The Perils of Bank/Brokerage Synergies

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The one-stop financial shop has always sounded great on paper: Why should a person go to one institution for checking accounts, to another to invest in stocks and bonds and to another to buy insurance? When Merrill Lynch was purchased by Bank of America, an advisor friend of mine told me that he was actually happy, since the thought of a client depositing money in his Merrill brokerage account by going to his BofA branch seemed pretty convenient. Theoretically, rich banking clients would be leads for Merrill brokers.

As this amusing story from today's New York Post shows, there can be hidden traps when bankers cold call wealthy clients to pitch investments. To wit: A Long Island dentist had hidden a substantial sum from her husband in an account in her own name at Chase. A "well-meaning" Chase bank employee cold called the dentist, but spoke to her husband, accidentally spilling the beans on the secret account worth $800,000. "You should take that small fortune out of the low-yielding account and invest it," was the message. The dentist, Nazita Aminpour is suing Chase, saying the bank violated federal privacy laws and place her in a position of "duress" in her marriage.

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