Solutions, Self Defense and Best Practices

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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Jul 15, 2014 8:42 am

8 questions about your investments, and one firm that handles them all up front. This is how investment pro's act.

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Asking About FeesPrint
Posted on July 14, 2014
By Tom Bradley
In his column in the Report on Business the other week (How to Discuss Fees With Your Investment Adviser), Rob Carrick provided investors with a list of questions to ask their adviser about fees. In case any Steadyhand clients are interested in asking the questions, here are the answers.

1. Please explain how I’m paying you, and how much, both in percentage and dollar-value terms.
The total amount of fees paid to Steadyhand is shown on page 2 of your quarterly statement. It’s presented in both percentage terms and dollar and cents.

2. Please list what services you provide clients like me in exchange for fees charged.
Professional management of your portfolio.
Assistance filling in application and transfer forms.
Oversight and scrutiny of the transfers from another institution to Steadyhand.
Investment advice, specifically as it relates to portfolio construction and asset mix.
Education materials.
A steady hand.

3. Do I own any funds that carry ‘deferred sales charges’?

4. Are there other fees I’m paying beyond your MERs (management expense ratios)? Am I paying the fund manager separately?
No and no. Out of the MER we pay staff, fund managers, regulators and a whole host of service providers - lawyers, auditors, custodian, record-keeper, website host, landlord, etc.
The only costs that are not included in the MER are those related to buying and selling securities in the funds (i.e. trading commissions). These costs are calculated and published semi-annually in the Management Report of Fund Performance (MRFP). The trading expense ratios (or TERs) in 2013 for the Equity, Global Equity and Small-Cap Equity Funds were 0.04%, 0.18% and 0.23% respectively.

5. What annual administration fees am I paying? Am I paying an annual administration charge on my RRSPs and TFSAs?

6. What am I paying to buy or sell the funds?
Nothing - there are no commissions charged for transactions.

7. Please list the fees that apply if I withdraw money from a registered account of any type?

8. How much would your firm charge me to move my account to a different adviser?
Nothing. ... bout_fees/

(I feel that Canadians would be well served by firms who act like this. Eliminate the commission-driven middleman and then eliminate the revenue-hungry investment dealer and you will invest like a man swimming freely verses one with two 20 pound weights around his neck:)
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Jul 01, 2014 7:52 am

Kenmar Associates
Investor Education and Protection

OPEN LETTER to Regulators -
Some thoughts on the protection of seniors

Seniors seeking financial advice, guidance and services for their retirement years represent a significantly increasing proportion of clients as a result of changing demographics,and this trend will continue for the foreseeable future.

Dealing with retail clients who are seniors gives rise to issues and considerations of which regulators ( and investment industry participants ) providing retail advisory and managed account services should be cognizant. This requires a near zero tolerance of rule breaches and deeper interpretations of rules as they apply to vulnerable seniors. ' We've always done it that way ” isn't going to cut it. Seniors just don't have the time to recover from large losses.

Based on our analysis of feedback received from Fund OBSERVER readers , looking at numerous client complaints as well as the apparent obliviousness of regulator complaint investigators to seniors issues ( high tolerance for what we believe are abusive behaviours) , we decided this OPEN LETTER was timely. We have the following suggestions for regulators sincere about protecting seniors. Some may already be covered by rules but are evidently not being adequately enforced. Implementation may include some combination of rule changes,, Bulletins, enhanced compliance reviews, changes in complaint investigation criteria , enhanced Rep training, INVESTOR ALERTS, tougher fines for elder abuse, more Streetproofing materials/brochures etc. :

Rather than just providing guidance each time a sweep identifies misleading marketing materials, fine and sanction dealers who deceive elderly clients by using such materials.

Require dealers to ensure that Reps working with seniors have the necessary qualifications , experience ,temperament and senior- specific training. Never permit any Rep that is under supervision to be assigned to a senior/retiree Account.

Require dealers/Reps handling the accounts of seniors to be trained in the recognition of cognitive issues affecting elderly clients.

Enforce requirement for dealers to approve any use of a title or designation used by Reps. that suggests some special skill for dealing with seniors.

Require dealers to disclose "clearly" whether providing the client with a fiduciary duty or a suitability duty.

Depending on account size, promote the preparation of Investment Policy Statements.

Require Reps to clarify in writing whether or not a discretionary accounts carries with it a fiduciary duty as part of their client relationship disclosure statement.

Encourage and support enhanced NAAF (New Account Application) forms and risk tolerance and capacity assessment methodologies to reflect the unique needs of the elderly.

Require dealers to have a policy on "Free lunch" seminars that would include clear written disclosure on the invitation to clients if the seminar is supported or funded by a third party and enforce it.

Require close supervision of Reps that are dual registered to ensure the regulatory arbitrage game is not being played.

Ensure dealer processes keep the NAAF - KYC (Know Your Client) information up to date ( specifically life event changes) Require a copy of the signed and dated document to be provided to the client.

Require dealer Reps to justify to their clients the choice of a fee-based account. The justification should be in writing. Prepare a CSA (Canadian Securities Administrators) brochure listing the pros and cons.

Require dealer Reps to justify to clients any proprietary products or services recommended and to forthrightly proclaim in writing a conflict- of- interest.

In a Guidance Note , recommend that for every complex product or packaged solution such as pools and baskets, Reps give the client at least three days to review the materials in advance of any meeting to discuss and sign the documents. Encourage the client to bring a trusted friend or family member to the meeting. Ditto for an annuity recommendation.

Require dealer Reps to disclose the downsides of a proprietary product including the lack of transferability and typically higher fees. Prepare a plain language brochure on this topic. Ensure complaint investigators make this an important consideration in their analyses.

If a dealer Rep is recommending the redemption of any product with an early redemption penalty fee, require that the Rep fully justify the action especially since such redemptions also may cause the elderly person to incur unnecessary capital gains tax and in some cases eliminate their eligibility to obtain OAS or GIS.(Both subject to income tests ) .This could be via a Bulletin.

Ensure the amount of fees is disclosed in bold writing and initialed by the client that they fully
understand the amount of the fees that they will be paying ( dollars and cents and percent).

In a departure from embedded industry practice, make fees an element of suitability determination.

