Trusting Your Financial Advisor – 11 Signs They May Be Ripping You Off

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Written and Edited By

moneyGenius Team

Last updated: Jul 21, 2022

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Working with a financial advisor can be an incredibly convenient way to manage your finances.

However, not all financial professionals are created equal. We tend to think that anyone calling themselves a financial advisor or investment advisor must be more experienced and qualified than we ourselves are, but this isn’t necessarily the case.

To be sure you’re saving money and working with a true professional, there are questions you should ask potential advisors, plus a few telltale signs you should watch for.

Taking these extra steps to protect your financial future is well worth the effort. Let’s take a look at what these signs and questions might be.

Table Of Contents

The problem with financial advisors

It may come as a surprise to hear that Ontario is the only province that has regulations in place for those using titles such as “financial advisor,” “investment advisor,” “financial planner,” and such. Advisors everywhere do have to register with the province or territory, and the firms these individuals work for are regulated in other areas, but not the job titles themselves.

This means that just about anyone can set up shop and claim to be a top-notch financial advisor. No education, training, or experience is required.

Even when an advisor works for a big bank, they’re not always given much training, and what they do receive isn’t necessarily of the best quality.

Lack of regulation and training means that any Joe Blow out there can set up camp as an investment advisor and claim to be the best of the best. Many work on commission and will therefore recommend investment options that benefit themselves far more than it does their clients.

Alternatives to hiring a financial advisor

Of course, you don’t have to hire a financial advisor at all, especially with the surge of specialty online services.

So before we start talking about warning signs to spot with your advisor, here are a few alternatives to hiring a “professional.”

Use an online broker

An online broker is a sort of virtual investment assistant that helps you open an online account for trading securities. They allow you to make your own investment decisions and save fees – which can be the best of both worlds.

There’s still opportunity here for the individuals working for these brokerages to rip you off, but checking that it’s a regulated online broker can go a long way to ensuring your money is safe.

You can try a robo advisor

Robo advisors aren’t robots trying to control your money, despite what the name might imply.

They’re online, automated platforms and services that can save you time, hassle, and plenty of money on fees. Your personal input, including answers to questionnaires, combined with specialized software and algorithms enables a robo advisor to manage investments for you.

Essentially, they cut out the middleman and save you the expense. They’re definitely worth a look.

Try the DIY

Yes, you can do it yourself!

Whether you’re a new investor or an old hat, the DIY approach can work – just do some homework and get started. Heck, there’s even a method called couch potato investing, which sounds pretty low-key, right?

11 warning signs your financial advisor is ripping you off

We could probably list dozens and dozens of details to cover to make sure your financial advisor is legit, but narrowing it down seems like a better idea.

Keep your eyes and ears sharp for signs of these 11 details so you don’t fall prey to a scammer and lose your hard-earned money.

1. Your financial advisor doesn’t explain how they get paid

When you visit many financial advisors, it can feel like you’re getting a free service because you don’t have to pay anything directly out of pocket to see them. That couldn’t be any further from the truth.

Both the financial advisor and their parent company get paid a commission or fee based on the products they sell. Here’s how financial advisors are usually paid:

If you buy individual stocks or bonds, there will be a flat one-time commission charged both when you buy and when you sell them.
If you buy a mutual fund – a managed collection of stocks, bonds, and other investments – there’s a percentage-based management expense ratio (MER) fee that you’re charged annually, lowering your investment returns. The advisor, his company, and the company that manages the fund all get a piece of that. Mutual funds can also have hidden front-load and back-load fees (deferred sales charges) fees in addition to the MER. Fortunately, those have mostly gone away in the face of increased low cost competition.
If you buy exchange traded funds (ETFs), which are like low cost mutual funds that are traded on the stock markets, you’ll pay a flat one-time commission plus, typically, a very small MER. The commission goes to the advisor and his company, while the MER goes to the company that created the ETF.
If you pay for fee-based advice, then your advisor and their company charge you a flat percentage of the total value of your portfolio every year for their services. The cost of any trades on the stock market are typically included at no extra charge and the MER of any mutual funds are reduced accordingly. Your advisor doesn’t make any additional money from selling you investment products.

