Mutual Fund Wraps

Learn about the pros and cons of Mutual Fund wraps Read the full article   

Canadian fund fees, loads and much more

All you ever wanted to know about owning a mutual fund but were afraid to ask. Read the article 

Investor Awareness Booklet

Investor Awareness Booklet Give yourself a educational treat. Read this 28 page information jammed booklet focused on retail investors. You'll learn about mutual funds, PPN's, wrap accounts, advisor compensation systems , ETF's and much more.. It's written in plain language. Read the Booklet

Impact of Financial Incentives on Retail Investors

Impact of Financial Incentives on Retail Investors discusses the impact sales commissions and other sales incentives have on the quality of  " adviser" recommendations. Read the full paper 

Know your personal rate of return

This document from PWL Capital Inc. is one of the best explanations on how portfolio rates of return are calculated.Read the full article

Great article from Burgundy Asset Management

In SURVIVING SUCCESS; Investment Management and Value Added Burgundy gives us some pointers on how to spot a manager who is on his way to negative value add. Read the full article  

INVESTOR BEWARE! A book by Robert Goldin

This 1999 book by famed dispute resolver Robert Goldin still has plenty to offer readers. You'll learn all about the Bay Street tricks to separate you from your money  Read the book

The Scorpion and the Frog

This excellent book was written by David Yudelman in 2001. It provides a consumer view of Canadian  financial services and ways to transform them. Its message is just as valid today.Read the book      

OBSI Name and Shame The Octagon Capital case

This was the second case in OBSI's history that it named and shamed a firm.It also published the full recommendation Report keeping the victim's identity confidential. The Report provides an excellent insight into OBSI's approach to investigations and the type of issues that investors are exposed to. There are lessons to be learned for those who take the time to read it.

When it first appeared Ms. Debra McFadden , someone who also had been exposed to complaining to firms remarked:

"I am glad that OBSI has had a taste of what clients have to deal with when trying to resolve things with a firm. The defer, delay dispute crap has to stop! Many clients never even go as far as to complain to OBSI so you can imagine how many just give up when up against these arrogant firms. I know myself I bent over backwards wanting to give the firm every opportunity to do the right thing but they would just play me along. It isn't until they realize you won't back down and that it is all going to come out in a courtroom and to the public that they cave. It is a very unfair game of who blinks first in a child like game of staring them down. Since they have high powered guns on their side the imbalance of power is extreme. Since I believe many that are taken advantage of are likely seniors most are unable to engage in this formidable battle. I bet for every 1 complaint that goes to OBSI there are at least 1,000 more just like it that should be complaining. So for 21 complaints to at one time be stuck at an impasse with OBSI is deplorable. Instead of OBSI going to extreme measures to get them to comply the gov't should step in and crack the whip hard to bring this whole industry inline! Read the OBSI Report

Your investments are protected, right?

Your investments are protected, right? Well, maybe. A 2008 Mutual Fund Dealers Association of Canada (MFDA)  report has recommended that provincial securities commissions expand protection for investors because the two key funds - the Investor Protection Corp. for mutual fund investors, and the Canadian Investor Protection Fund for brokerage industry investors - have significant gaps. Both compensation funds protect investors' assets up to $1 million in the event that financial firms go bankrupt .But failed investment firms such as Portus Alternative Asset Management Inc. and Norshield Asset Management (Canada) Ltd. were not licensed as mutual fund dealers, which are covered by the IPF. Rather, they were licensed as portfolio and mutual fund managers, which are not covered at all, the report notes.

The MFDA recommends that both the fund manager and portfolio manager categories of firms be required to join either the IPC or the CIPF to ensure seamless coverage. According to a G&M article , the Ontario Securities Commission said its staff do not agree that there are gaps in the regulation and oversight of fund managers and portfolio managers. "While mutual fund assets are not held at mutual fund dealers, these assets are held at qualified custodians which are IIROC members or Canadian financial institutions, such as banks . We suggest you check on your specific investments . The MFDA report .

Legal liabilities of Financial Advisors in canada

This paper provides an excellent summary of the legal liabilities of financial advisers.It is worth the read if you are at all interested in this subject.Read the full paper 

The value of financial advice ( or not)

Does financial advice yield better results? Read the full article

Checking Registration and Disciplinary history

Securities Regulators rightfully recommend that investors check out their dealer and dealing Representatives ( aka “advisors” or salespersons) .Their websites are promoted as the starting place for investors to make informed decisions. Let's explore this in more detail.  Read the full article

Advisor Risk

When you use an adviser here's always the possibility you'll not get the full story. That's because most "advisers" aren't fiduciaries. They do not have to put your interests first. Read the full article

Sales incentives skew adviser behaviour

This Comment letter to the UK financial regulator summarizes our views and experiences with financial incentives used to "motivate" adviser sales of certain products. Most retail investorse do not understand the true nature of their relationship with their advisers.Read the full article.