Consider the use of trailer paying securities ( or any other form of commissions) in fee-based
accounts as a form of theft as part of a complaint or compliance investigation i.e. Treat it

Ensure the risk level on the NAAF-KYC is bolded and specifically initialed by the client that they
understand the risk level documented on this form and how it was arrived at.

Resist industry initiatives to permit dealer Reps to act as executors or to be the sole Signatory to a Power of attorney for clients.

Require dealer Reps to provide a copy of all documents signed to clients when signed .( Consider use of any pre-signed blank forms a form of forgery)

Treat any post-signing adulteration of client documents as fraud.

When Reps recommend leveraging to borrow against their homes to invest, require robust safeguards to be put in place ( eg mandatory supervisor approval).

Encourage dealer Reps to avoid products with long hold periods,illiquidity or high early redemption fees and to document justification if they do recommend such products.

Prohibit dealer Reps assigned to seniors from any off- Book or personal financial dealings. Any referral arrangements should be disclosed to the client in writing.
Hard wire this in the Client Relationship disclosure . Treat breaches with maximum penalties.

Promote and encourage annual performance reporting for each account starting now.

Investigate every complaint received from a senior or retiree . Responses should be written in such a way so as not to prejudice any third party litigation or OBSI file.

Enforce requirement to have dealers address client complaints honestly , fairly and expeditiously . They should provide a detailed explanation to support any decision. Ensure dealers explain options if client unhappy with result.( currently required but not always done)

The applicable regulator should promptly investigate every case where a dealer has rejected an OBSI recommendation for compensation and publicly disclose results.

Consider imposing a E&O Insurance requirement on any Rep dealing with seniors/retirees.

For IIROC and MFDA:Consider establishing a funded Investor Advisory Panel and/or a Seniors Advisory Committee.

Change rules that would make dealers accountable for payment of fines if Rep does not pay.

It's long been known that seniors are especially vulnerable to the financially devastating impact of conflicted advice due to declining faculties.

Seniors are also more vulnerable because trust in dealer representatives (with inflated titles) is unduly high, increasing their susceptibility to defective advice.

Widowers or seniors distant from their families have less opportunity for “second opinions”. Three trends - a huge number of people suddenly turning older, the prospects of longer lives but fewer guarantees of financial security, and at the same time a substantial percentage of our national wealth in the hands of seniors - have the makings of a perfect storm, a demographic tsunami.

Financial abuse of seniors is a rapidly growing problem, often being called the “Crime of the 21st Century.”. Regulators have a wonderful opportunity to prevent a socio- economic fiasco.

Ken Kivenko P.Eng.
President, Kenmar Associates
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Re: Solutions, Self Defense and Best Practices

Postby admin » Mon May 26, 2014 2:47 pm

Found another low cost, high transparency investment solution that I can say meets my approval:

Many times, investors ask me the same questions, namely. "how do I find someone I can trust to help me with my investments?", or "how do I even begin taking control over my own investments?"

It seems like an overwhelming task to gain control of doing your own investing, and it is what keeps many, many people trapped into the victimization of professional investment dealers and their commission salespersons. (aka "advisors")

So, always on the lookout for sound, ethical, professional solutions, I submit the following for your own research:

Become Your Own Financial Advisor

Step-by-step guide to investing your savings effectively

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Here is what I like:

Disciplined approach.
Do-it-yourself with clear step by step instructions on how to.
A cost approach which alone could double one's retirement, just from saving the investment industry's takeaway of your returns.
Empowerment, and control remains in the hands of the investor, with enough guidance to get you started.
Custodian (who holds your money/investments) remains in the control of the investor.
A youthful, yet experienced man with some values and ideas which he wishes to use to benefit fairness, honesty and good faith dealing for investors.

This is based on my own look into the process used, and I suggest you do the same for yourself, do not take my word for it. I have been wrong before, but my specialty is in spotting the sales scam, or the greed that gets easily hidden inside most investment situations, and I am personally satisfied in this case.

My opinions are my own, and not based upon any commercial, financial or other relationship that gives rise to a conflict of interest. I hope they help others who need a little help understanding the complex world of investing.

I think this should be added to the list of "solutions, best practices and self defence" and have put it here for your own study and consideration. Remember that simply cutting your investment fees and expenses by 2% per year will double your future capital when compounded over 35 years time.

Cutting out the commission middleman from your money could double your retirement without taking a single risk, or cost.......
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Re: Solutions, Self Defense and Best Practices

Postby admin » Wed Apr 30, 2014 2:03 pm

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Statement of Investor Rights
Ten rights that any investor should expect from financial service providers

The Statement of Investor Rights was developed by CFA Institute to advise buyers of financial service products of the conduct they are entitled to expect from financial service providers.

Investors: Present the Statement to your financial professionals, whether you are establishing an investment plan, working with a broker, opening a bank account, or buying a home.

Financial Professionals: Support the Statement and provide it to your clients to show that you are committed to fundamental ethical principles. Let your clients know that they can trust you to provide the service they expect and deserve.

The Statement of Investor Rights
When engaging the services of financial professionals and organizations, I have the right to…
1. Honest, competent, and ethical conduct that complies with applicable law;
2. Independent and objective advice and assistance based on informed analysis, prudent judgment, and diligent effort;
3. My financial interests taking precedence over those of the professional and the organization;
4. Fair treatment with respect to other clients;
5. Disclosure of any existing or potential conflicts of interest in providing products or services to me;
6. An understanding of my circumstances, so that any advice provided is suitable and based on my financial objectives and constraints;
7. Clear, accurate, complete, and timely communications that use plain language and are presented in a format that conveys the information effectively;
8. An explanation of all fees and costs charged to me, and information showing these expenses to be fair and reasonable;
9. Confidentiality of my information;
10. Appropriate and complete records to support the work done on my behalf. ... ights.aspx
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Re: Solutions, Self Defense and Best Practices

Postby admin » Wed Apr 30, 2014 1:26 pm

Found on Facebook:


Mandatory Advisor Disclosure Statement (MADS). For Financial Services/Investment Industry

"I am not really an advisor in the same sense as other professions like law or accounting. I am really a salesperson, and my responsibility is to put my best interests and the interests of my employer and the industry before yours".
Now that we've got that minor issue out of the way, let's get down to business! Time is money ...... and I've got quotas to meet and a contest to win!

