Cut The Crap Investing and Beat The Bank.

First off apologies to Larry Bates, the author of the simply wonderful book Beat The Bank, The Canadian Guide to Simply Successful Investing. This is a post about Larry’s wonderful new book, but I just had to come first in the headline. It’s kind of like Lennon and McCartney the famous song writing duo for The Beatles. Try saying McCartney and Lennon a few times, it just doesn’t sound right. Or how about Stills, Young, Nash and Crosby. Nope, doesn’t work.

Song writing analogies aside, the above headline is not about how it rolls off the tongue.

In the headline I’m the set up man for Larry. There’s a whole lot of crap investing going on out there in Canada, in fact we are the ‘crappiest’ in the developed world. And Larry has the punchline to that set up – Beat The Bank. And he should know how, he’s a former banker. On the book cover he is now tagged The Enlightened Banker.

Larry and I quickly gravitated toward each other as we share the same mission. Canadians pay the highest mutual fund fees in the developed world. Canadians are hooked on those mutual funds (mostly by way of the big Canadian banks that they whole heartedly trust as Larry points out) but there are many simple and wonderful investment solutions available.

Problem meet solution. Simple stuff that leads to a simply wonderful book. It’s a book that I think stands a very good chance to become a staple for Canadians who seek a better way. 

This post is not a review of the book, I will be back with that review next week; this post is about the ‘why’. Why did Larry Bates write this very important book? At times, why a writer felt the burning need to write is just as telling and insightful as the actual words and thoughts and messages that make up a book. Now in ‘the book’ Larry certainly gives us a taste of why he wrote the book, the a ha moment. Or perhaps it was the ‘oh crap’ moment that came in 2013 when his Sister called him and asked her banker Brother why her mutual funds were not delivering decent returns after so many decades, while she understood that the markets were performing very well. With a few clicks Larry found the Fund Fact Sheet and the culprit. The mutual fund fees were 2.3%.

Mary: “OK, but 2.3% of our gains doesn’t sound like very much.”

Larry: “No. Not 2.3% of your gains. Scotiabank charges you 2.3% of your total investments. Every year”. Larry went on to add “fees have eaten up 30-40% of your monies”.

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Kind and fair Larry adds for the reader …

Not to pick on Scotiabank in particular; Mary would have experienced the same result dealing with any big bank or traditional mutual fund provider.

And there you have it The Big Elephant in the Canadian living room. Canadians pay the highest fees in the developed world and as this Tangerine study shows Canadians don’t understand investment fees and many do not know the fees that they pay. Heck, about half of Canadians feel that they don’t pay ANY fees. Wondering who’s been telling them that? 🙂

Larry then went on to do more research to try to discover how this could all happen. As he peeled away the layers he could easily see the patterns and practices in the land of ‘Sales and Confusion’. It’s all quite disturbing and it gets to the point where you just can’t take it any more, and well, you get so ‘mad’ that in good Canadian fashion, you have to write something. Sometimes it’s a letter. Sometimes it’s a book. And this book will somewhat  ‘blow the whistle’ on the Canadian mutual fund industry. Of course we’re going to use a referee’s hockey whistle. Some of the calls and penalties? When Canadians are trying to discover the fees they pay there’s Interference, there’s Holding (onto too much of your monies), Delay of Retirement, and generally in the industry there’s a lot of Misconduct.

And being a good Canadian Larry is going to be very polite and honest and measured as he moves forward using the book as a springboard to deliver the message and solutions that can help Canadians. We know that repeatedly beating the drum of anger and disappointment will fall on deaf ears. This is all just simple logic, simple math. There’s a simple story to tell. There’s a problem but there’s a better way.

Over lunch on the first day after his book release it was easy for me to see that Larry’s heart is in the right place. The book required a tremendous amount of energy and time, courage and personal monies. Larry had a long and successful career at a few of the big Canadians banks. Now it’s your turn to benefit from that experience. He truly wants you to Beat The Bank.

On behalf of Canadian investors, thanks for writing.

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