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GET YOUR MONEY BACK! Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Solutions, Self Defense and Best Practices

Solutions, Self Defense and Best Practices

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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Aug 04, 2017 9:05 pm

Hello Larry,
Below is a slightly edited version which you can make public ... some of the details about my dad are not really necessary to make the point and I'd rather keep that private. Therefore if you do post it publicly, please add a note that certain personal details have, out of privacy concerns, been deleted from the original sent to Mr Kreigler.


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To: IIROC (Investment Industry Regulatory Organization of Canada)
Mr Kreigler,
Thank you for the substantive reply to my comment / question. Here is what I suggest you should consider at IIROC:

Substitute the word "representative" for "advisor" in all your material.
This more neutral term does not inadvertently suggest that advice may be allowed when in many cases it is not
the word actually is contained in the two main categories that deal with the public, Registered Representative and Investment Representative

Align the IIROC approval categories with those of the Canadian Securities Administrators (CSA)

It seems that it is possible for a person to be authorized by IIROC to trade and advise in securities but not by the CSA; in fact, I discovered by using your AdvisorReport that my dad's former Representative is approved by IIROC as Registered Representative and as such, allowed to offer advice, but is only a Dealing Representative aka SalesPerson per the CSA.

I interpret that to mean that CSA's classification takes precedence over IIROC's and the guy was just a salesman; does it need saying that such a situation is highly fraught with confusion for the public?

Back in 2015 when I last looked into this topic (blog post here http://canadianfinancialdiy.blogspot.ca/2015/03/investment-advice-trust-index.html) I found a minefield of confusing titles, approval categories and responsibilities - could the industry not see fit to adopt unified explanations at least, and better, common terminology?
Include information on the representative's bottom line authorized role

Though your online report helpfully includes the CSA classification, make clear what is the bottom line authorization (i.e. what the CSA says he/she is authorized to do)

Include information on the standard of care associated with the representative's bottom line CSA-authorized role

Is it suitability or fiduciary duty of care level that applies for the particular representative? In the case of my dad, the Salesman's suitability-only obligation resulted in several high-fee deferred service charge mutual funds being in the portfolio when I came along.

Now, my dad is no dumb "vulnerable" person but if he did not have such an ornery streak which led him to mostly ignore the "advice" of the particular salesman I am sure I would have discovered a portfolio stuffed with high-fee "suitable" mutual funds; not many people will have that successful instinct, as indeed I have discovered among other members of my family who are intelligent and well educated but too busy to make detailed enquiries about the nature of the relationship with their self-styled financial "advisors”.

Jean is the author of the financial blog found at http://canadianfinancialdiy.blogspot.ca

This blog has been a credible and respected source of investment analysis and objective information since 2007.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Aug 04, 2017 8:52 am

http://www.investmentnews.com/article/2 ... on-brokers

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Brokers in Nevada will have to meet a fiduciary standard when providing investment advice under a law that will take effect July 1.

The measure revises a current fiduciary law applying to "financial planners" that excluded brokers and investment advisers. The new law subjects brokers and advisers to the state's fiduciary rule.

Brokers normally operate under a suitability standard enforced by the Financial Industry Regulatory Authority Inc. that requires them to sell products that fit a client's risk tolerance, liquidity needs and investment objectives. Under the Investment Advisers Act of 1940, investment advisers must give advice that is in a client's best interests, or meet a fiduciary standard.

The Nevada law will go on the books just weeks after partial implementation of a Labor Department fiduciary rule that requires all financial advisers to act in the best interests of their clients in retirement accounts. The DOL rule is undergoing a review mandated by President Donald J. Trump that could result in modification or repeal.

"For a state to impose fiduciary duty on all accounts, not just retirement accounts, is a very big deal," said Andrew Hartnett, officer at Greensfelder, Hemker & Gale and former Missouri securities commissioner. "As uncertainty [about the DOL rule] lingers out there, it wouldn't surprise me to see other states step into that void."

The Nevada law was approved on party-line votes in the Nevada legislature, where Democrats hold the majority. It was signed on June 5 by Gov. Brian Sandoval, a Republican. A spokeswoman for Mr. Sandoval did not respond to a request for comment.

Under Nevada's fiduciary duty, financial advisers must disclose any "profit or commission" they receive based on their guidance to clients and must make a "diligent inquiry" about a client's financial condition and goals, according to an analysis by Mr. Hartnett.

The new Nevada law authorizes the state's securities administrator, Diana J. Foley, to "adopt regulations defining or excluding acts, practices or courses of business as violations of that fiduciary duty." A spokesperson for Ms. Foley was not immediately available for comment.

It's not clear whether the Nevada law subjects brokers to a continuing duty of care or simply makes them fiduciaries at the point of sale, Mr. Hartnett said.

"There are a lot of questions surrounding what this legislation means for a commission relationship," he said.

The Nevada law could be challenged under federal pre-emption, according to George Michael Gerstein, counsel at Stradley Ronon Stevens & Young.

"There's a little bit of a question as to whether a state could force broker-dealers to register [as a fiduciary] when they don't have to do so at the federal level," Mr. Gerstein said.

In a 2012 study in the Journal of Financial Planning, Michael Finke, professor of personal financial planning at Texas Tech University, said courts in four states have recognized a fiduciary relationship between brokers and their clients — California, Missouri, South Carolina and South Dakota — while 14 have not. He put the remaining 32 states, including Nevada, in a "quasi-fiduciary" category.