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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Feb 27, 2014 3:56 pm

some professional (and ethical) folks are stepping to the plate to offer "best practices" solutions to retail investors. Bravo to them. Here are some of my list of pro's:

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Andrew Teasdale Andrew Teasdale <> Canadian (ex UK) professional money manager expert. Based in Toronto. Well versed in best practices, well aware of abusive practices, and the differences between them. You would do well to read everything he covers, and even better to have him be of help. site blog

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Neil Murphy, Portfolio Audit.
Ex broker, sets up his own business in Canada, helping people spot and protect themselves from financial sellers who abuse their customers for profit and greater commissions. Remember, even if your "guy" is the Buddha, he or she still has to maintain his license and employment with a billion dollar financial corporation......and that is where victimization and financial abuse comes in nearly every time.

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MarketRiders (see pervious post and links to them) great info that works for US and Canadians. Very simple, clean and neat process for asset allocation (diversity among many asset classes) with next to nothing in costs.
Mitch Tuchman and company work to provide info and subscription (would be cheap at triple the price, about the cost per year of a cable vision subscription) opens the world to lowest cost ETF and index funds to cover a professionally diverse investment portfolio. If you want to eliminate the commission middleman who typically sucks 3% out of your returns each year, and robs you of 20 years of your retirement.......then you need to investigate this service and take up the reins of really pro do-it-yourself investment solutions. Palo Alto, CA located.

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Roger Gershman <> San Fran based broker AND licensed advisor (rare, most brokers lie their way into the "advisor" creds:)

What is WealthGuard?

Expert Due Diligence in Finding a New Financial Advisor and Evaluation of Current Advisors
We do NOT work with any investment firm, bank or advisory team
We receive NO remuneration from any source but our client
We search for top financial advisors who fit ONLY our client’s profile at the right price
We INDEPENDENTLY audit our client’s current financial advisors’ performance, risks and fees

The above list of people are all investment industry experts, HOWEVER, the key difference is how they felt about what they saw as client abuse by the investment industry, so they have all taken the brave path of stepping out, going it alone or without the support of the large-predatory investment dealer behind them, and solely working towards better, or best practices. Some of the rarest finds in Canada and America right here. No, I am not connected financially or otherwise with any. Just calling them as I see them.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Sat Jan 25, 2014 3:24 pm

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I am going to say that this outfit in the US has a wonderful investment model or process.

From my reviews of it, they will:

1. Lower your investment fees by a factor of TEN or more

2. Follow a professional and diligent, professional investment process.

3. Get you away from Skippy the "advisor", who is truly just trying to buy a new Porsche, not necessarily help your finances. (up to 20% of "advisors" might not fit in this description, but I assure you that based on sales, incentives and product stats, 80% do:)

I am not affiliated, compensated or related to these folks in any way. I also notice that their investment process applies as professionally whether you might live in the USA or another country. It is not magic, it is simple professional due diligence and I appreciate very much what these folks are doing. Watch a few of their videos, they are short, sweet and you will benefit a great deal whether you pay their ridiculously inexpensive subscription or not.

Me, I am a certified expert in investment selling misconduct and malpractice. This one meets my quick tests. Check it out for yourself and retire twenty years sooner than dealing with Skippy....
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jan 03, 2014 10:11 am

This is a GREAT, simple, one page summary for any young person wanting to know who to become rich and secure. No investment dealer bullshit marketing, no FREEDOM 55 fake promises, no "YOUR RICHER THAN YOU THINK" jokes (on you:).....just sound proven info:

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Note: This article is from J.D. Roth, who founded Get Rich Slowly in 2006. J.D.’s non-financial writing can be found at More Than Money.

The one-page guide to financial independence

This year, I learned a lot about money.

I think the biggest breakthrough I had in 2013 was to connect the ideas of personal and financial independence. I spent a week in Ecuador talking with folks about this subject, and then I spent a couple of months putting my thoughts onto paper. I’ve done a lot of writing and thinking and speaking on this topic.

But you know what? I’ve come to realize that the essentials of financial independence can be boiled down to just a single page.

Financial Independence occurs when you’ve saved enough to support you for the rest of your life without needing to work for money. You might choose to work for other purposes — such as passion and purpose — but you no longer need an income to meet your expenses.

To achieve Financial Independence as quickly as possible, follow the basic rule of personal finance: To build wealth, you must spend less than you earn. But instead of heeding the standard advice to save 10 percent or 20 percent of your income, practice extreme saving. Your goal should be to save at least 50 percent of your income — and 70 percent is better.

To do this, conduct a three-pronged attack.

To begin, minimize your spending. Because a handful of expenses consume most of your budget, pursue these first (and with the greatest vigor).

Choose a home in an area with a low cost of living. Reject the advice to “buy as much home as you can afford.” Buy as little as you need. Take out a small mortgage at a low interest rate. Repay it as quickly as possible. Don’t be afraid to rent.
Reduce your use of motor vehicles. Walk, bike, or take the bus.
Prefer used instead of new.
If you can, do it and grow it yourself.
Self-insure whenever possible.
Spend purposefully.
Avoid debt.
Next, maximize your income. It’s great to cut expenses and develop thrifty habits, but there’s only so much fat you can trim. In theory, there’s no limit to how much you can earn.

Negotiate your salary.
Become better educated.
Sell your stuff.
Start a side gig.
Finally, funnel your savings into investment accounts. Take advantage of employer- and government-sponsored plans first. Then put your money into regular investment accounts. Don’t get fancy. Invest your money into low-cost diversified mutual funds. Ideally, choose a total-market index fund. Ignore the news. Ignore the fluctuations of the market. Ignore everyone. Keep investing in good times and bad.

If you follow these three steps, you will become rich.

As you work and earn and save, keep score. Track your spending. Each January, conduct a review. How much did you spend during the previous year? How much are your investments worth? Have you saved enough to retire?