On large portfolios, those ongoing MER fees can really add up. Most MER fees paid by Canadians on mutual funds are around 2%, meaning if you have $250,000 invested, it costs you $5,000 per year. Your advisor might only see 25% of that, but that’s still $1,250 every year.

Fortunately, new regulations were introduced in 2013 (although only implemented in 2016) forcing companies to disclose exactly how much investors are paying in fees in actual dollar amounts.

2. Your financial advisor doesn’t really care about your needs and goals

If your advisor hasn’t taken the time to truly get to know you, then there’s no way they can properly advise you on your money. They should try to understand you as a person along with your life goals, your time horizon for retirement, and how concerned you are about investment losses over the short and long term.

If you don’t feel like your advisor cares about you and your financial success, it’s time to look elsewhere.

3. Your financial advisor boasts they can “easily” beat the market

If anyone tells you they can beat the market, don’t walk – RUN in the other direction.

Study after study has proven that the vast majority of people, including investment professionals, can’t beat the average long-term returns of the market after fees.

Keep in mind, your financial advisor isn’t a top-tier stock trader no matter how good they are. Most of their day is spent managing clients and portfolios. They don’t have the time to master the ins and outs of the markets to always be picking winners.

Even most highly paid mutual fund and hedge fund managers whose sole job it is to outperform the markets typically can’t beat market returns with any level of consistency.

4. You only hear from your financial advisor once a year, or less

Any advisor worth their salt should make an effort to communicate with you on a semi-regular basis. At the very least they should be calling to see how you’re doing, ask you about any major life changes, and make sure you’re on track to reach your long term goals.

Additionally, they should occasionally check to see if you’re earning extra money and want to increase your contributions, update you on investment performance, tell you about current market conditions, and possibly hold your hand and help you stay the course if markets are in turmoil.

5. You’re only invested in high fee “closet index funds”

We’ve established mutual funds often have high fees, but that doesn’t make them worthless.

However, if your fund has a high fee and is also a standard “balanced” or similar fund that contains a set basket of stocks and investments that rarely changes, you’re getting ripped off. You’re paying high fees for a fund manager to do practically nothing.

If this is you, seek out low cost alternative funds or ETFs that track an actual index. If you’re going to pay a high fee, make sure that your “actively managed” fund is truly actively managed. For the added cost, you should at least have a chance at outperforming the markets – but this chance has been proven to be relatively small.

6. Every time you talk to your financial advisor, they ask you to buy something

If your financial advisor is paid by commission, they only make money when you buy or sell something. They’re highly incentivized to call you and get you to buy and sell your investments.

Sure, it’s normal to buy and sell investments or change your asset allocation as your priorities and goals change. Or, sometimes there’s a real opportunity that has cropped up that you could benefit from. But be wary if that happens too often or if it’s always the primary reason for the call.

7. Your financial advisor hasn’t offered you a written financial plan

If you’re paying hundreds or thousands of dollars a year for a financial advisor, they should help you plan for the future. It should be more than just a little pie in the sky advice, but a real written financial plan with targets based on your budget and income.

8. Your financial advisor has few certifications and qualifications

We’ve established that pretty much anyone can call themselves a financial advisor whether or not they’re properly educated and certified, so it’s up to you to make sure they’re qualified

If they’re capable of buying and selling investments on your behalf, then they need to have taken the Canadian Securities Course (CSC) and Conduct and Practices Handbook Course (CPH), as the bare minimum.

Depending on their specialties, other certifications recommended for financial advisors include the following:

Wealth Management Essentials (WME)
New Entrants Course (NEC)
Investment Management Techniques (IMT)
Portfolio Management Techniques (PMT)
Advanced Investment Strategies (AIS)
Options Licensing Course (OLC)
Derivatives Fundamentals Course (DFC)
Futures Licensing Course (FLC)

There are plenty of other courses and certifications you can ask about, all of which are listed here on the Canadian Securities Institute site.

Another (optional) one to look for is the Certified Financial Planner (CFP) designation. This is a more rigorous training program with exams that the advisor needs to pass.

