Originally published in MacLeans’ Magazine June 21st, 2010. To go to the MacLeans’ Website please click here
It’s not every day a stranger calls to say they’ve got a sum of money waiting for you to collect, and when it does happen, it’s almost certainly a scam. So when a woman from a Toronto investment firm phoned Cindy Grauer last year and told her she was eligible to reclaim a mutual fund account she didn’t even know existed, alarm bells went off. But after cautiously confirming her identity, Grauer learned both the caller—Alison Pettigrew, a customer relations manager from Front Street Capital—and the fund—a straggler left over from a 20-year-old investment account—were for real. Then came the stunner. “Are you sitting down?” Pettigrew asked. After two decades orphaned on Bay Street, Grauer’s small initial investment had exploded to a healthy five-figure sum. “It’s like winning the lottery,” she says. “But how could something like this happen? It’s outrageous.”
It’s one thing to pursue a buy-and-hold investment strategy, but it’s not supposed to be buy, hold and forget. Yet over the decades many Canadians have lost track of some of their investment assets, whether through negligence or simple absentmindedness, a risk that’s likely to increase with an aging population. But while no one knows how much is sitting unclaimed in mutual funds, stocks, bonds and RRSPs—millions? billions?—there’s no easy way for investors to hunt down their forlorn funds. Nor do government and industry show any interest in doing much about it.
Grauer’s case shows how easily investments can go astray. In the 1980s she had a brokerage account with Pemberton Securities, which she closed at the end of the decade and moved elsewhere. But in the transfer, Pemberton overlooked one mutual fund. The firm was later acquired by Dominion Securities, which in turn was bought by Royal Bank. Front Street, meanwhile, took over management of the fund in 1999.
While Grauer’s account ping-ponged through these takeovers and mergers, it also flourished. Under Front Street’s management, the fund enjoyed average annual returns of 22.9 per cent over the last decade. Yet Grauer might never have learned of her windfall were it not for Pettigrew’s persistence, says the ?rm’s CEO Gary Selke. Pettigrew made it a personal project to reunite some early investors with their accounts, a task involving hundreds of phone calls. In one case an investor learned of an account worth more than $250,000.
Unfortunately, Pettigrew’s persistence appears unique in the industry. Which is why some, including Grauer, a Vancouver management consultant, believe there should be a national database of unclaimed investment accounts. The Bank of Canada already operates an online system that allows individuals to search through $351 million of unclaimed bank balances for their cash. But investments aren’t included. “I just assumed the Bank of Canada’s site captured investment funds,” says Susan Eng at CARP, a group that represents older Canadians. “At the very least we ought to have a default place where you can try to find your money.”