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Our Mission
This web site is dedicated to mutual fund investor education and protection.
The $600 billion mutual fund industry plays a key role in the savings and retirement plans of millions of Canadians. Many industry practices provide beartraps for the unsuspecting investor and securities regulations have not kept up with the pace of change in the industry. Financial literacy education in Canada has also dramatically lagged the increasing sophistication of financial products especially mutual funds. Increasing numbers of investors have expressed bitter disappointment with the returns obtained and the way they are communicated with. Smarter mutual fund investing and better financial performance is our goal. We welcome any comments.
Mutual Funds are Sold not Bought
Ken Kivenko P.Eng.
Investor Advocate
kenkiv@sympatico.ca |
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When the Earl Jones Ponzi scheme made headlines last year the media pointed out that Mr. Jones was not registered with a regulator. The implication was that if he had, the scheme would have been detected earlier.
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It's long been known that seniors are especially vulnerable to the financially devastating impact of adviser abuse, frauds and scams, and there are several reasons for this. A recent study by a researcher from the U.S. Federal Reserve and a professor at the University of Texas...
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There have been many articles written on the benefits and risks of borrowing to invest (leveraging). For instance, we've all been told that if you put $100,000 into a mutual fund–using $25,000 of your own money and a $75,000 loan–and the fund gains or loses 10% or $10,000, that would actually be a 40% gain or loss on your original equity–before loan costs. So why another piece on the topic?
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General: Actively Managed ETFs – Worth a Look?
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The mutual fund industry has been very competent marketers. Over the years, they've invented clone funds, tax-efficient funds, U.S. dollar funds, sector funds and even sub-sector funds like the Internet infrastructure funds. Bay Street never sleeps.
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Posted by root on Wednesday, December 14 @ 23:00:00 EST (0 reads)
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Mutual fund fees are the costs of running a mutual fund. They are disclosed in the simplified
prospectus. What investors don't readily see or comprehend and aren't readily explained by their salespersons is how the method of sale effects their ongoing trailer commissions and, of course, fund returns.
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The Canadian Securities Administrators (CSA) has authorized a new disclosure document for
mutual fund investors. It’s called Fund Facts (FF) and you’ll receive it when you’re sold a
mutual fund. It is a dumbed-down version of the detailed simplified prospectus. It highlights key information for investors, including the fund performance, risk and the costs of buying and owning a fund.
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General: G20 High-Level Principles on Financial Consumer Protection
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The high-level principles were developed as a response to the G20 Finance Ministers and Central Bank Governors call in February 2011 for the OECD, the FSB and other relevant international organisations to develop common principles on consumer protection in the field of financial services by their 14-15 October meeting.
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Posted by root on Monday, November 14 @ 23:00:00 EST (0 reads)
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The International Organization of Securities Commissions‟ (IOSCO) Technical Committee‟s Standing Committee on the Regulation of Market Intermediaries (TCSC3) and the Standing Committee on Investment Management (TCSC5) (known collectively as the Joint Group) have jointly authored the Principles on Point of Sale Disclosure Final Report. The Report sets out principles that are designed to assist markets and market authorities when considering point of sale disclosure requirements.
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... For about the last 20 years there has been an aggressive marketing campaign to convince retail investors that only by using an advisor will we safely meet our retirement and other savings goals ...
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The name Financial Consumer Agency of Canada (FCAC www.fcac-acfc.gc.ca ) conjures up an
image of an Agency focused on the protection of financial consumers. As an agency of the
federal government, it investigates complaints about financial institutions under federal
jurisdiction. These institutions include all banks and all federally incorporated or registered
insurance, trust and loan companies, and co-operative credit associations.
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Protect Your Investment From Broker Misconduct! by Robert Goldin.
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About six years ago I was a member of one of the OSC's Fair Dealing Model's [ FDM] subcommittees, the Performance measurement team. I was the only retail investor member ; the others were dealers and lawyers along with OSC staff. A number of firms suggested that the cost of providing personalized returns would be prohibitive. A few argued it was a value-add service that should be subject to fees.
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Posted by root on Tuesday, March 01 @ 23:00:00 EST (0 reads)
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General: The Richest Man in Babylon
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By George S. Clason (1926).
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General: Kenmar review of Mackenzie financed U.S./Canada COO study
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In a new study that challenges all previous comparisons of Canadian and U.S. mutual fund fees, researchers suggest that the cost of owning mutual funds purchased through a financial advisor in Canada compares favourably with U.S. costs. This, despite the fact of greater U.S. competition and a $7 trillion+ fund industry compared to just $600 billion in Canada.
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Posted by root on Friday, September 17 @ 00:00:00 EDT (0 reads)
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A report prepared for the Consumers Council of Canada for presentation to the Office of Consumer Affairs Industry Canada
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General: OSC Investor Advisory Panel
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An in-depth analysis by Dr. P. Reeve.
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Posted by root on Thursday, September 02 @ 00:00:00 EDT (0 reads)
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Canadian retail investors are exposed to financial markets that are among the most developed yet poorly regulated in the world. They enjoy an overwhelming supply of products and services to address their financial and investment needs. Advice is a component of this unduly complex marketplace. Canadians historically have chosen to invest and manage their financial decisions with the help of advisors. But things are changing . According to J. D. Power and Associates, one third of full service brokerage clients also do some investing online, and 26% of bank mutual fund investors are also using the online channel.
