In this issue of FAIR Focus we include an excerpt from Larry Bates' Beat the Bank: The Canadian Guide to Simply Successful Investing.
Larry Bates is a Toronto based consultant and author. Larry's best selling book, Beat the Bank - The Canadian Guide to Simply Successful Investing, was published in September 2018. The book is aimed at providing average Canadians insight as to how the investment industry operates and how to achieve significantly higher investment returns through the use of more efficient investment products.
To read more about Larry click here to visit his website.
 
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| Your Best Investment - An Excerpt from Beat the Bank by Larry Bates |
Your Best Investment
The best investment you can make is an investment in yourself.
Warren Buffett, CEO of Berkshire Hathaway
A little investing know-how can go a long way. Millions of Canadians have the potential to substantially increase their retirement nest eggs, and to live better lives as a result, by getting more from their investments. Beat the Bank will provide the insight you need to ensure that more of your investment returns end up where they belong - in your pocket!
You'll be the judge, of course, but I believe that, among the many surprises you will discover by reading this book, the most important will be how simple it can be to invest more successfully. Learn a bit, earn a lot. It's easy when you know how.
Mary
In early 2013 I was at my desk in one of the bank towers in downtown Toronto when I received a call from my sister Mary, regarding her investments. Approaching retirement and living in New Brunswick, Mary and her husband have university degrees, devoted their careers to the health care profession, raised two girls, and sacrificed to save a modest amount to supplement their pension income. The call went something like this:
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But what about the other side of the investment business: the retail market? How efficiently does Bay Street deliver products to individual investors? Banks, brokers, insurers, and financial advisors provide individual Canadians with access to stock and bond investments largely through mutual funds and other investment products that indirectly charge fat fees. Bay Street has done everything in its power to keep both the amount, and the impact, of those investment fees secret. As a result, very few Canadians understand how much they are paying for investment products and services, or how much value they are getting in return. And very few Canadians take the time to find out.
Why? There are several reasons:
* Unconditional trust in the advisor/institution
* Erroneously assuming there are no fees
* Not knowing the right questions to ask
* Fear of asking a 'dumb' question
* Not wanting to seem impolite
* Mistaken belief that the advisor/institution must act in the
customer's best interest
* Disinterest
* "I just don't have time!"
In a financial system traditionally dominated by the six big Canadian banks, these institutions-and by extension the entire Canadian financial industry-occupy a position of paternalistic authority that too many individual investors respect unquestioningly, and even appreciate to some extent. The industry brilliantly capitalizes on the combination of poor understanding of fees, deep loyalty, and misplaced trust by charging Canadians the highest mutual fund fees in the world. Unlike the institutional business, fees paid by the great
majority of individual investors have barely budged over the years.
Bay Street fees continue to quietly strip away 50 percent or more of
the lifetime investment gains of millions of Canadians. That's right,
50 percent or more!
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The impact of investment fees on Canadian retirement accounts
is more than a consumer issue, it is a major social issue of our time.
Government pensions will not be nearly enough to provide a satisfactory retirement lifestyle for most Canadians, and guaranteed employer pensions are rapidly becoming a thing of the past. In order to live well in retirement, you now likely need to build significant savings and make those savings grow through investment. So, while previous generations of Canadians with guaranteed pensions could casually observe the markets from the sidelines, most of us today must participate directly in the markets to secure a comfortable retirement.
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Before correcting a problem, you must first be aware the problem exists; and before pursuing any opportunity, you must be aware the opportunity exists. Beat the Bank makes clear both the problem of severe underperformance experienced by typical Canadian investors, as well as the potential for you to
significantly boost your investment returns through an approach I call 'Simply Successful Investing.'
Simply Successful Investing
We all know there are no guarantees in life. The same rule applies to the investment world; no crystal ball can accurately predict your results, or anyone else's for that matter. But Simply Successful Investing will give you an excellent probability of significantly increasing, and in many cases doubling, your long-term investment returns compared to the average Canadian mutual fund investor.
There are three key elements to Simply Successful Investing:
1. Learn investment basics: Taking the time to acquire a solid understanding of the fundamentals of investing will empower you to make better choices and achieve significantly better investment results.
2. Think long-term: Investments offering the potential for attractive long-term rates of return do not produce steady returns. All but the lowest-risk, lowest return investments produce volatile rates of return in the short to medium term. Riding out the short-term highs and lows of the market can be stressful, but it is absolutely essential to your ultimate success. Achieving an attractive long-term rate of return on investments requires a long-term mindset.
3. Minimize costs: Your investment returns can be dramatically improved, not by attempting to beat the market but by minimizing costs and keeping more of your market gains for yourself, even if they are just average gains. This step alone has the potential to double the long-term investment returns of millions of Canadian mutual fund investors.
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| FCAC Consultation on a Voluntary Banking Code of Conduct |
FAIR Canada provided written comments with respect to the consultation by the Financial Consumer Agency of Canada ("FCAC") on creating a voluntary code of conduct for banks in their delivery of products and services to seniors in Canada. These written comments followed our participation in the roundtable on this topic organized by the FCAC and held in Toronto on January 30th, 2019.
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Further to our comments at the roundtable, FAIR Canada believes the FCAC would benefit from reviewing and considering the Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity, a joint publication of FAIR Canada and the Canadian Centre for Elder Law (with financial support from The Law Foundation of Ontario) in connection with the FCAC's development of a code of conduct to guide banks in their delivery of products and services to seniors in Canada.
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Proposed FY 2019-20 FSRA Priorities and Budget Consumer Roundtable
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FAIR Canada was pleased to attend the Consumer Roundtable on the proposed FY 2019-20 FSRA Priorities and Budget and offer the following comments.
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Proposed Changes to the Legislation Governing the Management of Unclaimed Balances
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FAIR Canada has submitted comments regarding the Department of Finance's proposed changes to the legislation governing the management of unclaimed balances. FAIR Canada supports the policy objectives of the legislative review, and its goal of reuniting Canadians with their unclaimed balances.
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