Suitability system needs overhaul

The KYC -suitability system is not working as intended. Financial consumers are being exposed to undue risk. We call on the Joint Forum of Financial Regulators to address the issue on a priority basis. Read the ALERT 

ALERT on new bank complaint system

Read the full article

Our Comment letter to FCAC regarding proposals to regulate Bank's internal complaint handling systems.

Read the Comment letter 

What the limitation Act means for retail investors

During the investing life cycle, chances are you may have a complaint against your adviser . The complaint process has always been a painful experience. But in 2004, retail investors faced a new challenge to their ability to recoup undue investment losses caused by bad advice . The new challenge was reduced statute of limitation time periods.  Read more 

Proposed Federal External Complaint Bodies Regulation a bust

Our Comment letter to the Department of Finance explains why. Read the full article 

The New Diversification

Over the last several years, many investors have discovered to their unfortunate surprise that their portfolios were not nearly as protected from downside risk as they thought and that their traditional notion of “diversification” failed their expectations.

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The Elderly and Investor Protection

It's long been known that seniors are especially vulnerable to the financially devastating impact of
adviser abuse, frauds and scams, and there are several reasons for this. A recent study by a researcher
from the U.S. Federal Reserve and a professor at the University of Texas is a recent of many to suggest
that one reason is the declining mental faculties of senior investors, which negatively impacts their
personal financial management. Korniotis, George M. and Kumar, Alok, "Does Investment Skill
Decline Due to Cognitive Aging or Improve With Experience?" (July 2007). Available at SSRN:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=767125 Physical acuity, emotional
issues or dementia increase vulnerability. A half-million Canadians currently suffer from some form of
dementia, a figure the Alzheimer’s Society of Canada expects to reach 1.1 million within a generation.

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Actively Managed ETFs – Worth a Look?

The mutual fund industry has been very competent marketers. Over the years, they’ve invented clone funds, tax-efficient funds, U.S. dollar funds, sector funds and even sub-sector funds like the Internet infrastructure funds. Bay Street never sleeps. In late 2009, Invesco Trimark blurred the lines between mutual funds and ETFs with its PowerShares funds. ETFs followed the innovation lead by adding fundamentally indexed funds, leveraged ETFs and inverse ETFs. Now, there is the actively managed ETF, the subject of this article.

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Why Another Article on Borrowing to Invest?

There have been many articles written on the benefits and risks of borrowing to invest (leveraging). For instance, we’ve all been told that if you put $100,000 into a mutual fund–using $25,000 of your own money and a $75,000 loan–and the fund gains or loses 10 % or $10,000, that would actually be a 40 % gain or loss on your original equity–before loan costs. So why another piece on the topic?


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"Fund Facts" is Coming

The Canadian Securities Administrators (CSA) has authorized a new disclosure document for mutual fund investors. It’s called Fund Facts (FF) and you’ll receive it when you’re sold a mutual fund. It is a dumbed-down version of the detailed simplified prospectus. It highlights key information for investors, including the fund performance, risk and the costs of buying and owning a fund. Regulators believe short, summarized disclosures of key information, such as the Fund Facts document, are more likely to be read by retail investors and at least somewhat understood than are longer fund prospectuses. You will no longer receive the simplified prospectus unless you ask for it. Despite FF being only 2-4 pages in length it attempts to provide the key facts of the mutual fund. In any event, make sure you understand the objectives of the fund (not well articulated in FF – seeing what the fund invests in is not the same as understanding its objectives).

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G20 High-Level Principles on Financial Consumer Protection

The high-level principles were developed as a response to the G20 Finance Ministers and Central Bank Governors call in February 2011 for the OECD, the FSB and other relevant international organisations to develop common principles on consumer protection in the field of financial services by their 14-15 October meeting.

They were developed by the Task Force on Financial Consumer Protection of the OECD Committee on Financial Markets (CMF), in close co-operation with the FSB and its Consultative Group, other international organisations and standard setter bodies and consumer and industry associations. The Task Force is open to all G20 and FSB members. It held several rounds of consultations, including a public one, on different versions of the draft principles. A final version of the draft principles was discussed and endorsed by the

Task Force on 14 September and transmitted to the CMF and the FSB. The Final High-level Principles on Financial Consumer Protection were endorsed by the G20 Finance Ministers and Central Bank Governors at their meeting on 14-15 October 2011.

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Mutual Fund Loads, Fees and Other Expenses

Mutual fund fees are the costs of running a mutual fund. They are disclosed in the simplified prospectus. What investors don’t readily see or comprehend and aren’t readily explained by their salespersons is how the method of sale effects their ongoing trailer commissions and, of course, fund returns. The simplified prospectus does have a section “Impact of Sales Charges on Purchases of Mutual Funds,” showing the amount of loads you would pay under different purchase scenarios covering 1-, 3-, 5- and 10- year periods. (Firms assume a 5% growth rate in order to calculate the future years impact.)

A controversial study that found Canada’s fund fees are higher than 18 other countries has been a thorn in the side of the mutual fund industry ever since Peter Tufano, Ajay Khorana and Henri Servaes published it in 2006. Read the full article