Wednesday, July 29, 2015

ALERT Threats to your Financial Health

We have issued a number of Investor ALERTS in the past but new threats keep on appearing or old ones become more sophisticated. Here's our latest take on what to be on the alert for. Awareness of threats from Bay Street  is a key to successful investing.

Saturday, July 4, 2015

Advisor Titles requires Investor vigilance

Advisors use titles and designations to gain trust. While some titles and designations are meaningful, many are not.You need to be alert . Read Business Cards, Titles and Investor Trust

Thursday, June 25, 2015

Advisors as Executors: A wise move?

This article outlines the risks involved in appointing your investment advisor as your executor. Right now regulators do not perrmit this but the IIROC Board is considering allowing it subject to some conditions. Read the article

Fiduciary Standard and Financial Advice: Findings from Academic Literature


Fiduciary Standard and Financial Advice: Findings from Academic Literature

Abstract: This article provides an overview of theory and empirical evidence related to the benefits and costs resulting from the application of a fiduciary standard of care to the conduct of brokers, dealers (broker-dealers), and investment advisors. The purpose of this document is not to advocate a position on possible regulatory actions. It is intended to provide an in-depth review of the extant literature, primarily from economics, finance, and law, related to the regulation, incentives, and outcomes of the existing advice marketplace. Opinions on the likely impact of various strategies on the marketplace are entirely those of the author and are based on the preponderance of empirical evidence and the strength of related theories. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2419727

Wednesday, June 17, 2015

Kenmar Commentary on the CSA commissioned Fund Fee Research Report

Dealer / advisor conflicts-of-interest are top of mind for regulators and investor advocates.Conflicted advice can skew recommendations that are not in the best interests of investors , thereby impairing savings and retirement accounts. The CSA commissioned third party research into the impact of advisor compensation on advisor recommendations.The Researcher was to conduct a literature review to evaluate the extent, if any, to which the use of fee-based vs. commission based compensation changes the nature of advice and investment outcomes over the long term. Following a competitive procurement by the CSA, the Brondesbury Group was contracted to conduct this research. The Brondesbury Group  has now completed their work and their findings are set out in the Mutual Fund Fees Research report which is the basis for our commentary. The report concluded that there is sufficient evidence of skewing to consider regulatory reforms.Indirectly, the report also  points to the need for the standard of advice giving  to be examined since a change in compensation model alone cannot satisfactorily resolve the core issue.Read our Commentary on the Report which is made from the perspective of the retail investor.

Tuesday, June 16, 2015

INVESTOR ALERT: Think twice before using internal Bank "Ombudsman"

If you  have a complaint with a a Bank-owned IIROC  investment dealer you may find yourself getting an offer to make use of the Bank's internal "Ombudsman" if you didn't accept the dealer's restitution offer ( if any). This INVESTOR ALERT tells you that the use of this " Ombudsman" is entirely voluntary and warns of the risks involved . You may want to use the Ombudsman for Banking Services and Investments, a free, independent Dispute Resolution Service.

Saturday, June 6, 2015

Can Socially Responsible Investing reduce portfolio risk?

Responsible Investing (RI) aka Socially Responsible Investing (SRI) incorporates environmental, social and corporate governance criteria into the selection of investments.For some, these constraints mean that  portfolio construction is limited, opportunities lost and risk increased.But a May , 2015 study suggests that RI provides a number of potential advantages including strong financial returns,reduced risk , and more downside protection than traditional mutual fund incvestments.RI mutual funds and venture capital funds now total $17.5 billion . The paper  Canadian Responsible Investment mutual funds : Risk?Return Characteristics Study Findings  can be read here  It should be noted that not everyone agrees with the screening criteria. For example, those who survived the horrors of WWII do not necesarrily agree that investments in weapons manufaxturers like Lockheed Martin are necessarily undesirable. To them , it means the ability to defend our democracy and freedom .

Sunday, May 31, 2015

Ethics and trust in financial Services: John Bogle

JOHN BOGLE SPEECH AT GEORGETOWN LAW - Nov 05, 2014
John  delivered a keynote speech before the Public-Private Partnership Symposium at Georgetown University School of Law on October 31, 2014. Titled “Values, Ethics, and Structure in Finance,” the speech discusses the importance of getting the right structure of business model and incentives in order to have a financial system that serves the needs of clients first. “Values, Ethics, and Structure in Finance,” October 31, 2014, Georgetown University School of Law .

Friday, May 29, 2015

Research on Advisor Fiduciary duty


  • Ditching the Securities Blanket - Revisiting the Financial Advisor-Client Fiduciary Obligation in Canadian Law by Mark Donald  The author's conclusion : " While obviously well-intentioned, many supporters of a blanket statutory fiduciary/best interest standard apparently view this equitable legal construct as a sort of panacea. This position ignores the significant practical legal perils that such a statutory creation would create, and puts investor advocates on an unhelpful, and arguably unavoidable collision course with IAs and the securities defence bar.The better way forward would be for all parties to consider the power of targeted, systemic regulatory changes to the financial services industry, and accept that wholesale revolution to the client-advisor relationship is not a precondition to developing a fairer and more efficient financial services industry. Such an approach could have profound, positive results, while avoiding the theoretical debates that make a fiduciary/best interest solution so elusive.".  Read it here 

Thursday, May 14, 2015

Fed up with bank fees and bank exploitation?

If the latest round of bank fee increases finally got you upset enough to take action , read this article.
Some apathetic folks are simply taking the approach " If you can't beat em, buy em" and are investing in bank stocks. Over the years the fees they collect from the docile can mean real gains and dividends for shareholders. In any event, there's a feel good emotion thaat some of the client gouging is coming back to you.