WhereDoesAllMyMoneyGo.com

New Tool To Search Advisor Background and History

Preet — Wed, 01 Sep 2010 01:41:18 +0000

IIROC (the Investment Industry Regulatory Organization of Canada) has launched a new tool for investors that will allow them to find out more about their IIROC licensed financial advisor. It should be noted that IIROC licensed advisors are in the minority in Canada. There are roughly 25,000 such advisors out of a total of about 200,000 in Canada. IIROC licensed advisors are the only ones allowed to advise and trade individual securities like stocks and bonds. Everyone else is going to basically use mutual funds or segregated funds.

(Rough numbers: 25,000 IIROC, 75,000 MFDA and 100,000 Life Agents who may or may not advise on investments.)

AdvisorReport

The new tool is called AdvisorReport. You can find it under the new “Know Your Advisor” section of IIROC’s website. (Sound familiar??)

The advisor report will list the courses completed by the advisor, the roles they are licensed for, and any past disciplinary action from IIROC.

It is imperative to understand that if your advisor is not listed here, it may just mean they are licensed under a different regulatory body. IIROC has also set up a new page for to help point you in the right place to search for registrants outside of IIROC. Again, look familiar? Great minds think alike, I suppose… although most people forget the second half of that quote: “…and fools seldom differ.” Yeah, let’s forget that second part of the quote… :)

An Investment Banker’s Portfolio

Preet — Tue, 31 Aug 2010 01:44:35 +0000

It’s just not as cut and dry as some think… passive/active, advisor/no advisor.

Years ago, I interviewed with a securities brokerage, on the investment banking side. I met with one of the managing partners and we were essentially blue-skying about whether I would be a fit for that world. (I’m not, by the way.) One thing was apparent to me during the interview: this guy was on a different planet in terms of brain power. I felt intimidated because I knew nothing about his industry at the time. After the formal part of the interview, he asked me if I could give him my thoughts on his personal portfolio.

Was the interview still going on? Was this a test? Surely this guy had the creme de la creme of managers managing his money (their offices were all over his Bay Street office tower), or perhaps he had his own trading terminal set up beside his desk to manage his own portfolio…

Nope. It was seven figures stuck in a globally allocated basket of index hugging, active mutual funds charging close to 3% per year. It must have been a test.

Nope. It was his actual portfolio. I was dumb-founded.

Then I realized that while he clearly had the brain power to be able to figure things out if given the right reading material, he had neither the time, nor the inclination to do so. He was not an expert in portfolio management, he was an expert in investment banking – within the financial services, these are completely different things. His advisor was an old school buddy, and he just delegated everything to “his advisor”.

This may be an extreme example, but it was a story I thought was worth sharing. There are a few ideas to discuss that can be plucked from this anecdote, but if anyone wants to kick start it in the comments, be my guest.

A Lap Of The Blogs

Preet — Fri, 27 Aug 2010 01:07:29 +0000

If you are new to WhereDoesAllMyMoneyGo.com you should know that most Fridays I run a post called “A Lap Of The Blogs” in which I link to some articles of interest I’ve read in the past week. I also include a weekly “racing video” because my former life was in the auto racing industry… Enjoy!

I’ve started a detox/diet. It’s scheduled to last 2 months, so if you notice my tone getting snarky over the next while – blame it on the diet! :)

About three years ago I got really sick, to the point that I thought I wouldn’t be able to walk again. Part of the symptoms included vertigo, and it got worse when I exerted myself. As such, I essentially haven’t been exercising for the majority of the last three years. I’m basically 95% back to normal now, so no more excuses for letting my health take a back seat. That means paying more attention to nutrition, exercise, flexibility and stress. I’ll keep you posted on the detox/diet – I’m on day 3, and no major cravings yet… (famous last words?)

I’ll have to record the WDAMMG Internet Radio Show later and I’ll post it up over the weekend.

From Around The Blogosphere

Thicken My Wallet: The Value of Advice – hot topic these days!

Jonathan Chevreau: Putting the blog on hiatus for the remainder of summer, but provides Twitter lists of financial tweeps to follow.

Larry MacDonald: The Bizarre History of Employee Stock Ownership Programs. Interesting stuff!

Big Cajun Man: offers up some great advice for future university students, but I follow this advice myself. I remember it from the first time he posted it, and it works like a charm! ;)

Million Dollar Journey: The Landlord-Tennant Relationship from the Tennant’s Persepctive. Looking at the flip side of the coin in this post.

Money Smarts Blog: Six Reasons Canadians Should Invest In Oil Stocks. What? He’s not talking about real estate this week? ;)

Michael James on Money: Unrealistic RRSP Contribution Expectations. Read through the comments section for more insight into this as well.

