This is a continuation of the story I shared with you in “Bad Investment Advice.” If you do not have time to read the entire article, in short, a brother of a friend of mine went into TD looking to start up an RRSP, armed with some great recommendations for a balanced, well-diversififed set of index mutual funds in equities and stocks. Instead, thanks to the “advice” of one of their investment “advisors,” he came out with a 100% equity portfolio in Canadian equities because “it has done so well in the last few years.”
I wrote about that story on January 25th. The story continues. Just yesterday before the RRSP contribution deadline for deductions made for the 2005 tax year, my friend’s brother went in to add to his RRSP. Here’s what happened:
[he] went in to the bank to contribute some last minute money to his RRSP’s, and the
tried to get him to transfer his mutual funds to a GIC paying 2.5% per annum! A 23 year old kid with 45+ years of investing on the horizon, and she recommends a GIC paying 2.5%!? I’m going in there with him this Saturday.
Unbelievable.
Unbelievable is right!!
A 5-year GIC should be paying around 4.5%!!!! The yield curve is so shallow right now, that I think Achieva Financial is paying 4.05% for a 1 year term! Even their daily interest savings account is paying 3.50%!!
Your friend definitely needs to change financial advisors ASAP. I am assuming that it is the same advisor that suggested investing in all Cdn equities in the first place?
I am still waiting for confirmation that it is the same advisor that suggested investing in all Cdn equities in the first place. I was anxious to blog about this right away, but from what my friend said, I think his brother did go back to the same person.