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A Conflict of Invested Interest

A number of times each month I receive a few comments, E-Mails and general inquiries from various sources or contacts promoting products, services or websites in an attempt to gain some exposure through TMWTFS. I’m a picky blog owner and content on this sight for the most part needs to be relevant to readers and helpful in advancing the learning of myself and others related to investing and/or personal finance. The majority of the time I decline offers from authors who want me to review a book, review a website or host some sort of paid link for a product that doesn’t directly interest me or readers.

I received an invitation from Larry Elford over the weekend in reference to his website (breachoftrust) and videos created to inform and educate investors about the conflicts of interest that exist within the financial services industry. Although the website is quite crude and a clear work in progress (which Larry will openly acknowledge) I found that his main message is one that deserves attention for new/novice investors seeking or already involved with a financial professional. Every investor will make mistakes and minimizing mistakes over the long-term will lead the majority of investors to higher returns. Informing investors of bad practices, conflicts of interest and dangers in the financial services industry are one of the main motivations for this blog and Larry has an opportunity in this blog post to present some of his ideas and content to my readers.

Larry comes from a career within the financial services industry (former CFP, CIM, FCSI & retired Associate Portfolio Manager), appeared on CTV’s W-FIVE segment titled “Going for Broke” and presented at financial hearings in Ottawa on ABCP in 2008.

Larry’s first video on his website, Ch 1 Beginning, is a good introduction to his stance on professionals within the financial services industry as salespeople rather than advisors and opens the viewer to the tone of his work to bring to attention the issues investors encounter with what is motivating the managers of their portfolios and investments.

When I asked Larry what comment(s) he would like to contribute to this post he replied with the following content:

“The person claiming to be a trusted ‘advisor’ and who is helping you with investment advice is more likely to be looking out for his or her commission interests than your financial benefit. I say that with 30 years of experience, and with sales figures from the investment industry to back this up. To take this one step further, it must be noted that up until Sept 29, 2009, all 130,000 persons registered in Canada to sell stocks and mutual funds (with provincial securities commissions) were licensed officially in the category of ‘salesperson’. It is only after Sept 29, 2009 that this word, ‘salesperson’ was eliminated from securities acts in 13 provinces and territories. (This was not done in an effort to protect and serve the public interest)


Under the new National Instrument 31-103 as of September 28, 2009, mutual fund representatives, formerly called ‘salespersons’, are now called mutual fund ‘dealing representatives’ and individuals who were an advisor under a portfolio manager are now called an advising representative.


Many feel that the previous title was more descriptive of their behaviour. To be sure, the title salesperson wasn’t normally on their business cards. No matter what the title, these folks were paid lucrative sales commissions for selling you mutual funds and keeping you invested.”

Larry went on to provide a number of resources to support his stance such as www.investorvoice.ca and books written by John Lawrence Reynolds (Free Rider & The Naked Investor).

I won’t endorse or support any or all of Larry Elford’s comments or beliefs in any of this content but for new investors it’s important to understand where conflicts of interest exist, why they exist and what you can do to inform yourself before errors are made. At the end of the day your money is exactly that; your money. The best person to ever manage that money will be you and choosing the best advisor, financial professional or approach to DIY investing is a major step in managing your own finances and wealth.

Of course for an investor who wants to take advantage of these clear conflicts of interests and unfortunate profiting at the expense of naive investors you can always invest directly in these companies and benefit from the dividends they pay.

* I was not compensated for this post or mentioning of any content and have no financial interest in the content mentioned. *
 

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{ 3 comments… add one }
  • David Wilson August 25, 2010, 2:35 pm

    Thanks for the post, great info as always.

  • Larry Elford, Visual Investigations February 21, 2011, 8:51 pm

    Larry Elford, Visual Investigations said…
    an update from Larry Elford:

    http://www.albertafraud.com is a new site which is specifically dedicated to my "accountability projects". This project assumes that fraud, misrepresentation and breach of trust are still illegal or improper, even if done by politicians or public servants. Since the bankers/financiers cannot seem to be brought under these laws, I will try to bring a class action suit against those politicians and public servants. Yes, you are correct to point out that it is a challenge to sue a public servant, the hurdle to overcome is to prove negligence, gross negligence or conscious wrongdoing. That is a challenge I am willing to undertake. Send me a name if you know of a great, forward thinking Calgary law firm, and I will show them how they can all retire on one case.

  • larry elford April 15, 2012, 11:33 pm

    The Alberta Government allows special laws for the rich, to help them take money away from the public. This is a Canada wide robbery, using an Alberta example to illustrate.

    How to take one billion dollars of public money and “convert” it into private (banker) hands. It happens every day to your tax dollars, your investment dollars, your retirement. All your money is a free target when this aspect of government/banker corruption is allowed in your province. And it IS allowed.

    3 minute video with documents and examples

    http://www.examiner.com/crime-in-calgary/larry-elford

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