9. Your financial advisor only sells you funds from their own company

When selecting a mutual fund or ETF, you should be looking for a low cost option with a proven track record. If your advisor is only offering funds from their own company, chances are you’re paying more than you need to and possibly getting worse performance. This is a clear sign they’re trying to maximize profits and increase bonuses.

10. Your financial advisor always gives you “hot stock” tips

Any advisor who tries to talk you into investing a large percentage of your portfolio into an individual stock, especially a “hot” stock, should be avoided.

There’s a chance that they’ve done the research and have good reason to believe one particular company will perform well, but it’s still very risky.

Instead, if you’re buying individual companies, it should be with a small portion of your portfolio that you’re comfortable losing entirely, or a group of well-diversified companies to limit your concentration risk.

11. Your financial advisor won’t compare your results to an equivalent benchmark

Just because your investments are showing big gains does not mean you’re doing well. Markets are very cyclical and go through periods of massive growth and big declines.

When markets are on fire, even the poorest investments can look amazing. The only true test of performance is to compare your actual results with that of a comparable benchmark.

For example, if you’re globally diversified in 100% equities, then a benchmark or index that tracks the performance of all the companies worldwide would be suitable. If you have a balanced fund that contains stocks from North America and a diversified set of corporate and government bonds, then you would need a benchmark that combines a similar set of investments for comparison.

How to choose a financial advisor in Canada so you’re not ripped off

It seems picking a good financial advisor is almost as difficult as picking the investments themselves. This is why you need to do your research, ask the right questions, and get reliable help you can trust.

Research how to invest in Canada

A good place to start doing your research is by reading a couple of good investing blogs. That way you’ll get to know some of the terminology and investing strategies out there so you can have a more informed conversation with your advisor.

Here are 2 such blogs that I recommend:

Then, if you want to start asking questions and getting some advice from other people, you could read and participate in a few forums like:

If you want a quick study, then picking up a few Canadian personal finance books can help immensely:

Millionaire Teacher, by Andrew Hallam
Wealthy Barber Returns, by David Chilton
Wealthing Like Rabbits, by Robert R. Brown

Ask the right questions to your next potential financial advisor

When choosing a financial advisor, you should take the time to interview them properly – don’t just go with whichever name your bank recommends or a friend suggests.

Go in prepared with a list of smart questions to ask and see how well they answer them.

Here’s a few questions to get you started:

Can you explain what fees you charge and how you make money from me?
How often can I expect to hear from you after our initial meetings?
What process do you use for selecting the investment products you recommend?
What is your opinion on investing in individual stocks vs. mutual funds vs. exchange traded funds?
Can you give me a sample financial plan that you offer to your clients?
Can you provide a list of products and funds you typically recommend?
Can you guarantee my investments will beat market returns? (The answer should ALWAYS be no.)
Are you a certified financial planner? What training and certifications do you have?
What resources do you use for giving financial and investment advice? (This could be additional team members, software, tools, access to industry experts, etc.)

Use a fee-only financial advisor

One of the best ways to ensure you’re getting help you can trust is by removing any financial incentives from the equation. All bank employees and commissioned financial advisors have at least some conflict of interest.

One way to do this is to hire a fee-only financial planner and pay them to create a financial plan for you and get started with low cost investments from which they’ll earn no commission.

Don’t forget to ask yourself some questions too

All of the above information is useless if you yourself aren’t ready to take charge of your money and your future. Educating and preparing yourself to work with a financial advisor is just as important as interviewing the advisor themselves – if not more so.

To get ready, here are a few questions to ask yourself:

What stage are you at with investing? How comfortable are you with this stage?
If you’ve been managing your own investments this far, why are you thinking of changing it up?
What do you feel a financial advisor can do for you? What are your expectations?
Are your finances complicated? Has it become too much for you to handle alone?
How much money are you able and willing to invest?
Do you have a lead financial advisor you can trust? How did you find this person?

Being honest with yourself about your finances, abilities, and expectations will help you to identify the type of help you want and require from a financial advisor, therefore helping you choose the right one.

How do you feel about your financial advisor?