"Quasi-fiduciary states impose standards that exceed the suitability standard set forth under Finra rules, but do not expressly classify broker-dealers as fiduciaries," Mr. Finke wrote.

Mr. Gerstein anticipates that more states will tackle investment advice regulation.

"The notion of these high standards of care across all the regulated entities is entering the public consciousness," he said. "It has become much more of a kitchen-table discussion than it used to be.”

http://www.investmentnews.com/article/2 ... on-brokers
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Aug 01, 2017 6:29 pm

Financial Advisor Fees Comparison – All-In Costs For The Typical Financial Advisor?


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While the standard rule-of-thumb is that financial advisors charge 1% AUM fees, the reality is that as with most of the investment management industry, financial advisor fee schedules have graduated rates and breakpoints that reduce AUM fees for larger account sizes, such that the median advisory fee for high-net-worth clients is actually closer to 0.50% than 1%.

Yet at the same time, the total all-in cost to manage a portfolio is typically more than “just” the advisor’s AUM fee, given the underlying product costs of ETFs and mutual funds that most financial advisors still use, not to mention transaction costs, and various platform fees. Accordingly, a recent financial advisor fee study from Bob Veres’ Inside Information reveals that the true all-in cost for financial advisors averages about 1.65%, not “just” 1%!

On the other hand, with growing competitive pressures, financial advisors are increasingly compelled to do more to justify their fees than just assemble and oversee a diversified asset allocated portfolio. Instead, the standard investment management fee is increasingly a financial planning fee as well, and the typical advisor allocates nearly half of their bundled AUM fee to financial planning services (or otherwise charges separately for financial planning).

The end result is that comparing the cost of financial advice requires looking at more than “just” a single advisory fee. Instead, costs vary by the size of the client’s accounts, the nature of the advisor’s services, and the way portfolios are implemented, such that advisory fees must really be broken into their component parts: investment management fees, financial planning fees, product fees, and platform fee.

From this perspective, the reality is that the portion of a financial advisor’s fees allocable to investment management is actually not that different from robo-advisors now, suggesting there may not be much investment management fee compression on the horizon. At the same time, though, financial advisors themselves appear to be trying to defend their own fees by driving down their all-in costs, putting pressure on product manufacturers and platforms to reduce their own costs. Yet throughout it all, the Veres research concerningly suggests that even as financial advisors increasingly shift more of their advisory fee value proposition to financial planning and wealth management services, advisors are still struggling to demonstrate why financial planning services should command a pricing premium in the marketplace.

https://www.kitces.com/blog/independent ... ement-fee/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jul 28, 2017 12:52 pm

From Ben Carlson at Ritholtz Wealth Management:(link at bottom of page)

The Best Books on Financial Market History
Posted July 27, 2017 by Ben Carlson

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Earlier this week I wrote (again) about the importance of understanding financial market history. This prompted a few people to ask for some of my favorite books on the topic. Here goes:

Devil Take the Hindmost: A History of Financial Speculation
If I had to pick just one book to read on the topic, this would be the one. Chancellor weaves history, psychology, and economics beautifully in what is also one of the better-named finance books I’ve come across.

The Panic of 1907: Lessons Learned From the Market’s Perfect Storm
The story behind the banking crisis most people probably aren’t familiar with. This book shows how primitive the financial markets were before banking regulations and the Fed came around.

The Great Depression: A Diary

This first person account of what life was like during the Great Depression is not only a lesson in financial market history but also how difficult that period in history was for those living through it. I can’t recommend this one enough.
Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
I’m always a little skeptical about how much faith we can put into market data from the late-1800s or early-1900s but this book does a masterful job of going way, way back to show how the various markets have performed over the really long haul.

More Money Than God: Hedge Funds and the Making of a New Elite

A book about the history of hedge funds but it plays out over the decades and gives some great background on what it was like to invest in various market environments over the years and how things have evolved for investors.
The Big Short: Inside the Doomsday Machine
The definitive book about the Great Financial Crisis and subprime mortgage meltdown and one of the best non-fiction books of the past decade. Liar’s Poker by Michael Lewis is also a great account of what Wall Street was like in the 1980s.
A Short History of Financial Euphoria
Howard Marks recommended this one. Galbraith is really good and it’s a quick read on the history of bubbles.

Against the Gods: The Remarkable Story of Risk
In the conversation for best investment books ever written.

Bull: A History of Boom and Bust, 1982-2004

One of the best investment books I’ve read in some time about one of the biggest stock market booms ever.
Dow 36,000…ok just kidding.


I asked a few friends — Michael Batnick, Dan Egan, Meb Faber and Tadas Viskanta — for their list and while we overlapped on many choices here are some I missed:

The Go-Go Years
When Genius Failed
The Money Game
Where Are the Customers’ Yachts?
The Great Crash
The Snowball
An Engine, Not a Camera
Debt, the First 5,000 Years
The Myth of the Rational Market
Birth of Plenty
Financial Market History
The History of the United States in Five Crashes
Triumph of the Optimists
Extraordinary Popular Delusions and the Madness of Crowds

Now, after you read all of those books here’s what else I’ve been reading lately:
Delivering on the 300-hour rule (kc-roi)
The topic is gold (Irrelevant Investor)
How to create work that lasts forever (Ryan Holiday)
A dozen investing lessons from Ed Thorp (25iq)
Biggest investment regret? (Humble Dollar)
Barry had some questions to Vanguard’s new incoming CEO (Bloomberg)
Tennis with Howard Marks (Reformed Broker)
Our NYC conference in November already has Cliff Asness, Scott Galloway, Liz Ann Sonders & Jason Zweig as keynotes (EBI)

http://awealthofcommonsense.com/2017/07 ... t-history/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jul 28, 2017 10:25 am

The Stupidest Thing You Can Do With Your Money

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Go to Freakonomics, part of New York Public radio and listen to a dozen of the podcasts herein. Find them on iTunes as well, there are hundreds.