Canadian Capitalist: Is your caregiver an employee of yours? Great info on Payroll for Employers of Caregivers. I guess CC’s Moneysense deal is paying really well… :)

Rob Carrick: Storing your financial data the safe way.

This Week’s Racing Video

This video shows the footwork involved in driving a racecar. Often, you must use all three pedals at the same time even though we only have two feet. There are probably a few strange things here that need explaining. You’ll notice he uses the clutch when shifting from 2nd to 3rd, but not from 3rd to 4th, or 4th to 5th. With a close ratio gearbox, usually all that is needed to change up a gear is to relieve the force between the engine and transmission by lifting off the throttle. The next gear slips right in. He uses the clutch on the lower gears because there is a greater chance of catastrophic gearbox failure with the lower gears. Also, you’ll note that before he enters a braking zone he used his left foot to tap the brakes. This serves two functions. First, it let’s him know the brakes are still working (racing brakes get really hot, and if the brake fluid starts to boil the brakes get spongy and then ultimately don’t stop the car in time). Second, it firms up the brake pedal which allows for better modulation of the brakes when actually in the braking zone. And last, you’ll see him using all three pedals at the same time when he is in the braking zone. As you know, when the car’s speed is slower, a lower gear will accelerate the car faster. So when going from a high speed zone and into a braking zone, when you have finished braking you want to be in the lowest possible gear as soon as possible. At the same time, you want to match the revs of the engine to the new gear. A lower gear, means higher revs – hence, he must blip the throttle before letting go of the clutch or the car will buck. If you are driving at the limit of traction and then introduce a buck or jerk to the car, you can quickly lose control of the car as you have essentially asked it for more than 100% of the available traction. The trick is that you have to brake and blip the gas with the same foot.

Overall, I think you’ll get a better appreciation for the skill required in driving a racecar after watching this video. Click here to view if reading the email feed. Enjoy!

ING Direct Canada to launch no-fee chequing account

Preet — Thu, 26 Aug 2010 01:09:54 +0000

If you remember, a while back I interviewed the CEO of ING Direct Canada, Peter Aceto, using questions from the blog readers. The most popular question was “(when) will you be launching a no-fee chequing account?”.

You can see Peter’s original answer here, but his main theme in answering most questions was that they were always listening to what customers and prospective customers were saying. One could infer that a no-fee chequing account was in the cards. (One could also infer they are still looking to purchase a discount brokerage dealer as well! If I were a betting man, I might hope to see that announced in 2011… but that’s just my honest guess.)

Earlier this year I opened an ING savings account and it was a seamless affair. The website is intuitive and the customer service has been impeccable. I’m very happy with ING so far. I’ll definitely open up the chequing account when it is available. I currently handle my main banking at Scotia as I used to work at their full-service brokerage, but I would save about $120/year by switching to ING.

You can read some in-depth reviews here:

Canadian Capitalist

Million Dollar Journey

The Globe and Mail

You may want to read through all the comment threads on those sites as well. It’s been pointed out that after your first book of cheques, you’ll have to pay $10 for 20 cheques. For some, that is a deal breaker. In the last 5 years I’ve written 6 cheques, so I’m not too worried about it myself. To me, the customer service experience is more important than $0.50/cheque after my first free book.

If you want to pre-register, visit Your185.ca – a reference to the average $185 Canadians spend in bank fees per year.

Interview with the Secretary General of Luxembourg for Finance

Preet — Wed, 25 Aug 2010 00:37:04 +0000

A little while ago, I had noted that Luxembourg had a population of roughly 500,000 yet had the second largest investment fund industry in the world, second only to the USA. In Episode 12 of the WhereDoesAllMyMoneyGo.com Internet Radio Show I interview Mr. Jean-Jacques Picard, the Secretary General of Luxembourg for Finance, for more details.

Engage.

Episode 12 was just published and should show up in iTunes shortly (subscribe to the podcast here). Don’t have iTunes? You can listen to it here too.

Special Cell Phone Deal for Readers: $60/month, 350 min, 6GB data, lots of extras

Preet — Tue, 24 Aug 2010 02:43:44 +0000

I recently picked up an iPhone 4. My contract with Rogers had lapsed and I’ve been “off-contract” for over a year. A good friend of mine, Phil, sent a message to friends about a special offer he could provide (he works for a corporate Telus dealer). One of the reasons I had been putting off getting a new smartphone was the prohibitive cost of a data plan, and all those pesky extra fees. Phil’s deal changed my mind pretty quickly. He’s graciously offered to extend a similar deal to readers of WhereDoesAllMyMoneyGo.com.