To determine whether you can retire, use the following assumptions:

You’ll spend as much in the future as you do now. (In reality, most people spend less. But go with this.)
You can safely withdraw about 4 percent of your savings each year and your portfolio will maintain its value against inflation. During market downturns, you may have to withdraw as little as 3 percent. During flush times, you might allow yourself 5 percent. But 4 percent is generally safe.
Based on these assumptions, there’s a quick way to check whether retirement is within reach.

Multiply your current expenses by 25. If the product is greater than your savings, you still have work to do. If the result is less than your savings, you’ve achieved Financial Independence. (If you’re conservative and/or have low risk tolerance, multiply your expenses by 33 before comparing the product to your savings.)

That’s it. That’s all you need to know. That’s the sum total of everything I’ve learned about early retirement over the past decade. If you want more information, check out Jacob’s always-awesome Early Retirement Extreme. ... irmation=1
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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Jan 02, 2014 2:58 pm

This is perhaps the best, the shortest, and the easiest to follow investment "How To" that I have ever seen. Three simple steps that anyone can do. Summarized in a just few hundred words. Includes the most essential, hidden secret that no advisor in the world will ever share with you. I approve and applaud, and I am going to share this one three times:) ... ment-scams

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Worried About Investment Scams? Do These Three Simple Things
By Dan Ferris, editor, The 12% Letter
Thursday, January 2, 2014

Last month, I appeared on The Willis Report with Gerri Willis on Fox Business News.
The segment was too short, and I didn't get to say everything I thought was truly important about the topic at hand: The Madoff Ponzi scheme.
December 11, 2013 marked the five-year anniversary of the arrest by federal authorities of Bernie Madoff. Madoff was a financial advisor who ran the biggest Ponzi scheme in history, defrauding investors out of tens of billions of dollars.
Willis asked me what red flags investors should look for to avoid being taken by a Ponzi scheme or other investment fraud.
Sometimes, it's hard to come up with the right answer on the spot on live TV. I wasn't satisfied with the answer I gave. So I'd like to give you my fully thought-out answer now. It's very important, and it's not something you're likely to hear anywhere else...

There are three parts to avoiding financial frauds...
First, you should put the bulk of your stock-market money into a low-cost index fund, like the kind sold by money management giant Vanguard. The fees are some of the lowest in the industry.
Whatever the index does during the 10, 20, or 30 years your money is invested, that's about how much you'll make. Investing your money in index funds like Vanguard's will keep it away from the source of many investment frauds. If you don't have the time or interest in actively managing your money, this is a good low-cost way to invest for the long term.
Second, put any money not in a fund like Vanguard's into World Dominating Dividend Growers (WDDGs). Longtime readers know WDDGs are the safest stocks on the planet. (examples ... nd-growers )
These stocks are at the top of their industries and have a proven track record of performing well for decades. That's because they have one job: To pay you dividends and compound your money year after year after year. Keeping your money in your own account and investing in WDDGs are two of the easiest steps you can take to avoid fraudsters and scammers.
Third, avoid financial planners and advisors who make money by putting your money into investments. As a group, licensed, trained financial planners and advisors have failed America's investors.

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These people are little more than a sales force, trying to gather assets so they can charge exorbitant fees. And not only do they charge too much as a group, but the vast majority of the investments they put your money into will trail the market return you'd get with a Vanguard S&P 500 Index fund.
Vanguard will charge you 0.19% per year, on average. The rest of the fund industry will charge you 1.11% per year, on average (using 2012 figures from Vanguard's website).
So they'll charge you almost six times more on average... and likely not even earn a market return.
(For a great discussion of why you should avoid "financial helpers," read pages 18 and 19 of super-investor Warren Buffett's 2005 annual Berkshire Hathaway shareholder letter.)
The Bernie Madoff scam happened because the United States' financial-services industry – Wall Street – is itself something of a giant scam. It's a giant army of "financial helpers," charging fees and creating no value. (Although in Madoff's case, he was actually lying about numbers.)
On average, the financial-services industry must necessarily destroy the value of your investments. The reason for this is simple...
The most you can ever make owning stocks – or any other business – is all the excess cash generated by that business over its lifetime.
Beyond the basic brokerage function of helping investors buy and sell stocks in a liquid trading platform, there's little anyone can do for you except get out of your way and let your stocks do their job of compounding your money.
Good stock pickers are exceedingly rare. So as a group, it's impossible for tens of thousands of financial advisors and planners to do any better than a market return (minus their often exorbitant fees).
That's it. That's all there is to it. Put most of your money into a good index fund, buy WDDGs with the rest, and avoid financial planners and other expensive investment schemes.
If you do those three things, you'll avoid exorbitant fees, make a good return on your money over the long term, and avoid the fraudsters and scammers like Bernie Madoff. (advocate addition......and investment "sales-types", many of whom who are just one step fraud removed from Mr Madoff:)
Good investing,
Dan Ferris

(thanks Dan, this is THE BEST:) ... ment-scams
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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Jun 13, 2013 7:49 am

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FAIR Canada is a national, non-profit organization dedicated to putting investors first. As a voice of Canadian investors, FAIR Canada is committed to advocating for stronger investor protections in securities regulation. Visit for more information.


1. FAIR Canada is of the view that the mutual fund fee structure in Canada is in urgent need of reform and the necessary reforms go beyond improved disclosure to investors. While FAIR Canada supports Point of Sale disclosure and the Cost Disclosure and Performance Reporting Requirements (“CRM2”) as important initiatives, more needs to be done to protect investors.

Reforming mutual fund fees by banning third-party embedded commissions including banning trailing commissions on mutual funds sold through discount brokerages and direct from the manufacturer, needs to occur so that: Serious conflicts of interest, which are systemic and structural in nature and which lead to investment recommendations that provide higher compensation to the advisor while disregarding the costs to the consumer, will be significantly reduced;

Consumers will be able to determine the amount they pay for the operating costs of the mutual fund versus the costs they pay for advice;
Consumers will have more control over the costs they pay as they will
(1) know that they pay for “advice”;
(2) be able to compare the costs and services of different advisors; and
(3) be able to negotiate directly with their advisor as to the costs and the type of fee arrangement they will enter into;
Consumers will be more aware of the costs they pay (for the fund or for the advice) which will allow them to assess the value;
The fee structure of mutual funds, which is complicated and confusing to the average consumer, will be simplified and made more transparent; and
Consumers will be better able to compare the costs of various mutual funds and will be able to compare the costs of mutual funds to other investment products such as exchange traded funds (“ETFs”).

