John Heinzl
Friday, February 9, 2007
From time to time, we read a book on investing and
personal finance that stands out from the rest. Such is
John Lawrence Reynolds' The Naked Investor: Why
Almost Everybody But You Gets Rich on Your RRSP.
The book, first published in 2005 and recently updated,
details one heart-breaking story after another of
hard-working Canadians whose retirement savings have
been eviscerated by unscrupulous investment advisers
(Hello up there, grandma). In equally depressing detail,
it illustrates how self-regulatory organizations do more
to protect advisers than investors, who often spend
years in a fruitless effort to obtain redress for the
abuses they have suffered.
The book is timely now for a couple of reasons. First,
it's registered retirement savings plan season, when the
industry is pitching furiously for your business, often
with products that line its pockets more than yours.
Second, in case anyone is under the impression investor
complaints about advisers are rare, a recent slip-up by
the Investment Dealers Association would appear to
indicate otherwise. The IDA inadvertently posted a
document on its website containing the names of nearly
3,000 brokers who had been the subject of complaints,
internal disciplinary actions or lawsuits from October,
2002, to June, 2005. It has since removed the data, but
not before investor advocate Robert Kyle reproduced the
information on his website, investorvoice.ca.
A complaint doesn't prove wrongdoing, of course. But
when there are brokers with five, 10 or -- in one case
-- 44 complaints against them, we wouldn't necessarily
want them managing our nest egg. Would you?
Not all advisers are out to bleed investors dry. Most
are honest and have their clients' interests at heart.
But anyone who wanders into the minefield of investing
without proper protection is asking for trouble. They
are no match for the armies of commissioned salespeople.
That's where The Naked Investor comes in. Read it, and
pass it along to someone you care about. We only wish
grandma had had a copy.
jheinzl@globeandmail.com