They are so well done, so entertaining, and they will tell you 99% of everything you need to know about money matters.

I suggest the best investment education you could give yourself is the gift of getting into the habit of listening to this podcast. Thanks to my friend Derrick who today sent me the podcast he listened to with this comment:

One of the best podcasts I've heard about investing fees.
These freakenomics guys do a good job of exploring things in an unbiased way without preconceived notions.

Episode 295 The Stupidest Thing You Can Do With Your Money
It’s hard enough to save for a house, tuition, or retirement. So why are we willing to pay big fees for subpar investment returns? Enter the low-cost index fund. The revolution will not be monetized.

Check out this episode: https://itunes.apple.com/ca/podcast/fre ... =390360677


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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jun 23, 2017 9:55 am

From 2015 comes this simple, simple list from a wise man, (not myself:) to protect the average person:
I agree with it:

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Maybe we need an Investor Self Protection Organization with simple rules or guidelines
Don't trust the industry.
Don't trust the regulators.
Don't use Advisors of any sort.
Learn the basics of investing.
Do It Yourself with a discount broker using a CASH Account..
Don't buy mutual funds, seg funds or other structured products.
Buy only Shares, Bonds, GICs, and certain true ETFs.
Don't use leverage.
If you do need an Adviser select one who is registered and qualified to give financial advice and open a Discretionary or Managed Account where the firm has a fiduciary obligation. Make sure proper formwork is completed.

(Larry adds only the comment, that if you get a financial-fiduciary-professional, you will be looking at fees, all-in, of around 1%. These folks may not take smaller accounts, and that is to be expected, and if you cannot obtain this level of “do no harm” agency duty, then go back to the list from Stan above. Do NOT settle for the hidden predatory sales tactics of banks and investment dealers who misrepresent their sales agents as if they were advisers. That will be like walking into a trap in 70% of examples in my experience.)
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:14 pm

March 16th, 2016

To: Financial Consumer Agency of Canada
427 Laurier Avenue West, 6th Floor
Ottawa ON K1R 1B9

Fax: 1-866-814-2224 / 613-941-1436

I write to request investigation into breaches of ‘legislation, regulations, voluntary codes of conduct, and/or public safety commitments’, within the mandate described in FCAC’s annual report.

Specific to: Ontario Securities Act Section 44,
Alberta Securities Act Section 100,
BC Securities Act Section 34,
Manitoba Securities Act Sections 74 and 74.1

As well as any other rules, laws, or public safety commitments that pertain to misrepresentation, deception, or falsification by our regulatory bodies, as well as the banking and investment industry.

It is found that Provincial Securities Commissions, or key persons within commissions, are selectively ignoring violations of public protective commitments and laws found in Securities Legislation.

In one example, ignoring the most basic laws against “misrepresentation”, has seemed to cause a ‘cascade effect’ of negating the “Fair, Honest and Good Faith” requirements, for banks and investment firms. This ‘slippery slope’ has allowed Canadian’s financial security to thus be violated in a myriad of ways by our most trusted institutions. Captured regulation appears to describe this issue, which allows ‘two wrongs to add up to making billions’…predominantly for banks and investment dealers.

I call your attention to a recent report by the Small Investor Protection Association, titled ‘ADVISOR TITLE TRICKERY’. This describes the deception practiced by thousands of bank and investment system players. http://sipa.ca/library

It appears that Securities Commissions utilize ‘personal discretion’, to decide if and when to enforce laws or to ignore laws and principles entirely. This occurs even when commissions are notified in writing of the harms of ignoring the law. I am compelled to ask the Financial Consumer Agency to investigate Securities regulatory and self-regulatory bodies and to intervene to protect Canadians.

I look forward to co-operating with FCAC, with others, and hopefully with a public inquiry, to ensure that Canadian laws are applied to the protection of Canadians, and no longer ignored for the sole benefit of the financial sector.

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Larry Elford, Investment Forensics
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:10 pm

March 20th, 2017

To: Hon Bill Morneau, Minister of Finance

From: Larry Elford

Re: Banking, financial investigations, and call for Royal Commission

Dear Mr. Morneau,

I write to you regarding aspects of financial victimization of Canadians, which I believe to cause the greatest overall economic harm to our citizens, and our country.

I wish to place my name at your disposal if you should need it, regarding recent bank scandals and in particular the FCAC announcement to investigate.

I have spoken in three Canadian legislatures over the past decade or so, on this area, twice in Parliament in Ottawa and once in the Ontario Legislature.

39th PARLIAMENT, 2nd SESSION, Standing Committee on Banking, "How Canadians Are Financially Abused"
40th PARLIAMENT, 2nd SESSION, Standing Committee on Justice, "The Perfect Financial Crime”

I enclose a copy of a recent investigation request sent to the FCAC to ensure that they do not limit their investigation to the banks, which I believe to be only the “symptom” of Canada’s economic drain problems, and not the “disease”.

I believe the disease, or the cause, is well over 1000 financial regulators, who are being paid as highly as $700,000 per year to look the other way, at clear rule and law violations by the banks. In my view it is the regulators who are being so highly paid (paid 100% by the industry they are supposed to protect) that they appear willfully blind to systemic violations of rules and laws.

