# Rant: Bank MF salesmen are slimey, unctuous hyenas



## peterk (May 16, 2010)

I had the privilege of accompanying my girlfriend to the bank to set up her group RRSP work-matching program yesterday. 

We discussed the day before the various funds options, and she decided that she wasn't comfortable with stock exposure at this time and would be happier with a bond or money market fund.

We get to the bank and after half an hour of incompetent clicking and printing to even setup the account in the first place, we get to the fund choices.

The bank lady automatically clicks her as an average investor with average risk tolerance, and starts talking about the Balanced fund (MER 2.36%) I tell her that that has too much equity exposure and that if we wanted to go equities it would make more sense to buy half the bond fund and half the equity fund and call it a day. She condescendingly asks "why would you want to do that?" and I tell her because the MER is much lower. She then goes on to try and convince me that 2 funds with a MER or 1% is the same as 1 fund with a MER of 2% (Seriously?) and that the fees "are minimal anyways" and that "they are taken out of the fund directly so you aren't really charged a fee". She then prints out the paperwork all set to the Balanced fund, and says to my girlfriend "we can change it to something else later and print it off again if you decide to do that".

My girl then tells her that she really doesn't know anything about investing, and doesn't want to lose her money. The banker goes back to the "investment knowledge" page and makes a big dramatic deal about clicking on the novice investor button, like it's physically difficult for her. But then! she clicks it back to the "average" investor option again and proceeds to give my girlfriend a "crash course" (her words) about investing. She draws out a stupid pictogram of the various investing vehicles they have, crosses big Xs through everything but cash accounts and mutual funds, offers no further details, and proceeds forward confident that my girlfriend now is an "average investor".

I say "I think government bonds might be a more comfortable option at the moment" She show us the Bond fund with a MER of 1.2% as opposed to the Government Bond fund that I mentioned (with a MER or 0.66) and is explaining on how there's "a lot of risk" with bond funds (despite pushing for a 60% equity fund about 30 seconds previous), and gives an insultingly dumbed down and inaccurate explanation of the bond price-interest rate relationship. 

When she realizes I'm not at all overwhelmed with what she's saying, which was clearly her goal in a confuse-them-until-they-submit-to-your-will fashion, she jokingly asks my girlfriend "so which one of you asked about the prospectus?" (When we sent the email to make the appointment we put "can you please attach any prospectus information you have regarding the various funds that are available") She was trying to give off a are-you-going-to-let-your-boyfriend-make-all-the-decisions? vibe, which was completely uncalled for as I'd barely spoken other than to say the things written above.

At this point my girlfriend reiterates that she's not comfortable with risk, and that she doesn't know anything about investing. Then we're back to the "investor profile" page and another big dramatic button clicking session of changing her to a beginner and conservative investor.

Anyways we settle on the simple money market fund, the banker does an impressive paper tearing ceremony where she rips up, with her arms held at eye level, the "Balanced Fund" sheets that she pre-emptively printed out, and tell my girlfriend that she can make an appointment to look at the balanced fund when she's more comfortable.


The entire meeting took about 90 minutes, and was nothing more than a session of attempting to confuse, manipulate, lie to, and eventually tire-out my girlfriend so that she would buy whatever high fee fund they felt like selling that day. If I wasn't there she surely would have. 


Needless to say, I was not impressed.


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## andrewf (Mar 1, 2010)

You need to complain to this person's supervisor. This behaviour is not only highly unprofessional, but also unethical. You need to complain on behalf of all the poor souls that are abused by this person... not just you and your girlfriend.

Better yet, specify the bank and branch here, then send a link to this topic to customer relations at the bank in question. We need to start holding MF salespeople accountable.


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## Sampson (Apr 3, 2009)

peterk said:


> Needless to say, I was not impressed.


While it has been many years since being 'talked down to' regarding investing knowledge etc, my experience with the button clicking and account setting upping has consistently been identical.

Not exactly sure why it is so troublesome for people to do this aspect of their job? I do have it fine tuned now so the only time I have to deal with these employees is when setting up new RESPs, hopefully that is done and over now too. My biggest point of confusion is why, when very explicit and direct instructions are provided, some employees still need to go through A to Z, when you have already given direction of Z.

If everything could be done DIY... how the World has change with easy access to knowledge and information.


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## KLR650 (Sep 12, 2010)

andrewf said:


> Better yet, specify the bank and branch here, then send a link to this topic to customer relations at the bank in question. *We need to start holding MF salespeople accountable.*


Hear, hear! We need to hold the sellers of ALL financial products accountable.


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## peterk (May 16, 2010)

I'll think about reporting this to RBC, but I don't see how complaining would do much good. I'm sure her behaviour was condoned and taught to her by the bank, afterall. All of the subtle misdirections, inferrences, lies of omission (accompanied by a smile or chuckle) were minor in isolation, but added together they form an encounter where clients who aren't knowledgable about money issues don't even stand a chance of actually getting real advice or an investing plan their comfortable with.

I swear the whole point of these long drawn out bank meetings is to confuse and tire clients so that after 60 minutes of non-stop bullshit they finally say "Ok, whatever you say sounds good. Just let me sign the papers and get out of here so I never have to do this again!"


Part of my frustration stems I think from inability to get my girlfriend onboard with her own self learning about money issues, so that I don't need to worry about her visiting an unscrupulous MF advisor. It's a tricky balance of: offering advice, minding my own business, stepping in to provide protection when needed (from bank hucksters), and backing off to let her make her own decisions.


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## ChrisR (Jul 13, 2009)

I'm not surprised that this salesperson tried to confuse your girlfriend into buying something she didn't want. After all that is the job of a salesperson!

What really surprises me is that simply mentioning the fact that she's not comfortable losing money wasn't enough for the salesperson to immediately switch the conversation to GICs (another product that she is certainly paid to sell on behalf of the bank).

In my own similar experience taking the GF to the bank (CIBC in this case) we filled out the multiple choice questionnaire with "average investment knowledge", "long time horizon", and other answers that would point toward equities, but as soon as we checked the "not comfortable losing money" box it immediately directed us towards a portfolio of 100% GICs/money market. In fact, the salesperson told me point blank that as long as that box remained checked, she was simply not allowed to sell us any MF with equity exposure, and if we wanted equities we would either have to change the answers on the questionnaire or go DIY with a brokerage account.


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## Eder (Feb 16, 2011)

CIBC is no better....when I tried to get my wife's RRSP contribution to go automatically to one of their funds I chose, first the assistant manager then the manager seemed unable to make a computer do what she wanted. It was pathetic and I wouldn't hire her to flip burgers at McDonalds. 
Cue in several comments about how the "network" was slow etc etc and I wasted at least 90 minutes of my life I will never get back.


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## m3s (Apr 3, 2010)

They're all the same.. This is why you should buy shares of RBC rather than mutual funds from RBC

That's what I decided to do after my first meeting (aggressive sales pitch) with these fools. Canadians are a pretty gullible bunch


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## OptsyEagle (Nov 29, 2009)

What I don't understand is why she didn't just sell you the bond fund you wanted. I really cannot imagine the bank caring what fund you invest in. Maybe we have some bank employees or ex-bank employees, who can weigh in here, but I would imagine that she is bonused on the amount of money she brings in and less on where it goes...but maybe I am wrong.

The problem with questionaires is, there is nothing that can accurately assess a persons risk tolerance. Depending on how the same question is asked, the same person would potentially give two completely different answers, with none of them being the actual truth. That is because they may not really know the truth. No one likes losing money, but who will lose more sleep over it will not be discovered by a questionaire. It is discovered by experience. Bear market experience to be precise.


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## RBull (Jan 20, 2013)

That's terrible you both had to endure that. The bank would probably encourage their team to sell a higher MER fund initially, but not to ignore clients wishes or be condescending. They certainly would not condone having an employee providing inaccurate advice, inadequate investment knowledge, and setting up a client with an unsuitable profile. All of that exposes them to liability risk and plain and simple conveys an unprofessional image. 

I would have encouraged my girl friend to leave in order to find a more suitable bank sales person or other alternative. At this point if you don't want to lodge a formal complaint at least find someone else to deal with, even at the same branch. Switching clients to a different rep isn't a big deal and happens commonly at the banks.


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## Cal (Jun 17, 2009)

I think part of the problem is that the bank employees also have no clue about investing, they only know what the bank has brainwashed them with.

Good luck educating your gf in regards to $. Baby steps. Don't push her to it.


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## sags (May 15, 2010)

Perhaps part of the procedures at the bank, are a result of mitigating any liability to clients investing, losing money, and then asserting the bank didn't perform their fiduciary duty to determine the client's risk aversion and match it up with financial instruments.


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## Squash500 (May 16, 2009)

mode3sour said:


> They're all the same.. This is why you should buy shares of RBC rather than mutual funds from RBC
> 
> That's what I decided to do after my first meeting (aggressive sales pitch) with these fools. Canadians are a pretty gullible bunch


 Yes but the problem is you need a discount brokerage account to buy shares of RY. These MF salespeople have no fiduciary duty to the client whatsoever. MF salespeople are like used car salespeople....no difference.


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## Squash500 (May 16, 2009)

peterk said:


> I'll think about reporting this to RBC, but I don't see how complaining would do much good. I'm sure her behaviour was condoned and taught to her by the bank, afterall. All of the subtle misdirections, inferrences, lies of omission (accompanied by a smile or chuckle) were minor in isolation, but added together they form an encounter where clients who aren't knowledgable about money issues don't even stand a chance of actually getting real advice or an investing plan their comfortable with.
> 
> I swear the whole point of these long drawn out bank meetings is to confuse and tire clients so that after 60 minutes of non-stop bullshit they finally say "Ok, whatever you say sounds good. Just let me sign the papers and get out of here so I never have to do this again!"
> 
> ...


