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investor clinic

For nearly 15 years, Garth Rustand worked as a stock broker with a big firm in Vancouver, pulling down $125,000 annually and being wined and dined by mutual fund companies pushing their latest offerings.

But as the money poured in, generated by fat commissions on funds and insurance products, he came to an uncomfortable realization: He was doing a lot better than the clients he was supposed to be helping.

"If you're on commission, it's very, very difficult, almost impossible, to do what's best for the client," says Mr. Rustand, 55. "You're being paid to generate commission, period."

The problem with most adviser-client relationships is that the parties' interests aren't aligned, he says. The adviser is under pressure to sell expensive funds, wrap accounts and other products that generate the highest fees, but those high costs erode the client's returns.





Worse, many of the highest-commission products are the riskiest, exposing the client to potential losses.

The industry is built on "a huge conflict of interest," he says. Sadly, most consumers aren't aware of the conflicts when they turn their money over to an adviser whom they trust to do the right thing.

So in 2002, after his clients' nest eggs - and his conscience - suffered a blow in the tech meltdown, he decided to get out. He sold his "book" and started looking for ways to put his investment knowledge to better use.

"I wasn't feeling great about being a broker," he says.









Advisers behaving badly Any of the following can be signs of a potentially problematic adviser, says the Investors-Aid Co-operative of Canada:

  • Frequent recommendations to trade A well-built portfolio doesn't need a lot of changes. Excessive trading lines the adviser's pockets, not yours.
  • Pressure to invest in new products Most packaged or hybrid products are expensive, complex, add little value and have low returns.
  • Dropping hints about a stock that's about to go up This could be an enticement to trade stock, or an indication of insider trading.
  • No return calculations The adviser may be trying to hide lousy returns.
  • Constant contact Although everybody likes attention, too much can signal that your adviser is trying to generate fees. A good portfolio should be reviewed once a year or every six months at most.
  • No contact The other extreme is when an adviser ignores you. Make sure you are getting the attention you need.


After a stint working for an ethical funds company, he began laying the groundwork for the Investors-Aid Co-operative of Canada. Launched in 2008, Investors-Aid is an independent organization owned by its 200-plus members. Its mission is to provide consumers with unbiased educational materials, online tools and investment advice.

"We're trying to give people the nuts and bolts information they need," he says.

For a lifetime membership fee of $35, members get access to the co-op's website, which provides articles, sample portfolios, diagnostic questionnaires and tips on everything from slashing your investment costs to transferring your account if you're unhappy with your adviser.

For an additional $30, members get Investors-Aid's guidebook and workbook. There's a lot of solid information here, whether you're working with an adviser or you've decided to go it alone. Though many advisers push expensive products, educated consumers who ask the right questions can get the service and returns they deserve, he says.

For investors who want a second opinion, Investors-Aid offers portfolio reviews for an additional charge of $200 to $300, depending on the complexity. The co-op also plans to launch a subscription-based "virtual adviser" service that will provide personalized portfolio reviews online.

Most problems are easy to diagnose and fix, he says. Investors are usually paying too much in fees, or they're trading individual stocks when exchange-traded funds would provide better diversification. Many portfolios also contain risky investments such as emerging market funds.

For Mr. Rustand, running Investors-Aid is largely a labour of love. This year, he expects to take home just $8,000 to $10,000, but he's hoping his salary will increase as the co-op's membership grows.

"If I'd stayed where I was, I'd be making a huge amount more money. I didn't start this to make money. I started it because I think it's the best vehicle to help consumers in this country," he says.

"It's not all altruism. I would love to be able to make a good salary doing this. That would be great and I'd feel really good about being able to help a lot of people."

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