Tag Archives: insurance

A Day in the Life of a Financial Advisor


SONY DSCA sleazy salesperson? Someone trying to upscale you on risky investments you shouldn’t have? Someone you can’t trust? Who is it that you picture when you think of a financial advisor? Are you lucky enough to have a financial advisor you like? Or do you not have one for fear that you will end up with a stereotypical one that is described as so above?

While you may think advisors are all about the markets, glam and game, their typical days are a bit different than that. A good advisor is more focused on planning, not performance. (Ask your advisor about diversification next meeting to explain that last line). What I mean though is even though they need to maintain all the licenses and have the technical know-how of financial products and markets, the actual job is a bit different. It is much more relational and sometimes not at all what the public thinks about.

A couple years ago a colleague mentioned a former client. The first time he saw her they were strangers. He went to her bare bones apartment in inner-city Toronto, in the low-income neighbourhood of Parkdale. When arriving at her apartment, he found a very lonely, dirty apartment, covered with cigarette ash trays, smoke, and cat hair. Clutter was the name of the game. The superficial advisor would walk away there, assuming they were not a ‘qualified prospect’ while the good advisor would sit down and do their job. ‘Know your client’ starts here. The two of them chatted for 2 1/2 hours about travelling, he explained the life insurance policy she had, taken out by her parents when she was younger, and explained the importance of naming a beneficiary on the policy, as she currently had none. She thanked him, enjoyed the chat, but didn’t make any changes or additions to her policy or hr financial plan. Over the years this man always followed up on her. They chatted about life, travel and so forth. She never made changes, he accepted that. He jokingly would always nag her that it really did make sense to add a beneficiary. However, it was her call. Years later, dozens of appointments with a no-profit client later, customer service was still this advisor’s most important trait.

He received a phone call one day. Edna, we’ll call her, was in the hospital. It didn’t look good. ‘Do I still have time to change that policy?’. He was touched that he even thought to call her from the hospital. Of course. he said, and was in the hospital that same afternoon to have the very simple form filled out. She passed away in the hospital a day later. If he had not of picked up his phone, it may have been too late. If he had delayed going to see her, it would have been too late. Her money would have gone into the estate and perhaps would have been tied up for months. Instead, her sister received 300,000 dollars tax-free. Her sister, not sure what to do with this, told Charles, we’ll call him, that if he was good enough for her sister, he was good enough for her, and she invested the benefit with him. This unqualified client from Parkdale and turned out into one of his best clients. This solid advisor knew that as a professional, everyone deserves excellent treatment, and that a sale every appointment is not necessarily the proper philosophy to the job.

These and many more like it are what actually happens on the day in the life of a financial advisor. The payout is sometimes not for years, but it is those coffee chats and time spent talking about travelling, or whatever, that is what they do, much of the time.


What are some memorable moments with your advisor? How did you find them? Share your stories here as well!


Anatomy of a Mutual Fund


Tis’ the season. No, this article is not a month old, and this is not the holiday season I speak of; It is the season in which the consumer, investor and potential saver is inudated with the financial services $6 million advertising campaign.

All shiny and new, your new year’s resolution to get your personal finances in order seems like it may become a reality. You get a sense of entitlement when you see the subway-clad posters directing you to a website that is going to tell you how to get started, and how to actually have some money saved after everything else at the end of the month.

Granted, the vision of personal financial health and its actuality are very different. You begin to look into your options, and quickly feels like a first time home buyer walking in to the housing market for the first time: People are speaking a different language you did not even know existed. Your asked about your view on ETF’s, and warned that the deceptively low fees may result in bigger transaction costs later, and the loss of active management will come down to the overall effectiveness of the fund. Someone delves in to ‘passive management’, when you are still trying to grasp the last point, desperately wishing you had a pen and paper, feeling like you are back in your grade 12 math, as if grade 12 math covered any of this – wondering how cosine ever was more important than learning the tools of constructing a basic financial plan? You remember an e-mail a friend sent about ‘discount brokerages’ accounts, wishing you had asked further what that was. You’re not sure how to even enter the stock market, and think you know enough to write off the ING 2% savings account as not good enough – with all this research, you feel you should be able to find a better return than 2. You return home lost, confused and not any closer to the dream of financial security you crave for your future self, however not before stopping at a few stores on the way home, spending a few hundred dollars, realizing your resolution will have to pushed to the next month, diminishing the chances that you will actually pull through on your new year’s resolution. That evening, you remember the one person you know that works in the financial services industry. Being a long time acquaintance, you know you can ask some no pressure questions without being obligated to make a decision. She explains that there is another option for me: Mutual Funds. Mutual funds, she starts to explain to me, are kind of like watching the highlight reel on TSN when you are not able to actually get to (or even watch the game), in terms of the stock market. Mutual funds, by design, are only allowed to hold up to 10% of any individual stock, meaning one mutual fund has to hold at least 10 stocks, meaning they are diversified by their nature. Even better, after completing a painlessly easy ‘risk allocation’ questionnaire, you are placed into the proper risk category, measuring from conservative to balanced to an aggressive investor. Even better, as you get to be more comfortable with saving and investing, and wanting to know more about your portfolio and investments, you can easily to switch to include companies, industry sectors or other areas you grow an interest in investing in. She continued to say their was no minimum account balances, and that you could start a mutual fund account even if you were only depositing $50 or $100 each paycheck.

As I was trying to wrap my head around this, she made note of a couple things I should be aware of when opening up a mutual fund account. She summarized in the following:

Deferred Sales Charge (DSC)

A sales fee that you pay when you sell an investment, like a mutual fund. Also called a “back-end load.” The fee often goes down to zero after a few years. Also, you may be able to withdraw up to 10% of your investment each year free-of-charge. A deferred load fund is a mutual fund series that has no commission to purchase but is subject to a fund company charge upon redemption. Typically deferred load charges start at around 5% to 7% in the first year, and will decline towards 0% over the next 5 to 7 years. Also known as DSC funds, back end funds or rear load funds. These can be avoided by slecting FEL, or front-end load fee structures.