Simply put...the RBC MF salesperson gets a higher bonus selling your GF the balanced fund at 2.36% MER then to sell her GICS or lower MER funds. Also RBC makes higher trailer fees on the balanced fund as well. Of course her behaviour was condoned and taught to her by the bank.....these salespeople aren't your friends after all. If they don't produce enough business for the branch then their fired.


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## rnp56 (Dec 19, 2010)

*Different experience at TD*

I had a different experience at TD when I accompanied my daughter. The agent there was very professional and went through everything with my daughter while I sat back and made only a few comments. Once they had a plan put together, the agent then turned to me and asked what I thought. I agreed that the plan made sense for my daughter's experience and goals. The one difference may be that, although my daughter was a novice investor, she had a fairly good idea of what she wanted before going in. She is still working with the same agent and is quite happy with her.


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## Squash500 (May 16, 2009)

rnp56 said:


> I had a different experience at TD when I accompanied my daughter. The agent there was very professional and went through everything with my daughter while I sat back and made only a few comments. Once they had a plan put together, the agent then turned to me and asked what I thought. I agreed that the plan made sense for my daughter's experience and goals. The one difference may be that, although my daughter was a novice investor, she had a fairly good idea of what she wanted before going in. She is still working with the same agent and is quite happy with her.


Fair enough...but the problem here is that this TD MF agent might want to move on eventually to another branch or maybe get promoted to a branch manager etc. In other words....your daughter might not be dealing with the same agent for that long. In the TD bank hierarchy...there's often a high turnover among personnel.


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## GoldStone (Mar 6, 2011)

rnp56 said:


> I had a different experience at TD when I accompanied my daughter. The agent there was very professional and went through everything with my daughter while I sat back and made only a few comments. Once they had a plan put together, the agent then turned to me and asked what I thought. I agreed that the plan made sense for my daughter's experience and goals. The one difference may be that, although my daughter was a novice investor, she had a fairly good idea of what she wanted before going in. She is still working with the same agent and is quite happy with her.


Sounds nice, but... what are the MERs? Is your daughter aware of them?


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## lonewolf (Jun 12, 2012)

Ditch the bank eliminate the conflict of interest go credit union.


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## andrewf (Mar 1, 2010)

Credit unions are just as bad, and just as fee hungry.


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## peterk (May 16, 2010)

It's easy to say "just go to another provider" but in this case, which I'm sure is the same for a great number of employees across the country, that is not an option.

It's a group RRSP plan that the company contributes to. If you want the money then you gotta sign up with whatever bank they have the RRSP plan arranged at.

Perhaps that is part of the reason for the experience I had. The banker knew there was no risk in treating us poorly.


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## J Watts (Jul 19, 2012)

Luckily, I've had good luck with not dealing with idiots like these at either TD or Scotiabank. I've found it helps to already have in mind the product I'm looking for even before going into the bank. Even when going into the bank with my spouse (for savings products) we've always had an idea in mind beforehand. For example, going into TD I was adamant I would be purchasing TD e-Series. And earlier with Scotiabank: they tried suggesting Fund X or Y, but I already knew I wanted Fund Z. There were a few times where I did want Fund X, but I came back for it a few weeks later - the purchasing was always on my terms.

There's nothing wrong with sales reps trying to upsell you into the more expensive product - why wouldn't they, after all? But there comes a point where they've pushed hard enough and you've luckily held your ground.


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## Eclectic12 (Oct 20, 2010)

andrewf said:


> Credit unions are just as bad, and just as fee hungry.


I'm not sure ... certainly in the past, the CU employee wasn't in the rush the Bank employee was. It didn't mean they were any better informed or stop them from suggesting products that benefited them more.




peterk said:


> It's easy to say "just go to another provider" but in this case, which I'm sure is the same for a great number of employees across the country, that is not an option.
> 
> It's a group RRSP plan that the company contributes to. If you want the money then you gotta sign up with whatever bank they have the RRSP plan arranged at.
> 
> Perhaps that is part of the reason for the experience I had. The banker knew there was no risk in treating us poorly.


Maybe ... though I'd be asking pointed question about when it could be transferred elsewhere & what fees are involved.


Cheers


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## none (Jan 15, 2013)

This is bit of a harsh generalization. My wife went into Van city to talk to an investment advisor and he basically said: 'you don't need me you can do this yourself and save a lot on fees' and sent her on her way. They're not all bad although there are a lot of pretty stupid ones out there for sure.


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## andrewf (Mar 1, 2010)

As far as I know, all these MF salespeople are compensated the same way and have the same conflict of interest, regardless of bank or CU. Perhaps the institutional culture is such that these sales reps act contrary to their own interest and in the interest of the client, but I'm a skeptic.


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## Squash500 (May 16, 2009)

andrewf said:


> As far as I know, all these MF salespeople are compensated the same way and have the same conflict of interest, regardless of bank or CU. Perhaps the institutional culture is such that these sales reps act contrary to their own interest and in the interest of the client, but I'm a skeptic.


Andrew I 100% agree with you. I recommend that everyone on this forum read John Lawrence Reynolds' book entitled The Naked Investor. You won't feel the same way about MF salespeople ever again after reading this book.


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## Toronto.gal (Jan 8, 2010)

peterk said:


> 1. Part of my frustration stems I think from inability to get my girlfriend onboard with her own *self learning about money issues*...
> 2. backing off to let her make her own decisions.


What a thread title.

*1.* Are you not the one who said that you preferred uneducated foreign women? I will never let you forget that, LOL. :rolleyes2:
*2.* +1, but don't give up helping; she might surprise you!


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## Addy (Mar 12, 2010)

peterk said:


> I'll think about reporting this to RBC, but I don't see how complaining would do much good. I'm sure her behaviour was condoned and taught to her by the bank, afterall. All of the subtle misdirections, inferrences, lies of omission (accompanied by a smile or chuckle) were minor in isolation, but added together they form an encounter where clients who aren't knowledgable about money issues don't even stand a chance of actually getting real advice or an investing plan their comfortable with.


Perhaps not RBC, but I can see this being a hot CBC Marketplace episode! How about contacting Marketplace? Hidden cameras are their speciality, and appropriate in this slimy MF salespersons case.


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## peterk (May 16, 2010)

J Watts said:


> I've found it helps to already have in mind the product I'm looking for even before going into the bank. Even when going into the bank with my spouse (for savings products) we've always had an idea in mind beforehand. For example, going into TD I was adamant I would be purchasing TD e-Series.


This is really what I have the problem with though. To someone who doesn't have much inclination for investing matters, nor is too interested in learning, there is an implicit trust that they can just "give the bank my money and they'll invest it for me". From what I've seen from my GF and a few other family and friends, this trust is quite strong.

It seems what you get though, when you go to the bank, is the most MINIMAL fiduciary responsibility they can possibly get away with (i.e. "Fill out this brief risk questionnaire, and here I'll click half the answers for you to make it easier") followed by a displaying of the high fee funds on screen, without even a verbal mention of the other (lower fee) funds.

I asked to look at the Canadian Stocks and she shows me the "Equity Fund" at 2%, not the Index Fund at 0.7%. The Bond Fund at 1.2%, not the Government Bond fund at 0.6%.

It's very sly, only talking about the high fee funds, not even acknowledging that there are other lower fee options, and then glossing over the significance of the fee differences when I do bring it up. 

It's not me or CMFers that I'm concerned about. It's the people that have no interest in investing and give undeserved trust to the bank to act in their best interest.

I'm not sure what the correct answer is - I suppose you could say:

"Buyer Beware - Banks are for profit corporations trying to make the most money for their shareholders"

but you could also say:

"Banks have a fiduciary responsibility to their customers, and have an obligation to provide the best advice that they can (and not withhold information that will benefit the client).


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## Squash500 (May 16, 2009)

peterk said:


> It's easy to say "just go to another provider" but in this case, which I'm sure is the same for a great number of employees across the country, that is not an option.
> 
> It's a group RRSP plan that the company contributes to. If you want the money then you gotta sign up with whatever bank they have the RRSP plan arranged at.
> 
> Perhaps that is part of the reason for the experience I had. The banker knew there was no risk in treating us poorly.


I'm not buying that excuse. Your GF could always speak to the HR department at her company or to the branch manager at the bank. IMHO there is a big risk in bankers treating people poorly. The key is to know enough to beat the MF salespeople at their own game. Question them about MERS etc. Put them on the defensive for a change.


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## Squash500 (May 16, 2009)

peterk said:


> This is really what I have the problem with though. To someone who doesn't have much inclination for investing matters, nor is too interested in learning, there is an implicit trust that they can just "give the bank my money and they'll invest it for me". From what I've seen from my GF and a few other family and friends, this trust is quite strong.
> 
> It seems what you get though, when you go to the bank, is the most MINIMAL fiduciary responsibility they can possibly get away with (i.e. "Fill out this brief risk questionnaire, and here I'll click half the answers for you to make it easier") followed by a displaying of the high fee funds on screen, without even a verbal mention of the other (lower fee) funds.
> 
> ...


Excellent post peterk. Actually one of my relatives ( a few years ago) let me come with her to the bank to help her out in dealing with this arrogant MF salesperson. Too make a very long story short...this arrogant MF salesperson started yelling at me when I started questioning him about the high MER funds he was proposing to get my relative into etc.

