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The RRSP gravy train


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

 

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