encouraging you to not only do your checking with them, but also mortgages, personal loans, and of course investing your life savings,” says Forbes.

So, having said all that, should you use the investment services at your bank?

To help you answer this question, here are a few important matters that we are going to discuss. These things will help you understand whether or not investing at your bank is a good idea, at the same time, it will help you come up with an informed decision.

Here are some of the things we are going to focus on:

  • Does FDIC covers investments?
  • How do investment services work?
  • How to choose the right investment service?
  • How to choose a financial planner?
  • What are the basics of the stock market?
  • How do fees fair in making investments through banks?
  • What are the pros and cons of investing through banks?


As an investor, whether new or not, it is important to look into this aspect. Make sure that you are fully aware of whether investment services and accounts are covered by the FDIC or not.

So, for your information, the answer to the question is NO.

The Federal Deposit Insurance Corporation or more commonly known as FDIC does not cover investment services and accounts offered by banks. The FDIC only guaranteed deposit accounts you have with the bank.

Furthermore, because of the ever-changing nature of the stock market, the insurance company does not guarantee investment funds.

However, this does not mean you can no longer use your bank in investing. You certainly can. The thing is, your money is not guaranteed against market losses when investing it regardless of the investment firm you opt to invest in.

While your investment funds with a bank are not protected by FDIC, fortunately, it is still protected should the bank go through fraud or falls into bankruptcy.

It is the Securities Investor Protection Corporation (SIPC) that will step in to provide a safety net should your bank gets into trouble. However, similar to FDIC, SIPC will not cover if you lose money due to a drop in the market value of your investments.

When it comes to the protection provided by SIPC, it is quite the same as FDIC insurance coverage wherein you will have $250,000 of coverage for cash in your investment account. SIPC provides $500,000 total amount of coverage, which already includes the $250,000 cash coverage per customer. This is applicable for all of the accounts you hold at any one bank or brokerage.

Given this coverage, it definitely will make investors or bank clients feel safer when it comes to investing instead of keeping your money in a savings account that comes with very minimal interest annually.

Overall, although investments are not covered by FDIC, we can say that investing through banks is generally safe and secure.

If based on this, if you are thinking, “Should I use the investment services at my bank?” we’d say, go ahead. As mentioned, it is generally safe investing in your bank.


The kind of investment services your bank provides is likely comparable or the same as what investment firms provide.

What makes the difference though is finding a financial planner or adviser who you feel at ease worthing with. He or she should be willing enough to cater to all your queries when it comes to investing particularly about the products you are eyeing for.

Should you encounter a financial advisor or planner who does not meet your needs — someone who seems unwilling or unable to answer all your questions regarding investment products — then, it’s better to choose and/or look for a more reliable one.

Finding a financial planner or adviser is crucial because he or she has to ensure you fully understand everything about certain products. Needless to say, he or she has to be very helpful and willing to assist anytime you need one.

Remember, we are talking about your hard-earned money here. The last thing you want to happen is to put your money to waste, right?


As mentioned, choosing the right financial planner or advisor is crucial as he or she plays an important role especially when it comes to your decision-making.

Also, your financial planner or adviser must be able to assist you in choosing the right investment service or services, which include:

  • Money Management – This basically refers to a step wherein an investor has to ascertain the amount of money he or she has for his or her disposal for investing as well as other different financial options available to help maximize returns and tax rebates and minimize risks.
  • Portfolio Management Services – This type of service is aimed at investors achieving the right mixture of investments like bonds, commodities, stocks, CDs, and more depending on their financial goals as well as risk appetite. It encompasses making a choice between debt and equity, as well as domestic and international investments, and growth and safety.
  • Retirement Planning Services – Obviously, this particular service deals with retirement goals. Once everything is laid down, the right investments have to be made into pension plans, profit-sharing plans, as well as 401(k) plans.
  • Collective Investment Portfolio Management – This refers to mutual funds, managed funds, and ETFs.
  • Brokerage Services – Brokerage services include trading in bonds, stocks, foreign currency, and derivatives. Compared to other financial institutions, the brokerage services offered by banks are considered more reliable and are often preferred as compared to those being offered by individual brokers.

He or she must be able to help you in your investment journey particularly on the process of choosing the right investment service or services. He or she must also be of help in the following:

  • Reviewing your needs and goals
  • Looking into how long you are able to invest
  • Making an investment plan
  • Checking on fees and charges
  • Deciding what investments to consider and what to avoid
  • …and more

To be honest, investing is not as simple as putting money in a savings account. You have to be knowledgeable, you need to be wise where to put your funds into.

But let’s face it, some if not many of us do not have much time to master the art of investing – that is why a financial planner or advisor would be of great help – so let’s move on to how to actually choose a financial planner.


When it comes to making an investment, finding a financial planner is part of the process. In fact, it is an important process.

