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Today's Investment Industry
Everyone older than 40 remembers the pitch: money invested in a GIC earns a negative return after adjusting for inflation. An investment in the world's equity markets would outperform these boring bank products and reward investors for their increased risk with substantially higher returns and as interest rates began to fall, a greater proportion of these assets began to shift into equity markets - primarily mutual funds.
Today, the equity mutual fund has replaced the GIC as the investment vehicle of choice for retirement accounts while generating more than $10 billion dollars in management fees for the investment industry in 2003 alone! Despite the premium fees paid, most funds failed to outperform the benchmark indices. For many investors, their promising retirement dreams turned to nightmares.
 It is ironic that while investors were speculating on equities, one of the safest financial products, the Government of Canada Bond, outperformed the S&P/TSX Composite Index (equity) investment return during the same 10 year period 1994-2003.
It is unfortunate that few financial advisory firms have a business model that allows for investment plans that are predominately in safe financial products.
First Leaside has identified Transaction Bias and Product Bias as the two most significant impediments preventing Canadian retail investors from receiving responsible financial advice.
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Product vs Service
Wealth Management
