A Money Coach in Canada

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I far prefer my self-directed RRSP but for reasons to boring to explain, I contribute a bit each month via a financial planner towards a couple mutual funds. Last week I had my first annual meeting. I wanted to know 2 things:

1. How much money did I make?

2. What specifically am I invested in?

In answer to #1, my planner said, “this portfolio grew by 10%” in the last year.

Ok, but how much did my investment grow? By 10%, said the f.planner, pointing out the market value of my portfolio.

“How much of that market value is just my own monthly contributions?” I asked, insisting that we find out the total of my contributions.

Get this:  The market value was LESS than my total contributions made over the year! So much for the nice chart showing 10% growth. Turns out I actually lost money this year. (in contrast, my own stock picks have averaged over 15%).

Second, I wanted to know what I held. I have funds managed by Inhance, one of the socially responsible investment firms. I have a Balanced fund (part bonds, part equities) and a Global Leaders Fund.

“Well, they’re wrap funds,” said the financial planner, implying, End of Story.

fyi – wrap funds = funds that hold other funds inside.

“But I want to know, what do I hold?” I insisted again. So we did the legwork and I found out the major companies I hold – no real surprises, but at least I knew. The financial planner told me out of 2200 clients, I am the only one who ever asked him what companies are in my mutual funds.

Gentle readers: do you know what companies are in your mutual funds? Does it matter to you? Why, or why not?  Also:  do you feel comfortable having detailed discussions with your financial planner?  Do you feel like you get  complete, understandable responses to your questions?coffee-and-financial-pages.jpg

About the Author


Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com

6 Comments

  1. yes, it does matter to me. the idea of helping philip morris or shell making more money is not terribly palatable to me.

    [Reply]

    Oct 01, 2007
  2. I have to admit… it doesn’t run through my head if the companies I invest in are socially responsible…

    As for you being the only one out of 2200 clients questionning him, I’m not surprised. I wouldn’t have asked him either. I think that’s why the majority of people go to financial advisors, they don’t know about their finances or the right questions to ask. “They” are supposed to take care of it. So good for you for holding your fp accountable!

    [Reply]

    Oct 01, 2007
  3. It is great to ask questions…sometimes even if you think you know the answer.

    Have you tried comparing your gain to the market gain? The market being indexes like, the DJIA in the US, and S&P Composte Index in Canada. My research indicates that most mutual funds don’t beat the market. Index mutual funds are available that match the market, with less annual cost (MER) than the stock picker typical mutual funds. The lower MERs give the index funds a ~2 percent per year advantage over the other funds – no matter what the market does that year.

    CM

    [Reply]

    Oct 03, 2007
  4. Warren

    The experience of “Financial Planners” being unable or unwilling to separate financial gains from contributions is very common. Sad. It would be more honest to refer to them as Financial Sales.

    I haven’t done any research into this, but my first question about wrap funds would relate to management fees. Now that you are dealing with two layers – the original fund and the wrap – are you paying higher management fees? And why not just deal directly with the original fund and avoid that extra layer? Perhaps I’m missing the point here.

    And, I do care about the companies my money is invested in and do not want my money tied to tobacco. Uranium is the one I’m trying to figure out. The once taboo radioactive element is suddenly getting endorsements from historic opponents. Nuclear power is rumoured to be coming back into the vogue. I need to do some research to see how and if “ethical screens” are changing to accommodate this.

    [Reply]

    Oct 03, 2007
  5. Thanks for your comments!
    Isabella – there are growing numbers of funds that weed out the ‘baddies’, although what’s ‘bad’ to one may not be to someone else, eg., ‘sin stocks’ – gambling? (but do we go to vegas for a holiday?) alcohol (but do we enjoy our wine?). But some simply keep out military, dreadful environmental impact etc. Others go further and use their clout to push for change from within.

    Mariam — I totally agree. I think the financial industry can have a vested interest in not encouraging confidence and know-how in individuals which perpetuates the orientation towards ‘just let Them look after it’.

    CA – good question. I think ethical funds (I don’t mean the brand there) are new enough that I don’t know what to compare them to. I know the MER is 2.5%, but they’d argue that they are boutique enough to need to take that cut.

    Warren – I never even thought of that (double MERs). I’d be livid! I’ll ask and update the post. Uranium … I have some Uranium, truth be told. It’s done me well. I think the general idea is that as nuclear power becomes better managed, it will no longer be the baddie it has been; in fact on the contrary esp. compared to alternative energy sources in emerging countries (eg. China) may be literally a life-saver for the earth (ie. clean).

    [Reply]

    Oct 04, 2007
  6. David

    Like Warren said you may be paying double MERs or worse the MER of some wraps can be higher than the total of the MERs for the funds inside the wrap. You should also check to see if some of the funds contained inside the wrap aren’t duplicating the companies held inside the funds.

    [Reply]

    Oct 06, 2007

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