When looking for the right financial planner, it’s absolutely okay to look at several candidates. The more options, the better. This includes both financial planners from your bank and outside of your bank.

In addition, you may also consider finding out the policy if in case your financial planner changes from one company to another.

It is in fact important to know this. For instance, what if your chosen financial planner resigns from the bank, what will happen to your account? Will it be assigned to a different planner? What if you want to stay with the bank or financial firm, will you be allowed to choose your new planner or you will need to stay with whoever is assigned to you?

These are all important aspects of your investment journey. So, make sure to look into these details as well.

You see, the role of a financial planner or adviser is very critical. He or she is someone you can turn to for investment advice. He or she is like your partner in managing your money — take note, your hard-earned money.

So, when looking for a financial planner, make sure to ask about the services offered through your bank, interview potential planners, and once you’re done, then, that’s the only time you make a decision.

Additionally, when choosing a financial planner, choose that person not just because he or she works for the bank or the firm, but because he or she has the capability to co-manage your funds, and helps you grow your money.

Meanwhile, if you want to know the common mistake people make when using a financial planner or advisor, here’s a very informative video clip from The Dave Ramsey Show:


So, we have already tackles about whether or not FDIC covers investments, and also about finding the right investment service and the right planner. This time around, we are going to talk about something that is very important for every person who plans to invest to know – the stock market.

First and foremost, what is the stock market?

According to Investopedia, the stock market refers to “the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place.”

Additionally, these financial activities are “conducted through institutionalized formal exchanges or over-the-counter (OTC) marketplaces which operate under a defined set of regulations.”

If the stock market is totally new to you, and you want to or are interested to jump into it, the best thing to do is to seek advice from a financial planner who is knowledgeable and who understands the markets as well as the products available out there.

One very common product is mutual funds, which help reduce the overall investment risk as they spread risk through the stock of various different companies instead of just a single one.

It is important to note that any individual stocks you buy have a greater risk. Why? Because if a company fails, the stocks automatically could become worthless. That fast!

To put it simply, be sure that you are ready to invest and that you know what you are buying before jumping in. Otherwise, you might just regret it.

When investing, make sure to use only your spare money, which refers to funds that you are not using for living costs or to pay for any big expense soon. Make sure the money you are using is not the same funds you will use on your monthly needs. Otherwise, it’s not going to work.

Make sure that your investment fund is totally different from your monthly budget. Also, see to it that your budget has enough room to protect your savings and investment accounts at the same time meeting all your regular financial obligations.


Still thinking about — “Should I use the investment services at my bank?”

Well, here’s another important thing that you need to know when it comes to availing investment services at your bank.

You know what they say — nothing is free? Does everything come with a cost? Well, that is true when it comes to using investment services at your bank.

Banks are usually controlled by large corporations. These publicly-traded corporations are normally tasked with creating or shareholder value and these shareholders want to see big income margins.

So, to ensure banks and credit unions meet that, they tend to be the biggest seller of expensive as well as costly investment products such as Mutual Funds and Variable Annuities — this one is according to the same Forbes report we mentioned earlier.

But apart from selling costly products, banks also charge fees for their services, and guess what? It may be a little costly, too. For instance, according to Forbes, “the average mutual fund can run around 3% a year in fees, so after you tack on 1.20% you’re paying the bank and the advisor behind the desk a whopping 4.20% per year.

See that? But the advantage of that would be — you won’t get into the hassle of managing these accounts. They do it for you.

Take note that fees and charges differ from one investment service to another, and from one bank to another.


So, this time around, let’s look into the advantages and disadvantages of investing through banks.


  • Most of the time, you get excellent and well-knowledgeable people to help you manage your investments.
  • Most banks especially the big ones have a solid foundation and are credible, which means they are likely to handle your money well.
  • They can provide you with the right financial planner or adviser.


  • It’s not insured by the FDIC.
  • Banks have limited investment options.
  • Banks tend to have expensive, costly investment options.
  • There are higher trading costs.
  • Banks tend to give biased advice.
  • Banks tend to have a less impressive trading platform because of the nature of the business.


The thing about banks is that people tend to feel secure when dealing with them. Since they are in the business of safekeeping people’s money, customers have that feeling of security and safety with banks. That is why it is not surprising that clients consider entrusting everything to the bank including investing.

Investing is broad. To be honest, it takes a while before a newbie could understand fully the whole concept and the proper way or ways of investing. While doing it yourself is doable, sometimes, having someone else do it for you is better especially if you have no time or you have not enough knowledge about the business.

Banks are well-trusted institutions. As mentioned, we see banks as the most reliable institution when it comes to handling finances.

So, if we were to answer the question, “Should I use the investment services at my bank?” We’d say it depends. If you have the ability to manage your own investments, then go ahead and manage it yourself. Otherwise, entrust it with the bank. In the end, as long as you have the capability to pay for such services and you have the confidence that the bank will take care of everything, then that’s the end of discussion.

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