I visited their Business Centre in Oakville and they also provide free consultations and have some fantastic productivity solutions for business with outbound sales, company vehicles, service/installation/delivery crews, problems collecting payment for completed jobs, a need for Internet for mobile booths/offices, etc.

NOTE: I receive no compensation for posting this, nor do I receive any compensation for anyone who takes advantage of the offer. Phil is a buddy from when I was back in university.

The Only “Catch”

The only “catch” is that you need two people or more for this plan. It is normally geared towards businesses, but Phil is extending it to couples and families as well. It is not suitable for friends as one person will ultimately be responsible for the bill – you just don’t want to go there… :)

$60/month + HST, 350 min + 6GB Data, and more

	Groups of 2+
Shareable Minutes	250
Anytime Minutes	100
Data	6GB/month per person if you sign up by August 31st
Text Messages	Unlimited
Local Telus to Telus	Unlimited
Unlimited Weekends and Evenings at 6pm	Included
Voicemail 10	Included
Call Waiting	Included
Call Display	Included
Conference Calling	Included
911/SAF System Access Fee	Waived
TOTAL COST	$60/month + HST per person

Airtime Credit for 2+ Activations	Up to $700 (only for customers new to Telus)
Unlimited Canadian Long Distance	$15/month

Additional Notes

This wouldn’t be WDAMMG if I didn’t put my own extra spin on things. Forget the unlimited Canadian long distance option at $15/month. Just download the Skype app and you can get unlimited long distance to North America for $2.95/month. That’s what I’m doing. Plus, when you are in a WiFi zone, you won’t use up any minutes doing it. (Assuming you get an iPhone. There are many other phones available – basically anything you see on the Telus website.)

“Shareable” minutes means that for two people, each subscriber gets 250 shareable minutes and 100 anytime minutes on “their” phone number only. So, 2 people would have 500 shared minutes and 100 minutes each. If one of those two people used 600 minutes then he/she would have to pay $0.10/min for each additional minute after that. The other person would pay $0.10/min for each minute past 100 since the other person used all the shareable minutes.

Available to anyone in Canada.

If you are interested…

Just send an email to pkundu@primeline.ca, make sure to tell him Preet sent you and leave him your name and phone number to reach you at during business hours. He’ll take care of everything from there.

CTV News Channel Appearance: Money Saving Tips

Preet — Sun, 22 Aug 2010 22:53:27 +0000

CTV News Channel asked me to give an interview on some simple money saving ideas. I chatted with anchor Jacqueline Milczarek about saving money on life insurance, negotiating discounts, and simple budgeting. The interview appeared live on Sunday at 4:15pm EST and I’m linking it here for anyone who wants to watch. You can also share it with people who don’t read the blog as the conversation is geared towards a broader audience. Enjoy!

NOTE: a 15 second commercial plays before the clip. The clip is about 6 minutes in total.

Click here to watch the video

A Lap Of The Blogs

Preet — Fri, 20 Aug 2010 01:39:13 +0000

A new W Expert has been crowned! The final episode of the W Experts Search II aired on Wednesday night. For those that missed it, it will be airing again (Saturday at 6pm on W Network). To see who won, you can visit the W Network’s website here. In lieu of a weekly racing video, I’ll post some pics from the set and the wrap party from Wednesday down below…

Episode 11 of the WhereDoesAllMyMoneyGo.com Internet Radio Show

Approaching the 1,600 subscriber mark for the WhereDoesAllMyMoneyGo.com Internet Radio Show! Episode 11 was just published and should show up in iTunes shortly (subscribe to the podcast here). Don’t have iTunes? You can listen to it here too.

From Around The Blogosphere

If you don’t know who Dan Hallett is, you would be wise to read through some of his blogs on The Wealth Steward. He leads off this week’s Lap of the Blogs…

Dan Hallett: More evidence that Canadian mutual funds are not the most expensive in the world

Squawkfox: Back to school tips – Student Budget Planner!

Money Smarts Blog: 8 things you need to know about withdrawing money from RESPs

Rob Carrick: ING launches a no-fee chequing account.

Canadian Capitalist: Mutual fund lobbyist report not meaningful

Million Dollar Journey: Overseas Canadian residents and tax returns

Michael James on Money: The costs of an in-ground pool.

Big Cajun Man: Dumber Than Snake Mittens

Larry MacDonald: An alternative to buying bonds

Jonathan Chevreau: 3 out of 5 boomers can’t retire?

Thicken My Wallet: Tough times for life insurance companies.