Do you already work with a financial advisor who you trust? What is it that makes you feel comfortable with them?

If you don’t already have an advisor, are you considering a move towards working with one? What are the qualities you hope to find in a financial advisor?

We love hearing about our readers’ thoughts and experiences, so feel free to leave us a message in the comments section below.

FAQ

What does a financial advisor do?

A financial advisor is someone who helps you invest your money, whether it be for retirement, buying a house, or any other goal you have. They provide personalized advice and will take care of the complicated parts of investing your money. Click here for 11 warning signs that your financial advisor is robbing you blind.

How do I find a financial advisor near me?

The easiest way to find a financial advisor near you, like most things, is turning to Google. Simply search for “financial advisor” plus the name of your city or town, and Google will show you a map of nearby financial advisors. Click on “More places” to see a full list, and check out reviews and other information. Here are some tips for choosing the right financial advisor for you.

How to become a financial advisor?

The first step to becoming a financial advisor is to get licensed. You can see more information from the Independent Financial Brokers of Canada, which is a great resource for getting your foot in the financial advisor space. Make sure to keep the 11 warning signs of a bad financial advisor in mind, so you can give a great experience to your clients.

How much do financial advisors make?

Most financial advisors in Canada make a base annual salary between $55,000 and $65,000, but the more experience an advisor has, the more they can make. A financial advisor with several years of experience under their belt can earn upwards of $110,000 per year.

If you liked this article and want more practical ways to save money every day, we've compiled our best tips all in one place.

Editorial Disclaimer: The content here reflects the author's opinion alone, and is not endorsed or sponsored by a bank, credit card issuer, rewards program or other entity. For complete and updated product information please visit the product issuer's website.

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Comments

Bakke |October 24, 2023

Love this article, As a financial planner myself, I've seen countless examples of "financial advisors" have trouble managing their own money, don't understand the most basic financial concepts, and yet they are "financial advisors" selling products to customers and claiming themselves as financial advisors - big banks particularly. For us, CSC and WME are the REGULATORY REQUIREMENT for you to be licensed to buy or sell securities , is like you get a permit to open a business, funny thing is I walked into a big bank the other day ( will not name which), the "Financial Planner" has CSC and WME as part of the business title , which is like a joke. Some investment firms have strict rules in terms of what designations you can put in your business card and email signature such as CFA, CFP etc and these are rigorous , hard earned designatations which take years to pass. It took me less than two months to get my CSC. And yet the big banks, where they serve over 90% of Canadians, this is not a requirement ( The Big 6 combined have over 90% of market shares in Canada).

Yulia |October 25, 2023

Hey Bakke,

Very interesting, thank you for sharing!

IanB |October 29, 2021

I have another warning sign - your advisor says people who use financial advisors make 2.3 times as much as those who do not. Correlation is not causation. Any advisor who doesn’t know the difference does not know what they are talking about. Those who do are simply lying to you. Either way, run!

moneyGenius Team |November 9, 2021

Hey Ian, That's another good example! Thanks for sharing :)

G Stokes |June 18, 2021

Liked having learned all these info, however i feel I might have lost a good bit of the confidence (on self-directed) I thought I have gained over months of trying to learn o/l where best to invest (?) Only investment i've done so far is TFSA mutual funds. I am gearimg towards ETFs 'buy & hold' (couch potato) I do not csre for e-books.

moneyGenius Team |June 21, 2021

Hello, ETFs are a popular investment option for sure. We've written more about them here, if you'd like to check it out.

LGtBT |February 10, 2020

I wanted to open a stock trading account when I was 22 but got roped in to a Mutual Fund by the Investment Advisor. I didn’t know then that they got a commission for one and not the other. Seems fraudulent. While holding those mutual funds, I called 300% (GM Canada bail-out) and 500% stock raises (Ballard Fuel’s China contract) several times so I finally got in to the market last September. I quickly made 70% returns on the SNC Lavin scandal. Now I’m up 70% on the reinvestment with I position I’m still holding, for a total up of around 160% in under 6 months. And you’re right. After several years, I lost money after withdrawing my mutual fund. Frankly, I feel like I was robbed by the person who should have given me advice.