My relative was laughing in the background....as I was questioning this arrogant MF salesperson about everything. Another thing these MF salespeople count on is that the potential investor will never be rude to them....they create a mystique about the whole financial industry so to speak. I knew I was on the right track when this MF salesperson started getting mad at me--LOL.

I wound up getting my relative into index mutual funds. Afterwards I marched right into the branch manager of the bank and lodged a complaint against that rude MF salesperson. All I can say is that this MF salesperson wasn't going to invite me for tea anytime soon---LOL.


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## peterk (May 16, 2010)

Toronto.gal said:


> *1.* Are you not the one who said that you preferred uneducated foreign women? I will never let you forget that, LOL. :rolleyes2:


Haha - Well since you keep bringing it up... Yes that was me  But I believe it was in the context of 'wife selection to minimize the risk of losing all your stuff in divorce'. And on that subject my views haven't changed.

But we're talking about a girlfriend afterall, not my wife.

Perhaps I should just go back to having girlfriends that I don't know the last names of, and where I don't give a hoot about what's in their RRSPs.  All this caring about your relationship stuff is hard work! lol


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## J Watts (Jul 19, 2012)

Addy said:


> Perhaps not RBC, but I can see this being a hot CBC Marketplace episode! How about contacting Marketplace? Hidden cameras are their speciality, and appropriate in this slimy MF salespersons case.


They just did a hidden camera episode on TD Bank's collateralized mortgages and the sales reps not properly explaining what they really mean or provide.


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## rnp56 (Dec 19, 2010)

I agree that agent turnover is an issue with TD and influenced my decision to continue using TD products.
In response to the question of MER's, we have discussed this and, for the size of the portfolio and her knowledge level, she is comfortable with the product she has and the cost. As her investments grow, I am sure she will look at other investments, such as e-series funds.


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## donald (Apr 18, 2011)

What I don't understand is when the Canadian government is going to get off there *** and start mandating personal finance/investing/money management starting in junior high instead of learning about pi r square or xdc=x14 or whatever I was being taught that never made a lick of a difference and I suspect a lot of others
Why does the government/education system love to have everyone in the dark in the personal finance area?I don't get it....every citizen weather they like it or not has to learn these skills,why not start early.who needs exponents bull crap(on average)or a junior high school math teacher teaching geometry.Teach practical/tangible/real life skills need by all(instead of the small section of future engineers or whatever-less than 10% of students)then we all wouldn't be abuse/intimated and lost when we enter adulthood and have to trust the big banks and the army of crooks they employ to abuse people....just a thought.
No.then maybe peter wouldn't have to deal watching this from the sidelines.


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## RBull (Jan 20, 2013)

peterk said:


> It's easy to say "just go to another provider" but in this case, which I'm sure is the same for a great number of employees across the country, that is not an option.
> 
> It's a group RRSP plan that the company contributes to. If you want the money then you gotta sign up with whatever bank they have the RRSP plan arranged at.
> 
> Perhaps that is part of the reason for the experience I had. The banker knew there was no risk in treating us poorly.


Have a look at my post #10. I have offered you a suggestion that may resolve future issues and it maintains the required bank.


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## J Watts (Jul 19, 2012)

peterk said:


> This is really what I have the problem with though. To someone who doesn't have much inclination for investing matters, nor is too interested in learning, there is an implicit trust that they can just "give the bank my money and they'll invest it for me". From what I've seen from my GF and a few other family and friends, this trust is quite strong.


Where does this trust come from though? You don't blindly walk into a car dealership or a restaurant or a new house for sale without questioning the parties involved in that (potential) transaction.

Would you get the best deal if you walked into a car dealership and said "I have $50,000, give me any car"? No, you wouldn't. A reasonable person would do their research and would understand whether it's a restaurant or a car dealership or a bank, they all have their own financial interests.

Banks promise to invest your money in accordance with your risk tolerance - if you ask for a 60-40 fund they'll give you one - but beyond that we can't expect them not to do what's in their best interest... unless we tell them otherwise.


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## Squash500 (May 16, 2009)

J Watts said:


> Where does this trust come from though? You don't blindly walk into a car dealership or a restaurant or a new house for sale without questioning the parties involved in that (potential) transaction.
> 
> Would you get the best deal if you walked into a car dealership and said "I have $50,000, give me any car"? No, you wouldn't. A reasonable person would do their research and would understand whether it's a restaurant or a car dealership or a bank, they all have their own financial interests.
> 
> Banks promise to invest your money in accordance with your risk tolerance - if you ask for a 60-40 fund they'll give you one - but beyond that we can't expect them not to do what's in their best interest... unless we tell them otherwise.


 IMHO a lot of people don't want to deal with confrontation. When you go to a Doctor, Lawyer or Accountant these professionals have a strict fiduciary duty towards the client. MF salespeople or used car dealers have a very low level of entry and as a result very little (if any) fiduciary duty towards the client....yet for the most part these MF salespeople and car dealers have more knowledge about the product then their clients.

There's a lot of people out there who think it's rude to negotiate etc. Therefore IMHO this trust comes from fear. That's why a lot of mutual fund salespeople etc are trained to be very pushy. The problem is many people don't do their research. Most of this stuff is on the internet. Yet many people wind up paying retail for goods and services. Thanks goodness...I'm not one of them.


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## arrow1963 (Nov 22, 2011)

Squash500 said:


> IMHO a lot of people don't want to deal with confrontation. When you go to a Doctor, Lawyer or Accountant these professionals have a strict fiduciary duty towards the client. MF salespeople or used car dealers have a very low level of entry and as a result very little (if any) fiduciary duty towards the client....yet for the most part these MF salespeople and car dealers have more knowledge about the product then their clients.


I don't think doctors or lawyers have a fiduciary responsibility to their clients, at least not in a strict sense of the word. It's unethical for a doctor to prescribe tests or drugs for his patients that they wouldn't approve of if they knew as much as she does. However, it's unlikely to be illegal, unless they're clearly harmful, or patently useless.

I'm no fan of the MF salespeople at big banks, having had a very poor interaction with a woman at TD when I was 21, who wouldn't 'allow' me to invest my money in the manner I wished. But, as much as we all hate mutual funds with an MER of 2.5%, there's always a chance that they'll outperform the index. They won't on average, but there's a chance. I don't think you'll find a higher standard of responsibility for doctors or lawyers, both of whom might be expected to engage in supplier induced demand.


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## arrow1963 (Nov 22, 2011)

donald said:


> What I don't understand is when the Canadian government is going to get off there *** and start mandating personal finance/investing/money management starting in junior high instead of learning about pi r square or xdc=x14 or whatever I was being taught that never made a lick of a difference and I suspect a lot of others


When I went through high school in Alberta (about 10 years ago) we had a required course called Career & Life Management (CALM). Apart from having to carry around a robot baby for a couple of days, personal finance (budgeting) was a part of the course. Was there 'enough' emphasis on personal finance? Probably not. However, for many students the message "your life will really suck if you have a baby before gaining a career" is probably more pertinent than lessons relating to compound interest.

I'm also never sure what exactly people want taught. Really basic personal finance & investing lessons builds around a budget (boring), compound interest (wildly unrealistic), and in many cases 'the stock picking game', which may build really bad investing habits. I'd hope to build towards index funds, controlling investment costs, and questioning the incentives of advisers, but:
1) what are the chances of that sticking with 15 year olds?
2) what are the odds that the official state curriculum will demonize one of the Canada's largest industries, the banks?


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## arrow1963 (Nov 22, 2011)

I don't know if this has been covered in this thread, but to the OP, is there any chance that the MF sales rep's behavior could be driven by the odd investment choice you or your girlfriend appear to have been making?

I don't know the exact situation, but there is no one in my life that I would be advocating go 100% into bonds right now, let alone into a money market fund. There's nothing magical about a 60/40 balanced fund, but if you're 50% balanced and 50% bonds, that gets you to a 30% equity allocation, which might be a reasonable 'anti-inflation' allocation for a conservative investor.


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## MrMatt (Dec 21, 2011)

donald said:


> What I don't understand is when the Canadian government is going to get off there *** and start mandating personal finance/investing/money management starting in junior high instead of learning about pi r square or xdc=x14 or whatever I was being taught that never made a lick of a difference and I suspect a lot of others
> Why does the government/education system love to have everyone in the dark in the personal finance area?I don't get it....every citizen weather they like it or not has to learn these skills,why not start early.who needs exponents bull crap(on average)or a junior high school math teacher teaching geometry.Teach practical/tangible/real life skills need by all(instead of the small section of future engineers or whatever-less than 10% of students)then we all wouldn't be abuse/intimated and lost when we enter adulthood and have to trust the big banks and the army of crooks they employ to abuse people....just a thought.
> No.then maybe peter wouldn't have to deal watching this from the sidelines.


Well education is provincial not federal.
Financial literacy is sorely lacking, the problem is people don't know the basics and they aren't being taught them.
Family/household management, many people lack basic life skills.
Civics is a big one too, people don't understand how our government works, or the roles of each level.

FWIW, 
Exponents/logarithms are frequently used in financial algorithms. Without understanding exponentials you can't understand how powerful compounding, inflation etc actually are. 
I think mid-level math is useful to a large number of people, far more than merely 10% of the population.