How may I be of help to Canada in this matter? I seek nothing in compensation.

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Larry Elford, former CFP, CIM, FCSI, APM
Investment Forensics
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:08 pm

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“Dear ABC Bank,

I would like to ask ABC Bank if it is true that most ’advisors’ of ABC Bank, and in specific, the ‘advisors’ that ABC Bank allowed to give me financial advice on my investment accounts, are or were legally registered in the category of “advisor”, as they represented to me and in your advertising? I have enclosed some samples of bank “job openings” to show that most banks advertise “advisors”. Is it a true form of advertising or have Canadians been duped?

Or were they legally registered as “dealing representatives”, which is further clarified as ‘salesperson’ under that registration category, with the Canadian Securities Administrators?

I feel that if this question can be answered by you, I will be saved the trouble of having to retain legal counsel and ABC Bank may be saved the trouble of having to do similar.

Failing a prompt response to this question I feel that ABC Bank may leave me/us am with no other alternative than to continue my search for “fair, honest and good faith” services and answers to my question through legal counsel.

I once again, thank you for simply making my account “whole” as if I had never stepped foot into a ABC Bank ‘advisor’ relationship, to prevent much ado over not very much money. This is becoming more a matter of principle to us than a matter of the dollar value of my account. I would like my initial investment value returned to me/us, with a nominal and reasonable amount of interest for the years that I feel I have wasted with the deception of your employee titles.

Thank you for your prompt attention to this concern, which will allow me to put this matter to immediate rest.  


A Client who wishes “Fair, Honest and Good Faith” disclosure as you promised to me.

Strangely, when I search my ‘advisor” at your institution, I find he holds no such registration/.....

This 1.5 minute video (link below) shows investors how to search and find the difference between a “dealing representative”, which 96% of investment sellers in Canada are found to be concealing......”Hey, isn’t license concealment illegal.....?”

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Re: Solutions, Self Defense and Best Practices

Postby admin » Mon Jan 16, 2017 7:23 pm

Larry Elford says:

Ron Rhodes shares this wish list for investment regulations and protection considerations. Please refer back to this list after the next Black Swan that has our global heads spinning.

Best of 2016

Wish List for the Trump Administration

What any person or legislator would benefit from reading. Any investor will see in this set of simple rules some answers to their investment risk questions, which they have not even thought of yet. Any politician will see this as the way to be a public protective hero. There will come a day (too soon I fear) when the public must turn their full attention to finding those hero’s who truly protect the public interest and not just their self interest. Thanks for this Ron.

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Ron A. Rhoades, J.D., CFP® is an Asst. Professor of Finance at Western Kentucky University's Gordon Ford College of Business, where he serves as Director of its Financial Planning program. This article represents his views, alone, and are not those of any institution, organization or firm with whom he may be associated. Follow Ron on Twitter: @140ltd. To contact him, please email: Ron.Rhoades@wku.edu.

Sunday, January 1, 2017
My Financial Services Regulation Wish List for the Trump Administration
Dec. 22, 2016

1. Keep the U.S. Department of Labor "Conflicts of Interest" Rule. Why?

The core of the rule is principles-based. Only 237 words ... that's the Impartial Conduct Standards it applies.
It has already led to decreased asset management fees.

It has been shown that small investors can, and will be served, under a fiduciary standard.
Businesses large and small want the fiduciary standard - so they can rely upon the advisers to their retirement plans, and hold them accountable. No more plan sponsors left "holding the bag" as "retirement plan consultants" escape liability for their really poor recommendations under the inherently weak and ineffective suitability standard.

Many, many investment advisers are able and willing to provide such services, often aided by technology.
It will accelerate the trend away from arms-length product sales, and toward fiduciary-client relationships. Fiduciary status is justified given the high degree of information asymmetry, the necessary reliance by individual Americans on financial and investment advisers.

As trust in financial advisers grows, under a fiduciary standard, so does the rate of utilization of financial advisers. This is a good thing - as Americans need help to save more and invest more wisely.
It provides a foundation for financial and investment advisers to, eventually, become a true profession.
Greater accumulations of capital will result, as investment fees/costs come way down. In turn, this results in:
Greater financial security for Americans, as they enter and are in retirement.
Greater capital accumulation by Americans. And a lower cost of capital for corporations.
In essence, this "supercharges" U.S. economic growth. Greater capital accumulation provides the fuel necessary to transform innovations into new products and services.

2. Sunset B.I.C.E. after three years.

The DOL's Best Interests Contract Exemption is complex. Trying to accommodate commissions and other inherently conflicted sales practices, and fit them into a fiduciary-client relationship, is what causes the complexity.

As the years go by, B.I.C.E. may be interpreted so that its very tough requirements become weakened.
The industry is moving toward fee-based accounts. Good firms that understand how the fiduciary standard truly operates (e.g., Merrill Lynch, etc.) already have rejected the use of B.I.C.E.

It's best to permit B.I.C.E. for a limited period as a means of transition, then to sunset it.

3. Have the SEC alter how it enforces the Advisers Act.

If a person or firm holds out as a "financial adviser" or "wealth manager" or "retirement consultant" or "financial planner" or otherwise uses a title that evokes an adviser-client relationship, they should be held to the fiduciary requirements of the Advisers Act - at all times and without exception.

If the primary role of the person is to provide investment advice, rather than to execute transactions, the "solely incidental" exclusion to the definition of investment adviser should be applied properly and that person should be required to register as an investment adviser and to comply with the fiduciary duties arising from the Advisers Act.

