Banks Are Winning No Matter What

In the course of doing taxes I see many financial statement about investment and earnings. RRSP statements, Stock transactions, capital gains statements etc. Each time you do a stock transaction (buy or sell) your bank or brokerage firm takes a commission/fee out of your account. To my understanding it only takes few clicks of computer keyboard to complete any stock transaction. For that service, your stock broker will charge you any where from $100-$300.

So, the banks and investment firms are always making money, by handling your money, regardless if you are making money or not, by following their advice.

I have seen financial statements where the value of investment went down by 50% but they were still charged thousands of dollars as management fees by their brokerage.

A recent report in Fortune Magazine reported on the so called bank/brokerage fee earnings by the investment banks.

Overall the investment bank fee earning went up by 9% compared to last year (2009) for the first 9 month of 2010 to a total of $58 billion.

Government entities are the biggest fee payers, leading by USA. The U.S. government paid $1.15 billion in fees, mostly on bond offerings by the government-run mortgage companies Fannie Mae (FNMA) and Freddie Mac (FMCC). US is closely followed by no. 2 government of China, which paid $1.07 billion for a mix of stock and bond offerings and merger deals. Japan was at No. 7 with $275 million in fees, and Germany, at No. 9 with $274 million.