S-O-S Who will Save Our Seniors?

The evidence collected by SIPA suggests that many seniors are losing their savings due to fraud and investment industry wrongdoing. The media is full of stories regarding leaders in government and industry acting for their own benefit at the expense of ordinary Canadians. Many of the issues that receive media coverage affect all investors but are rarely the cause of extreme loss.
Extreme loss is when the small investor loses a significant portion of his savings. This usually is the result of fraud in many forms or widespread investment industry wrongdoing.
Individuals with no affiliation with the legitimate investment industry can perpetrate fraud. It may be the sale of non-existent investment products such as Guaranteed Bank Certificates, Limited Partnerships for non-existent properties or properties that do exist but do not have the value stated, or simply a cash scam (known as a Ponzi scheme & supposedly named after the initiator of these schemes.)
The more serious issue is that of widespread industry wrongdoing. Many seniors have accumulated substantial savings over their working careers, have no investing experience and relied upon income interest generated by GIC’s, bank savings, Canada or government bonds, and Treasury Bills. Their capital was protected and they were able to manage on the modest interest earned.
With interest being reduced to historic lows, rates on savings accounts down to less than 1% and government bond returns reduced to unforeseeable levels, many seniors felt forced to move to other forms of investment offering higher rates of return.
Few seniors are prepared to risk the loss of their savings and they are assured there is little risk in following their advisors advice.
Often the advisors suggest or implement a strategy of leverage without explaining the increased risk of significant loss. Many firms have a corporate policy to leverage clients. They encourage mortgages, bank loans, and margin loans (loans form the investment firm guaranteed by the assets in your account). Sometimes these strategies result in highly leveraged accounts.
Leveraging can work in certain circumstances when the investor understands the underlying factors that can affect risk, but there is always risk of change in the investment market.
When advisors combine the selection of inappropriate investment products, and excessive trading to generate commissions, it is a recipe for disaster.
When mutual funds are churned deferred sales charge can be incurred on top of MERs and Trailer Fees.
Sometimes it is not easy for seniors to monitor their accounts because the statements provided are not easy to decipher.
While many statements will provide a value for this month and last month, few provide an annualized rate of return. Managed accounts will normally provide this information but registered and non-registered accounts often do not unless it is specifically requested.
So how can we Save Our Seniors?
· Speak with older friends and relatives about the need to be watchful over savings and investments.
· Help educate others about the danger of following an investment strategy that we do not understand. Seniors in particular should avoid leverage.
· Talk about the need for a statement that clearly shows where you stand and shows the annualized rate of return for your investments.
· Write to the Hon. Tony Ianno, Minister for Families and Caregivers, in Ottawa and express your concern about the lack of investment protection for senior investors.
· Also express your concerns to your M.P. and your M.P.P.
· Become more informed and support the journalists who are writing to help small investors. Send them letters of support.
· Make sure that you protect yourself so you will be in a position to help others.
· Support CARP/SIPA in their call for an Investor Protection Agency, TruthTeller Protection legislation and a firmer stand on white-collar crime.
At a SIPA meeting Glorianne Stromberg said the situation would not change unless small investors speak out. SIPA is one voice for small investors. We need many voices speaking out.
We estimate that Canadian investors are losing billions of dollars each year due to fraud and industry wrongdoing. We believe that industry wrongdoing is the cause for the major portion of this loss.
Seniors are suffering from the loss of their life savings. Their lifestyles are compromised in their Golden Years. Often their health, hope and happiness are destroyed.
Help to Save Our Seniors. Become active in supporting the need for better investor protection. Write your M.P.P. and your M.P. Become involved. Support SIPA.