CBC Go Public is like a dog with a bone when it comes to going after Canada’s big banks. First it exposed the high pressure sales culture that has made its way down to the front-line – prompting bank tellers to open up about the aggressive tactics used to dupe customers into taking out new products or borrowing more money.

This week CBC took aim at ‘dealing representatives’ – bank salespeople masquerading as financial professionals. I’ve been arguing for years that bank salespeople don’t have their customers’ best interest at heart because the system is designed to put high-commission products ahead of actual financial advice.

However, the article took a bizarre turn when the author, Erica Johnson, said the banking industry gets around fiduciary duty by using the title ‘financial advisor’ instead of ‘financial adviser’, as if replacing an ‘e’ with an ‘o’ has any bearing on whether an individual or company is licensed to give investment advice.

Financial Advisor or Financial Adviser. What's in a Name?

This is a myth repeatedly used by invester investor advocate Larry Elford, which, in my view, is a nonsense argument that detracts attention from the real issue: unbundling product sales and advice by banning trailing commissions on mutual funds. By doing this, financial advisors (or advisers, whatever you want to call them) must offer a more holistic approach to financial advice in order to demonstrate value for their fees.

Bottom line: Banks employ salespeople to sell products that maximize profit for the bank and its shareholders. Those products are often not in their customers’ best interest, but are deemed okay under the current ‘suitability’ standard. For truly unbiased financial advice that is not tied to product sales, look for a fee-only or advice-only financial planner.

This Week’s Recap:

On Monday I wrote about why I don’t invest in a non-registered (taxable) account and why most people under the age of 40 will never need to to invest outside of their RRSP and TFSA.

On Wednesday Marie looked at how the various fees you pay on your investments affects your ability to accumulate wealth.

Weekend Reading:

About the only April Fool’s Day gag worth reading is Dan Bortolotti’s annual post on his Canadian Couch Potato blog. This year he contemplates what will happen to the markets if too many investors turn to indexing. Definitely worth a read.

Taking a more serious tone with the same topic, A Wealth of Common Sense blogger Ben Carlson plays devil’s advocate on the popularity of index funds.

Toronto resident and investment blogger Tim Bergin attended the Canadian Real Estate Wealth Expo to watch Tony Robbins and Pitbull explain how Toronto real estate is the path to riches. If this isn’t peak housing bubble, I don’t know what is.

Financial Uproar takes an in-depth look at investing in the Canadian mortgage market by comparing Home Capital Group vs. First National Financial.

Here’s a detailed look at the average ‘Joe Debtor’ and why he files for insolvency. Some key findings:

While not living in poverty, today’s Joe Debtor is using debt to make up for a low, intermittent or stagnating income. Already having difficulty making ends meet, his lower-than-average income makes it almost impossible for him to manage his debt-repayment obligations once his debts begin to accumulate:


  • Joe Debtor owes an average of $52,634 in unsecured debts, 7% below our previous study. It now takes less debt for Joe Debtor to reach a financial crisis.
  • Joe Debtor owes $1.85 in unsecured debt for every dollar he earns (after tax). His total debt-to-income ratio (including secured debt) is an alarming 778%.

Squawkfox Kerry Taylor fires back at those who equate achievement with luck instead of skill and hard work.

Sketch Guy Carl Richards uses his own kayaking experience to argue that sometimes spending brings a bigger return than saving.

We’ve all had that friend or acquaintance who gets tangled up with a pyramid scheme, multi-level marketing scam, or direct sales ‘opportunity’ and wants you to join in. Here’s what to do:

“Don’t go to the sales pitch. Don’t take the phone call. Don’t waste your time.”

Rob Carrick argues that homeowners in Toronto and Vancouver (or those who’ve taken on too big a mortgage in other cities) need to shift their focus from saving and investing to paying down their mortgage debt. This assumes, of course, that the homeowners aren’t house poor to begin with and have extra cash to deploy.

Did you know you can qualify for EI benefits in retirement? Jason Heath explains how.

Michael James works through a problem for a friend who feels ripped off because his pension benefits only go up by inflation each year, even though his plan’s assets grow at a faster rate. His friend is conveniently ignoring the fact that his plan must account for him living until he’s 120.

Finally, Mark Seed from My Own Advisor looks at the FIRE movement (Financial Independence, Retire Early) and how adopting this extreme view on frugality and savings would affect his current, more balanced, lifestyle.

Have a great weekend, everyone!

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