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## GoldStone (Mar 6, 2011)

donald said:


> What I don't understand is when the Canadian government is going to get off there *** and start mandating personal finance/investing/money management starting in junior high instead of learning about pi r square or xdc=x14 or whatever I was being taught that never made a lick of a difference and I suspect a lot of others


A recent study looked at the couples approaching retirement or in retirement. The researchers tested the couples for math skills and looked at their Net Worth. They found a strong correlation between math proficiency and Net Worth. Couples with better math skills had higher Net Worth. Of course, that's on average. You can always find exceptions to the rule.


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## Eclectic12 (Oct 20, 2010)

andrewf said:


> As far as I know, all these MF salespeople are compensated the same way and have the same conflict of interest, regardless of bank or CU. Perhaps the institutional culture is such that these sales reps act contrary to their own interest and in the interest of the client, but I'm a skeptic.


There's possibly a culture but for the times it happens, I suspect it's more the individual wanting something closer to win-win.

IAC - the best way I've found to deal with this is to know the basics before any discussions take place. I also like to ask questions that make it clear that I want to understand it, including how each party benefits. That's usually shutdown any attempt at "I recommended it so go with it" type sales pitches.


Cheers


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## Eclectic12 (Oct 20, 2010)

peterk said:


> This is really what I have the problem with though. To someone who doesn't have much inclination for investing matters, nor is too interested in learning, there is an implicit trust that they can just "give the bank my money and they'll invest it for me". From what I've seen from my GF and a few other family and friends, this trust is quite strong.
> 
> It's not me or CMFers that I'm concerned about. It's the people that have no interest in investing and give undeserved trust to the bank to act in their best interest.


It always puzzles me why people who go out of their way to get a second opinion or check what say a mechanic or doctor is recommending then turn around an trust a bank/financial advisor - even when there are red flags.

The ones who say it's too much work I can at least get a discussion going with.




peterk said:


> I'm not sure what the correct answer is - I suppose you could say:
> 
> "Buyer Beware - Banks are for profit corporations trying to make the most money for their shareholders"
> 
> ...


IMO, the answer right now is "Buyer Beware" as I doubt the gov't wants to get involved in any misunderstandings. While there's a lot of examples of the financial institution misbehaving - there's also those like my father who refused to listen to or consider anything but GICs. When forced into other products that paid a lot more, the tune chanted to "why didn't anyone tell me".

The permanent solution is building financial literacy into the educational curriculum along the lines that Ontario is doing.
http://www.edu.gov.on.ca/eng/surveyliteracy.html

Some will refuse to learn, of course but at least there will have been an option available.


Cheers


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## Eclectic12 (Oct 20, 2010)

J Watts said:


> Where does this trust come from though?
> You don't blindly walk into a car dealership or a restaurant or a new house for sale without questioning the parties involved in that (potential) transaction...


If you have any theories - I'd like to know as I know many people who treat their financial relationships completely the opposite of a lot of other things they do. 


Cheers


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## Eclectic12 (Oct 20, 2010)

Squash500 said:


> IMHO a lot of people don't want to deal with confrontation...
> There's a lot of people out there who think it's rude to negotiate etc. Therefore IMHO this trust comes from fear. That's why a lot of mutual fund salespeople etc are trained to be very pushy...


That theory works for some ... but others have no problem getting a second opinion for a doctor or confronting a mechanic yet are sheep with a financial rep or advisor.




arrow1963 said:


> ... Really basic personal finance & investing lessons builds around a budget (boring), compound interest (wildly unrealistic), and in many cases 'the stock picking game', which may build really bad investing habits. I'd hope to build towards index funds, controlling investment costs, and questioning the incentives of advisers, but:
> 1) what are the chances of that sticking with 15 year olds?
> 2) what are the odds that the official state curriculum will demonize one of the Canada's largest industries, the banks?


It doesn't have to though. For example, when I went to high school, the stream that was not going to university learned how to do their tax return as part of math class. Then too - you don't need a budget to illustrate the more important concept of "spend less than you make".

IAC - we'll see what approach Ontario's financial literacy curriculum and what, if anything is demonized. 

As for who it sticks with, at least there will be some broad exposure. Part of the challenge is that without having a full range of expenses, most kids won't be interested until they have to pay for housing, rent, electricity etc.

With so much information available in libraries for free and through the internet - the question I wonder about is why do so few want to improve their financial literacy? Even in the less accessible info stage (i.e. before internet) - most libraries I visited had a reasonable range of books, all gathering dust.


Cheers


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## kcowan (Jul 1, 2010)

I don't think the situation is much different than other consumer behaviour. Consumer Reports and others do extensive research about various products yet clearly inferior products continue to make good sales. Because a huge number of people do not approach purchases from a rational perspective. Learning about finance has many components of education and people avoided such courses even when they were available. Making them more available is not going to change behaviour.

And I don't see the government moving to stop life insurance salesmen and other misleading sales careers from adhering to a code of ethics.


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## andrewf (Mar 1, 2010)

I kind of agree. 100% MMF is a little ridiculous.


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## MoneyGal (Apr 24, 2009)

After thinking about this issue for years, I honestly wonder if the mistaken notion that generic financial advisors (as opposed to discretionary money managers, who are licensed separately and differently from generic financial advisors) have a "fiduciary duty" to clients is partly at the root of the difficulties people seem to have with financial advisors...maybe even largely at the root of it. 

If you knew that a FA had NO fiduciary duty to you (and make no mistake, he or she does not), would you be more or less likely to take their advice with a grain of salt? Would you be asking "who benefits" as you contemplated entering into a transaction?

I'm all for increased math skills and financial literacy -- I worked for a company incubated at the Fields Instititute, I create the exam questions used to test CFPs, etc. -- but I think maybe what's lacking more than anything else is critical thinking skills, or whatever is required to get people to think in their own interests as they make purchases.


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## MoneyGal (Apr 24, 2009)

It took me a long time to type that and hence I x-posted with the most excellent kcowan.


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## andrewf (Mar 1, 2010)

I don't know about anyone else, but when I was buying a car, I calculated the implied interest rate on the cash discount vs '0% financing'. I'm sure if you asked the sales rep at the dealership what the implied rate was, you'd get a blank stare and they'd tell you it's 0%.


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## andrewf (Mar 1, 2010)

MG: they are not financial advisors in any true sense. Call the MF sales representatives. Calling them advisors implies that they are acting in the interests of the client.


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## MoneyGal (Apr 24, 2009)

Yabbut no one would be arguing with you that the car salesperson had a "fiduciary duty" to present you with the options that are in your best interest!


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## MoneyGal (Apr 24, 2009)

They are "registered representatives" in most cases. I used "FA" because it's the industry lingo and the phrase used in the thread. It's worth pondering why "registered rep" is the term. :02.47-tranquillity:


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## andrewf (Mar 1, 2010)

I've seen business cards that say financial advisor. It's a total misnomer.

And no, I was not expecting a car salesmen to act as a fiduciary. I didn't even ask the question. Believe me, I had no illusion I could trust anyone there.


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## Eclectic12 (Oct 20, 2010)

MoneyGal said:


> After thinking about this issue for years, I honestly wonder if the mistaken notion that generic financial advisors (as opposed to discretionary money managers, who are licensed separately and differently from generic financial advisors) have a "fiduciary duty" to clients is partly at the root of the difficulties people seem to have with financial advisors...maybe even largely at the root of it.
> 
> If you knew that a FA had NO fiduciary duty to you (and make no mistake, he or she does not), would you be more or less likely to take their advice with a grain of salt? Would you be asking "who benefits" as you contemplated entering into a transaction? ...


IMO, it's a step in the right direction but not enough and/or will take a long time to get the message across. 

There's been years & years of "for important medical procedures, get a second opinion" yet I know people who still think their GP as well as whatever tests were run are the end all & be all.


Cheers


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## MoneyGal (Apr 24, 2009)

Andrewf, no worries - my point was (intended to be) that people do not expect their car salesman to act as their fiduciary, why do they expect it of a financial advisor (whatever moniker the person is using)?

Electic: _but your physician DOES have a fiduciary duty towards you_. That does not mean they will never make mistakes or fail in their duty, but the duty of care includes a fiduciary duty. See http://www.cpso.on.ca/policies/guide/default.aspx?id=1702

From the link:

"Physicians have a fiduciary duty to their patients—because the balance of knowledge and information favours the physician, patients are reliant on their physicians and may be vulnerable. The patient must always be confident that the physician has put the needs of the patient first. This principle should inform all aspects of the physician’s practice."


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## J Watts (Jul 19, 2012)

Squash500 said:


> IMHO a lot of people don't want to deal with confrontation. When you go to a Doctor, Lawyer or Accountant these professionals have a strict fiduciary duty towards the client.


So now mutual funds sales reps are doctors and lawyers?

A better comparison, if we're going to make one, is your local nutrition supplement sales rep: if you tell him you want a supplement to make you ripped like a body builder, he'll give you one, but it might cost you $10 a pill, when you could really take a vitamin that sells for 2 cents...


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## Squash500 (May 16, 2009)

J Watts said:


> So now mutual funds sales reps are doctors and lawyers?
> 
> A better comparison, if we're going to make one, is your local nutrition supplement sales rep: if you tell him you want a supplement to make you ripped like a body builder, he'll give you one, but it might cost you $10 a pill, when you could really take a vitamin that sells for 2 cents...