2. Banning embedded commissions will lead to better investment recommendations for many consumers. If advisors are compensated directly by the clients they serve rather than the product manufacturers, they will no longer be incented by higher trailing commissions to sell high-fee products to their clients, and will be better able to provide recommendations that are in the best interest of the client.

3. Banning embedded commissions will allow consumers to make more informed investment decisions. If consumers know the price they are paying, they will be able to assess the value they receive for their fees and be empowered to make better decisions. This will result in better outcomes for consumers.

Banning embedded commissions should lead to a more price-competitive market for mutual funds, which should lower the average fees paid by Canadians, which are currently among the highest in the world. If consumers end up paying less for their investments, they will improve their returns, thereby enabling them to accumulate more savings for their retirement or other financial goals. This is an important public policy objective of all governments in Canada.

Banning embedded commissions should enhance the professionalism of the financial services industry and enhance public trust in the industry and financial markets. This would be of benefit to both consumers and dealers and advisers.

The current mutual fund fee structure contains serious conflicts of interest which are not addressed by the Point of Sale initiative or CRM2 (Client Relationship Model?). These conflicts result in inadequate consumer protection and inadequate consumer information. Given the concerns identified by the CSA (Canadian Securities Administrators), and in order to fulfill CSA Members’ mandates to foster efficient capital markets and protect investors, there is no justifiable reason to wait and “...monitor and assess the effects of related regulatory reforms in Canada and around the world”1 before considering any of these regulatory options further.

We see no reason to wait until CRM2 comes into effect three years from now, and then to wait beyond that to see their effect, when those requirements do not meaningfully address the serious conflicts of interest that have been identified by the CSA in the Consultation Paper and that we discuss in this submission.

FAIR Canada urges all members of the CSA to take immediate steps to address the serious concerns identified in the Consultation Paper and in this submission by banning third party commissions, including banning trailing commissions on mutual funds sold through discount brokerages and direct from the manufacturer.
FAIR Canada also recommends that a statutory best interest standard be introduced, as being both feasible and highly desirable.

read the entire report here: ... d-Fees.pdf

(Advocate comment: FAIR Canada is an organization which to date has been 100% funded by the Organization of Investment Dealers in Canada in response to allegations that the industry has prevented independent and objective industry oversight and consumer protection. It is encouraging to see them take a hard stance on important issues, and it is hoped that it does not become yet another organization mainly intended to conceal and do "damage control" for industry greed and conflicts. This has been said about securities regulation as it stands today.)
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue May 21, 2013 4:34 pm

From the USA comes this article about a "wave of lawsuits" resulting from accepting advice from those who do not have a fiduciary duty....... Some solutions herein.

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Sheldon Geller: Engaging non-fiduciary consultants and relying on their advice is not evidence of prudence.
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9 things advisors to 401(k) plans must do to keep clients out of hot water
A wave of fiduciary lawsuits is creating new plan best practices

Friday 7.13.12 by Sheldon M. Geller Guest Columnist tags: Sheldon Geller | Stone Hill | 401(k) | ERISA

Brooke’s Note: We keep publishing articles with oblique mentions of momentous changes at the DOL that will forever change the 401(k) business from one in which financial salespersons prosper to one in which friendly handshakes have little value. But we haven’t really looked into the black box where the specifics fester to see what exactly has changed and just what an advisor needs to know to succeed in this new regulatory environment. Sheldon Geller, a longtime industry veteran with no fear of the small print, has undertaken that task and we publish it here.

It’s no longer good enough for investment advisors to pick a few mutual funds for sponsors of 401(k) plans and then adjourn for lunch.

Financial advisors need to also consider it their jobs to protect 401(k) plan sponsor boards, corporate officers and other plan fiduciaries from an increasingly active and high ERISA bar. See: Why the DOL’s massive new 401(k) disclosure requirements are a 'very, very big deal’.

Liable to be liable
Recent court decisions have identified issues that investment advisors need to consider to effect prudent plan management and to protect their 401(k) plan clients from significant fiduciary liability. Plan sponsors are at risk and and thus investment advisors need to insulate them from a new wave of ERISA lawsuits, regulatory oversight and legislation. See: How Schwab is gearing up its RIAs to fight for 401(k) assets.

Plan sponsors will likely call upon investment advisors with ERISA experienced with the ins and outs of the Employee Retirement Income Security Act of 1974 to manage plan operation and fiduciary compliance. Investment advisors will need to do more than perform fund due diligence and provide fund recommendations. The marketplace will offer ever-expanding fiduciary service models, thus challenging investment advisors to expand their service deliverables for their 401(k) plan clients.

Risky outsourcing
401(k) plan fiduciaries have been found to have breached their duties to plan participants and have been assessed significant damages for failing to monitor recordkeeping costs, negotiate rebates and prudently select and retain investment options. Many plan sponsors have relied upon non-fiduciary service providers for investment selection and fiduciary guidance in the absence of a fiduciary-overlay service or discretionary vendor.

Plan sponsor fiduciaries cannot rely upon a non-fiduciary service provider with a conflict of interest to accept responsibility for their service model and investment fund recommendations. Plan sponsors should become increasingly skeptical of non-fiduciary service providers’ managing plan assets and plan administration. Investment advisors need to educate plan fiduciaries who may not recognize a conflict of interest.

Investment advisor due diligence
There will be more claims against 401(k) plan fiduciaries who previously considered themselves immune based upon offering a broad selection of investment alternatives. It is critical for investment advisors to have the requisite skills and knowledge to uncover embedded fees, conflicts of interest, service incapabilities and contract limitations inherent in the retirement plan solutions they offer their 401(k) plan sponsor clients. See: DOL tells employers when they must fire advisors to 401(k) plans.

Courts have emphasized the importance of implementing and adhering to a deliberative process and focusing on the merits of employer decisions affecting plan participants. ERISA fee litigation cases emphasize that employers must follow established processes and act in the best interests of the plan and for the exclusive benefit of plan participants.