MLee |November 21, 2019

I like to add this warning sign to your list - its the flipside to #4 "You only hear them once a year, or less" and an enhanced version to #6 "Every time you talk, they ask you to buy something". The warning - your broker calls you every month, every other week or more frequently. This is the tactic my Janney Montgomery Scott broker in Philadelphia headquarters did to my retirement account. This financial advisor is named Pearl Lee and she mastered the manipulative evil salesman psychology and targeted any of her unsuspecting clients (like myself). Once she gains your trust, full speed ahead with repeated calls. Examples would be like Week 1 - "I see money just sitting in your money market account, lets buy some shares of XYZ, its growing and the profit margin for this stock is high." A month later, you get another call - "Hey, your ABC stock went up 10% since you bought 20 shares of it, lets retrieve some of that gain by selling 10 shares. You still own some ABC but now you've made money from it". A week later, "Janney just ranked MNO stock very positive, lets get you into this deal and buy a few shares with the money you made from last week." Another month later and XYZ is not doing well, she would be creative and call you to say, "We need to diversify your account, you have too much domestic, lets invest international. We can sell XYZ and buy EFG international. EFG is really popular and growing in the int'l market." And of course no mention whatsoever that you will lose money with XYZ - she would only highlight the positives, not a single word about the negative. Rinse, Repeat! And its not isolated to just stocks, she would get you to buy mutual funds and highlight how safe and less violatile this is and in less than 6 months, convince you to sell that mutual fund and buy something else. I am convinced to this day she became emboldened and confident in churning my account without consequences, she would call and ask "how's the weather" and shoot the breeze, she would then make a trade in my account after hanging up (of course there is no proof months or years after the fact, it would be her word against mine). This woman made my retirement account fluid, my portfolio became a revolving door resulting in 140+ trades in the 4 years with Janney (that's over 2 trades per month). Needless to say, I made money for Janney and Pearl Lee at my expense. Now you may ask "why would I give my complete trust to this stockbroker?" Answer ..... Pearl Lee is my sister, she WAS a close family member who I had implicitly trusted and she took advantage and preyed on it. She, like many others who's salary are completely based on 100% commission, betrayed her fiduciary oath and succumbed to the insidious disease = GREED! Be forewarned with these commission-only based wealth managers!

Cj |June 3, 2019

I'm stuck. I've had my money (about 150k) with a Freedom 55 guy. It's been ok, but costing a lot in fees, and the funds haven't all been that great. I spoke to a person I really liked a lot, who came from the banking industry and has a PFP designation and sells only mutual funds. They believe in "active" management, and I'm not super comfortable with Manulife. Spoke to another person who has more qualifications (CFA) but deals only in ETF's. The more research I do the more confused I get. What next? How does one find the right fit? thx

moneyGenius Team |June 5, 2019

Hello Cj,

A good way to go is a fee-only financial advisor so you can get unbiased advice that isn't tied any way to a commission.

Here's a good resource:
https://docs.google.com/spreadsheets/d/1iGzy9kkSXqjGbhXfcfczs9qwSQfI1PdRuNUOMybxvl4/edit#gid=0

Hope this helps!

LBG Adviser |January 29, 2019

I actually work as a bank advisor. I got the job at age 19 straight out of school with no financial qualifications. Im lucky because I work at a British Bank and hence do not work on a commission basis, I just receive a wage and that is all. But, believe me when I say that most advisors in retail banks, especially the young ones, do not have a clue when it comes to complicated financial products. Thats why they recruit us, we have no bias and can be told what to say and will do it. I got into the industry with good intentions and just wanted a job my mother would be proud of, and I promise that I would personally never miss-sell a product, but I know people who would - the worst bit - they dont realise they are doing it! There are good Advisors out there, and the staff in banks are not all crooks, I have helped hundreds of people improve their financial situation. Just remember its your money and just because someone wears a suit and has a fancy title, doesnt mean you should take their word as gospel. I wish there were more resources like this website.

moneyGenius Team |January 29, 2019

It's inspiring knowing there are people like you who care about their customers. Thanks for sharing!

