There are distinctions between financial planning and financial advice – unfortunately for many Canadians the lines have been blurred for far too long and most investors don’t know the difference.
The extent of our financial education requirements (in order to sell a financial product) is that a person has completed a short licensing course. This should not mean the title of Financial Advisor or Financial Planner is appropriate. Many of these folks may be well-intentioned but Financial Salesperson or Financial Dealer might be more reflective of their job.
Ken Kivenko has been fighting for Canadian investors for decades. He is the President of Kenmar Associates, a firm dedicated to investor protection and education. His firm maintains CanadianFundWatch.com and publishes reports to assist retail investors in preventing broker shenanigans and salesperson malfeasance. Ken is a regular contributor to Canadian MoneySaver and other national publications.
I got the chance to catch up with Ken recently to get his take on the Canadian investing landscape, how he invests and what he’s doing to assist Canadian investors from at times seems like a massive marketing machine – the financial industry.
Q: Ken, this is overdue – thanks for the time.
My pleasure. Canadians need to engage more with their investments. Never forget it’s YOUR money.
Q: I won’t 🙂 Ken we’ll get into Kenmar Associates and their work in a bit. I first wanted to ask you this: how would you characterize the Canadian investing landscape today, from an investors perspective? Is it good, bad, or getting ugly?
I think it is improving but there are many investor protection issues to be dealt with. Performance reporting coming in 2017 is a positive. The lack of a best interest’s standard for advisors is a huge negative though. Canadians should understand they are in a Caveat Emptor environment.
Q: Why do we remain in this environment?
Industry opposition to regulatory reform has been the major obstacle. For instance, the endless consultations to eliminate embedded commissions has dragged on for years. These commissions skew advisor recommendations towards higher cost and riskier products. The decompounding effect of high costs is incredibly high especially in low return environments. Needless to say investors need to focus on low-cost, diversified investments.
Q: What does Kenmar Associates do to help investors?
Kenmar is active on many fronts:
- We participate on regulator panels and committees
- We host canadianfundwatch.com – you listed that above
- We issue the Fund OBSERVER bi-weekly – discussing investor protection issues primarily for investment fund investors
- We assist with complainants in getting their complaint resolved
- We respond to regulatory consultations
- We issue ALERTS whenever we detect an investor warning is needed.
Q: Let’s talk about your own portfolio. I assume you’ve saved yourself from yourself over the years. How do you invest and what do you invest in?
I am very conservative. I invest in convertible debentures, individual dividend paying stocks, Real Estate Investment Trusts (REITs) and some tech companies. I do use low-cost plain vanilla Exchange Traded Funds (ETFs) for international investing.
On the stocks for extra income I use covered calls. I do not buy mutual funds because of the high costs and chronic benchmark underperformance. I have one full service account but most of that is in cash.
Q: If you had to provide Canadian investors with only one or two nuggets of financial advice what would that be?
Read a good book on investing basics. Never forget that reward and risk are relatives. If you are unwilling or unable to manage your own money use a fee only advisor. Using a commission incented advisor can be risky as they are not required to act in your best interests. Lastly never forget to consider tax in your investment decisions.
Thanks for this Ken and being a fan of the site. My interview with Ken Kivenko reinforces a theme I try to write about often on this site – managing your money effectively and efficiently is an important modern life skill. Do this well and it can provide options for you and your family. Manage money poorly and disastrous consequences can, and often do, occur.
At the end of the day your financial health depends on your own survival skills. Government regulations and interventions will only help you so far.
Do you believe more investor protection is required? If so, what types? How much? What are you doing to educate and protect yourself? Share your take in a comment below or via social media.