Foreword from James Gauthier
I’ve known Larry for a while now and share his passion for bringing justice to Canadian investors. His new book Beat the Bank highlights many of the problems Canadian investors face – often unknowingly – and the major sources of the problems: Old Bay Street. Many Canadians could benefit from reading this book which is now available through Amazon or Indigo. Following is some Q&A which provides some perspective on the content of the book:
JG: Your book is entitled “Beat the Bank”, but it really only scratches the surface of how the bank’s take advantage of their customers, namely investments. Would you agree?
LB: I had to keep the book to 200 pages so I ran out of room! Seriously, the purpose of the book is to jolt Canadian investors with enough of a “wake-up call” to get their attention. The book then provides an easy walk through investing basics and a guide to smarter, lower cost investing through online brokers or robo-advisors. The book will give readers the confidence to make better choices and build bigger nest eggs. It can be very easy when you know how.
JG: Who should read your book?
LB: Absolute, unconditional trust in any financial institution or investment advisor is bad for your financial health! So, whether you are one of the five million Canadians currently investing in mutual funds or if you are just starting out, you need to understand investment basics. “Beat the Bank” will tell you what you need to be a more successful investor. Learn a little, earn a lot!
JG: What are some of the more prevalent deceptive tactics used by companies or sales representatives of “Old Bay Street” to lure investors?
LB: Some typical “Old Bay Street” misdirection:
“Investing is so complicated, don’t even bother trying to figure it out”
“You must have a professional monitoring your portfolio 24 hours a day”
“Just trust us”
“We expect the market to <<fill in the blank>>”
“Our fees are competitive” (with other crappy high fee products)
“We will provide you with advice for free” (we will not mention, now or ever, that our fees can consume 50% of your returns)
JG: You list fees as one of your “Wealth Killers”. Since there are costs involved with investing, what advice can you give investors in seeking the best value for their investment fees?
LB: Old Bay Street never presents a proper bill. They never reveal the full impact of fees. So, most Canadians do not know what they are paying, even though some are convinced they do know! Make sure you have full understanding of the fees and costs you are paying or which are being deducted from your accounts. Don’t be shy….this is your money and your future!
Once you are certain you have the full fee picture, you have spent a bit of time to learn investment basics and you have a better understanding the choices you have, you will be in a position to make an informed value judgement. You can determine whether the service you are receiving is worth the price you are paying or whether you prefer a different level of service at a different price point.
JG: We are big proponents of tax efficiency, as that is one thing that you can control (not like the markets!). At what point does tax planning become an important consideration for investors?
LB: You mentioned “Wealth Killers” in the previous question. Let me explain a bit further. There are three Wealth Killers: fees, taxes and inflation. Each can have a seriously damaging impact on your ultimate investment results. What can you do about this terrible trio?
You can’t manage inflation, you just have to beat it. You can make sure you are paying a level of fees that get you the service you require, and not a penny more. And, whether you are just starting out or have been investing for many years, you can minimize taxes through the use of TFSAs, RRSPs, and other tax-sheltered accounts and tax-efficient products.
JG: You explain the benefits of using a robo-advisor. What advice can you give to investors to find the robo-advisor that is right for them?
I believe that robo-advisors can be the right investing solution for millions of Canadians. But all robo-investors are not alike. I suggest doing some comparison shopping online. Just do a search for “Canada robo advisor comparison” and, once you scroll past the advertisements, you will find independent reviews to assist in your search.
The content of the article is provided solely for information purposes only and should not be construed as advice of any kind.