The situation faced by Mike Holmes when he retired: Mike is 89 years old. His wife Rebecca

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The situation faced by Mike Holmes when he retired: Mike is 89 years old. His wife Rebecca died 2 years ago. Mike has 3 children and 10 grandchildren. Mike has banked exclusively with the same bank for the past 60 years. He retired 30 years ago. He has 3 different bank accounts. He has a chequing account with a balance of $15,000. Savings Account 1 has a total of $10,000 and savings account 2 has a total of $45,000. None of his banks account pay any interest. (The interest rate is zero.) He owns a small house in central Ontario. The house is worth $300,000. He has some personal household items worth approximately $4,000. His debts include a $50,000 secured line of credit on the farm and $10,000 of credit card debt. The line of credit interest rate is 4% compounded semi-annually. Mike is required to only pay the interest each month. The credit card charges a very reasonable 11.9% compounded monthly. The minimum payment on the credit card is 1.5% of the outstanding balance. Mike uses the credit card to make small purchases so the balance on the credit card has remained at $10,000 for the past few years. It would appear that Mike should have paid off his credit card and loans and invested the surplus from his savings account as well as the monthly interest payments on his loan in an investment account. We discovered that would have increased Mike Holmes net worth by more than $300,000. Review RBC’s approach to helping customers improve their financial literacy. Determine what the bank sees as its duty to its customers. Prepare a memo to Mike Holmes heirs that describes the bank’s approach to improving the financial literacy of its customers. You are to determine, if Mike Holmes had been a customer with your bank, would he have been more financially literate and therefore would he have paid off the loans, invested the lump sum surplus and the monthly interest payments and would his net worth have been higher. In addition, you are to determine what the bank believes is its duty or obligation to its customers. Would Mike Holmes net worth had been greater if he banked with RBC. Answer