FAIR Focus
March 2023
March is Fraud Prevention Month. In this newsletter, we highlight the key signs of fraud and tips to avoid becoming a victim. We discuss some gender barriers that exist when it comes to investing, and ways to address them. In addition, we discuss the costs of investing and the persistent problem that many investors do not understand the investment fees they pay.
Fraud Prevention Month: Learn How to Protect Yourself
Did you know? Victims of financial fraud rarely, if ever,
get their money back after being scammed.
The best way to protect yourself from financial fraud is to learn how to spot a scam and avoid becoming a victim.
According to the Canadian Anti-Fraud Centre, investment scams were the largest types of fraud in 2021, based on the dollar amount people lost—almost $164 million. As of September 2022, Canadians lost more than $109 million through wire transfers, which is just one type of investment fraud. And these figures are only the tip of the iceberg, since most frauds are never reported.
Signs You Are Being Scammed
Most investment frauds involve Canadians investing after they received deceptive advertising, or a telephone call, or email message from a stranger. Here are a few common signs that you are being scammed.
A fraudster will:
  • Pressure you to decide right away, or tell you it is a limited time offer.
  • Guarantee you high returns on your investment, while downplaying the risks.

  • Tell you they have “inside information” they are sharing with only a few people, and you need to seize the opportunity before it is too late.
  • Ask you to share personal information, including information about your bank account, credit cards, or whether you can pay in cryptocurrency.
  • Spend more time asking you questions, rather than answering your questions about who they are, or explaining the five “Ws” about the investment opportunity: Who, What, When, Where, and Why.
Tips to Protect Yourself

It’s important to be proactive and protect yourself from investment scams:
  • Always be cautious when a stranger calls you about the next great investment opportunity, and never share personal or financial information with them.

  • Be skeptical and ask them questions, including how they got your contact information and where they are licensed in Canada to give advice about investments.

  • Never decide on the spot. Ask the individual to provide you with written information about the investment, as well as their contact details so you can get back to them later.
  • Check to see if the person or company that contacted you is registered through the Canadian Securities Administrators’ (CSA) National Registration Search. You can also find out if they have been in trouble with a securities regulator by viewing the CSA’s Disciplined Persons List.

  • Speak with someone you know and trust about the opportunity, or do your own background research before you invest.

To learn more about the different types of fraud, how to spot them, and what to do if you become a victim, check out FAIR Canada’s A Guide to Protect Yourself Against Investment Fraud.
Reporting Fraud
If you do become a victim of fraud, it’s important to report the incident. You can contact the appropriate securities regulator, the Canadian Anti-Fraud Centre and the Competition Bureau. Reporting fraud helps regulators and law enforcement agencies better understand the scale of the problem and take action to protect investors.
Empowering Female Investors
Women are expected to inherit more than $700 billion
in financial assets by 2026.
When you think of the typical investor, what comes to mind? According to a 2021 BNY Mellon Investment Management study, almost nine out of 10 asset managers admitted that their default investment client is a man. Additionally, almost three quarters of asset managers reported that their organization’s investment products are mainly aimed at men.
BNY Mellon’s research also revealed three key barriers that discourage women from investing:
1. Women tend to have less confidence in their investing abilities.

2. Women believe they need a certain amount of disposable income, around $4,000 per month, before they can start investing, and

It is important for the investment industry, regulators, governments, and advocates to address these barriers so that women can enhance their financial well-being, including through investments. Investing has the potential to help our money grow more quickly than it would in a savings account. A disciplined, long-term investing strategy can also help us achieve our financial goals, such as saving for retirement or our child’s education, and having more security in our later years.
We also know that Canadian women tend to outlive their male counterparts. Therefore, it is important that we find ways to break down barriers that stand in the way of women investing for their retirement years.
There is another important reason to support female investors: Canadian women are poised to control a significant amount of wealth in the coming years. According to a report by Investor Economics, women will control half of all wealth in Canada by 2026, compared to one-third in 2016. Women are expected to inherit more than $700 billion in financial assets by 2026.
By breaking down the barriers that discourage women from investing, we can promote more inclusive financial well-being for all investors—men or women—while also promoting more efficient allocation of capital and greater confidence in our markets.
Below are resources aimed at women to support them along their investment journey:
  • North American Securities Administrators Association resources are designed to empower female investors to take control of their finances: Financial Empowerment for Women
  • Chartered Professional Accountants of Canada has a webinar that helps women understand the complexities of investing and become more investment savvy: The Strong Woman Investor
Check out these additional investing basics resources:
Financial Consumer Agency of Canada: Investment Knowledge Quiz
Ontario Securities Commission: Get Smarter About Money
The Costs of Investing: How Much Do You Really Know?
Are you in the dark about the fees associated with your investments and how these fees affect your returns? Consistent with other research, the results of FAIR Canada’s first Investor Survey show that most investors lack a clear understanding of investment fees. Sixty-three percent reported not understanding the fees they pay, with only one-third feeling very confident about their understanding of investment fees. An alarming 80% were concerned they are paying too much in fees.
These results are troubling. It’s important for investors to understand investment fees because they reduce the returns you earn from your investment. Even small fees can add up over time and lower your overall investment returns. Knowing what you pay in fees can help you select better products that leave more money in your pockets.
Part of the challenge for many investors is how dealers present and explain their fees. Another issue is that dealers are still not required to disclose all the fees you pay in connection with your investment. Imagine that!
After many years of public debate, regulators are finally taking action to address these issues. In April 2022, Canadian securities and insurance regulators proposed rules to improve annual fee statements by requiring they include all your investment fees and costs. The proposed rules also include a new prototype statement that would provide you with a total dollar amount for all the fees you paid, and that would explain, in an accessible and easy-to-read format, the multitude of different fees you paid. 
Before you decide to invest, consider how much the different options (e.g., advisors, online brokerages) charge for their investing services.
FAIR Canada supported this critical investor-protection initiative and urged the regulators to implement the proposal without undue delay. Unfortunately, industry lobby groups are calling on the regulators to delay implementing the changes for several years, arguing they need more time to adapt their systems to cope with the changes.
We hope regulators will continue to prioritize investors’ interests on this issue and move as quickly as possible to implement the new rules.

While we wait here are some tips you can take when it comes to your fees:

  • Shop around – Before you decide to invest, consider how much the different options (e.g., advisors, online brokerages) charge for their investing services.

  • Ask questions – Account statements may use jargon or confusing terms. If you don’t understand a fee or charge, educate yourself about the different types of investment costs (see the list of resources below) and/or ask your advisor to explain it in plain language. Also be sure to ask what other products may exist that may be equally suitable for you but would come with lower fees. For example, many exchange-traded funds are less expensive than mutual funds, while offering many of the same benefits.

  • Negotiate lower fees – Once you have a better understanding of the fees you’re paying, try to negotiate them. Investors may not realize that some fees, such as commissions and transaction fees, are negotiable.

Check out these resources to help you improve your knowledge of investment fees and statements:

British Columbia Securities Commission:
What’s New at FAIR Canada

Resolving a complaint against a bank or investment firm can feel overwhelming and complicated. To help Canadians get through the process, FAIR Canada published a new guide entitled: Getting Your Money Back: An Investor’s Guide to Navigating Canada’s Complaint System.

Written in plain language, the guide includes critical information Canadians need to know when seeking financial compensation. 
Podcast Series: The Great Disconnect

The best way to protect yourself is to get informed. MoneySmart Manitoba produced a six-episode podcast series called The Great Disconnect.

The series is a great resource, particularly for younger investors who want to learn about overcoming investment pitfalls, better manage their debt, plan for retirement, and navigate today’s housing market.  

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