 Of course mutual fund reps aren't Doctors or Lawyers but they can still lose your life savings. In this case it involved almost $150000 of a 76 year old widows RRIF money. Much more than a $10 pill--LOL.

http://investorvoice.ca/PI/3082.htm


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## andrewf (Mar 1, 2010)

MoneyGal said:


> Andrewf, no worries - my point was (intended to be) that people do not expect their car salesman to act as their fiduciary, why do they expect it of a financial advisor (whatever moniker the person is using)?
> 
> Electic: _but your physician DOES have a fiduciary duty towards you_. That does not mean they will never make mistakes or fail in their duty, but the duty of care includes a fiduciary duty. See http://www.cpso.on.ca/policies/guide/default.aspx?id=1702
> 
> ...


But car salesmen are not billed as 'car advisors', helping you ensure your successful car future!


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## J Watts (Jul 19, 2012)

Squash500 said:


> Of course mutual fund reps aren't Doctors or Lawyers but they can still lose your life savings. In this case it involved almost $150000 of a 76 year old widows RRIF money. Much more than a $10 pill--LOL.
> 
> http://investorvoice.ca/PI/3082.htm


Are we talking about people "trusting" their financial advisor, or financial advisors moving money around in a way that is clearly counter to what the investor needed and wanted? I'm speaking about the former; obviously what the latter did was highly illegal and inappropriate without the consent of the investor.


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## OhGreatGuru (May 24, 2009)

Peterk: You got miserable, misleading, and disrespectful service. (Bordering on the irresponsible from the sound of it.) If you don't want to fight it up the management chain, maybe try another branch of RBC and see if you get a better MF agent. 

The bank has lots of brochures on its Mutual funds, and you can download their prospectuses from RBC's web site. But there is no excuse for the agent not being able/willing to give you copies to study, especially when opening an account.


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## peterk (May 16, 2010)

Thanks OGG, but it's unlikely that her or I will be returning on a regular basis anyways, this is just an auto deduction company matching group RRSP that my girlfriend has no interest in managing. So hopefully another visit to the bank won't be necessary for many years.

To the second point - That's not really the concern I'm having. I'm sure if I went in on my own to discuss my own finances the meeting would not have gone like it did. The problem is that when someone who doesn't have any interest or knowledge goes in for a meeting they get walked all over and "conned" (for lack of a better word) into doing precicely what is in the bank's best interest and not their own.

To those mentioning: I realize that putting a 25 year old into a money market fund is fairly ridiculous. But that's all she was comfortable with at the time and didn't want to take any stock market risk. Hopefully I can try to lessen that risk aversion with gentle nudges going forward...


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## MoneyGal (Apr 24, 2009)

What's right for her is what's right for her. I didn't like the linked case in which it was assumed that an elderly woman would necessarily only be comfortable in fixed income funds.


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## andrewf (Mar 1, 2010)

MG, I agree that the bigger problem is that her account was moved into 100% equities during a time of peak/absurd valuations. Even if the money was to be managed as an 'intergenerational investment', I doubt 100% equity was really appropriate.


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## MoneyGal (Apr 24, 2009)

Right, which would be why I wrote my sentence the way that I did. Relying on broad-brush stereotypes -- "young investors should be in equities / older investors should be in fixed income" -- and then suggesting that investment advisors have violated a standard because they haven't conformed to the stereotype doesn't actually help anyone much. (Not that anyone is sincerely suggesting this.)

What helps is informed consumers and informed investors. I have to go teach two undergraduate finance classes early next month about working in finance, I wonder if this is what I should be talking about.


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## Squash500 (May 16, 2009)

MoneyGal said:


> Right, which would be why I wrote my sentence the way that I did. Relying on broad-brush stereotypes -- "young investors should be in equities / older investors should be in fixed income" -- and then suggesting that investment advisors have violated a standard because they haven't conformed to the stereotype doesn't actually help anyone much. (Not that anyone is sincerely suggesting this.)
> 
> What helps is informed consumers and informed investors. I have to go teach two undergraduate finance classes early next month about working in finance, I wonder if this is what I should be talking about.


MG....maybe you can tell your financial students who will be working with retail investors not to be so rude to the potential client---LOL. The internet is becoming a great equalizer and unlicensed investors (myself included) aren't as dumb and naive as these MF salespeople and financial advisors who are licensed (to sell stocks and ETFS) seem to think we are.


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## Squash500 (May 16, 2009)

J Watts said:


> Are we talking about people "trusting" their financial advisor, or financial advisors moving money around in a way that is clearly counter to what the investor needed and wanted? I'm speaking about the former; obviously what the latter did was highly illegal and inappropriate without the consent of the investor.


 I was talking about both. IMHO it's almost impossible to sue a financial advisor for negligence. Just too repeat myself. Read the book....The Naked Investor by John Lawrence Reynolds and you'll see exactly what I mean. IMHO JLR is one of the best financial authors that I've ever read. His book entitled....The Skeptical Investor is excellent as well. Both of these books are readily available at the public library.


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## scomac (Aug 22, 2009)

arrow1963 said:


> I don't know if this has been covered in this thread, but to the OP, is there any chance that the MF sales rep's behavior could be driven by the odd investment choice you or your girlfriend appear to have been making?


I was thinking the exact same thing. This seems to be an unfortunate side effect to the move away from defined benefit pension plans to defined contribution. Not only, is the plan holder assuming all the risk, but they are instrumental in the decision making as evidenced by this thread. In the good old days of DBPP participation the only decisions the participant had to make was to enroll. Now, they not only have to opt to enroll, but must make investing decisions that many clearly aren't adequately equipped to make.

Despite all the gnashing of teeth that has gone on in response to the episode detailed above, ultimately the recommendations of the "advisor" are more the likely far better aligned with the clients best interests than the choices made. Fear and ignorance or worse yet, incomplete knowledge can lead to many poor decisions despite best intentions.


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## MoneyGal (Apr 24, 2009)

Scomac, I have a ton of respect for you and even for this position, but equities and investing are not right for everyone. There are people who legitimately "can't sleep" at the thought of accepting ANY risk in their portfolio. The implication is that they have to save a ton more than an equity investor for the same income at the other end, and ideally that's the "education" they would get, but "a little" investing knowledge could arguably be much more dangerous than a fear of equity risk. If there's no DB pension with a counterparty providing a guarantee, some people are not going to be willing to place their money at risk, period - no matter what you or I or a MF salesperson or a boyfriend might advocate.


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## scomac (Aug 22, 2009)

MoneyGal said:


> Scomac, I have a ton of respect for you and even for this position, but equities and investing are not right for everyone. There are people who legitimately "can't sleep" at the thought of accepting ANY risk in their portfolio.


And yet these same folks sleep just fine enrolled in CPP which has moneys at risk in equities. Guarantees be damned, risks are being accepted, albeit unknowingly which begs the question: would they accept such risks if they were aware of them? Ignorance is bliss it would seem.


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## MoneyGal (Apr 24, 2009)

Yes, but CPP will make good on the obligation. "Their" money isn't at risk. I don't feel the same way about "guarantees be damned." At the same time, it is entirely possible that an ultra-conservative investor has rationalized that all-cash is appropriate for their personal portfolio given the equity exposure in CPP.


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## scomac (Aug 22, 2009)

MoneyGal said:


> Yes, but CPP will make good on the obligation. "Their" money isn't at risk. I don't feel the same way about "guarantees be damned."


You and I know this, but how many of the population at large realise this? I was surprised at the number of folks on this board who assumed that CPP was paid out of general reserves and as such, the guarantee would be worth as much as a guarantee on the country's debts; IOW not a whole lot if you felt the country's finances were ruinous. Across the general population, knowledge is sadly lacking with respect to these issues.



> At the same time, it is entirely possible that an ultra-conservative investor has rationalized that all-cash is appropriate for their personal portfolio given the equity exposure in CPP.


Agreed, but I rather doubt we are talking about a know nothing investor. Based on what you have described, we could well be talking about someone who has amassed significant assets, part of which could well be a family business or investment real estate holdings. 

My mother was about as risk averse as they came when she began to invest beyond the realm of GICs and even she became "schooled in the ways of the force" and agreed to a minority allocation to equities which eventually grew along with her comfort level for such things. This is my point really, that sometimes folks don't know what is best for them and as such advisors need to be charged as teachers to bring up the general level of knowledge WRT personal finance. The ability and willingness to demystify the "Dark Arts" is the most valuable asset an advisor can bring to the table in the relationship.


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## andrewf (Mar 1, 2010)

There's risk in holding all-cash, too, particularly from inflation. Who knows how long we'll have negative real rates.


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## MoneyGal (Apr 24, 2009)

Indeed. 

Someone was arguing on Rob Carrick's Facebook page that they don't want to buy an annuity because "insurance companies make money on those products." 

Yes, much better to buy a product that provides lifetime guaranteed income from a company that does NOT make money on these products; that sounds like a sustainable plan.


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## fraser (May 15, 2010)

I have full confidence in the CPP. My understanding is that ten years or so the government of the day bravely took the prudent step to review CPP. The result was to increase CPP deductions, employee and employer, and to change the CPP Investment Board compositon and how CPP funds are invested. 

The result today is a CPP pension system that is in the top ten or so government pensions schemes in the world in terms of ability to fund and investment returns. The rates are slightly high to account for past underfunding but overall CPP is on a very sound footing.

I think the problem comes with our close proximity to the US and US media. The US social security system, their version of CPP, is a complete mess and is at risk. The US Post Office is in the same situation. Politians failed to act and constituants failed to hold them to task.


