Lately, there have been new threads on “Financial Advisors”. For anyone who is seriously considering a FA I am following up on my experience with “Advisors” and hope that anybody will stay away from this brood in the financial industry.
My last plan was (see my response upthread post #7 which was a response to Humble’s comment); I stated that we will close the account with the broker of that time and move 1/3 to TDW and 2/3 to a big 5 brokerage.
I researched once again brokers; informed the ones I met that 25% would be in DIY. The first one told me in no terms that I would "never have the investment knowledge, that only financial advisors have the proper training to manage your money” (he could be right, lol) He was out of the equation.
Finally thought I had picked one well versed in investing in a volatile market. In our first meeting he seemed to be flexible and a listener, and agreed we should make joint decisions on investments. We moved 75% of portf. in September. Directly after that he proved inflexible + stubborn - must have thought if he didn’t respond to my questions he could wear me down. When I asked him where he got his research his response was “from HQ in Toronto”. So, no own research. If he didn’t have info on stks we owned they were to be sold. Long list what we should sell, little recommendations for replacements. No transparent client profile! No consideration of personal needs, no sector allocation. What struck me, no strategy where are we going. He lied about a record date because he wanted to desperately sell at least one of the stks.
Little research provided by the underlying bank - I was supposed to be kept dumb and stupid. The guy really went on my nerves. When asked for our client assessment I rcvd the following: “.....We do not ask our clients sign a risk agreement, rather the FA would determine your risk tolerance from your meeting and discussions. As a result, we have defined your risk tolerance to be (see below). Should you not agree with this assessment, please let us know and we can adjust this accordingly. Low - the risk of price volatility and loss of capital is low 40%
Medium - risk of price volatility and loss of capital is medium 50%
Medium - High - risk of price volatility and loss of capital is medium to high 10%
High - the risk of price volatility and loss of capital is high 0%.......”
The above score is meaningless without the underlying questions and answers which we never received. No mutually signed agreement. It was supposed to be a mystery to us. You may ask why I fell for another advisor - well, I still had the hope that one of them could do better than myself.
Two months after transferring 3/4 of our portf. we made a very fast decision to switch everything to TDW. (still getting furious when I write about it). In 2 days the last of our accounts will be open for DIY trading.
It’s a bit scary as we are retired and have to be careful, but we weren’t prepared to pay somebody 2.2% transactional fees for not using his brain. And I hope that anybody who thinks that a Financial Advisor is a solution thinks twice before making such a decision
Causalien suggested upthread (post #6) to publicize the broker’s name from the first brokerage for his wrongdoing. But it doesn’t help. All three brokers I have talked about in this thread worked for very reputable bank brokerages, all of them from the big 6. It is not one or two Financial Advisors, it’s the whole financial management industry. The Financial Advisor Gang simply gives the financial industry a bad name. All we can do is discourage anybody who thinks a FA is a solution not to give into their superior sounding sirene songs.
I need to thank everybody on this forum, especially HP, who encouraged me to go the DIY route - "cold turkey". I will need help and hope to get some advice from CMFers. Next step will be assessment what we own. Thks again, Pucki.
Jut thought I'd add my 2 cents that they aren't all bad! My financial advisor gave me his blessing to leave him and the mutual funds behind and said I'd probably be just fine on my own. Mind you, my FA was from a credit union and not a big name bank.
pucki you've recently sent me pmms so i'll reply to you here.
first, the trivia. This business by the new broker about selling a long list of securities is because he wanted big commish up front. Please ignore.
now, the serious. What i am believing, indeed counting upon, is that your former broker (not the immediate former, but the old-old former) had built you up a decent investment portfolio that was appropriate to your circumstances. Accordingly, since you have mentioned you are in retirement mode, the list that forms your present portf is probably already decent enough.
please do not worry it has not been "re-balanced" for 2 or 3 years. Classic good bones - which are probably there - last longer than a few years. Right now i feel that your portf may be good-to-go for at least several more months, say until mid-2013 or late-2013. It will take at least that long to settle your feelings, research your plans & take up the new challenge with - dare i say this - pleasure & enjoyment. And, in time, you will.
if in the meantime some cash appears & you feel a definite need to send this cash somewhere other than a HISA, you could commence constructing a small, basic, 20/20/20/40 couch or sleepy portfolio from etfs or efunds. If your present portf is heavy canadian equities or largely canadian equities, please ignore this division & create something like 25% US equity, 25% international equity, 50% short or mid-term bond etfs. Please note that this couch suggestion is only a temporary arrangement for surplus cash as you work through the transition phase to DIY, which might take a year or longer. It is *not* an overall or umbrella suggestion for the entire portfolio.
