Look hard at investing advice

Recently, regulators turned up the heat on a well-known financial guru, alleging he used so-called seminars to solicit business that furthered his own interests.No matter who ends up on the “winning” side of this case, it calls into question once again concerns regarding abuses that can arise when promotion postures as independent information.Protect yourself
Whether from a self-styled financial expert on a public speaking tour or an investment adviser at a large brokerage firm, investment information is bound to reflect some self-interest. After all, profit in the financial services industry relies on our willingness to invest our money.

Make no mistake about it: Investor education is a good thing.

New products, strategies and legislation are never-ending in investment world.  Sponsored seminars can provide excellent basic information, especially for the novice investor.

But the first rule of investing is to protect yourself. Watch out for the possibility that the information being provided crosses the line into the area of financial advice – which the speaker may or may not be authorized to provide. 

Be sure you understand how much of the information is designed to serve your interests and how much, if any, is designed to line the pockets of the seller/promoter.

Information or promotion?
Here are some tips to help you determine the difference.  

  • Check out your “guru.” 
    What are his or her qualifications?  If the information amounts to a sales pitch for specific investment products or strategies, remember that there are laws dictating who may dispense such advice.

Find out whether the “expert” is indeed licensed to give financial advice.

Has his information been questioned in the past and, if so, by whom?  Don’t mistake publicity or popularity for trustworthiness or expertise.

Next page: Think objectively

  • Think objectively.  
    Ask yourself whether the information is factual or primarily based on the speaker’s apparent enthusiasm for a particular investment.

Remember that no single security or strategy is suitable for everyone. A factual analysis will usually include a description of potential disadvantages or risks for some people, as well as the positive selling points.

  • Look for conflicts of interest. 
    Don’t be surprised if you’re contacted later about an investment product or service – one of the common strings attached to “free” seminars is that your name becomes part of a list of potential investors.

However, more important is to base your investment decision on knowing the full truth about the information you’re receiving. How does the expert get paid for running the seminar? What is his interest in the product or service?

A key allegation of regulators in the much-publicized case mentioned above is that the financial commentator held undisclosed interests in the investment he was promoting and stood to profit from recruiting new investors.


  • Do your own research.
    Before you commit to anything, don’t hesitate to check other credible sources, such as the securities regulator in your province or territory, resources from the industry organizations (the Canadian Securities Institute), daily newspapers and the Internet for comments, columns and critiques.


  • Go with your gut.
    Often we have an inkling when something sounds too good to be true – no matter how great the deal appears. If your instincts tell you something’s not quite right, walk away.

June Yee is financial editor of CARPNews FiftyPlus and edits books and newsletters on personal finances.
David Tafler is the publisher of CARPNews FiftyPlus and a writer on financial planning.