Liz Crookshank |January 24, 2019

My husband who has a very sever squired brain injury went to a a financial adviser recommended by our local Canada Post office. this advisor Tracy Martell at Clearview Fincial Servecies took advantage of my husbands disiabilty. She with out any other person in office invested his oer a million dollares in unseccessful funds and locked them in until 2025. He is retired and currently has no way of getting his funds out and able to live with out paying a huge pently. I have contacted Manulife Fincial but they are caliming she was not aware of his disability. This is a complete lie. He had not done his bussiness taxs for 10 years and his personnal income tax for 3 years. He has lost a great deal of money. Even after beefing up his tax free savings account she told him to take his truck payments out of this account. Tracy Martell Kennedy is a very nasty and smooth operator do not invest with her.

Ted |January 20, 2019

I literally did the opposite of what this article recommended. I was at a bank, while my money was steady, it was not really doing anything in the balanced plan it was in. But I wish I stayed. I switched to a wealth management group at the advice of a relative who spoke very highly of them and has been with them for years.. and they've done nothing but lost me money. And what I mean by that is they have dipped into principle. I am terrified and don't know how to get out of this hole now.

Paul Lambe |August 27, 2018

Really balanced article. Great comments also. I am just beginning as a fee-for-service CFP after 20 plus years, as a financial planner selling mutual funds and insurance. I plan to be unlicensed and help clients set up under robo advisors or direct investing.

hockey |June 8, 2018

Senior in late 70s 4 mutual funds not doing well 18 dividend stocks most lost over 27%. Was put into the Meridian Account which charges 1 1/2% on each account EACH month. Advisor only sells as never advice and when asks relies on Head Office to give him product to sell. Was worn down and bought a bank tied autocallable 5 year unprotected note and worried I won't get money back. Have used other companies over years and don't want to change again BUT would like SECOND OPINION but don't know how to get it. Have asked bank if could get someone else but they said there isn't anyone. Not getting ahead but loosing money every year. Advisor just says well I'm withdrawing set amount each month -- if need money take it out of TFSA or Unregistered or Savings. What do I do other than scream as don't know much about investing and yes I said I 'm not aggressive but middle investor.

Marpy |October 25, 2017

I started managing my own money 40 years ago at a very young age. It was a learning experience and for the first 5 years a losing proposition. Learn I did and I have done quit well ever since. I very much enjoy managing my own money and as such, I don not have any mutual funds or exchange traded funds and prefer to buy individual stocks. My advice to those who do not like managing their own money is to take the GIC, Exchange traded funds route and to stick with the big institutions even when taking this route as this helps greatly in avoiding all the scammers that are out there. Even with exchange traded funds, you can get quite a variety with some of them very leveraged ( they will go up or down at a much higher rate than the index they are tracking) and so you have to understand what you are buying or at least be able to convey your level of risk to the banks investment advisor and make sure he buys the right exchange traded funds. Some key points that i found very helpful are as below: 1) Understand what you are buying and why you bought it and occasionally review this after buying. 2) Avoid greed as it usually always costs you - if something seems to good to be true, it most likely is. 3) Don't follow the herd and get caught up in the latest investment trends as the herd generally loses money. 4) You need to look at things over the long term - buying quality stocks or Exchange traded funds when they/ the market is out of favor and holding for a considerable time was , I found was a very good approach that worked very well. 5) Buy what you know and understand - For example, I did/ do not buy any tech stocks as i do not understand them well, the market changes to fast and the price to earnings is generally to high for my liking. 6) Don't be afraid to be completely out of the market for periods of time. I have done this a number of times as i felt the market was to high and did not have a good feel about the economy and it worked well in preserving my money. This is one area where the greed factor comes into play as people do not sell because they are afraid of missing out. 7) Preservation of capital is very important. - losing 50% of your portfolio means you have to make 100% on whats left to get back to even. its twice as hard to make up what you lost. Just my opinion after a long time in this game! ;-)

Amr Hefni |September 17, 2017

Thank you Stephen for the valuable information and the time you dedicated to explain financial planning for usual folks like me (for dummies). I want to ask you if you have resources, references, or guides for Quebec? Usually the ones given are valid also for QC but often there are QC provincial particularities. Thank you!

