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In my monthly net worth updates, I categorize my assets into stocks, cash, RRSPs, TFSA,  and other, to name a few.  In this month's net worth update,  Investing Newbie wanted to know what my "Other" investments are.

Well to answer that question, I’m going to tell you a story of how NOT to invest.  So don’t try this at home, kids.  The Other investments basically consist me flashback 4 years ago tagging along with my mom and having her introduce me to her financial advisers.  Note the plural form of financial adviser.

I was keen on investing my money and getting the 6% per year returns that everyone talks about.  More importantly, I wanted to find a way to reduce my taxes paid (aka get a bigger tax refund).

My initial investment into these funds were pretty big.  I gave each financial adviser $5000 each, pretty much.  In total, I invested $18,000.  Today this section of my portfolio stands at $11455.  I am down 37% of my initial investment.  Ouch.

The first investment adviser who I gave $3000  to isn’t performing too badly… I suppose.  One of the mutual funds  is principal protected at $2000 and the other is up $61.  Though this is after about 4 years…And these are actively managed mutual funds with MERs.

The second financial adviser who I met, I invested in an oil income trust with $5000.  Currently it is down $2000, though I do get monthly distributions.

The third financial adviser hit me the hardest.  She was REALLY good at selling.  I had her at “tax credit”.  I bought $5000 worth of a venture stock (though I did get $1500 back from the government in my tax return) and I bought $5000 of flow through shares.  She told me she gets them every year and wished she got them early on in her career.  In hindsight, I should have asked her why the “risk tolerance” she checked off while doing my investor profile said “high”.

The flow through shares are worth $2000 currently.  I did get a tax credit of about $1500 as well.

So including the tax credits I received back from the government,   with the $18000 initial investment, I would be at about $14455.

My lesson learned:

1)  The only person who really cares about your money is you.  I’m not trying to bash financial advisers, but they do get some good coin for selling you their financial products.

2)  Don’t buy financial products just because of the potential tax credit.  Obviously the government is supporting these initiatives because they are risky.

3) Get to know your financial adviser.  You need to be able to trust them.  Don’t have your family member be your financial adviser just because they’re family.   HINT: Don’t be like Earl Jones’ brother and  give your money to him (Montreal financial adviser) just because he’s blood.  He’s sentenced to 11 years in prison after pleading guilty to $50 million in a fraud Ponzi scheme.

4) Pick one financial adviser, not three.  Though different financial advisers may offer different products.  My experience with  Investor’s Group comes to mind, they may request that you consolidate all your portfolio and give it to them, or else you’re not eligible for that better performing product, or they may entice you to borrow money from them and leverage your investments.

How about you? Have you had any experiences investing where in hindsight, you wish you had better foresight? Have you had a “Doh!” experience with financial advisers?

Article comments


I haven’t had a d’oh experience yet and I intend not to have such experiences. I completely agree that one needs to be careful with one’s own hard-earned cash. Hire a financial adviser if you have to, however, make sure both you are on the same page. There is a thin line between advisers and salesmen, and I would advise you to differentiate the two for obvious reasons.

@Kellen @Young The value of a financial advisor is a third-party perspective on your situation. Make sure the advisor is fee-only and that they have worked with clients whose situations are similar to yours. Ask the prospective advisor many questions, you want to make sure that you are getting the best advice possible.

@ Young Sorry for the very belated response. First of all some advisors work under a fee-based model. This means they might charge a fee for a financial plan, but implement the plan with commissioned products. In my opinion this is very deceiving to the public. Fee-only is just that, advisors working under this model earn fees from their clients, period. Many of my NAPFA colleagues work on an hourly as needed basis and might be appropriate for some of your readers who are just starting out or who have not accumulated a large portfolio as of yet. The Garrett Network is also a network of fee-only, hourly planners, many of whom are also NAPFA members. For an explanation of the difference between fee-only and fee-based please check out this post I wrote last year. http://wohlnerfinancial.blogspot.com/2009/11/how-is-my-financial-advisor-compensated.html

Kellen says:

So far, I’ve never really felt the need for a financial adviser. Of course, I don’t have nearly the amount of resources to manage, but I plop all of my money into high-risk mutual funds with low fees and trust the market to take care of it for me.

Once I have enough money, I might try trading stocks, but I tend to have more of a buy-and-hold (forever) philosophy towards investing. I’m not sure if I want to bother having to keep track of stocks.

What do you feel like are the benefits of a financial adviser? Maybe I should think about getting one a few years down the road when I have more assets for them to manage 🙂

young says:

@Kellen- I personally feel no REAL benefit to financial advisers, unless they are the financial advisers that you pay for their services (so that they are commission free). Buy and hold is a good mentality to have, as long as you either do the dollar cost averaging or buy your funds with the “value” technique (buy dirt-cheap low). Thanks for commenting Kellen!

