From “Beat the Bank: The Canadian Guide to Simply Successful Investing”

 

In early 2013 I was at my desk in the trading room on Scotiabank’s

sixty-eighth floor 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:

Mary: “We haven’t saved a huge amount, but every dollar of it will

count when we retire. We don’t understand why our Scotiabank

mutual fund has gained so little over the past twenty years when

we constantly hear about how well the market is performing.

Can you have a look?”

Larry: “Sure. Let me check it out.”

(With a few clicks I found the ‘Fund Facts’ description of Mary’s

Scotiabank mutual fund.)

Larry: “Mary, are you aware that Scotiabank charges fees amounting

to 2.3 percent a year?”

Mary: “Okay, but 2.3 percent of our gains doesn’t sound like very

much.”

Larry: “No. Not 2.3 percent of your gains. Scotiabank charges

2.3 percent of your total investment. Every year.”

Mary: “You mean they charge fees whether the fund goes up or

down?”

Larry: “Unfortunately, yes. That’s the way mutual funds work. And

at 2.3 percent annually for twenty years, fees have eaten up

30 or 40 percent of your money!”

 

Mary was shocked and upset. She felt betrayed. Mary made

the mistake of unconditionally trusting her bank to treat her

fairly. Instead, many thousands of dollars of her precious savings

were lost.”

I was embarrassed. I felt ashamed of my employer and of the

investment business overall. (Not to pick on Scotiabank in particular;

Mary would likely have experienced the same result dealing

with any big bank or traditional mutual fund provider.)

 

Hey, most bankers are good people but they sell mostly bad investment products to millions of Canadians just like Mary. There is a better way!

That’s why I wrote “Beat the Bank”.

(Btw I am not sure why my parents chose rhyming names for me and my sister. But their names are Aubrey and Audrey……go figure!)

To learn more, read “Beat the Bank: The Canadian Guide to Simply Successful Investing”.