D King |August 23, 2017

We had a very reliable advisor for over 30 years and then 2 years ago we had to change; he became very ill. I consulted with a trusted and well invested friend, who worked for a financial advisor, (a) is he honest and forthcoming re fees and advice, and (b) does he make a good return for his clients? Her answer was "yes" to both and we made an appt. to interview him. He explained his sample plans after assessing our risk tolerance and expectations and we decided to go with him.

Douglass Brayer |August 6, 2016

See a high amount and it’s time to call your advisor on it. If you can’t rectify the situation or there isn’t a good reason why the expenses are so high, it’s a sign you may need to fire your financial advisor.

Don |July 21, 2016

I started investing 30 years ago in what seems like the stone age. It really surprises me how few people actually want to spend time to research one of the most important things they'll do in their life. I know people that spend more time figuring out what they'll eat for dinner than what they want their retirement to look like. The thing that really has me scratching my head is how you can do in-depth research with a few clicks of a mouse these days, but most people don't even bother to spend a few minutes to find out the basics such as how much they're being charged, and what the CAGR is for their investments vs an index such as the S&P 500. I remember poring over ROB, FP, and countless annual reports in the library because there was little investment resources, other than some investing letters. You were forced to either put in the work, or go with the advise of your broker, and that was at $50 a pop. It was like putting your trust in some secret society because you really had no way of knowing what was going on in the stock market during the day, without calling your broker. At best, you had a five minute recap on the nightly news, and then you could read about the closing numbers in the paper the next day. There was so little clarity in how the prices were set at that time that you'd swear they were done by some secret occult ceremony. Buying mutual funds was even worse because a CFP was just someone who sold funds on the side of their real job, which was selling you life insurance. Good luck finding out what you were actually buying. You had a better chance of figuring out who Jack the Ripper was, and the fees were buried on the 32nd page of fine print in a prospectus. The reality is that the information is so readily available (such as on this blog), and there are so many alternatives that there are few reasons for anyone to be ripped off. I know that there are older people who aren't in a position to know better - I've seen it happen to my parents. However, for most people, it really comes down to priorities.

Stephen Weyman |July 21, 2016

Very well said Don - I definitely chuckled at your remarks. I can't imagine what it must have been like trying to invest in that era. The wealth of information we have now is simply amazing.

The down side is that there is so much more information and knowledge out there to distract and overwhelm us now it's easy to lose focus and not pay attention to something as important as investing for your future.

Nancy Greenaway |July 18, 2016

I, along with my husband, am just starting the retirement stage of investing. So not much actual investing now, just deciding what to do with things that come up for renewal. Our first financial advisor was with BMO, because my parents were using him and getting good returns. I became joint account owner of my parents' account, with my mom, when my dad died The advisor's credentials were revoked for improper practices and my mother was refunded some money. We were all assigned a new advisor and my husband & I kept our investments there for a few years before moving them to our local credit union, to consolidate things, and for convenience. I left the joint account with BMO, and the advisor took us through the passing of my mom's account to us four children / inheritors. I have become concerned that our advisor does not give us individualized advice, but just phones to recommend a sell & buy when he's doing it for all his clients. He doesn't like to have "orphan" holdings, which would complicate things for him. He recommended buying GasFrac, which I did, but then he did not recommend selling it as it slid towards bankruptcy. To realize the capital losses I had to sell it to a family member for $1. I would have liked to have been informed of my options regarding GasFrac prior to the bankruptcy. The advisor only calls when he wants to sell & buy, for $500 each way. I'm wondering if this is the best I can expect from BMO, and if I should transfer the BMO investments to our credit union, where we trust & like our advisor. Any advice would be much appreciated!

Stephen Weyman |July 19, 2016

Since it seems like you are uncertain if your BMO advisor has your best interests at heart I would consider consulting with a fee-only advisor to get an unbiased opinion on your current situation. You could have them review both the track record of your BMO advisor and your credit union advisor to see if they both are making good decisions on your behalf.