Accordingly, 401(k) plan sponsors rely on their investment advisors to establish these processes, to effect procedural prudence, to avoid conflicts and to document decisions.

Investment advisors need to become experts qualified in fiduciary standards of care and assessment. Most firms providing retirement plan administration services do not guarantee the completeness or accuracy of their services — they process the information plan sponsors provide to them.

Most employers do not have the internal controls in place to ensure operational compliance with plan terms in order to satisfy ERISA.

Consequences of noncompliance consume company staff time, increase legal costs and expose plan sponsors to liability and monetary sanctions. The current regulatory environment makes it difficult for an investment advisor to adequately represent plan sponsor interests unless the advisor is an ERISA fiduciary. See: Report of a possible delay in DOL’s fee disclosure rule sparks apprehension among advisors and industry observers.

Plan fiduciary best practices
Recent case law imposes new responsibilities upon plan sponsors. A wave of fiduciary lawsuits is creating new plan best practices. Plan sponsors must implement and maintain an objective strategy with predetermined procedures to remove subjectivity and comply with ERISA 's fiduciary requirement to act solely on behalf of participants.

Investment advisors need to implement and manage, among other best practices, the following plan fiduciary best practices to protect their 401(k) plan sponsor clients:

1. Revenue sharing and recordkeeping fees: Employers must monitor record-keeping fees and revenue sharing pursuant to a deliberative process demonstrating that committee decisions are in the best interest of plan participants. Service providers may not retain revenue sharing that far exceeds the market value of plan services.

2. Revenue sharing and fee offsets: Employers must negotiate revenue-sharing rebates with service providers to reduce the cost of providing administrative services to plan participants, if mutual fund expense ratios are excessive and unreasonable based upon a comparison in the marketplace. See: How giant advice provider Financial Engines can sweep the 401(k) field — or not.

3. Selection and de-selection of investments: Employers must document the process of evaluating the competitive market for comparable investment funds. Deleting a good performing fund or using alternative share classes to create more revenue sharing to offset fees violates investment policy statement criteria and the exclusive-benefit rule. Fund replacements must provide a reasonable investment advantage to participants.

4. Subsidization of corporate services: Employers must avoid the payment of fees that exceed the market costs for plan services in order to subsidize corporate services, including payroll processing, welfare benefit plan and defined benefit plan services.

5. Float Income: Float, the income and interest earned when contributions and disbursements are held temporarily during the transfer process constitutes plan assets and therefore must be allocated only among 401(k) plan participant accounts.

6. Fiduciary monitoring criteria: Employers must review custody statements monthly, compare manager performance quarterly, evaluate service provider quality annually and scrutinize service provider contract capabilities, services and fees every three years. See: Merrill Lynch jumps on the fiduciary bandwagon in retirement plans but critics see lingering conflicts.

7. Asset-based fees: It is imprudent to use asset-based fees to pay for administration services, as fees increase even though no additional services are provided.

8. Risk-sharing: It is imprudent to enable service providers to charge hard-dollar fees to replace lost revenue sharing resulting from declining plan asset values without determining the revenue-sharing amount, the market cost of comparable services and whether using revenue sharing to pay plan fees is in the participant’s best interest.

9. Investment policy statement: It is imprudent to maintain an investment policy statement without adhering to its fund replacement criteria and revenue-sharing application, as plan sponsors will be held liable for the failure to comply with same.

Plan sponsors must show their work
Plan sponsors may have to explain — if not defend — their actions in retaining service providers if they do not conduct a full request- for-proposal process to formally test the marketplace for retirement services every three years. Neither ERISA’s prudence requirement nor its exclusive-benefit rule support a rule of law requiring plan fiduciaries to conduct a competitive-bidding process to support a fee and avoid litigation. See: A Q&A with Phyllis Borzi, the DoL powerbroker aiming to remake the retirement market.

Recent lawsuits have alleged that plan sponsor boards, corporate officers and other fiduciaries have breached their fiduciary duties by failing to investigate plan transactions. Investment advisors need to help plan sponsor fiduciaries identify conflicts or potential conflicts and evaluate whether those conflicts affect the 401(k) plan and its participants. Further, investment advisors need to help plan sponsors protect the plan from any adverse effect of a conflict of interest.

Dynamic statute
Plan sponsors are advised to retain investment advisors who can be strong fiduciary partners to provide open-architecture solutions facilitating identification of best-in-class service models and lower-cost, best-performing fund lineups. ERISA anticipated that independent fiduciaries would manage retirement plans on behalf of plan sponsors, protecting boards of directors, corporate officers and other plan sponsor fiduciaries.

An independent ERISA fiduciary cannot be conflicted and is legally accountable to the plan sponsor client, which is indispensable when retaining service providers, approving fee arrangements and selecting investment funds. Plan sponsors need advice from an advisor with subject matter expertise to avoid ERISA violations, monetary sanctions and civil liability for corporate directors and corporate officers who fail to establish internal control procedures for monitoring operational compliance.

ERISA is a dynamic statute, requiring an advisor to have extensive fiduciary, regulatory, transactional and practical experience. The Department of Labor has significantly raised its enforcement effort against plan sponsors, targeting fiduciary negligence. Many plan sponsors are unaware that the Labor Department has jurisdiction over them and fail to understand their fiduciary responsibilities under ERISA. See: Proposed DOL regs expose more advisors to fiduciary liability.

fluent in ERISA
Plan fiduciaries must scrupulously identify, examine and, where possible, avoid, conflicts of interest and prohibited transactions. Recent legal decisions underscore the importance of adopting prudent operational compliance procedures and best-practice governance standards. Engaging non-fiduciary consultants and relying on their advice is not evidence of prudence and may cause the plan fiduciary to commit a breach.

Plan sponsors should retain independent ERISA fiduciaries who are worthy of a fiduciary mandate, having acknowledged fiduciary status in writing, to consistently apply fiduciary practices and make fiduciary decisions. It is imperative to implement a compliance strategy to manage plan sponsor fiduciary liability and a retirement plan solution to relieve officers and managers from plan administration decisions.

