John Oliver, Last week Tonight on Retirement Planning

[Slava]

Last night John Oliver hit pretty hard against financial planning and retirement planning. He did this in his usual hilarious (at least to me) method, while highlighting some real concerns with the industry.

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It may seem odd that a financial advisor here would encourage people to watch this video as it basically takes a sledgehammer to my industry. The thing is for me there are some parts of this video that I wholeheartedly agree with. In Canada we do have some differences, and some things here he kind of glosses over or is just not completely accurate about. Unfortunately though, the fact remains that people can hold themselves out as financial planners or advisors with almost no qualifications.

Anyway, its an interesting take on the industry. I would love to see some discussion on this topic here!

[Coach]

^^^ Is that true in Canada, Slava? I know, at my bank, they are very careful about what we call ourselves depending on our certifications. Is that just because I work for an IIROC institution? I may be wrong here, but for some reason when watching that I had the thought that all Canadian investment firms are fiduciaries. Is that wrong?

Obviously there are still people that load up clients with high management fees, DSCs, A+ Access bullspit, etc.., but I was under the impression that if you can prove your advisor is not acting in your best interest, you can after them, no?

Personally, I know that the advisor I work(ed) for is very above board in this regard, but I do know some people, even around here, that do things that I would consider less than ethical. And we get transfers from smaller firms where people are just getting absolutely boned with unnecessary fees.

[Slava]

Well within the dealerships themselves they might have certain approved titles, and there are some approved titles for IIROC and that sort of thing. But overall in the industry you have widespread use of titles like "financial planner" or "financial advisor" or whatever the title might be with really nothing that distinguishes that individual as having any particular qualification. Its interesting because no one is holding themselves out as a lawyer, for example, without completing a law degree and being called to the bar. It's bizarre that the industry has let this continue without a regulatory body stepping and saying you cannot use these titles before you have completed these particular certification programs. As it stands though, people can theoretically complete the IFIC program or LLQP and be licensed for mutual funds and/or life insurance and be off to the races.

As far as the fiduciary duty, we do have one in Canada. I'm not certain about how difficult it would be to prove that an advisor failed to act in your best interest. I do think it is rather distasteful that companies fought that law in the US though.

The fee discussion he brings up is a little bit of an anomaly that he is using to compare all accounts. So I don't know the specifics of how that kind of thing works in the US, but the fee he is talking about seems to be related to setting up a group plan, and not directly for the investments. So the plan presumably has to be maintained and accounted for separately, along with proper accounting and tax filing. Is the fee too steep? Maybe, and maybe not. Its hard to say. He talked about people putting away $6000/year there, so based on that nearly 1.7% we're talking about $100/year. That feels like a lot perhaps, but it depends on what's involved. Its great to compound that fee for 30 years and multiply by the number of people and get to some huge figure and frame it as "look how much these companies are stealing from your retirement" and for all I know, could be accurate. But when you consider that the companies are providing thirty years of service for those fees and servicing all of these accounts along the way with proper reporting you have to consider that as well.