Friday, June 15, 2007

YOUR Retirement cut in half

It has been a year since I last updated this blog. I have been busy working on BREACH OF TRUST, a documentary film about the systemic abuses of the public by the financial services profession. I know more now than I ever did while working inside the industry.

I have worked with RCMP IMET on one particularly devious case, talked to numerous politicians, agencies, and concluded that a Royal Commission into white collar fraud in Canada is needed to even fully understand what is going on. The public is being gouged in Canada.

Below is a letter to the Toronto Star in response to a good article by them:


June 15, 2007

To: The Toronto Star

Editor: Mark HeinzlPhone: 416-869-4811 Fax: 416-865-3630 Email: business@thestar.ca

Here are some comments learned while doing research for a documentary film on Canada’s financial services industry. It relates to your good article “MILLIONS FACE OLD AGE POVERTY”, by Rita Trichur.

Breach of Trust, the documentary, continues to grow and get closer to becoming something. It is starting to look like it will provide an “Ontario Lottery Corp” style of disclosure to an industry badly in need. See www.breachoftrust.ca site for some preview material.

Also clear, from the research and study, is that Canadians are being badly gouged by our financial services system. Enough to fund the entire budget for my home province of Alberta each year. I am not talking about, nor am I interested in run of the mill criminals, who break the law and obviously steal things they should not steal. Those should be no-brainers for a seven year old to figure out.

Breach of Trust, is concerned with fraud and systemic abuse of clients, by professionals, by entire industries, major corporations, and at times with apparent assistance from financial regulators.
These things cause lives to be altered, persons to be used and abused, without the recourse of a normal crime. Police look the other way, since it "appears" that all is well. Politicians are not properly informed. Regulators in Canada try and make the record “look good” by not allowing proper investigations to take place. Ever wonder why every major case of securities fraud, or Conrad Black style of case, is investigated by U.S. authorities?

Breach of Trust, the film, is getting around to understanding some of the numbers, but for now, and to be rather conservative, facts would appear to support this statement:

"Abuse of clients, in subtle, often invisible self serving ways by financial service industry professionals, or those claiming professional status in this industry is responsible for enough cost to pay every man, woman and child in Canada at least $1000 dollars." "Each year."

Think about this the next time you hear of the quarterly profit figures announced by your favorite financial institution.
Here are some of the violations of professional conduct that occur daily in Canada’s financial industry:

Self dealing
Misrepresentation………..salesmen calling themselves advisors to mislead consumers into greater trust
Self policing………….(we police ourselves)………any wonder there are no Canadian investigations?
Double dipping……..charging fees on top of commissions, or vice versa
Acting on both sides of underwriting transactions (dual agency) without clear disclosure or understanding by the public.
Underwriting of "please dump this crap" products like some income trusts, ………Eatons...............$25 billion on some income trust analysis.
Intentionally tainted research to support underwritings……………..Nortel?
Mutual fund fees found to be 2% to 3% higher in Canada than world average costs......$15 to $22 billion each year
Proprietary funds....(selling your "house brand" funds)........$1 billion each year
DSC "HIGHEST COMP" selling of funds..........$1 billion each year
Legal exemptions granted to help move junk off the shelf........$X billionlions per yr……..(hundreds of exemptions each year are granted in private to financial firms so they can skirt the law)

Securites Act, industry rules, codes of conduct, mission statements all notwithstanding, these things occur daily inside Canada’s financial industry and are so systemic, to be thought of as “standard industry practice.”

It would be rather easy to find $33 billion in annual costs to Canadians for this kind of "intentionally tainted" investment product. The product is advice, and when the advice given is in the interests of the giver and not the person asking for, paying for, or receiving the advice, it is tainted.

No other industry in the world (outside of China) is allowed to get away with putting so much "tainted product" on the market knowingly for the public to consume.

Canada needs a full Royal Commission into white-collar crimes, frauds, and financial abuses by the industry that promises to serve Canadians.

Last, but not least, this fact. Each mutual fund survey done this year by independent universities from around the world suggests that Canadians pay the highest mutual fund fees in the world........BY FAR..........here is the cost to you.

Squeezing just 2% more profit from each client's mutual fund portfolio (which is included in every investment firms unwritten marketing strategy) will do the following two things:

1. It will cut IN HALF the amount of money each given dollar you invest can grow to after 35 years time.

2. It will place the other half of this cut in the hands of your trusted financial firm.

Results. If your personal retirement target was $1 million dollars, and you were on track to obtain that amount.........this simple 2% trick (which every firm is working hard on) will cut your future nest egg in half and put the other $500,000 into the hands of your retirement planner.

Now you know how those firms announce billion dollar profits.

Ask, no, TELL your member of parliament you want to see a public inquiry into the matter of Canadians being abused by white collar crime, fraud and financial abuse. Or vote for the party that acts like they care about this topic. The very rich of this country no longer need to be subsidized by average hard working Canadians.

Larry Elford (former CFP, CIM, FCSI, Associate Portfolio Manager, retired)
Investor advocate
Lethbridge, Alberta
403 328-0391
http://www.breachoftrust.ca/



Millions face old-age poverty
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RICK MADONIK/TORONTO STAR FILE PHOTO


Jun 14, 2007 12:52 PM
RITA TRICHUR BUSINESS REPORTERTwo out of three Canadians expecting to retire in 2030 are failing to save enough money to cover basic household expenses in their golden years, says a new study released today by the Canadian Institute of Actuaries.
The report, “Planning For Retirement: Are Canadians Saving Enough?,” warns the greying baby boomer generation to either scramble to sharply increase their annual savings or plan to work past age 65 to avoid financial hardship.
"The message for most Canadians in their early to mid-40s is they will need to save more if they expect to enjoy an independent retirement," said the Institute's president, Normand Gendron.
"Governments need to provide Canadians with more education about the role that different savings vehicles can play in generating retirement income, and provide tools and incentives that encourage more households to save."
Canada’s public pension system is not intended to provide all the income needed for an independent retirement, the study said, noting it is only geared to replace about 40 per cent of gross income for households earning the average industrial wage, which was about $40,000 in 2005.
Canadians must act fast to build on this income through some combination of workplace pension plans, registered retirement savings plans, home equity and personal savings, it added.
In fact, actuaries determined a 40-year-old single person earning about $40,000 would need to save as much as 20 per cent, or $8,000, of his or her gross income every year for the next 25 years to cover necessary expenses in retirement. The study found that only a third of Canadian households are currently on track.
The study's findings stand in sharp contrast to a recent opinion poll by Pollara Inc. that found 55 per cent of Canadians aged 40 or older feel some level of confidence that they will have the financial resources to retire comfortably.
Those with retirement savings feel more confident, as do those with a workplace pension plan. Three out of four people surveyed said they plan to retire at or before age 65.