I recently finished a book that chilled me to my bones with some of its stories. The Naked Investor by John Lawrence Reynolds has the subtitle ‘Why Almost Everyone But You Gets Rich on Your RRSP.’ It’s a good description for the book.
The book starts with a near near miss by the author with a financial advisor whom could have wiped out half of his RRSP’s savings with his proposed investment plan. The incident got the author thinking and it produced a scary look at the investment industry in Canada. The book tells several tales of advisers investing in completely inappropriate funds for clients to line their own pockets. The real scary part is when the clients try to get some money back when their instructions were ignored or out right fraud took place.
Often they never see a dime or they end up with a tiny portion of their money back and a gag order with the settlement agreement. But that’s only for the investors who take the time to chase justice through a labyrinth of self regulated agencies and slow acting government regulators who make a sloth look like a sprinter. We are talking about a decade in some cases for a retired person to get any results.
I have to admit I always was a bit nervous around financial advisers for some reason I could never explain. This book has firmly changed the nervous feeling to out right paranoia about some things, but to be fair the author does point out there are some good financial advisers that are out there. They are just hard to find.
Perhaps the only draw back to this book is a lack of advice on what to do about the problem. The author repeatedly mentions the industry should go to a fee based structure rather than commissions, but offer no pratical advice on solving the issue. The only useful advice the author does provide is some general RRSP tips of buying index funds.
Overall I thought it was good read, but I would suggest you borrow a copy from your libaray rather than buying the book. The book lacks the content that would make it a useful reference.