The fiduciary liability landscape includes litigation alleging breach of ERISA fiduciary duty for inappropriate 401(k) investment options, misrepresenting the risks of investing in employer securities, permitting excessive fees and expenses, and failing to administer plans in accordance with the terms set forth in plan documentation.

As the challenging economic environment prompts more lawsuits over retirement plan benefit losses, boards, chief financial officers and other plan fiduciaries should think carefully about the retention of advisors and attorneys with ERISA subject matter expertise to manage conflicts, avoid prohibited transactions and provide legal accountability.

There is a need for highly credentialed and independent ERISA professionals compensated by plan sponsors, not by custodians and fund companies, to serve and protect plan sponsor boards, CFOs, CEOs, corporate officers, human-resources managers and other plan fiduciaries.

Sheldon M. Geller is the president of Stone Hill Fiduciary Management LLC. ... -hot-water

see also ... ent-gamble
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Re: Solutions, Self Defense and Best Practices

Postby admin » Sat Apr 20, 2013 8:59 am

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Don’t invest that RRSP contribution in mutual funds
By Alison Griffiths
Metro Canada
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Istock Images Canadians are afflicted with some of the highest mutual fund fees in the world.
Don’t invest that RRSP contribution! At least, not yet. I’ve got a better idea than throwing money into the mishmash of mutual funds that are probably littering your portfolio.

These days, far too many mutual funds have high sales commissions and MERs (management expense ratios) that drag down return. And by the way, Canadians are afflicted with some of the highest mutual fund fees in the world.

Most mutual funds are sold by commissioned sales people. A recent and stunning study, co-authored by University of Toronto’s Rotman School of Management economist Susan Christoffersen, demonstrates that up-front fees, paid when you purchase front end load mutual funds, and ongoing trailer fees, paid to advisors annually, result in biased advice. (1)

“Both fees bring dollars in the door (for mutual fund companies) and both alter recommendations,” she emphasizes.

The bias, not surprisingly, is toward funds that offer higher compensation to the sales person. The study showed a direct link between higher fees and lower performance.

In my opinion, most investors are better off choosing low fee exchange traded funds (ETFs). These products trade like stocks and mirror the performance of an index such as the Dow Jones Industrial Average or the domestic S&P\TSX Composite Index.

There’s a ton of ETFs now available. Here are some of my favourites that focus on dividend paying companies.

The ticker symbol, MER and yield are in brackets.


1. iShares Dow Jones Canada Selected Dividend (XDV, .30 per cent, 4.12 per cent)

2. BMO Canadian Dividend ETF (ZDV, .35 per cent, 5.67 per cent)

3. Vanguard Canadian High Dividend Yield (VDY, .30 per cent,*)

* This ETF is too new to list yield but the underlying index currently yields about 4.19 per cent


1. iShares U.S. High Dividend Equity Index (XHD, .30 per cent,**)

** Also a new offering, the index yields 4.11 per cent

2. BMO S&P 500 Index (ZSP, .15 per cent, 2.20 per cent)

Though BMO’s ZSP is a broad market ETF, I like it because it isn’t hedged to the Canadian dollar. If the dollar settles to more historic levels investors will gain, as the units will be worth more. Of course if the dollar goes up the reverse will be true.

Pick one ETF for Canada and one for the U.S. and you’re set.

Average MER

The average MER for most Canadian ETFs is under .35 per cent while the average MER for equity mutual funds is 2.25 per cent.

Contact Alison at or ... ual-funds/

(1) ... tudy-says/

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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Mar 28, 2013 4:31 pm

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Questions and Answers about the proposed Individual Investor Organization (IIO)
How a Canadian IIO with 500,000 members and a $20 million annual budget can be formed

The Individual Investor Organization (IIO) is a proposed federally-chartered, non-profit organization designed to represent and educate investors on investment issues worldwide.

The IIO proposal is based upon Citizen Utility Boards (CUBs) which have been established in four states in the U.S. In these states, utilities were required to enclose a one-page pamphlet in their billing envelopes inviting people to join the CUB. About five percent of consumers usually join the CUB at a $10-15 annual membership fee. CUBs are independent, broad-based watchdog groups that are run democratically by their members and represent consumers’ interests in the marketplace. For example, in Illinois the CUB has 150,000 members, a $1.5 million annual budget, and has saved consumers about $9 billion since 1983 by opposing rate hikes by utilities.

According to a national survey, 64% of Canadians support the creation of the IIO using the pamphlet method, while only 27% oppose it.

In 2006, an Ontario legislative committee recommended that the Ontario government seriously consider establishing an IIO using the pamphlet method.

In addition, a national coalition made up of 31 citizen groups with a total membership of 3.5 million Canadians supports the creation of the IIO.

To set up the IIO, the Canadian federal government must require federally incorporated financial institutions (banks, trusts, insurance companies, pension plans and, working with each provincial government, pension plans and mutual fund companies) and a few other large corporations (that most investors hold shares in) to send a one-page pamphlet in the bi-annual and/or annual reports they send to their 10 million individual shareholders.

Alternatively, financial institutions and corporations could volunteer to enclose the pamphlet, and as long as enough large institutions and corporations volunteered enough individual investors would receive the pamphlet to make the IIO viable.

The pamphlet will describe the IIO and invite individual investors to join at an annual membership fee of about $40 (with a lower fee for people with low incomes). The government can either lend or grant to the IIO the funds needed to print the first pamphlet. After the first pamphlet, however, the IIO will pay all the costs of the pamphlet. As a result, the IIO can be set up at little or no cost to government or the financial institutions.

If only five percent of financial institution investors join the IIO, it will have 500,000 members and a $20 million annual budget. With these resources and large membership base, the IIO will be strong enough to hold financial institutions and large corporations for their activities both in Canada and worldwide.

The IIO will be a democratic organization, controlled by its members through the election of regional delegates and the IIO’s board of directors. The board will hire the IIO’s professional staff and determine the group’s policies.

The IIO will hire economists, experts, organizers, lobbyists and attorneys to represent investors.

The IIO will also educate investors through price surveys, public forums, and investment guides.

In the past 20 years, the big five Canadian banks have obtained control of a majority of investment banking assets (including mutual funds) in Canada, and now operate in more than 60 countries worldwide. Together with other large financial institutions and corporations, they offer more than 1,500 investment products and services.

