Reynolds gives good coverage of the investment funds industry in
Canada. This book is a must read for investors and advisors alike.
As an advisor, I find many of the case studies very pertinent.
While I have not come across incidents as bad as Reynolds outlines,
his cases can be held up as examples of what not to do, that leave
you shaking your head and asking, "What could they possibly have
been thinking?"
One trick that is missing from the book is the practice of annual
"re-balancing" of mutual fund portfolios.
This is when the unscrupulous advisor use the 10% free redemption
of back end load funds to purchase a new fund (one on which they
are paid commission!) thus re-setting the back-end load and
redemption charges. I frequently come across this practice when
reviewing the portfolios of potential clients, easily spotted by
the tell tale give away of having numerous funds that just happen
to be 10% of the portfolio!
This book is a must read for all advisors. It truly shows that the
industry is moving towards a fee for service structure and you had
better be up on it before you are left behind.
For investors, you need to read this book, and then examine your
own portfolio for any of the illustrated shenanigans. Start looking
for a new advisor if you find them.