Most people still feel having a local bank is a necessity, though many often express frustration to me about how the salespeople seem to jump them like sharks as soon as they walk in. The recent news of Wells Fargo employees being guilty of widespread illegal sales practices has naturally put many bank clients on high alert. While the chances are likely that the person you are talking to is simply trying to do their job as well as help you out, here are a few red flags to watch for:

1. “Thank you” lines of credit. An offer of a line of credit is fine. But if someone tells you you’ve been given a line of credit because you’re such a great client, you’ve got a big problem. Nobody should be opening up a line of credit in your name without you asking for it.
2. Selling you on new checking/savings accounts. There are reasons to have multiple accounts, as any Certified Financial Planners™ (CFP® professional) will tell you. A new account promotion is the bank’s reason, not your reason. Bankers are incentivized to open new accounts and fund them. If a banker pushes you to internally transfer assets from an existing account into the new one, he or she may be engaging in a deceptive sales practice for his or her own benefit.  
3. Asking to open accounts for family. There are obvious exceptions to this, such as education savings accounts, custodial accounts, etc. If you didn’t ask about such an account though, be on alert.
4. Bundling. This is a tricky one, because bundling itself is not necessarily a dishonest thing: a company can afford to give you a better price on something because you are doing more business with them. However, if you are told something is only available when part of a package, you may have a problem. The Wall Street Journal reported that according to a 2015 lawsuit filed against Wells Fargo, staff told customers “certain products were only available as a package with other ones such as additional accounts, insurance or retirement plans.”
5. “Pre-approvals.” Again, these are not always a bad thing. The key to remember here is that “pre-approval” doesn’t actually mean exactly what it says. It really means you’ve been scanned against a list of criteria and suggests you may be approved. In reality, you can’t be approved until your credit is run, an action that can have a negative effect on your credit score. Then, your credit is known, they may likely backpedal and offer you terms that weren’t what was advertised in the “pre-approval.” In reality, all pre-approval means is this: “We’d like to sell you some credit, so we need your permission to run your credit to make you a real offer, so here’s the best we could ever possibly offer anyone under the perfect conditions as a teaser.”
6. The “best” investments. Firms often steer clients into their own in-house investments that are more profitable to them as a firm, or into investments that pay “retrocessions” (placement fees) to their firm. Banks, broker-dealers and wirehouses don’t owe their clients a fiduciary duty, so this is actually legal! It only really becomes a problem when brokers sell clients a version of their product for a higher fee when the same exact product would’ve been available to the client for a lower fee that paid the broker less. JPMorgan recently paid out $307million for such sales practices. The important thing to understand is that JPMorgan won’t be required to stop preferring its own funds; it will only have to send new disclosures to all clients.
7. Free investments. As investors become more fee sensitive, some banks and brokers have come up with a new scheme: free investment products, free trades, or free advice. Of course, this is not something a fiduciary could do. Why? Because of the layers and layers of conflicts of interest! This should be a no-brainer: they don’t invest your money out of the goodness of their hearts or just because you are a “good client.” Just how do they get paid? First, the free investments are usually made in proprietary products that pay them a fee. These products are usually less liquid and thus cost you more to trade in terms of the “bid/ask spread” that is paid to the market maker, who happens to be the firm that sold you the product. Second, they can get paid by market centers for routing trades their way.  Third, they often require a high percentage of the account to remain in cash at all times, which is beneficial to their firm but not to you.  And fourth, their prime concern is to keep you invested in these products rather than advise you on tactical decisions that could benefit you.  Oftentimes, “free” can be the most expensive route!  

The bottom line is this: when in doubt, walk away. Some of these red flags can be addressed by simply calling the bank and speaking to another person on a recorded line to see if what you are being told is true. Other times, there may be no way you can get a straight answer, so the best course of action is to get another point of view from an advisor who owes you a fiduciary duty.