smelly wrote:BTW that last shot about how VG has done compared to MMF or Cdn Small Cap funds is really lame don’t you think? You really want me to respond to that?
Yes. You complained several times about the media not factoring in the tax credit when reporting LSIF returns. So I did factor in that credit. Do you consider a five-year CAGR of 2.5% to be a “good” return, especially during one of the best runs ever for Canadian equities? Yes or no.
You stated earlier:
I've polled my peers about financial media influence and the majority of the responses say that the media isn't a factor because very few clients actually pay any attention. I used to feel that way too but lately I've seen and heard things from clients and others that lead me to believe we should worry.
So I asked you to cite those things that you have lately found so worrisome. You cited several.
Regarding the first, I cited three reasons why investors might have reasonable cause to feel concerned and seek information/clarification/assurance from the advisors who are paid to provide ongoing service. Why do you find this egregious? If a fund is thrown into receivership, is it unreasonable for people to wonder about their own funds? Is the failure of a fund newsworthy?
Regarding the second, you expressed concern that the great unwashed are unaware that Ontario backed off its previously announced changes to the LSIF program. I noted that the media duly reported those changes and asked what you and the LSIF industry have done to ensure that the message got across to the great unwashed. You did not answer.
Regarding the third, I cited a number of actual and factual situations in which DSCs have been “bad.” Do you claim those situations are not bad or that they've never occurred?
Regarding the 4th, you expressed concern that many people feel they have too many funds and many feel they have too few. I noted that many do, in fact, have too many or too few funds. Are you suggesting that every investor has the precisely correct number of funds? Indeed, can you tell us the unanimous view of advisors on the “proper” number of funds?
Regarding the 5th, you expressed concern about irrational exuberance over first tech and now energy. I pointed out that advisors (and analysts) have also engaged in such lopsided thinking. Are you saying they haven’t?
Regarding the 6th, do you dispute that wraps and PPNs have generated the most competition for traditional mutual funds? My source is the tracking by Investor Economics. What’s yours? And what do you see as the biggest competition for traditional MFs? Are you suggesting that Canadian investors rose up en masse and demanded that wraps and PPNs be created, and that clients then steamrolled their advisors into selling them?
Regarding the 7th, you cited the worrisome state of affairs in which one client bought a stock that crashed. I pointed out that stocks recommended by advisors also crash from time to time. Do you disagree? I also suggested there’s a good chance the article was quoting bullish comments by advisor(s) or analyst(s). Is that not possible?
I gave you examples of incorrect information as well as examples of facts and semi facts that may or may not be valid or are at best just superficially semi-correct.
You did? What was the incorrect information?
But in all cases if investors took action based on this information could likely hurt themselves.
“If”…”could”…”likely.” And if anyone gets behind the wheel of a car, they could likely hurt themselves in a crash. So only take a taxi or ride the bus!
I didn’t realize you’d want to debate each item as we’ve done before ad nauseam.
I don’t. I simply asked you to flesh out a sweeping statement you made so that I could understand why there’s cause to worry. I didn't get any flesh, let alone meat.
Obviously your opinions of my examples are coloured by your experiences and a pessimistic view of the industry where you’ve witnessed a few examples of bad advisors – some proven, some not proven, a sprinkling of facts and lots of innuendo and anecdotal evidence.
Obviously your opinions are coloured by your experiences and a pessimistic view of situations where you’ve witnessed a few examples of bad clients – some proven, some not proven, a sprinkling of facts and lots of innuendo and anecdotal evidence.
I’ve seen thousands of examples of great work by many, many advisors and thousands of happy clients whose lives have been literally enriched by their experiences.
I too have seen examples of good work done by many advisors. I’ve also seen examples of slipshod and even immoral work done by bad advisors.
If all advisors are good and all clients are happy and feel well-served, why is there cause for worry? Indeed, if all advisors are good and all clients feel well served, why do so many advisors feel compelled to hide behind the embedded compensation of the DSC structure?
And I’ve seen no first hand examples of bad advisors and read/heard about a very tiny amount of proven cases.
What do you mean by “proven?” Please comment on the following recent cases presented to me:
1. The one mentioned in my earlier post. A wrap is supposed to be a properly diversified portfolio – what the industry insists on calling a “solution.” Why then would a client need two wraps plus a handful of stand-alone funds plus a PPN? The PPN, by the way, is linked to the performance of shares in the big six banks. Why does the client need a 5-year capital return guarantee when investing only in the major banks? Indeed, if the client can handle the risk of two wraps, a handful of standalone funds and a $500,000 leverage loan
, why does he need a capital return guarantee at all?
2. An advisor tells a couple who jointing make $50,000/year that they must save more than $10,000/year to be able to retire – even though they are debt-free, have always made max RRSP contributions, have a partially indexed DB pension, and have a modest retirement income target. Examination of his voluminous report reveals that he (or his assistant) repeatedly mixed up pre- and post-tax income when entering data into their software. Obviously, the report was then delivered to the clients without being checked.
3. A client recently asked his advisor why the high-end wrap he was sold last year has substantially underperformed a benchmark composed of indices that match the wrap’s allocation. The advisor told him that indices are just artificial constructions that do not represent the market and there’s no way to invest in them. The client replied that there is – ETFs. The advisor told him that ETFs are only for active traders and not suitable for those who wish to buy and hold.