Planet horror: Horror stories with financial advisors

I am a young investor and as a young adult, I make mistakes. And one of them was to invest through a financial advisor. I should open a broker account right from the start, it would had provide me the freedom to purchase any mutual funds I want, without having to go through a financial advisor.

Me and my investments: how it’s all started

I was 25 years old when I discover the world of mutual funds and investments. Ever since that time, my interest for finance never stops growing. Back in 2005, my first investment was a 1 000$ in the Desjardins Fidelity True North Fund. I had made that investment over the phone. Later on, I received a call, asking for confirmation, etc. Investing outside a broker account can really be extremely annoying. And I still have problem to admit that I had been investing outside a broker account for 4 years (from 2005 to 2008)!

Reasons why I don’t invest through financial advisors anymore

First, some financial advisors are really missy. In many occasions, I notice that when it actually came time to make the investment I wanted to do, it took forever, printer was not working and so on. And sometimes, financial advisors, maybe because they were new to the job, I really don’t know, but hey, it was taking forever and in some occasions, I ask myself if they actually knew what they were doing! Scary!

Take control of your assets: now!

In the United States as well in Canada, fraud unfortunately exists. By dealing with financial advisors, you share your personal information. The more you share, the more you increase the risk of fraud. Personally, I don’t like to share my personal information to strangers. With a broker account, this is done only at the time you open the account. After what, you don’t have to share any information to a third party. And best part being: you are free to do whatever you want with your money!

But there’s more than just having your personal information being sale, lost or steal, if you name a financial advisors in charge of your assets. The worst of your nightmare could happen: you could loose all of your money. Ever heard of Bernard Madoff?

Problem being we live in strange world, bad people is being mix with the good ones and at the end; you can’t honestly say that you can trust this or this individual for being in charge of your assets. You simply can’t. I am not willing to take this kind of risk and no one should. Same thing with investments. It is very important to diversify your assets and not to invest it all in one simple company.

In Canada, 9,200 investors had lost a total of 130$ million in the Norbourg scandal. Massive amount of money had been diverted by its funder, Vincent Lacroix. And from the 130$ million lost, only 31$ million had been giving back to only 5 600 investors.

And even more recently in Quebec, Bertram Earl Jones, an investment advisor, is being suspected of stealing money from his clients. He had been missing since May 24, 2009. In many cases, senior citizens had to go back to the work place because they had lost everything they have. We are talking here about the assets of a lifetime gone with the wind. Gone forever! Losses are estimated to be between 50$ to 100$ million. And this case only begin.

Financial advisors = sell persons

Did you ever end a meeting with a financial advisor by signing up for a credit card without asking for one? I did! And maybe it happens to some of you. I wouldn’t be surprise! Fact is, financial advisors are sell persons. For many of them, they do not take your interest at heart and, to tell you the true NO ONE DOES. This is why you have to take control of your assets by yourself.

Didn’t you know? Financial advisors touch a commission each time they “sell” you one of their financial products as example mutual funds and also, whenever they make you open a credit card!

Open a broker account and say good-bye to your financial advisor

Open a broker account is really easy. At first, I didn’t know too much what to expect. I was scared that my application would have been refused. But it’s not like that it’s working at all. It’s just like opening a banking account: no one can be refuse. There’s nothing frightening about opening a broker account. It’s been easy for me. Only problem I had is when the representative ask me if I was an institutional advisor. Like of course not! That question had been asked to me by a TD Waterhouse representative. Can you imagine? This is another reason why you may want to invest alone: not to have to deal with stupid and/or arrogant representatives anymore. You shouldn’t let anyone intimidate you among the way! I didn’t, and I am close to reach 50 000$ value in investments! And I did it all by myself. You can too!

Of course, financial advisors are not all the same. I do believe there might be some good representatives or good financial advisors out there somewhere but in 4 years of active investment outside a broker account, I never met one!

If you are Canadian and you are looking to invest in mutual funds outside RRSP, I suggest TD Waterhouse. I didn’t always get the best service in the world coming from TD Waterhouse, but I recommend that you open a TD Waterhouse account because there’s no fee. It’s fee to open an account and if you register to eServices, you won’t get any annual fees. It’s also free to purchase mutual funds through them. But watch out for the commission fees if you plan to invest in stocks or income funds. If like me you are a small investor, the commission fees will be of 29$ per transaction. You can have cheaper with Scotia iTRADE (19.99$ only of commission fees per transaction). I personally prefer to stick with banks when it comes to open a broker account. It helps me to feel more secure.

Use free online resources, read Derek Foster books and invest like a pro

Among the resources I consult for mutual funds, I really like morningstar.ca. For information regarding the Canadian stock market, I frequently visit canadianbusiness.com. I start investing in the stock market after reading Derek Foster books. For my part, I am an active blogger and worker, I don’t have too much time to spend after reading some boring financial books. Reading Derek Foster 3 books should be enough to educate yourself in finance.

I am now an independent investor and I like it

Ever since I had been investing by myself, I did a couple of mistakes. I lost 24% value of my portfolio but it wasn’t enough to make myself cry for help to a financial advisor. From my point of view, those losses of mine are acceptable with the recession we are going through. I am now an independent investor and I like it.