Large amounts of broker-dealer advertisements suggest that advice is the primary component of the broker-customer relationship, and it is certainly understood that way from the standpoint of the customer.
The process of executing trades no longer requires the skill it took in the 1930's, due to the involvement of automated systems, and the improvements in market liquidity.

Registered representatives have been provided education on "trust-based sales techniques," without understanding that the formation of a relationship of trust and confidence with a client leads to fiduciary status under state common law.

The recommendation of another investment adviser should be subject to the fiduciary standard of the Advisers Act. This includes recommendations of separate account managers, as well as recommendations of mutual funds. (The doctrine of suitability was originally intended to shield brokers from liability when their primary role was in executing a trade for a customer; the doctrine should have never been extended to the recommendation of pooled investments.)

No more wearing of two hats. No ability to switch hats. Once you are a fiduciary to a client, your status as a fiduciary continues, and it extends to all aspects of the adviser-client relationship.

Estoppel and waiver have limited applicability to fiduciary relationships. Sect. 215 of the Advisers Act needs to be properly applied to prevent both "disclaimers" of core fiduciary duties and seeking client "waivers" of them.

The SEC must realize that, although the securities laws generally are based upon disclosures, the Advisers Act went much further. We have fiduciary standards because disclosures are largely ineffective. A huge body of academic research supports this conclusion.
Say what you do. Do what you say. A fiduciary steps into the shoes of the client, and acts - with all of the expertise required of a professional adviser - with total loyalty to the client's interests.

Let's not keep permitting "particular exceptions" (as the late Justice Benjamin Cardozo opined) to erode the fiduciary standard of conduct. Let's conform the industry to the standard, and not the standard to the industry.

4. Clean up mutual fund regulation.

Europe and Canada have stronger disclosures of mutual fund / ETF fees and costs than the U.S. possesses. We lag behind, again, instead of leading the way.

"Portfolio turnover" is measured incorrectly. It should not be the lower of sales or purchases divided by the fund's net assets, but the average of them. This important statistic - as the SEC now permits it to be calculated - can often mislead investors.

Require in all mutual fund / ETF advertising truthful comparisons to broad-based indexes. No more comparing active funds only against indexes that exclude index funds in their computations.
Do away with state-based and municipality-based retirement accounts. This is not the essential role of government.

5. Work to reduce regulatory overkill.

Every regulation on the books should be reviewed. Does it work? What is the burden of the regulation, versus its benefit?
Increase the number of RIA exams for verification of assets (i.e., custody); but decrease substantially the number of RIA exams for everything else. Investment advisers are professionals - treat us like such. And use the SEC's limited resources to combat the most egregious frauds.

Take a good hard look at FINRA. With hundreds of pages of rules, it still has utterly failed the vision of its creators - Senator Maloney and others - who sought to create an organization that would raise the securities industry's conduct to the highest levels. In fact, FINRA has opposed raising standards at every turn. FINRA embraces conflicts of interest at every turn, rather than seek to minimize them - even broker-dealer fines levied by FINRA become part of FINRA's budget (thereby lessening the fees assessed against broker-dealer firms!). Consider whether FINRA's oversight of market conduct regulation should be transferred back to the SEC, or snapped altogether.

Lastly, permit me to include an economic imperative in my "wish list." Invest in people - through education. The most effective intervention to promote long-term economic growth is that of expanding educational opportunities for all. Yet, financial support for higher education has diminished over time. This, along with increased federal regulatory mandates (requiring more administrative staff to comply with all the regulations), has led to high tuition costs and, as a result, huge student loan debt burdens.

Additionally, interference in primary and secondary education (mandatory testing, etc.) has created the perverse incentives ("teach to the test," etc.) that have diminished the quality of the education provided by dedicated teachers in our schools. Multiple-choice test questions encourage a focus on recognition via cramming for tests and exams. Students now focus more on the acquisition of test-taking skills for multiple-choice exam questions, rather than the acquisition of true understanding of concepts and long-term memory formation. From the standpoint of a college professor, students entering college lack critical thinking, writing, and verbal communication skills one would expect from a college freshman. While I willingly tackle the challenge of increasing these skills in my students, a better foundation in these skills before students enter college would lead to a better overall college learning experience.

As technological progress destroys many jobs, our society is in need of a more educated workforce - especially graduates of high-quality vocational educational programs. Let's invest in education, and reduce regulatory burdens imposed from above upon colleges, high schools, and primary schools. In so doing, empower America to meet the demand for the skilled jobs of tomorrow.

Ron A. Rhoades, J.D., CFP® is an Asst. Professor of Finance at Western Kentucky University's Gordon Ford College of Business, where he serves as Director of its Financial Planning program. This article represents his views, alone, and are not those of any institution, organization or firm with whom he may be associated. Follow Ron on Twitter: @140ltd. To contact him, please email: Ron.Rhoades@wku.edu.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Apr 05, 2016 5:53 pm

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Some great solutions and descriptions of the problems to be solve, can be found in the first portion, executive summary and Introductory Comments of this Ontario Minister of Finance study: See quotes of interest/summary below:

There is an absence of an explicit obligation for providers of Financial Planning or Financial Product Sales and Advice to act in their clients’ best interest. This is detrimental both to consumers who rely on these services to achieve their financial goals and to confidence in the financial services industry.

The plethora of titles and designations utilized in the financial services industry may cause consumer confusion, making it difficult for consumers to be certain of the qualifications and expertise of their financial advisory or financial planning service providers.

