Alison Griffiths on Lang & O'Leary Exchange

Interview with Alison starts at 47 min. and 30 sec. into the video

The first thing I want to talk about the interview is what she had to say about using advisors.  In her words, "Very few advisors add value to most investors."  She isn't saying advisors never provide value, but that few do, most of the time.  She also said up to 75% of the portfolios of people she talks to are in the negative position!  Even if it is only 50%, that means the average advisor is making more money than the average investor!  She says that, "Advisory services are about selling product."  Of course, Kevin O'Leary disagrees, and he isn't the only one who compares investing to brain surgery.  I agree with Alison - it doesn't need to get that complicated!  Again, advisors and people like Kevin want us to believe that so they can sell us more product.

Alison says "Don't buy junk."  I agree, stick to quality.  We don't get more RRSP contribution room because we lost money buying junk.  She also makes the point that depending on how much money you have saved, GIC's (guaranteed investment certificates) might even work (despite losing to inflation).  She recommends we  forget mutual funds (too expensive); buy broadly based exchange traded funds (ETF's), instead.  Keep it simple - we don't need a lot of product.

When asked about yield she failed to mention REIT's.  There are ETF's which consist of Real Estate Income Trusts.  Globeinvestor.com shows the yield of iShare's XRE as 4.8%.

I haven't read her book, but I may do just that after seeing the interview!

Are you a fan of what Alison Griffiths is telling us?

Saving For Retirement

I find the media debate about what is wrong with the pension "system" in Canada to be somewhat amusing.  While the situation isn't funny, I do find it interesting how the politicians and the professionals in the financial services industry can't seem to put their finger on the problem.

In my personal experience, the opening to the pension bucket is too small, while the bucket, itself, is filled with too many holes.

By that I mean, if they really want people to save more, you would think they would make it easier.  When I was making sufficient money to actually top up my RRSP savings, there were too many income restrictions, and no Tax Free Savings Account to do so.  With all but senior executive and government compensation decreasing in real dollars I am afraid that window of opportunity is lost.  At the same time our governments, in my opinion, have done a lousy job of protecting hard-earned Canadian pensions from foreign controlled companies, and even the likes of Nortel.  Besides, given the state of modern computer technology, why are pensions not portable?  Why does it matter where I work, as long as it is in Canada?

The holes in the bucket I am referring to are the enormous commissions, fees, and charges imposed by the financial services industry on people trying to save for retirement.  What is worse, in exchange for all of that hard earned money that could have been going toward people's retirement, we receive terrible advice since most of it is designed to make the institutions money at the expense of the "client".  No person, it has been said, can serve two masters, and since one of the two is directly in charge of compensation, we can guess which one is being listened to.  At the same time, I am expected to save more so, in future, I can help pay for those indexed pensions of our faithful civil servants despite having no pension of my own.

It all reminds me of the debate over why people don't vote in Canadian elections.  The politicians run around acting like little children, while spending like drunken sailors (sorry to slight any sailors out there) on shore leave.  Then, when it comes time to vote they can't understand why everybody has lost interest or any hope of ever seeing any positive outcome.

It has always been my opinion that if people are not acting in the desired fashion then those doing the managing have failed in their job.  We can call people lazy, indifferent, and even ignorant, but wouldn't that tell you they have not been educated, motivated and inspired?  I keep hearing, "Save more, save more!"  I don't think, "Do as I say and not as I do", is going to inspire people in this situation any more than it has in the past.