next, assuming the present portf contains a mix of bonds & what i call Good Old Stocks, the bonds can be left alone for the time being. As for the stocks, please resist all calls to sell them, convert to etf couch potato strategies, convert to other stocks, whatever.
instead, please just compare your canadian holdings to 2 excellent lists of suggested canadian investments that have recently appeared in this forum. These were researched & authored by doctrine & by echo respectively. May i ask their forgiveness for pasting here their well-thought-out lists & may i emphasize that these lists are not my own, they are definitely the product of doctrine (from his website the canadian dividend blogger) and of echo.
Pucki you'll notice that argo's 5-pack suggestions also appear in these somewhat longer lists by doctrine & echo. What i am hoping is that many of the suggestions found in all 3 of these overlapping lists are also present in your portfolio, the one you are presently taking under your own control & management.
the fact is that the list of hi-quality investments in canada is not that extensive, so there are many duplications as can be seen from the above-mentioned lists. Many roads lead to Rome & many investors find themselves sharing the same mantra that canadian banks are a Good Thing, etc.
btw my own bank choices are td, ry & bmo, so do not worry if you don't happen to own the above list-approved commerce, scotia, etc. In fact, any 3 banks will do.
again, with thanks to doctrine & to echo:
doctrine's list (one is missing)
. . . . . . . . . . . dividend . . . yield
BMO Bank of Montreal $2.80 4.58%
BNS Bnk of Nova Scotia $2.28 3.91%
CM CIBC $3.76 4.56%
NA National Bank $3.32 4.28%
BPO Brookfield Office Prop $0.56 3.30%
FTS Fortis $1.24 3.65%
BCE Bell $2.56 5.30%
T Telus $2.44 3.90%
HSE Husky $1.20 4.19%
echo's list:
Bank of Montreal
Bank of Nova Scotia
BCE Inc
CIBC
Canadian Oil Sands
Fortis
Great West Life
Liquor Stores Income Fund
Riocan Investment Trust
Rogers Sugar
Shaw Communications
SNC Lavalin
TELUS Corp
Transcanada Corp
there is much more to do, of course, with respect to US & foreign exposure. But one thing at a time. Baby steps. For now, see if your present holdings are keeping some company, to a certain extent, with these lists.
I've posted on here about bad experiences with a bank. After a series of issues, an appointment was made with someone who was 'experienced'. When I asked her to buy some MFs for me (I was unable to myself) she sold them instead. I was able to get everything reversed and the purchase made at the price it should have been originally purchased for.
After the problems you've had, I would also push for everything to be transferred to a different brokerage, at no cost to you.
ETA: Oops, I missed the updates, as the page hadn't loaded with all the posts when I first read it. I should have reread before I posted. Glad to hear things are better!
Last edited by Koala; 2013-01-09 at 03:20 PM.
Reason: missed reading posts
I chckd doctrine & echo’s sec list, we do own a number of those securities. Here is the
Present Portfolio (in registered and non-registered accounts).
Goals: 1. Income generating / 2. Moderate Growth Total Return 2012: 7.7%
Securities are almost 100% Canadian (except for a forgettable amount MCD)
Energy Minerals (ARX, CPG) 3.29%
Energy Services (PPL, ENB, IPL.UN, KEY, TRP) 16.38%
Consumer Non-Durable (A&W, LIQ, KEG, CGX) 9.09%
Industrial Services (WJX) 0.33%
Real Estate (AX, AP, CAR, REI) 13.55%
Utilities (NPI, EMA) 6.94%
Finance (largely TD, a bit BNS) 3.82%
Communications/Telcos (T) 5.02%
Bond ETFs (XBB, XCB, XGB, XLB, XSB) 28.06%
Govt/Corp Bonds 3.79%
Cash: 9.74%
Short-term goals
1. leave asset allocation as is / not planning to sell anything until we know better what to do
2. check out ETFs and buy (US equity, international equity as suggested for short-term),
not so fond of US securities for various reasons but will check
3. use cash to a) fund TFSAs with 2013 contribution,
b) add financials/banks (BNS, RY, perhaps BMO/NA, waiting for dip, missed the one mid Nov
c) buy ETFs as mentioned in pt.2
d) add to WJX
Mid-term goals
- add Transportation
- trim back XBB and find better solution for those Bond ETFs We know yield is dropping...
be aware of CG
- perhaps buy hi-quality US stocks
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