There is a stark asymmetry in financial knowledge between providers of Financial Planning or Financial Product Sales and Advice on the one hand and consumers on the other.

We recommend that a Statutory Best Interest Duty2 (SBID) be adopted and applied to all individuals who and firms that provide Financial Product Sales and Advice and/or Financial Planning in Ontario. This SBID should be based on a uniform and codified standard of care.

We recommend that the use of titles by individuals and firms engaged in the provision of Financial Product Sales and Advice and/or Financial Planning be prescribed in order to reduce consumer confusion.

Those engaged in providing Financial Product Sales and Advice and/or Financial Planning are not permitted to use corporate positions or titles given the consumer confusion that results and can result from the use of such titles.

http://www.fin.gov.on.ca/en/consultatio ... tions.html
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Re: Solutions, Self Defense and Best Practices

Postby admin » Sun Apr 03, 2016 7:20 pm


DRAFT Resolution on Regulation of the Financial Securities Industry    Presented to Policy Convention 2016


Most Securities regulators in Canada are “self”-regulatory and can use this to often bypass investigation and prosecution of industry wrongs.


The financial industry pays the salaries of the regulatory force, rather than the taxpayer. This means that clever financiers get to choose who to hire to regulate financiers. i.e. hiring your own police


The financial industry pays regulators three to four times more than what they would earn in similar employ elsewhere; over-paying makes regulators “compliant” and more willing to say “YES” to the financial industry; In consequence, failing to protect the public.


All thirteen (13) securities commissions, acting in concert will allow any financial institution in the country to be exempt from our Securities laws, simply by completing an application with no public debate and no public notice.


Securities Regulators and Self-regulators in Canada have representation on the RCMP Investigation Units which further allows the investment industry to avoid criminal prosecutions.


That the (name deleted) Party of Canada adopt policy supporting and implementing major changes to the Securities regulatory system in Canada.

Establish a national Investor Protection agency with the following attributes:

1. Separating all investment police functions and investigations from the securities commission and the securities industry. A separate, specialized, Securities Crime Police Unit would be formed.

2. The government appointing Regulators representative of the public interest and that will be paid by the taxpayer, not industry.

3. Allowing no exemptions to the law, except in extreme cases where full public discourse and disclosure can show no damage to the investing public by such exemption.

4. Separating the Securities commissions and industry paid regulators from the RCMP Investigation Units and any police agency.

5. Enforcing rather than ignoring the Criminal Code for the Financial Industry.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Oct 01, 2015 3:46 pm

Five, "Billion Dollar" questions for any investment "advisor".

ethics.jpg (53.38 KiB) Viewed 8116 times

In Canada the financial regulators are proposing new CRM (client relationship disclosure models) to better "protect" consumers.

The trouble is that the new CRM info does every bit as good a job of hiding the most important factors in an investment advisory relationship. In the US, these most important items are also well, well hidden from investors.

Here, then, for the record, is a Recovering Broker's list of the FIVE MOST IMPORTANT QUESTIONS to put towards anyone offering you investment "advice".

What EXACTLY does your license or registration say that you are registered as? (Please do NOT tell me your "title", or your latest correspondence course)

What legal duty of care, (TO PROTECT THE CLIENT), comes WITH that license or registration?

Is it a FIDUCIARY or a SUITABILITY duty or standard of care?

Can you provide that duty of care to me in writing, on your firm letterhead, or direct me to where this is written/sourced?

Can you direct me to a source where I can better understand the risks and benefits between a fiduciary or a suitability advice standard?

These questions will cause commission salespeople to choke, or talk very very fast……while true financial professionals will smile and gladly answer each one. You will understand whom you are dealing with simply by being witness to their reaction...

Here is a short one minute view of retired TD CEO Ed Clark, revealing the "counterpart" game that bankers prefer not to reveal, then a couple minutes by Tony Robbins on the concept of a fiduciary.

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These questions are worth billions to the industry, to HIDE from you, and to you they are worth possibly a DOUBLING your long term future retirement capital, if you learn the differences.

View this video which looks at SEC Advisor rules, and shows how 99% of "advisor" persons in the US are "exempt" from following SEC rules or being governed by the SEC…..oops! https://youtu.be/aX52f3Jjbm8

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Please send me any thoughts suggestions, improvements or comments to improve this list, and PLEASE SHARE it, as it is very difficult for ordinary investors to gain access to information truly intended to protect their interests.

Follow me at:

Larry Elford, former CFP, CIM, FCSI, Associate Portfolio Manager

Current http://www.investment-bodyguard.com

Twitter: @RecoveredBroker


Facebook group for Fraud victims


Facebook group for Fraud victims across Canada (Small Investors Protection Association of Canada, 1998)


Video site for victims of investment malpractice

http://www.youtube.com/user/investoradv ... ature=mhee



"The main thing I have to remember is to always try and keep the main thing, the main thing."
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Re: Solutions, Self Defense and Best Practices

Postby admin » Wed May 27, 2015 2:22 pm

Three “secret-tips” that your investment “advisor” will never share with you.


How to put an additional one million dollars into your retirement fund, or let it instead go into the pockets of the investment industry…..

Secret tip #1. Search the exact license and registration category held by the person claiming to be your “advisor”.

Use the FINRA Broker Check site: http://brokercheck.finra.org/Search/Search.aspx

or the SEC Adviser Search site: http://www.adviserinfo.sec.gov/IAPD/Con ... earch.aspx

(Now just for fun and curiosity, note how the SEC spells “adviser”, and note how your “advisor” spells it….put that info away in the back of your mind for now)

Secret tip #2. Spend just 20 minutes on Google or another search engine, looking this up: difference between a broker with a “suitability” (close enough☺) obligation, and an Adviser with a professional “fiduciary” duty to you and to none other. 