Your post seems to ignore financial advisors who do not sell product, those who are fee-only. NAPFA members are about unconflicted advice geared to the client’s needs. Some of us work on flat fee retainer, some on assets under management, others by the hour as needed. “Advisors” who sell financial products in my opinion cannot provide the unbiased advice that every client deserves. NAPFA’s website is http://www.napfa.org
.-= Roger Wohlner

young says:

@Roger Thanks for visiting! Perhaps those select advisers are the ones Financial Samurai was referring to. Is there a certain minimum portfolio amount to be able to have an adviser like that? I personally haven’t come across any like that, but I’m sure they are available- guess I’m not looking in the right place! Actually, the THIRD adviser (the one who sold me the riskiest products), I thought she was a no-fee adviser, but afterwards realized she wasn’t. You’re right Roger, Advisers who sell financial products really cannot give unbiased advice… how can they, really? To earn their living they must sell, sell, sell, even in a product they may not believe 100% in!

The Rat says:

When the last batch of mutual funds I had in my portfolio ( I had them in my RRSPs) finally appreciated to a level I was happy with, I transferred them all to GIAs (guaranteed investment terms) and never looked back. One thing’s for sure, your investment will never go down in that regard.

Don’t get me wrong, I hold stocks in my TFSA and non-registered accounts but for the most part, I tend to stay away from funds that charge any kind of management fee. I’m sure some people make money with funds, but it’s not something that falls within my radar.

Look at your experiences as opportunities to learn from. Trust me, you’re not the only one to have but 5k or more in an oil & gas trust and to be down significantly on the value of the investment. I put a sizable chunk of money in Harvest Income Trust (HTE.UN) and it was a nightmare on wheels. First the distribution cuts and then the buyout. I never did recuperate from the losses. But I did learn from the experience and the dangers of chasing higher yields.

There’s absolutely nothing wrong with detailing your investment history. It’s the only way to accept what has occurred and how to approach investing on a go-forward basis.
Nice thread!
.-= The Rat

young says:

@The Rat Awe thanks! Good to know that I’m not alone =) Yeah, hindsight is 20/20 vision, right? It is a very good learning experience not to chase higher yields or just to get something because you can save on taxes! (Though that feeling of getting money back from the government was quite liberating, I must say!).

Hard to say on how much. I spoke to USAA last week, and they said one needs $500,000 in investable assets to have then assign a financial adviser/wealth manager to me.

I think at Citibank, one must have at least $250,000 worth of assets including mortgage debt or something, so it’s lower.

Donno for sure!

young says:

@Financial Samurai I think my eye balls just fell out of their sockets reading that!! I guess if they mean assets (e.g. house) then that’s not too bad, but still. Maybe my financial advisers don’t consider me their financial advisee then! =(

I recently shared some lessons learned with my dealings with a financial advisor a few years ago. The main lesson I learned was similar to your #1 lesson. It’s your money, so you have to care about it…have at least a basic understanding of what’s going on. Otherwise you may end up with a heavily loaded mutual fund and steep commissions.
.-= Lakita (PFJourney)

young says:

@Stay at Home Mom CFO Yeah! That was an expensive learning experience! I guess it’s all relative right? Thanks for making me feel better =)

@Investing Newbie haha you mean I pushed it in the corner a few years back and had to resurface my anger and resentment? (kidding!) Re: the market 4 years ago- that’s true- good point! (I’m just a greedy little bugger! lol!) Yes, that’s true we have many years upon us, so it’s okay to be “high risk”. =)

@Lakita Cool, great minds think alike!

I hope I didn’t undo any therapy you might have undergone by bringing up this point! That sounds tough, but yet-and-still, a valuable lesson was learned. In your defense, the marker 4 years ago, was a totally different landscape. Had I invested 4 years ago, I probably would have named my blog, I hate Investing. Fortunately you are Young (and Thrifty) so, you have plenty of time to recoup and gain upon those losses.
.-= Investing Newbie

I’ve never had enough money to need a financial adviser! That stinks but at least it’s a learning experience albeit an expensive one. Considering the market over the past two years it actually doesn’t sound THAT bad:)
.-= Stay at Home Mom CFO

Point #2… buy more save more! Dangerous mindset to have, so good you pointed it out.

Point #1… you are right, but sometimes there are those special people who really do care for others as much as you care for the well being of your seslf.

Do you believe all people should get an adviser despite their capital amounts?
.-= Financial Samurai

young says:

@Financial Samurai Hey Sam, thanks for visiting! I think that getting an adviser doesn’t hurt, as long as you feel there is a good ‘fit’ and you are given the tools and information to make the right choices (without having to feel pressured). In terms of capital amounts, some advisers might not give you the time of day if you don’t have enough capital for them to invest with…from my experience dealing with them, I think they were happy with >$5000 amounts. What about you? What do you think? =)