Here in Australia, the Banking Royal Commission is well underway. And you may wonder what this has to do with good purchasing decisions, but at some point, we all chose to buy their services, and some of us chose to invest in them, and all of our superannuation funds invest and bank with them.
The Commission was established 14 December 2017. It’s purpose is to investigate Financial Services industry “misconduct.” And my goodness there has been a lot of it. The Institutions in question have been breathtakingly draw-droppingly duplicitous in their dealings with their customers. Like:
- Charging customers for services they’re not receiving, charging dead customers fees, or misinforming customers about fee structures to maintain higher fees.
- Fraudulently changing customer documentation, impersonating customers to obtain personal information, or having customers sign blank forms
- Advising customers to buy unsuitable products, to borrow money they can’t afford to pay back, or not disclosing conflicts of interest.
And indirectly, through our purchasing and investment, we have all been encouraging them.
The common denominator of the testimony to date is that the Institutions in question have no regard for their customer’s interests. It doesn’t matter if customers lose everything and are driven into bankruptcy, or the staff are ill-paid and badly treated, as long as Institutional returns to the shareholders are increased. In other circumstances, we would call it profiteering.
It’s almost to the point that this disregard for humanity makes buying stock in financial institutions is as dire an act as buying shares in tobacco, munitions, or slot machine manufacturers.
And if the disregard for customers and staff is not enough for you, it turns out that some Institutions have also been ignoring their responsibilities under the law. All while paying the executive staff responsible for the misconduct enormous bonuses.
And this comes on top of investigations into collusion on lending and foreign exchange rates.
I guess that’s just what happens when you have a few BIG Institutions that buy up all the small ones so there’s not much in the way of genuine competition.
Now, as in all purchasing decisions, there is an element of buyer beware. But in the face of high-pressure sales techniques against a background of trusting the Institution you’ve been with for decades without question you’re at a distinct disadvantage.
Which leads to the question of how you can grow your knowledge and experience so that you can make good purchasing decisions about your goods and service provision.
How to Make Good Purchasing Decisions
You need to know a bit about yourself, a bit about business, politics and government, and have a bit of nous.
Your Ideal Life
Like almost every single thing I talk about, it starts with your vision of your ideal life and future.
Vision, Mission, Virtues
The foundation of good decision-making is who you are or want to be. Your concern for the environment, an end to slavery, or animal welfare will prevent you dealing with some companies, and steer you in the direction of others.
You don’t need to set a specific goal for this, it’s more of a getting better situation where you aim to become more informed and make better decisions than before. And given the constant rate of technological change, and businesses buying other businesses, you need to make a commitment to stay in touch with what’s going on in any industry that you buy or invest in.
The Other Stuff
As well as your vision, there are some other factors that can help you make good purchasing decisions
You need to know what level of quality you want. And if you can’t afford it, what you’re willing to sacrifice to get it. For example:
- Is fresh raw organic produce worth more to you than processed tinned food?
- Do you want the durability of synthetic clothing or the breathabilty of natural fibres?
- Are you willing to pay fees for bells and whistles banking or will you take the basics because they are low or no cost?
Price v Value
Another important component is knowing whether your subjective interpretation of value is worth the objective price you pay. For example:
- Will you get the full value of your TV subscription each month or should you hire movies instead?
- Do the join up bonus/membership benefits off-set the long-term cost of supply?
- Could you get better use of the cost elsewhere?
It is reasonable that a supplier covers their costs. And makes enough profit to take care of their employees, reinvest in the business and keep a little for themselves. Does the price suggest:
- Efficient and effective processes, or waste and mismanagement?
- Care for staff, suppliers and customers?
- Compliance with relevant regulations?
Nous is the ability to discern what is real, a kind of common sense or street smarts. Your gut instinct or bullshit detector.
You’ll most commonly use this checking a company’s website for their policies, and cross referencing with a quick google search to see whether they’re living up to them or not.
Purchasing is not the End
Making a purchase is not the end of the story. You’ve opened a relationship with a business, but you need to keep an eye on them. If you don’t, you’ll end up paying fees for services you aren’t receiving Banking Commission style. Or trashing the environment and supporting slavery in Bangladesh.