By doing this, I believe that you will learn something more valuable than the last one hundred telephone calls and meetings, with your current “advisor”. (Add this info to the crazy idea that perhaps there is a difference between the person using an “adviser” or an “advisor” title. In some jurisdictions it is THE trick.)

Secret tip #3. Hone your spider-senses to the absolute perfection, as well as the absolute bullshit, of the investment industry “bait and switch” marketing. This is the advertising, luring, baiting and promising of trusted financial professionals, whilst cleverly switching the “product” upon delivery to that of an extremely conflicted commission salesperson or broker. One with massive industry incentives and SEC loopholes to NOT have to place your interests first. 

Video link here explains the SEC loopholes which exempt 95% of “advisors” from having to protect you from selfish or predatory investment sales practices: https://www.youtube.com/user/investorad ... ature=mhee

Free web site dedicated to revealing systemic investment industry practices which are intentionally harmful to the customer: (Canadian and America content discussed) viewtopic.php?f=1&t=193

Please find me on Twitter @RecoveredBroker and also here, to engage for change: https://www.facebook.com/groups/albertafraud/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Feb 26, 2015 8:31 pm

As a professional "Investment Bodyguard" I found this article well written and insightful. Readers looking for an alternative to what information is offered out there might benefit from one on one, sit down education and/or discussion sessions with a coach (or bodyguard:).

It is like having a very close friend, who is an expert in the field of interest, who will sit with you and talk endlessly in plain, clear language, while not having any hidden conflicts of interest. Costs about the same as hiring an engineer or psychologist by the hour. Could be worth half your future retirement…or more.

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Imagine that sometimes the broker, otherwise know as the "advisor", might be the pickpocket in your financial relationship…..how do you know who to trust and how do you learn the ropes?

Investment Coaching: Catering to the DIY Investor

February 24, 2015 by makinthebacon Leave a Comment

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One of the great things about the investment course I’m currently taking is that from time to time, guest speakers are brought in to talk about various concepts of investing.

The most recent guest speaker was Aman Raina, an investment coach from Sage Investors. You can follow him on twitter @sageinvestors. He delivered an engaging presentation on capital and the balance sheet. We also went through a company’s balance sheet to determine if it was a good company to invest in.

I enjoyed the presentation so much and was very curious about investment coaching because it was the first time I had ever heard the term. This may also be the first time you’re hearing it too! So I reached out to Aman via email and asked him if he could do an interview for my blog about investment coaching and the services his company provides.

Here are his responses to my interview questions:

1. How would you describe investment coaching and how is it different from traditional investment advice?

The traditional financial advisor provides ideas, strategies and recommendations regarding security selection for an investor. This advice is often provided by an individual that can be directly or indirectly associated with a financial services organization and as a result, any advice offered can be potentially tailored to the purchase of financial products that may or may not be appropriate for an investor’s portfolio.

A financial advisor is compensated either by charging a flat fee for specific set of services (developing a financial plan, portfolio management etc) or by taking a percentage commission based on the total assets of the portfolio.

An investment coach focuses on elevating an individual’s financial literacy and decision-making capacity through a combination of education and one-on-one real-time mentoring. An investment coach is an independent third-party resource that is not associated with a financial institution nor do they sell or promote specific financial products. An investment coach can be compensated on a flat-fee basis or on an hourly basis.

2. What made you decide to become an investment coach?

In a previous life, I used to work as an independent investment analyst and specialized in providing customized investment analysis and research using the Economic Value Added portfolio to individual portfolio managers and institutional investors. Over time, I came to a realization that this segment, which has limitless access to investment data really didn’t need much help, let alone help from me. The nature of the investment industry is that the institutions will make their money no matter what.

What I noticed over the years is that these institutions were making their money at the expense of individual investors who were essentially talked down to and treated like 3rd class citizens. I was always getting questions by people who were exasperated and confused by the lack of performance in their portfolios and the lack of support their advisors were giving them. Some of the stories were heartbreaking and frankly made me angry and I always thought there has to be a way to help these people. They are working hard and trying to the right things but the system which in its current form should be helping them was not supporting them. After a series of stock market crashes in early 2000’s, investors just became fed up with what the traditional financial advisor model was offering them and were seeking to take control of their financial decision-making.

The emergence in the last 10 years of the Do-It-Yourself class of investor, who is trying to take control of their financial destiny didn’t just happen by accident. This evolution is commendable, however what I ‘ve seen is that this class of investor still needs an avenue and ideally an objective, independent party to bounce ideas and decisions they are facing rather than having someone sell a product to them. They are also seeking a confidante that will not tell them what to do, but can give them tools and emotional support and discipline that can help them make better decisions.

I looked around and realized while there are many people and companies who are defined as “Money Coaches”, it appears the level of coaching is focussed primarily on learning to save and pay debt . There really wasn’t anyone focussing on the investing side which is a huge component in the process of building wealth over a long period.

Personally, I have always found that the concept of investing in stocks to be intuitively and mechanically simple. Buy well-managed businesses that sell products and services people want, create tangible wealth and buy those companies when they are on sale and sell them when they have reached their intrinsic value or a return we are comfortable with. We know the process. The problem is we do a lousy job of executing it because we lack the education, but more importantly the emotional discipline.