Book Value

The original purchase price (cost) of your investment plus distributions valued at the time of distribution.

Capital Gains

Profit earned from the sale of real estate, securities, mutual funds or other capital assets.


A per-share payment designated by a company’s board of directors to be distributed among shareholders. For preferred shares, it is generally a fixed amount. For common shares, the dividend varies with the fortunes of the company and the amount of cash on hand. It may be omitted if business is poor or the directors withhold earnings to invest in plant and equipment.

Early Redemption Fee

Fee charged to unitholders who redeem or switch out of their units within 30 or 90 days of their original purchase. Should an investor choose to redeem or switch during this time, a 2% fee would be charged and paid to the fund for the benefit of other unitholders.

Foreign Content

The 2005 Federal Budget removed the foreign content limit for registered plans. Customers with RSPs, pension plans or other registered accounts are no longer subject to the 30% foreign content limit. This change means that customers can now exceed 30% in foreign holdings in their accounts without incurring a monthly 1% penalty.


A front load mutual fund is a fund that offers a broker the option of charging investors a commission on the purchase. The commission is charged as a fixed percentage of the gross dollars invested. Also known as Service Charge (SC), Initial Service Charge (ISC), Low Service Charge (LSC), or Front End (FE).

Fund Manager

The individual or team of individuals manages a mutual funds portfolio of stocks, bonds and other securities. The fund manager decides when to buy or sell the securities held in the mutual fund. The fund manager is paid an annual management fee for his or her services. A fund manager is also referred to as a Portfolio Manager, Money Manager, or Mutual Fund Manager.

Fund Sponsor

The name of company responsible for promoting and distributing its fund(s). Most fund sponsors will promote under the same brand name several different funds, often managed by different fund managers. Also known as the Fund Company.

Management Expense Ratio (MER)

Is a measure of the total administrative costs incurred by a mutual fund expressed as a percentage of the assets. These costs include costs incurred in day to day operation of the fund and the compensation paid to the fund manager for managing the investments (management fee).

Management Fee

The compensation paid to the mutual fund manager by the fund company for managing the mutual fund and for supervision of the day-to-day administration and operations of the mutual fund.

No Load

Term used to describe a mutual fund that can generally be purchased or redeemed without a sales commission.

Canadian Balanced

These funds invest in a mixture of primarily Canadian Equities and Canadian Bonds. The ratio of the holdings in these two categories will vary from time to time, but will remain split in a ratio of between approximately 70/30 and 30/70 of the overall portfolio holdings.

U.S. Small & Mid Cap Equity

These funds invest primarily in common shares of US companies with a market capitalization of less than approximately $1.5 billion in the case of small cap holdings and between approximately $1.5 billion and $10 billion for mid cap share holdings.

Sector Funds


These funds invest primarily in common shares of Canadian corporations involved in the exploration for, mining or drilling of, refining of or production and harvesting of natural resources ranging from pulp and paper to base metals. These funds can also have up to 30% of their holdings invested in companies based outside of Canada.

Precious Metals

These funds invest primarily in the common shares of Canadian domiciled gold or other precious metals producing, mining or exploration companies. Some funds may also choose to hold the physical precious metals commodities as a portion of their investments. These funds can also have up to 30% of their holdings invested in companies based outside of Canada.

People don’t understand Insurance (and why nothing is really being done to remedy this situation)


SONY DSCWatching the news, I (like yourselves perhaps) couldn’t help but notice the frustrations of the Hurricane Sandy victims, now going on almost a month with power, and in some cases, homes. I also couldn’t help but hear some of the complaints that had to do with homeowner’s insurance. “My homeowner’s insurance said they can give me $150”. Well now, if you live in NY, that probably can’t even get you one night in a hotel, much less put any dent whatsoever in doing something to get there home back. These families have lived in these houses or apartments, paying premiums for a product that has given them no benefit. Is it just me, or is there a huge disconnect between what people think they are buying and what they actually have. I had a similar sales experience where my movers actually used their insurance as a leading factor on why I should hire them. A few broken pieces of (expensive) furniture late, the insurance covered no one, wouldn’t even pay for the tax for the repair, and the people that broke the pieces help no responsibility. Others have probably had similar experiences with auto insurance. From here I am going to make a statement that isn’t based on any studies, but willing to take the risk that it might hold some truth: people do not understand insurance. In my days as a financial advisor, for the beginner, I always advised them to buy life insurance, as it is the most straight forward. You pay a set rate, and you know exactly how much you will get when you die. And the best part is, because there is only one definition of death, the insurance companies can’t argue their way out or try not to pay you. (Some have suicide clauses, or people that lied to get the insurance – however if you were honest, you know exactly what you get when you are approved for life insurance). Critical illness insurance is a well-designed product as well, as  it is very clear on defining the benefits – 28 days after being diagnosed with a critical illness (heart attack, cancer or stroke, in most cases), a benefit is paid directly to the survivor. It is when insurance products have a lot of ‘grey’ is when you have to be careful.

People looking for insurance should look for the clear answers on what the product is that they are looking for – if your advisor or bank can’t even give you a straight answer, find a new one. Look for the black and what, and make sure there is a clear definition of when the benefit kicks in. Anyone that has faced a injury on the job, become sick and had to pay for the treatment themselves or paid out-of-pocket for a car accident knows the importance of get an insurance policy that works, and also knows the frustrations of an insurance policy that does not.

Do you have any insurance horror (or heroic) stories? Share them here! What are your tips?