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## Squash500 (May 16, 2009)

MoneyGal said:


> Indeed.
> 
> Someone was arguing on Rob Carrick's Facebook page that they don't want to buy an annuity because "insurance companies make money on those products."
> 
> Yes, much better to buy a product that provides lifetime guaranteed income from a company that does NOT make money on these products; that sounds like a sustainable plan.


 MG I totally realize that you're a very respected financial author etc. I'm just wondering if you're being a bit sarcastic here--LOL. I've read that segregated mutual funds and annuities are two of the biggest money makers for insurance companies. In fact these insurance companies often gouge the client with high MER offerings that are often very difficult for the average investor to understand.

IMHO when you're buying an annuity it's kind of hard to trust the insurance salespeople who sell this product to you because often the commissions that they charge on these annuities aren't very transparent at all. It would probably be best to have a neutral chartered accountant or fee based financial planner look over the annuity contract before you sign on the dotted line?


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## Squash500 (May 16, 2009)

scomac said:


> My mother was about as risk averse as they came when she began to invest beyond the realm of GICs and even she became "schooled in the ways of the force" and agreed to a minority allocation to equities which eventually grew along with her comfort level for such things. This is my point really, that sometimes folks don't know what is best for them and as such advisors need to be charged as teachers to bring up the general level of knowledge WRT personal finance. The ability and willingness to demystify the "Dark Arts" is the most valuable asset an advisor can bring to the table in the relationship.


Scomac I respect you 100% as I read all your posts here and on another financial board as well and they always make a lot of sense. However IMHO most advisors don't want to educate a client too much because their afraid that you'll become a DIY investor if they give you too much good advice. In fact wasn't Norbert fired as an advisor from his big bank brokerage in 2003 for getting his clients into index based solutions that paid such low MERS that his superiors at the bank got irritated because he wasn't selling high MER mutual funds to his clients etc. Therefore the bank he was working for at the time wasn't making enough fees from his clients?


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## MoneyGal (Apr 24, 2009)

Squash500 said:


> MG I totally realize that you're a very respected financial author etc. I'm just wondering if you're being a bit sarcastic here--LOL. I've read that segregated mutual funds and annuities are two of the biggest money makers for insurance companies. In fact these insurance companies often gouge the client with high MER offerings that are often very difficult for the average investor to understand.
> 
> IMHO when you're buying an annuity it's kind of hard to trust the insurance salespeople who sell this product to you because often the commissions that they charge on these annuities aren't very transparent at all. It would probably be best to have a neutral chartered accountant or fee based financial planner look over the annuity contract before you sign on the dotted line?


Seg funds and annuity contracts are money-makers for life insurance companies _because those are the products they sell_. If they weren't making money on them, they wouldn't sell them. 

And sure, go ahead and take your annuity contract to a CA or fee-based planner. But do you do that with your mutual fund? Your house insurance contract? 

(I'm sorry if this sounds snippier than I intend it to. I understand that annuities are complex. But are people really reading and understanding their MF prospectuses? Even the parts that use derivatives?)


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## Squash500 (May 16, 2009)

MoneyGal said:


> Seg funds and annuity contracts are money-makers for life insurance companies _because those are the products they sell_. If they weren't making money on them, they wouldn't sell them.
> 
> And sure, go ahead and take your annuity contract to a CA or fee-based planner. But do you do that with your mutual fund? Your house insurance contract?
> 
> (I'm sorry if this sounds snippier than I intend it to. I understand that annuities are complex. But are people really reading and understanding their MF prospectuses? Even the parts that use derivatives?)


 MG that's why I gave up investing in MF's years ago due to high MERS and lack of transparency. At present I just buy very basic ETFS ( ie. I stay away from Horizon and Direxion ETFS) in my own discount brokerage account. At least with ETFS such as XDV you can see exactly what's in the fund every day etc. In other words XDV is very transparent.


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## MoneyGal (Apr 24, 2009)

Basic life annuities are actually not complex products. Variable annuities, or GWLB/GLiB/GMWBs (choose your acronym) are much more complex.


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## andrewf (Mar 1, 2010)

Deliberately so, I would say. I don't trust GMWB. It seems like insurance companies/salesmen are pushing these more, which leads me to conclude they are more lucrative and often a worse deal for the investor/customer.


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## MoneyGal (Apr 24, 2009)

They are a fundamentally different product.


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## scomac (Aug 22, 2009)

Squash500 said:


> IMHO most advisors don't want to educate a client too much because their afraid that you'll become a DIY investor if they give you too much good advice.


I don't think so. In fact, if an advisor held this point-of-view, it is due to a lack of experience and/or short sightedness.

For starters, most folks have no interest in DIY no matter how much information they have if they have a strong relationship with their advisor. In most cases, DIY is the end result of those who have been perpetually disappointed with the financial advice they have received and as a result have become disillusioned with the system. 

I can assure you that an advisor's easiest clients to service are those with a high level of knowledge on the subject. Routinely, these same folks are the ones who enjoy the best results within an advisor's broad book of business because they aren't prone to destructive behavior that can be all too common with know nothing investors. It really is in an advisor's best interest to have a knowledgeable client base.


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## crazyjackcsa (Aug 8, 2010)

Nine pages and a couple of digressions later, it comes down to "Who is putting on who?" A salesperson is there to sell things, and if you can't recognize that, then they win. If you do, then you win.

I had the same thing happen each time I opened the kids' RESPs. I played along and then went home and changed everything to how I wanted it.


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## MoneyGal (Apr 24, 2009)

Yeah, this is my point! It seems to me that what's needed is more consumer literacy generally, not (just) financial literacy. If you understand how the products "work" but do not understand how they are sold, are you any further ahead?


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## kcowan (Jul 1, 2010)

Salesmen that act in their own interest are normal. Ones that adhere to a higher principle are destined to fail as salesmen. This does not make them sleazy. Although they might be sleazy too.


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## fraser (May 15, 2010)

It is good business for the banks. 

Many of these funds have a 2.5 percent MER. That is a great return for the banks. Not one dime of their money is at risk and they get this 2.5 percent whether the luckless invester makes money or looses money.

Just another reason why I like Canadian bank stocks but no longer deal with them for any investment advice or mutual funds.


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## andrewf (Mar 1, 2010)

It's like saying that selling drugs to kids is not sleazy, because they are acting in their own interest. Knowingly doing harm to others/taking advantage of their ignorance is sleazy, in my book. I could not do it.


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## Eclectic12 (Oct 20, 2010)

MoneyGal said:


> Seg funds and annuity contracts are money-makers for life insurance companies _because those are the products they sell_. If they weren't making money on them, they wouldn't sell them.


 .... and if they didn't make money from them - they wouldn't be worth buying. There can be temporary periods of extra gain or losses but a steady steady string of losses means there won't be the funds for the product or to keep the company going.




MoneyGal said:


> (I'm sorry if this sounds snippier than I intend it to. I understand that annuities are complex. But are people really reading and understanding their MF prospectuses? Even the parts that use derivatives?)


Or the parts about loaning out stock to make extra cash?


Cheers


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## Eclectic12 (Oct 20, 2010)

scomac said:


> You and I know this, but how many of the population at large realise this? ...
> Across the general population, knowledge is sadly lacking with respect to these issues.


The details ... sure. 

Most I talk to assume CPP will be there, regardless of where the funds come from.




scomac said:


> Agreed, but I rather doubt we are talking about a know nothing investor. Based on what you have described, we could well be talking about someone who has amassed significant assets, part of which could well be a family business or investment real estate holdings.


Of course there is a huge range out there.

My aunt was smart enough to be putting money into an RRSP from when the program was introduced. Her complaint was that here GIC only RRSP hadn't grown that much and no amount of discussion or numbers could convince her that this was the result of her GIC only decision.

She was had bought a participating life insurance policy that gave her a pile of insurance company shares, to her delight. However, in her mind that meant the policy bought for her daughter should have done the same, even though it was a different type of policy.

So knowing something about investing is not a cure all for some strange ideas.


Cheers


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## J Watts (Jul 19, 2012)

I was in TD this afternoon to contribute to an RRSP. I'm already invested in other e-Series funds, looking to use this RRSP money for the Home Buyers Plan, and thus wanted a safe and boring GIC ladder.

But wait, the rep said! GICs are so boring and the returns are so low. Why not choose a mutual fund? I explained why. But what if TD had a no-risk (yes, no risk), no-fee (yes, no fee) fixed income mutual fund that would _guarantee_ at least a 5% annual return?

"Wow!" I thought, "how did I miss this amazing mutual fund?!"

What was the fund? Oh, here it is: TD Canadian Core Plus Bond. It's not no risk, it's not no fee, and it's not guaranteed to return anything. I was quite taken aback by this individual's recommendations. She was quite pushy, which wasn't an issue to me, but that she blatantly lied about the performance of a supposedly better product (to avoid a GIC ladder) was unacceptable.

FYI, her business card says both "Financial Advisor" on one side and "Investment Consultant" on the other.


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## andrewf (Mar 1, 2010)

You don't expect her to put 'MF shyster' on her card, do you?


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## Echo (Apr 1, 2011)

andrewf said:


> You don't expect her to put 'MF shyster' on her card, do you?


MF'er?


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## andrewf (Mar 1, 2010)

Ha... indeed.


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## Four Pillars (Apr 5, 2009)

andrewf said:


> You don't expect her to put 'MF shyster' on her card, do you?


Lol - very good!


