Mutual Interest?

Last spring, I was sitting in my financial advisor's office, and we got around to that part of the script where she tells me I should be investing more in RRSPs. The fact is, I had been, but it was with a self-directed account at a financial institution.

Was it me, or was she making me feel I was cheating on her? I'd been seeing the advisor for many years now, and was slowly coming to the realization that although I'd been sharing very personal information about my annual earnings and overall wealth and risk profile, I really wasn't getting the kind of advice I wanted and needed. She was in business to help sell me products from her firm, like insurance and mutual funds.

I've known for several years that if I did my own investing it would be a lot cheaper. Years ago I'd heard of 'couch potato' investing and it went straight to my to do list, where it languished. Then ETFs came on the scene. I wanted a cheaper alternative and since my advisor wasn't offering it, I tried another route.

Unfortunately the bank advisors weren't much better.

"I'd like to try Index Funds and ETFs so I can reduce my fees."

"Those type of funds can only purchased through the online brokerage account. Do you have one?"

"No."

"Well let me show you this fund, modelled on the Canadian Index." 

It wasn't until I took an investment course this past fall that it finally sunk in that front-office bank staff and mutual fund 'financial advisors' aren't licensed to sell anything else but mutual funds. What I wound up with from the bank retail discussions were  mutual funds that were modelled on index funds and even labelled as such. They referred to them as 'funds' so I wasn't really catching on. Misleading!


Yes, buyer beware, but I feel like my long-time advisor and my trusted financial institutions have taken me for a sucker.

The course I signed up for was a college night course, thirty hours over ten weeks, with an introduction to bonds, the stock market, options, trading etc.  Now, while I'm certainly no expert, I am less intimidated by all the lingo and finally got around to setting up that online account.

I am still a couch potato at heart. By the end of the course it was confirmed.

When I saw the title of this book by Larry Bates, Beat the Bank, it became a handbook for me to help with assembling my own online portfolio.

The book reinforced that Canadians are a loyal bunch, trusting in our banks and among the highest per capita to hold mutual funds. We are also charged the highest management expense ratios (MERs) anywhere on the planet. Percentages of 2.0 - 2.5 percent don't sound too bad until you start adding it all up. Over the long-term, those fees can eat up as much as half of your investment return! Infuriating! The author's website has a useful tool to help illustrate how much of your investment return you actually get to keep after paying out fees.

What's that saying? "Too late smart"? "Better late than never?" Or, "it's only too late if you don't start now"?