This Week’s Racing Video

Skipping the racing video this week as mentioned above. Here are some pics from the set for the W Expert Search II, and the wrap party. The host, Karen Bertelsen, writes a fantastic blog: The Art Of Doing Stuff. Quirky, funny and really interesting posts. Jenny Tryansky Faba is half of the duo behind Communal Table – if you like food, you’ll LOVE Communal Table. Enjoy!

The Contango Killing Commodity ETF

Preet — Wed, 18 Aug 2010 02:41:43 +0000

Canadian Capitalist recently discussed the negative drag on commodity futures ETFs caused by contango (also known as negative roll yield). This is a specific contango that exists due to front-running of the ETFs.

The Contango Killing Commodity ETF

Ironically, two days later a new ETF was launched (these things are like tribbles these days!) which was designed to counteract the contango-drag. The ETF in question is USCI (United States Commodity Index Fund, trades on NYSE Archipelago). The goal is to track the SummerHaven Dynamic Commodity Index Total Return less expenses. This index skews towards longer term contracts and commodity futures in backwardation (opposite of contango, and also referred to as positive roll-yield).

What Is The Index Methodology?

There is a basket of 27 eligible commodity futures for inclusion. The index is rebalanced monthly to include 14 of those 27 constituents. 7 are selected based on the highest positive roll yield. The other 7 are selected based on the highest one year momentum (highest price change). The 14 constituents are then equal weighted.

Should You Care?

As with many new products, it’s best to take a wait and see approach before diving in, in my humble opinion. Beyond that, let’s look at the following factors:

The index is designed to essentially cancel out the contango drag by introducing a backwardation headwind. By selecting 7 components with the most momentum, they are more likely to be in contango. Selecting the 7 components with the highest positive roll yield (backwardation) will tend to counteract this. With the index rebalancing monthly, this essentially provides a long position in a basket of commodities while minimizing the contango drag. You will have different commodity exposures every month though.
There is only $5 million in the ETF right now, and it launched a few days ago.
Ironically, if it became wildly popular this index could be front-runned as well. (front-ran?)
We don’t know how tight the premia and discounts to NAV will be (how good the market makers are).
Most people probably don’t know how much commodity exposure they have in their portfolios currently, so how do you know if you need more (or less)? Consider all the stocks you may own in companies involved in exploration, mining, development, etc. of commodities.
Given that commodities have been shown to do well in the past, is the party over? Is there a new market equilibrium for commodities?

Conclusion

I don’t own any direct commodity plays in my portfolio. I feel I have plenty enough through the companies in my index funds that are involved in commodities. Nothing about this new ETF really stands out to make me change that, but the ETF itself does attempt to solve the contango problem. If you have your heart set on direct, long term commodity exposure, you may want to keep an eye on this ETF for a year or two to see how it plays out in practice. For now: avoid.

My Thoughts on “The Interview with a Marked Man”

Preet — Tue, 17 Aug 2010 04:34:14 +0000

Please see yesterday’s post for background on this issue.

Until now, I have remained silent with my opinion on the heated discussions taking place on the blogosphere about Moneymechanics and Martin Horvath. After having interviewed Mr. Horvath I feel I am ready to disclose what I feel needs to be said in my humble opinion only. I’ve had a few email exchanges with Oren Gutman and Martin Horvath. They seem like pleasant enough guys. The website is put together nicely. But these alone are not reasons to deal with financial advisors / consultants / promoters. You have to dig a bit deeper.

To cut to the chase: there are just way too many red flags, some of which still need to be addressed.

No business address
MFDA lifetime ban
Claim on website: “There are such things as high yielding and safe investments.” (I don’t believe the market is 100% efficient, but I certainly don’t believe it is THAT inefficient.)
Information withheld on identity of creator and founder of the “up to 100% income tax reduction strategy”.
Information withheld on mechanics of warranty which guarantees against GAAR (General Anti-Avoidance Rule enactment by CRA).
Information on the source of money to fund claims on warranty not satisfactory. My question asked that if a claim was made against the validity of the strategy, then all investors would have a claim which would need to be funded. The warranty covers expenses of fighting claims, interest payments on loan, denied tax savings, etc. So if one claim is required, they are all required and the money required to satisfy claims of warranty holders would have to equal the premium for the warranty. Since this would negate any benefit of the strategy this wouldn’t work, but the cost of the warranty is relatively small. The answer provided indicated that the strategy facilitator would be responsible for handling the shortfall. This is an unacceptable, especially in light of the lack of information on the identity of the facilitator.
There currently is no opinion from CRA on the acceptance of the tax strategy.

There are more, but seven red flags are more than plenty. I’d like to know why the identity of the creator and founder of the strategy needs to kept secret. That’s a deal-breaker all on it’s own.

Have you identified any other red flags? Do you have more questions?

Interview With A Marked Man