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## MoneyGal (Apr 24, 2009)

I tried to do one of those Morpheus memes, but can't figure out how to upload here. Anyways, here's what it would say if I could get it to work: 

What if I told you
that you could avoid getting crappy advice from retail bank reps
by not buying financial products through retail bank channels


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## andrewf (Mar 1, 2010)

Good point. Same goes, of course, for insurance companies and outfits like IG. That whittles away a huge chunk of the industry. I don't know what proportion of people would know where to start.


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## KLR650 (Sep 12, 2010)

This thread reminded me of when my girlfriend (now wife) was setting up her first RRSP account at her bank. The advisor got her set up with the balanced fund, composed of Canadian, US, international equity and cdn bonds, with an mer of 2.36%. Shortly before we married, I took the lead on her investments and got her to switch to the bank's Cdn bond, Cdn, US, and int'l equity index funds, with an avg mer of about .7%. That was probably about 2-3 years ago. Just checked and found that over the past 3 years, the index funds on average have beaten the balanced fund by 1.85%, which is unsurprisingly very close to the difference in mers. Coincidence? I think not.


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## andrewf (Mar 1, 2010)

I don't think GICs are any worse than bonds in terms of return. Just liquidity.


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## humble_pie (Jun 7, 2009)

it occurs to me that perhaps somebody should put in, if not a kind word, at least a neutral word for bank mutual fund sales reps. 

at least the bank reps are monitored by a network including their managers & beyond. Outright fraud is almost never present. It's even slightly difficult for me to picture that a TD rep would deliberately represent a mutual fund as having a "guaranteed" return when it doesn't; i don't believe the TD mutual fund reps i know would ever do that.

imho the small insurance offices & the neighbourhood "financial services" offices are far worse, at least in quebec. It's in these kinds of offices that the norbourg, mount real & earl jones scandals unfolded. Stanford also had a fair-sized roster of insurance agent dealers in montreal who sold his ultimately worthless "offshore bank" GICs.

i'm slightly acquainted with 2 mutual fund reps at the neighbourhood big green. They both like to work with people, communicate well, are deeply interested in finance, hope to advance in their careers, accept from bank management at present that selling financial products is a stage that they must pass through. If i were a kid or a brand-new investor with small accounts, i think i'd be served decently enough by these folks. Of course, sooner or later i'd have to hasten to cmf forum and/or couch potato dot com to get the full montey & then i'd have to start over with e-funds, etc. But in the meantime nobody would have stolen my savings.

ok u can start the snowballs now


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## Echo (Apr 1, 2011)

Yeah, I don't think it's the people as much as it's the process. My mom sold mutual funds for a big bank in the 90's and truly looked out for her clients' best interests, from investing to personal finance (actually moving money from one account to another if she noticed you were overdrawn. Who does that now?). 

I'm sure there are some great bank reps out there; I've met a few. It's up to the individual, as HP noted, to educate themselves as to how they want to invest and what products best serve their needs.


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## andrewf (Mar 1, 2010)

Thanks, HP. Someone should defend MF salespeople or at least play devil's advocate. I think I'm probably being too harsh but can't think of a decent way to defend their behaviour, except to say that good and decent salespeople probably exist.


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## kcowan (Jul 1, 2010)

I even had a couple of good stock brokers!


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## sags (May 15, 2010)

Really good point Humble.

There is a value to safety............especially for anyone who is already retired or fast approaching it.

The ideal situation is to have enough retirement income from private and government sources to pay the day to day living costs.........and to have some money put away to pay some of life's little pleasures.

Giving your money to an independant financial planner may put that concept at risk.

I wouldn't put money into mutual funds...........but we are planning on a GIC ladder for a substantial (for us) inheritance.

I find the discussions on options, stocks, and strategies interesting.........but I always think of the line in the mobster movie where all the older mafia leaders are sitting around the back room at the courthouse, discussing the lawyer that has represented them well over the years......and they ask the leader what he thinks.

And he says..........yea, he is a nice guy and everything and I don't think he would say anything, but then sometimes I think........why take the chance.

The next shot shows the lawyer getting clipped.

There is also much made of the effects of inflation on future purchasing power, and it may be a big consideration for someone solely dependant on their own income for retirement, but for someone whose money is set aside for those extras..........they always have the option of not buying if inflation has made it too expensive.

Then there are other considerations as well, such as the hassle of doing taxes on complicated strategies as one grows older and mental capacity isn't what it used to be, or is passing the estate on to someone who has no knowledge or interest in the subject.

We live in an area with a lot of older people, and the bank we use is a favorite with older people.

Every day there is a big lineup of older people with a clutch of bills in their hands, or some other simple transaction such as cashing cheques or withdrawing funds.........and they hand it all to the teller to do for them.

Sometimes simpler is better.........even if some money is left on the table due to fees or low returns.


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## Sampson (Apr 3, 2009)

To be fair, I have had several good experiences with the front-line MF salespeople at big banks. These individuals were responsive, patient and listened to what I was after, and also added their opinion at times, none of which I took, but they weren't pushy.

What I learned is that these individuals did not stay at their positions long, they moved up the chain.

In the end, these are customer service staff, and the ones that realize they are there to provide excellent customer-focused service will be the ones that succeed. Imagine going to a clothing retailer and having the sales rep push clothing that made you look fat - no chance they would do well. We have to remember that it doesn't take much in terms of qualifications to land such a job.


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## Squash500 (May 16, 2009)

Sampson said:


> To be fair, I have had several good experiences with the front-line MF salespeople at big banks. These individuals were responsive, patient and listened to what I was after, and also added their opinion at times, none of which I took, but they weren't pushy.
> 
> What I learned is that these individuals did not stay at their positions long, they moved up the chain.
> 
> In the end, these are customer service staff, and the ones that realize they are there to provide excellent customer-focused service will be the ones that succeed. Imagine going to a clothing retailer and having the sales rep push clothing that made you look fat - no chance they would do well. We have to remember that it doesn't take much in terms of qualifications to land such a job.


Excellent response Sampson. That's the major problem..."none of these individuals stay at their positions very long."


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## MoneyGal (Apr 24, 2009)

One could make the case that successful investors don't stay with retail bank advisors very long, either. If the advisor is "too good" for the position, perhaps the investor should move on as well.


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## Squash500 (May 16, 2009)

MoneyGal said:


> One could make the case that successful investors don't stay with retail bank advisors very long, either. If the advisor is "too good" for the position, perhaps the investor should move on as well.


 IMHO an investor can "get caught in no man's land" so to speak. You need at least a minimum of $300000 in investable assets to get a decent advisor these days who's licensed to sell both mutual funds,individual stocks and ETFS. 

Sometimes you get to a point ....where you might as well go out on your own and become a DIY investor and save yourself paying an advisor at least 2% of assets plus HST in advisory commissions each year. IMHO if you have over $150000 in investable assets then mutual funds start becoming too expensive to own ....no matter how good the MF salesmen is.


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## LifeInsuranceCanada.com (Aug 20, 2012)

Having just gone through another 1.5 hour with my local banker over investments, I agree with the thread title and have a couple of other adjectives I'd throw in as well. He's advising me on investments, and I'm not sure he's entirely clear what an index fund is. Every time I ask a question, he has to call the bank's customer service line. And we recently had another banker suggest that my 83 yo father in law's shrinking capital (he lives on the capital) wasn't getting enough of a return, and should be in something more aggressive. Yeah, burn through the man's capital during a market downturn, and now who's he going to go live with - the banker?

the problem is twofold. First, people like my father in law bank at a bank just because. I advised him to do something else (i.e. laddering some guaranteed investments) at a different bank, but the only consideration that mattered to him was dealing at the specific branch of one bank. They could've been advising him to invest in tulip bulbs and he'd have gone along. Basically, it's your money, and the only person ultimately responsible for it is you. If you defer that responsibility to someone else, you take additional risk.

And the second problem with the reps isn't that the most reps are outright trying to harm their clients. I think they're working with the education they have, and that their education is deficient. Because despite some of the concerns addressed in this thread, the financial advisor sector is highly regulated, standards must be met, advice reviewed by supervisors, continuing education, etc. But from what I've seen, most of the education is dumbed down and driven by the companies. Perhaps what we should have is a 2 year university course on financial advice in order to become a sales rep. But that'll never happen.

By comparison, I've attended life insurance continuing education courses (they're always put on by companies, because really, who else has the financial incentive to rent a ballroom and pay for a speaker?) and seen people sleeping at the back of the room. Which shows us that continuing education in the financial sector requires that you attend but does not require that you be conscious.


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## lonewolf (Jun 12, 2012)

When it comes to money it is a mistake to ever think your entitled to have someone to look after it for you. You cant be lazy & defure the responsibility to someone else.


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## Squash500 (May 16, 2009)

lonewolf said:


> When it comes to money it is a mistake to ever think your entitled to have someone to look after it for you. You cant be lazy & defure the responsibility to someone else.


 I 100 % agree with you. None of these advisors are your friends--LOL. I personally would never hire an advisor to look after my money in a million years!


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## LifeInsuranceCanada.com (Aug 20, 2012)

Squash500 said:


> I 100 % agree with you. None of these advisors are your friends--LOL. I personally would never hire an advisor to look after my money in a million years!


I don't think it's as bad as all that. Advisors are not generally your enemies either. There's plenty of advisors with more knowledge than most of the people on this forum, people well worth their money. You just need to have some working knowledge so that you don't get fleeced. 

No different than getting your car repaired. You don't have to do it yourself if you're not interested in it, but its good to know enough to know what's reasonable. If you completely ignore anything mechanical related, not every mechanic is going to screw you, but you open yourself up to the possibility.