The IIO will provide easily accessible information about investment products and responsible investing, encouraging competition in the marketplace and better service for all investors.

And while several groups try to track what Canadian banks and large corporations are doing worldwide, they all lack adequate funding and resources. With a $20 million annual budget, and 500,000 members, the IIO will have the funding needed to do the job.

Individual investors are an important part of Canada’s financial system, but their voice is not strong enough to be heard by government, especially given the enormous resources and strength of the investment and corporate Canada lobby. The IIO will also act as an umbrella group, giving investors an organized voice for their interests.

For more details, go to Democracy Watch’s Citizen Association Campaign ... -campaign/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Sat Mar 23, 2013 7:11 pm

Proposed Operational Resolution to Confront Systemic Abuse of Seniors by the Investment Industry
WHEREAS deceptive practices designed to separate senior citizens from their savings are primary forms of abuse of the elderly in Canada, and

WHEREAS regulators and the RCMP Commissioner Coulson have all made statements over the past year that fraud is a very serious problem, and white collar criminals must be treated as seriously as drug dealers, and

WHEREAS the fact of the matter is that nothing tangible can be put into effect to stop criminal abuse for financial gain if there is no discernment between honest mistakes and misunderstandings that are appropriate for mediative settlement, and that which is not appropriate for any mediation what so ever, specifically, acts of deliberate malice that are calculated to separate vulnerable and trusting people from their savings through deceptive predatory acts that are prohibited by the Criminal Code of Canada specifically outlawing any form of deception in the sale of securities. And,

WHEREAS, the purposes of the law are 1) to prevent undue enrichment from the proceeds of fraud, and 2) to prevent future abuses; therefore it is essential that the Criminal Code of Canada become the primary regulative tool of all oversight agencies such as the OBSI, the IIROC, the Insurance Council of BC, the Office of the Provincial Ombudsperson, The BC Securities Commission, the Mutual Fund Dealers Association, all supervisory staff in all investment firms, all law enforcement personnel including volunteer administrative staff - must become versed in the wording and intent of Sections 361 to 363 of the Criminal Code of Canada which spells out clearly that there is to be no misrepresentation in the sale of any securities in Canada, period. And,
WHEREAS, in the cause of accomplishing the last statement, the fact that police currently are overworked and do not have the time to start from scratch in looking into cases where a client has been criminally misused by investment dealers, the Okanagan Chapter of CARP proposes that there be fundamental changes in the terms of reference in all oversight and regulative organizations that have a goal in any form that is related to governing the investment industry:
THEREFORE BE IT RESOLVED that in order to correct the shortage of enforcement mechanisms  of the law, relating to fraudulent misuse of the savings of the elderly, that every person in the oversight organizations at all levels, when a client of one of the investment firms in Canada, seeks help due to being defrauded, that the oversight agency personnel must be conversant with the relevant sections of the Criminal Code, and must look at specific evidence of breaches of the law. When the evidence is completely understood and vetted by complete analysis and discussion with the complainant, that a process be established to confront the errant investment dealer with the specifics of the evidence, and to question the errant dealer on their knowledge of the Criminal Code laws prohibiting the sale of securities under false pretenses. A careful recording of the responses of the errant dealer must be made, including the question of what the dealer visualizes as a method of correcting the harm that has been caused. This report must be then forwarded to law enforcement using a formal process that will prevent the report from being passed from office to office and agency to agency without any investigation of the facts. Unfortunately this passing-off phenomenon is the standard operating practice at present, and it is creating dysfunction in the supervision of investment firms. 
BE IT FURTHER RESOLVED that the above corrective action has been necessitated due to the fact that the current irresponsible practice is forcing victims to struggle in solitude, having to put out tens of thousands of dollars in legal fees just to seek a civil judgement. This situation is completely uncalled for, in that no person should have to suffer any additional burden when the criminal law exists to protect all persons equally. 
BE IT FURTHER RESOLVED that CARP Chapter #30 undertake the administration of the Community Conversations Project filed last year with New Horizons For Seniors that will provide up to $25,000 in funding to hold a series of meetings with seniors in the Okanagan Valley over a period of eighteen months, to assess personal experiences with harmful investment contracts, and to gather the views of seniors on the subject of what kind of legal clinic services may be desired so that individuals no longer have to further sacrifice their savings individually in court battles on this kind of problem. One of the possible remedies for this problem would be if the new Seniors Advocate position may be a fully empowered enforcement position, at the same level of authority as the SPCA in stopping and correcting abuse of animals. The Ministry of Seniors could become an intervenor thereby allaying court expenses to the victim of these deceptive practices. The Seniors Advocate could order that the law be complied with on honest dealing by any vendor of service, thereby making the expenses and time delays of using the courts unnecessary. 
Alan Blanes
Phone 250-860-7719
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Mar 01, 2013 5:16 pm

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If I have learned anything from spending most of my life within the 20th Century and some of my life in the 21st Century it is the above.

The solution to save you from grave or irrecoverable financial harm is two simple criteria in my opinion:

One is to ensure that you only deal with strong enough and safe enough financial firms so the IF YOU ARE DEFRAUDED, you at least have someone to pursue for compensation.

I have just witnessed 20,000 to 30,000 Alberta investors who were not aware of this, and are suffering irrecoverable loss as a result.

Two is to deal ONLY with someone who can provide you with a WRITTEN FIDUCIARY DUTY or obligation to you. That is available from the very best advisors (usually referred to as "portfolio managers" , usually CFA's, see ) and other than that I am not aware of this criteria being available. If you invest without this duty or a clear, explicit, written duty to PLACE THE INTERESTS OF THE CLIENT AHEAD OF THE INTERESTS OF THE SALESPERSON, then you are asking to be FISH FOOD for the largest and strongest financial institutions in the world.

I am sorry to say that 99% of Canadians cannot find the above two criteria, and if they cannot, then they MUST do their own investing, educating and informing themselves. Sorry, but like changing your oil, you can either do it yourself and get a bit dirty or go and have someone do it for you. If you have someone do it for you and they do NOT meet the two criteria above,.........well good luck beating the pros at the game run AND refereed by the pros. Just sayin.

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