February 2002 - Nr. 2
Toronto’s Financial Forum:
A K-W perspective
by Herwig Wandschneider
The 16th Annual Financial Forum was held at the Metro Toronto Convention Centre January 24 – 27, 2001. The event is free to Individual Investors and ran from 8:15 to 17:45 on most days.
The concept of the Forum is to inform investors of investment opportunities in Stocks, Bonds, Insurance Products, Mutual Funds and the more sophisticated financial products.
I normally write about the fun parts of K-W activities and
do not bother much with serious activities 100 km from here. For this year’s
event, though, I would like to make an exception, as the Forum and Investors
are in a recovery stage from the horrors of the Financial Markets in 2000
and 2001. This was very evident at the Forum.
First, the Forum’s exhibitors were significantly reduced in size and numbers. Banks and Mutual Fund Companies, for the most part, reduced the scope of their participation or were not there at all. This can be explained in many ways, perhaps even including reduced budgets. (A bit unrealistic for most institutions considering the huge profits they are making). More significant is a change in atmosphere. The Forum is largely intended to make investors aware of financial products. This also includes promotion of hands-on investing, by familiarizing investors with ways of "do-it-yourself" investing. Most banks have on-line banking and stock and bond market trading facilities, and several Mutual Fund Companies promoted the do-it-yourself approach in the past. For the most part, these are the institutions that were not there.
The phenomenal drop in Nasdaq, S&P 500 and the TSE300 indices over more than a year changed some attitudes. Individual "do-it-yourselfers" suddenly realized that markets can go down too, and that perhaps there is something to long term planning, asset allocation and diversification. That maybe, just maybe, not all the money should be let loose into the wicked world of people who know how to make money on others through an amazing array of products that are getting way too difficult to understand, unless you have in education in the field.
Now, you have to know, that I am in the business of advising clients on Mutual Fund and more sophisticated investments through Insurance products, to appreciate a bit of the bias that I obviously have against doing things without professional help. I view the "do-it-yourself" approach as rather counterproductive. It’s a bit like growing your own foods, doing the architecture, engineering and building of your own house with your own two hands and educating yourself in another profession, while executing and pursuing a prime career and sharing life with your family. For the dollars this saves, phenomenal time is wasted, personal relationships and huge returns are lost over the long term.
Most of the financial institutions are aware of this, but nonetheless take advantage of this most human of all behaviors - greed and the adrenaline rush people get from investing and from quick gains. The institutions compete in an aggressive market, and accelerate their profits - using means and ways to reduce their costs by downloading the overhead onto the backs of individuals, who are quite prepared to listen to ideas for cost reduction, but who surely cannot handle this extra work and risk for long.
So, now the institutions are progressively going back to including advisors in their lineup of financial products, developing new departments, or acquiring expertise through Mergers & Acquisitions, continue the reduction of the once staggering fees that were charged as front-end and back-end loads and improving their own cost structures to facilitate reduction in the Management Expenses and the corresponding Ratios (MER’s).
Now they advertise that investors should be using advisors and should invest wisely for the long term and they begin, or return, to working with advisors once again. Assuming investors still have the money to do so, after the heavy losses or monumental reduction in profits incurred with so many companies. They are also out to repair or develop relationships with advisors, who continued to work with those other institutions, who knew that advisors will be needed more than ever in the future.
The Financial Forum is well worth your while to understand the products on the market. And well worth the 100 km drive. This time the Forum even included seminars and presentations on non-financial and the more personal and human aspects of a future retirement; a welcome change in atmosphere and back to a responsible approach for rational investing and planning.