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The core challenge is to what extent the industry is prepared to take hold of the matters
that require regulation and to operate a self-regulatory system that will deal effectively and
efficiently with the issues raised in this report and that will result in fair and equitable
treatment of investors.
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General: Are Index Funds Worth a Second Look?
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With
all the media hype over exchange-traded funds (ETF's) , the lonely
Index fund provides a acceptable vehicle for index investing. Index
funds are sold mainly by the big banks, and they offer exposure to a
wide variety of stock and bond indexes. The key distinguishing
feature is fees. Because management fees and sales commissions are
relatively low, fund companies and dealer representatives don't
promote them. Index funds have some features that make them
attractive to some investors. The ability to make small dollar
investments and easily reinvest distributions is a plus. Some
investors shudder at opening a brokerage account to buy ETF's - they
find it easier and less intimidating to hold a mutual fund account.
Additionally, some sort of advice, albeit conflicted , comes with
owning an Index mutual fund.
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General: Socially Repsonsible Investing -- Myths and Reality
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Socially responsible investing (SRI), also known as socially-conscious or ethical investing, describes an investment strategy which seeks to achieve both financial return and social good.
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General: Mutual Fund Investors: Sharp Enough?
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Who are mutual fund investors? The answer is critical to regulatory policy. The mutual fund industry portrays fund investors as diligent, fairly sophisticated, and guided by professional financial advisors. The SEC paints a more cautious portrait of fund investors, though touts improved disclosure by the fund industry as a sufficient antidote. However, an extensive academic literature finds that fund investors are unaware of the basics of their funds, pay insufficient attention to fund costs, and chase past performance despite little evidence that high past fund returns predict future returns. These findings suggest that policymakers should rethink current regulatory policy. Disclosure may not be enough.
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Communication is important, especially at the outset of the relationship. The best thing people can do to protect themselves is make sure your objectives are clear in your own mind and clearly communicated to your advisor or broker. This will help avoid problems and complaints downstream.
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When you open an account with an investment dealer you have to provide personal details like your income, net worth, risk tolerance etc. This information, periodically updated, supports Know Your Client (KYC) rules that securities regulators have put in place. The theory holds that the more an adviser knows about a client ,the better he can serve them. The recommendations he makes must be “suitable” based on the KYC.
There is however no equivalent form for an investor to Know Your Advisor-KYA . Not knowing your advisor can lead to unsuitable investments, higher costs, loss of capital and even “misappropriation of assets” as regulators refer to theft. So, here`s a form you can use to keep track of your advisor
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General: Opening an Online Brokerage Account? Points to Consider
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On-line
accounts
are growing at a fast pace.Whether
its investment dealer shenanigans, incompetent advisers, high mutual
fund fees,/ trading commissions, the non-bank ABCP fiasco, poor fund
performance , the Earl Jones Ponzi debacle, or advisor fraud, retail
investors are looking at alternatives to the commission-driven
advisor channel.
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Posted by root on Saturday, March 20 @ 00:00:00 EDT (2145 reads)
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All you have to do is enter the gross return of the fund (referred to as the Market Return which could be misunderstood as the benchmark index return), the annual fee, any applicable loads and the number of years.
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For any number of reasons there is an increased interest in Do-it-yourself investing (DIY) .Whether its investment dealer shenanigans, greedy commission- driven advisers, high mutual fund fees, the non-bank ABCP meltdown, the Earl Jones fiasco, poor fund performance or advisor fraud, retail investors are looking at alternatives to the commission-driven advisor channel...
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Legal: Markarian v. CIBC World Markets Inc.
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Markarian v. CIBC World Markets Inc.
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Posted by root on Saturday, September 12 @ 00:00:00 EDT (0 reads)
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SIPA Public Forum - Markham - 6 June, 1999 , STREETPROOFING FOR INVESTORS :STRATEGIES FOR MOVING BEYOND HOPE, GREED AND FEAR by Glorianne Stromberg
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While mutual funds help reduce issuer –specific risk through diversification, they introduce a plethora of new threats to satisfactory returns that are inherent in their legal / tax structure, fees/commissions and industry sales practices. These threats are not articulated in the fund prospectus. Subtle hazards specific to the fund include “soft “ dollars (brokerage business given to brokers in exchange for research but sometimes for other goodies-there’s a reason the word soft is used), and the hazards of style drift (consciously deviating from the fund’s stated investment policies, risk profile and objectives to boost returns).
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Over 10 million Canadians make investments in stocks, bonds, GIC’s and mutual funds. It’s a BIG business and highly profitable for the banks, fund companies, dealers and brokers. Mutual funds alone collect over $10 billion in fees each year. -the sales are commission based and include embedded sales commissions. When financially unsophisticated investors meet commission or quota- driven advisers, a toxic mixture can be created. So, it's not unnatural that problems will develop due to incompetence, greed, misrepresentation, or even administrative errors. This is where an effective investor complaint process can help you recover undue financial losses. A “Complaint” is defined to include any written or verbal statement of grievance from a client or any person acting on their behalf, former client or prospective client, alleging a grievance involving a firm or representative of a firm.
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