October is National Investment Education Month.
When it comes to protecting the financial security of older Canadians, one of the ways CARP advocates for older Canadians is through Investor Protection.
The financial industry is self-regulated. High fees, sub-optimal advice and an unwieldy complaints system put all older investors at serious risk. What’s more, complaints by seniors are disproportionate to the financial consumer population.
CARP is currently working with allied organizations such as FAIR, which champions the rights of individual investors in Canada through advocacy, education and regulatory advancements.
As well, with advocacy always comes education. Part of ensuring older Canadians are investment literate or of ensuring they know the ways in which their financial protection might be better protected through advocacy, is ensuring they understand the investment landscape, concerns, and red flags.
Investment fees
An example of this would be CARP’s education regarding investment fees.
It’s generally well known that investment fees are the silent killer of returns. Fees are inevitable since professionals who provide financial services need to be compensated for their work. The goal for a senior is to obtain the needed services at the lowest cost.
Investment fees are one of the most important determinants of investment performance and are something on which every investor should focus. Over time, minimizing fees tends to maximize performance. Read about what you should know about fees here.
Investor education is important, to be sure. But that alone will not resolve the issue of vulnerable investors losing significant savings due to industry wrongdoing.
Regulations must be responsive to the wrong that is done, and ensure investor protection is achieved through a just process when preventative measures fail and financial loss occurs.
Non-Disclosure Agreements
Currently CARP is advocating for better investor protection related to non-disclosure agreements (NDAs) or gag orders. In a landmark vote in early 2023, lawyers from across Canada vowed to help stop the use of NDAs, to silence victims and whistleblowers. You can read more here.
Independent Banking and Investment Ombudsman
CARP has also partnered with investor and consumer advocates and worked for more than 13 years advocating for an independent ombudsman, which is one of severally critically needed measures to protect the financial security of older Canadians.
Without an independent financial ombudsman service, customer complaints related to investment (and banking) are not handled consistently and compensation orders are not always upheld. The impact of no or low compensation settlements can be life altering for a senior or retiree. While CARP celebrated when the Federal Budget 2022 announced the government’s intention to strengthen banks’ external complaints handling system through the Ombudsman for Banking and Services and Investments (OBSI), a well-established, non-profit body, there is still work to do to ensure a robust and impartial governance structure within the OBSI, as well as the integration of a seniors perspective.
Retirement
A survey conducted by CARP earlier this year found that 1/3 of respondents don’t find it easy to plan for retirement. Canadians are living longer than ever, and with fixed retirement incomes and an unpredictable economy, for many, retirement is marked by financial insecurity. Next month on November 14th at 2:30-3:30pm ET CARP will host a webinar with a financial expert from Sun Life who will provide an overview of retirement income options and considerations. Stay tuned for registration information.