From there, you could decide to go with one or the other of your existing two advisors or choose a new one entirely. I can't really give you any specific advice here other than to get a proper financial review by a qualified professional.

Bob Pearson |July 17, 2016

Hi Two years ago I decided to become a DIY investor. I used major indices ETFs for diversity, as well as a bond ETF My criteria for ETFs was which one was cheapest. My mutual fund advisor was not happy, but I was. When i sold my funds, I noticed that most were in the 2.6 to 2.8% MER range, No wonder I was not making money. My portfolio was over $400,000 so the fees were approaching $10000 per year. My fees now are approximately $800, and the charges are going down because of the competition in the ETF market. I love the fact I can check my portfolio every day, or twice a day if I prefer, and it tells me exactly how much each investment is worth. I do not rebalance my portfolio as I am not sure it is worth the trouble. I also put my mutual funds holdings, before I sold them, in an online portfolio so I could check on how well they were doing, compared to my ETF portfolio. It is shocking to see the difference. I had a LIF that I left alone. The mutual funds LIF is now 44,000, my ETF is now just over 50,000, even though I have withdrawn 6000 from the account. My only regret is that I did not do this sooner. I feel that if I had done this when I retired, 2009, I would be so much further ahead. Changing over your investments from one company to another is not as easy as it sounds. It took me almost four months before all transactions were complete. My advice to anyone? Do it and do it as fast as you can.

Stephen Weyman |July 18, 2016

That's a perfect example of what poor advice from self-serving financial advisors can cost you. The funds he had you could theoretically have been good funds and somehow worth the 2.6 to 2.8% - but the fact that you tracked performance and have shown much stronger performance with index ETFs suggests that those high MERs were costing you big time.

You are right that opening new investment accounts and getting things switched over can be a bit of a hassle. Some companies make the process easier than others I think. But, as you say, it is worth it to go through the short term pain for long term success.

Steve Bridge |July 14, 2016

Hi Stephen, Thanks for writing such a great article. I feel that the scales are starting to very slowly tip in the favour of fee-only unbiased advice and that Canadians are opening up to paying for advice. One of the biggest challenges people like me, Robb and Sandi face is the power of the mutual fund industry- they have all the marketing dollars and want to protect their interests (the best example I can think of is that many people use the phrase, "I am going to buy some RRSPs", which is impossible, it is like saying, "I am going to buy some savings accounts." But banks and others have for so long promoted and almost exclusively sold mutual funds inside RRSPs, Canadians now think they are the same thing). Your illustration of the impact of fees is excellent- it should be mandatory for mutual fund salespeople to show this impact to clients (can you imagine that conversation???). Keep up the good work! Steve Bridge Money Coach

Stephen Weyman |July 14, 2016

When I was originally planning this article I actually meant to put a link out to Money Coaches Canada because getting a money coach is another great way to help get your finances organized and on track.

I spoke to Noel D'Souza at length at the 2015 Canadian Personal Finance Conference and loved the sound of the work he was doing to help his clients. He was very passionate about his clients and it seems like he builds a very personal relationship with them to truly understand their needs so he can help build them a better future.

Francois |July 14, 2016

the one i am currently encountering dealing with my mom's estate, is that her advisor didn't really tell her he had little value to her in the last 5-7 years with her revised investment policy. There was actually probably no way for him to even beat simple GIC's with her full service account, but he failed to disclose that. He did an OK job in the accumulation period, but the 1.2% management fee, when there was nothing to managed looks really bad now. Most of the fees were above board. Even when there was extra fees he had her in cheap bond ETF, there was just no advice to give, and he should have moved her to a transactional type account

Stephen Weyman |July 14, 2016

The ongoing 1.2% fee is pretty standard depending on the size of the portfolio. It definitely would have been nice if he had disclosed that he wouldn't be able to provide any real value going forward. At least it's good that he had her in an ETF instead of a more expensive bond fund.

Moving away from transactional accounts and going towards flat fees is becoming a bit of a trend to have a more stable revenue stream and so there is less pressure on the client and the advisor when it comes to commissions. Sounds a commission based account would have saved your mom a good chunk of money though, especially if she wasn't doing any buying or selling at all.

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