I really believe anyone can learn and develop into a successful investor without getting a CFA or an MBA. I believe it can be done with a time commitment, education, and most importantly working with someone who can instill some structure, discipline, and more importantly working with someone who genuinely wants them to succeed. This is where I feel an investment coach can offer value.

coach talking to players
Image courtesy of pal2iyawit/FreeDigitalPhotos.net
3. Could you briefly describe the services your company provides?

We offer 2 streams of investment coaching services. The first stream involves a combination of learning and coaching. We offer these in a monthly module format. For each month, we would undertake the following program.

1-2 hours per week of one-on-one tutorials on key investment topics and concepts that are customized to the protégé’s level of investment knowledge and experience. In a one month module, we’ll go over about 4 learning tutorials.
Another 1 hour per week of follow-up coaching conversations where we will drill down into realtime investment decisions the protégé is facing. The goal is to leverage the learnings from the learning modules to enhance and improve the protégé’s decision making capability.
For each monthly coaching module, we charge a flat fee. There is no fixed long-term commitment required. You can go month-to-month and come back later on. To gain maximum value out of these learning/coaching modules, a commitment to allocating the time is important. The second stream is involves just coaching conversations. We found that many people, especially the more experienced investors, just want to discuss their personal investing situation only. For this service we charge on an hourly basis.

4. How do you determine what kind of coaching a person needs?

One of things I like about coaching is that each person I work with doesn’t fall into a standard cookie cutter program path. Before engaging in a coaching/learning module or individual coaching conversation, I like to meet briefly either on the phone or in person with a potential protégé to understand their background, as well to gauge their comfort level with investing, their risk tolerance, and finally what financial goals they are seeking to achieve. I also ask every protégé how much time they are willing to commit to learning to invest as ultimately their level of commitment will drive the path in how I develop their education and coaching program.

I should note that I do not automatically take on protégés. In some very rare cases after an initial conversation, I have determined that a coaching program may in fact not be beneficial to them and will suggest other more channels that could provide greater benefit.

5. How much of a time commitment is needed to receive investment coaching and is there a lot of homework involved?

In a typical one-month learning/coaching module, a protégé is expected to commit to about 1-2 hours week of participating in a one-on-one learning session along with about an hour per week of coaching conversations. So in a typical month, a protégé will spend roughly 12 hours engaged in learning and coaching conversations. In terms of “homework”, there is some extra research work expected but I try not to make it a chore because if it becomes a chore than it can be procrastinated upon. A lot of it is just reading the newspaper, watching the news or searching online for various investment information, tasks you can do tapping away on your smart phone/tablet while sitting in the subway or lounging at home. These are typical activities you need to do when evaluating investment opportunities.

6. The concept of investment coaching is still relatively new to most people and to the finance industry. Do you see it becoming a growing trend in the near future?

Investment coaching is a very new type of relationship, so I realize that a lot of people have no idea it even exists. I do believe that as more people seek to take control of their finances, they will seek to learn more about investing. I know this is true because you can just go to the book store and find endless shelves of books on investing and also on the Internet where there are numerous blogs and web sites which provide great ideas, resources, and perspectives on investing. The desire to learn is there. The problem is the quantity of information can be overwhelming. Working with an investment coach who can help them learn about how to filter that mountain of information can be invaluable, so as more people become aware, I see investment coaching gaining traction.

7. What do you enjoy most about investment coaching?

At the end of the day, I want to help people be successful and helping them accomplish something that is important to them. Investment coaching has provided me with a great avenue into achieving this. I’ve had the opportunity to work with people who are so committed to learning about investing and improving their financial street smarts. I’ve gained great satisfaction to working with people who come in with little understanding about investing and seeing them develop to make better more successful investment decisions. The great part is they made it happen! They own it and it is likely to stay with them. They have worked hard to develop their financial competency. It’s great to see people become more confident in their capabilities. I also enjoy the fact that because I’m not tied to any other financial company or affiliate, I can express my ideas and thoughts good or bad without fear of being shackled down. So people working with me know I am telling it like it is.

8. What requirements does one need in order to become an investment coach?

There is no registered certification for being an investment coach, however I would say a good investment coach or any type of coach should possess core competencies such as being able to listen with empathy, an ability to synthesize large volumes of information and articulate them in a matter that a protégé can understand, along with being comfortable with working with people (when you sign up as an investment coach, you’re now in the people business!) as well as being flexible and adapting the coaching/learning program as the relationship with the protégé evolves.

In addition, the investment coach should carry themselves with a high level of professionalism and transparency. Finally, an investment coach should have the obvious proficiency in investing. In my case I’ve done a fair amount of formal school training (B.Commerce, MBA, Canadian Securities Course etc) to develop my investment skillset along with thousands of hours in analyzing and evaluating companies and their stocks. In a way I feel very much like an Outlier. Malcom Gladwell would be proud of me!

9. What advice would you give to someone who is considering becoming a DIY investor and/or considering investment coaching?

The first question I ask potential protégés is how much time they are willing to commit to learning about investing. If they really don’t have the time or couldn’t be bothered with understanding the nuances of how companies create wealth and how to evaluate stocks, but they still want to have exposure to the stock market, then I would create a program that give them the fundamentals of understanding passive investing and more importantly how to be more street smart when interacting with the financial community. If they are indeed willing to put in the time to learn and understand the technical and behavioural intricacies of investing then I would create a different kind of program. Neither path is a bad road to take. The reality is everyone is in a different space when it comes to investing. That would be the first thing someone considering becoming a DIY investor needs to have. They need to have clarity in themselves before moving forward either going it alone or with a counsel like an investment coach.

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