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## warrdogg (Feb 8, 2013)

I have had 4 "advisors" since I started investing. I really believe my current one really wasn't someone trying to put one over on me. When I switched from my old funds to where my money is now, he paid the DSC for me. The MERs were actually lower too. I'm just tired of paying all these fees for average performance. 

My very first advisor was a slimeball for sure. He was an insurance salesman for my parents. I was only 23 years old and he was really pushing this whole life insurance policy along with mutual funds. I stood my ground and told him I didn't think a kid with $5000 cash, with no wife or children needed an insurance policy. Well I signed all the necessary papers and left. 4 years later I left that advisor and went to someone new (I know, I know) I went into his office to sign some papers I realized I was paying for a whole life policy! 

The funny thing was when he was selling it to me he showed me the projection of what my policy would be worth in each year. When I looked at the 4 year projection it was way off what I actually earned. I confronted him on it and he had no answer for me.


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## Squash500 (May 16, 2009)

Excellent article by Ken Kivenko in the March/April 2013 issue of Canadian Moneysaver. The article is entitled Trailer Commissions---Do they skew Recommendations? Talks all about potential conflict of interest among MF salespeople.


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## My Own Advisor (Sep 24, 2012)

Yeah, it was a good article by Ken.

Another reason to DIY, own the stocks and companies that sell these products. That's it. Investing can be simple.


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## larry81 (Nov 22, 2010)

Let me tell you folks, it doesn't get better if you have a portfolio that qualify you to have the "opportunity" of talking to the wealth management, private investment council.

Promises of active management outperformance are just promises, when you take time do some comparison (even with their own low-cost TD e-series...!) the promises don't last long.

They are out there to take your money and make a profit, the papers is just a little bit more glossy and the charts in higher resolution.


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## LifeInsuranceCanada.com (Aug 20, 2012)

warrdogg said:


> The funny thing was when he was selling it to me he showed me the projection of what my policy would be worth in each year. When I looked at the 4 year projection it was way off what I actually earned. I confronted him on it and he had no answer for me.


You have a morbid sense of humour .



> My very first advisor was a slimeball for sure. He was an insurance salesman for my parents. I was only 23 years old and he was really pushing this whole life insurance policy along with mutual funds. I stood my ground and told him I didn't think a kid with $5000 cash, with no wife or children needed an insurance policy. Well I signed all the necessary papers and left. 4 years later I left that advisor and went to someone new (I know, I know) I went into his office to sign some papers I realized I was paying for a whole life policy!


To be fair, some companies train their advisors this way. The advisor believes they're doing the right thing based on the training they've received from their insurance company. It's an issue at the insurer level, not the advisor level. Most advisors are just folks, just like the rest of us.

Just stick to my number one rule of thumb - "never mix insurance and investments". Things are cleaner that way, and people know what they're getting, and are less likely IMO to get improper product sales.


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## andrewf (Mar 1, 2010)

It's interesting how companies can gather a group of mostly decent people, ask them all the be just ever so slightly evil, and add up to an organization of good people doing bad things.


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## Squash500 (May 16, 2009)

LifeInsuranceCanada. said:


> You have a morbid sense of humour .
> 
> 
> To be fair, some companies train their advisors this way. The advisor believes they're doing the right thing based on the training they've received from their insurance company. It's an issue at the insurer level, not the advisor level. Most advisors are just folks, just like the rest of us.
> ...


 IMHO it's also an issue at the advisor level. These advisors are all trying to earn a living but often at the individual investors expense and detriment. These advisors IMHO are trained exactly like used car salespeople. You should definitely read that ken Kivenko article and you'll see exactly what I mean.


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## Squash500 (May 16, 2009)

larry81 said:


> Let me tell you folks, it doesn't get better if you have a portfolio that qualify you to have the "opportunity" of talking to the wealth management, private investment council.
> 
> Promises of active management outperformance are just promises, when you take time do some comparison (even with their own low-cost TD e-series...!) the promises don't last long.
> 
> They are out there to take your money and make a profit, the papers is just a little bit more glossy and the charts in higher resolution.


 I totally agree with you.


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## kcowan (Jul 1, 2010)

I got weaned from this approach by always having my returns from my spreadsheet to refute what the advisor was claiming were their standard returns. Eventually they started using the same numbers as I was. They had them but just never had seen the need to show them to their clients.

They think the colour charts and pie graphs can replace an honest discussion of performance. I also ask them for their annual compensation from my portfolio. (These represent tiny fractions of our total holdings just to stay connected.)


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## larry81 (Nov 22, 2010)

When the charming PIC sales lady tell you about how many great portfolio managers and analysts they have working for you, imagine a parking full of bmw and audi, all paid with your precious MER 

TD will push this:
https://www.tdassetmanagement.com/Content/Download/p_Download.asp?FILE_TYPE_ID=70&iProductType=17

But what you really want is this:
http://www.gptdinstitutionnel.com/tmi/content/FI_P_FundFacts?language=en_CA

Say hello to 0.02% MER broad index funds, comparables to VTI and VXUS and the like but CAD denominated


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## none (Jan 15, 2013)

larry81 said:


> When the charming PIC sales lady tell you about how many great portfolio managers and analysts they have working for you, imagine a parking full of bmw and audi, all paid with your precious MER
> 
> TD will push this:
> https://www.tdassetmanagement.com/Content/Download/p_Download.asp?FILE_TYPE_ID=70&iProductType=17
> ...


What the? Why do I own ZCN rather than TD Emerald Canadian Equity Index Fund - Class B? What am I missing?

I pay 0.17% MER on the former compared to 0.02 to the latter.....


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## larry81 (Nov 22, 2010)

none said:


> What the? Why do I own ZCN rather than TD Emerald Canadian Equity Index Fund - Class B? What am I missing?
> 
> I pay 0.17% MER on the former compared to 0.02 to the latter.....


"You pay a negotiable management fee to TDAM of up to 1% per year (a minimum of $25,000 may apply)."

For this, they will provide "wealth management", whatever that mean


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## MoneyGal (Apr 24, 2009)

none said:


> What the? Why do I own ZCN rather than TD Emerald Canadian Equity Index Fund - Class B? *What am I missing?*
> 
> I pay 0.17% MER on the former compared to 0.02 to the latter.....


You aren't an institution. :02.47-tranquillity:


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## christinad (Apr 30, 2013)

I have to share my TD complaint. In 2008 I met with a Financial representative to go over my investments. Based on my risk profile, he put me in more equity funds. I swear he never asked for my permission. He did it really quickly. You can imagine how badly my investments did. Later I felt sick, but I never complained. I was too timid. Now i'm with TD Waterhouse and I feel better. It still bugs me that I didn't complain. I sometimes think it's worse for females when they go to see these financial representatives. It was my own fault for being so inexperienced and naive. I think you can never go to see these bank representatives without being armed with knowledge first. 

Thanks for listening to me vent. At least i'm not the only one.


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## Squash500 (May 16, 2009)

christinad said:


> I have to share my TD complaint. In 2008 I met with a Financial representative to go over my investments. Based on my risk profile, he put me in more equity funds. I swear he never asked for my permission. He did it really quickly. You can imagine how badly my investments did. Later I felt sick, but I never complained. I was too timid. Now i'm with TD Waterhouse and I feel better. It still bugs me that I didn't complain. I sometimes think it's worse for females when they go to see these financial representatives. It was my own fault for being so inexperienced and naive. I think you can never go to see these bank representatives without being armed with knowledge first.
> 
> Thanks for listening to me vent. At least i'm not the only one.


 I think your 100% correct. Knowledge is power. Don't let these financial representatives intimidate you...remember it's your money. IMHO those risk profiles or KYC (know your client) forms are very flawed products in the first place.


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## Retired Peasant (Apr 22, 2013)

christinad said:


> I sometimes think it's worse for females when they go to see these financial representatives. It was my own fault for being so inexperienced and naive. I think you can never go to see these bank representatives without being armed with knowledge first.
> 
> Thanks for listening to me vent. At least i'm not the only one.


No you're not. I have an elderly friend (female) that has most of her portfolio in GICs. It's what she understands, and what she wants. The TD Bank is continually trying to get her to talk with an advisor. She did at one point, and was completely put off by his recommendations - all high-fee mutual funds. She said no, and stuck with her own plan. However they continue to phone/pressure her, especially when any GIC comes due. It's getting to the point where she might file a formal complaint.


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## fraser (May 15, 2010)

We may be fortunate. We have experienced a huge difference between dealing with (and paying a percentage fee ) our bank's investment counsel and then moving to a private wealth management company. 

For us, there is no comparison between the service, the level of conversation, and the experience of the individuals. We went from dealing with a new person every six months (each time more junior in experience/knowledge) to dealing with investment counsel with a background as a CA(tax specialist). Low cost EFT funds are fine but our preference is for active management and we are willing to pay-as long as we get the service and the results. It took seven months of shopping and meeting with potential advisors firms to settle on the person and firm that best matched our requirements and our personalities.


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## Squash500 (May 16, 2009)

Retired Peasant said:


> No you're not. I have an elderly friend (female) that has most of her portfolio in GICs. It's what she understands, and what she wants. The TD Bank is continually trying to get her to talk with an advisor. She did at one point, and was completely put off by his recommendations - all high-fee mutual funds. She said no, and stuck with her own plan. However they continue to phone/pressure her, especially when any GIC comes due. It's getting to the point where she might file a formal complaint.


She should file a formal complaint...and ask to speak to the branch manager etc. If the branch manager won't do anything....ask to speak to the area supervisor.


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