Financial Red Flags: Bad Advice We've Seen Recently

In this episode of the Canadian Money Roadmap, Evan and Sam examine common examples of bad financial advice they've encountered online and with real clients — including chasing past returns, being pressured to commute a pension into a complex insurance product, and having locked-in investments (like labor-sponsored funds and GICs) placed in accounts where money is needed by a specific deadline.

📱 Book an intro call - Cedar Point Pathway retirement planning service

📝Financial Foundations Scorecard - See how you score in the areas of cashflow & spending,  saving & investing, debt & risk protection, and retirement readiness. Instant feedback and recommendations on how to improve your finances.

💰Get your money organized - Full Financial Picture Spreadsheet

Transcript

SPEAKER_00 0:01

Boy, oh boy, oh boy, there is some bad financial information out there in the world. We have seen it all. Well, we haven't seen it all, actually, but we've seen plenty of it, and we're gonna talk about it here on the podcast today. Some of these things we have seen online, some of them we've experienced in person, and others we've had to walk clients through to back their way out of some bad financial situations. So we hope this episode will help you identify some of the bad information out there before you inadvertently apply it to your own financial life. But let's get right into these topics right here on the Canadian Money Roadmap Podcast. Sam, we're going handheld today.

SPEAKER_01 0:37

We're in the handheld and no one can see us. We're not doing video today.

SPEAKER_00 0:42

We're getting a little bit different here on the podcast, but this is kind of nice, kind of going back to the roots here a little bit.

SPEAKER_01 0:48

Absolutely. And going back to the roots of we have lots of advice to give, and there's lots of different pieces of advice out there that we need to uh engage with.

SPEAKER_00 0:57

Okay, so I probably go on Instagram more than I should, just like scrolling through reels and whatnot, and just being in the financial space here, inevitably I get recommended some of these videos. And man, I saw one on the weekend that was just so jarringly bad. Like all of it was bad, like the terminology was bad, the title she gave herself was like an unregulated title. You know, there's a complete lack of understanding of what any of the concepts were, and she had thousands of followers and tens of thousands of views on these videos, and I'm like, oh my goodness, I'm not gonna call her out by name or anything like that, but it was just this moment of realizing that, oh my goodness, there's so much bad information out there, and sometimes just calling out what is bad information can help you and help us understand what good information might then be as a result.

SPEAKER_01 1:51

Yeah, well, you sent me this video as well, and so we were just kind of reflecting on it together, but one of the themes of some of this content is a bit of a pie in the sky promise of you're gonna get higher returns, or you can be, you know, you can kind of have a little bit of a shortcut financially to the place you want to be, right? And this this video particular video fit into that, and that seemed to be what a lot of the people were reacting to is like, oh, you got such fantastic returns in only a few months. I I want to do that. I want to skip ahead a few um a few steps in the process.

SPEAKER_00 2:27

Yeah, your your language of shortcut there is is apt because you know, good returns can happen over a very short period of time, a hundred percent, but to not tell the full story of you know whether it's guaranteed returns, which is kind of what she was implying almost. It's like, well, this is a good investment, so it's going to have good returns. It's like, well, there's more to that story, right? And you as the listeners of this podcast, you know that there's more to that story here. But let's uh we we've got a list of a few different things that we've seen, um, some that we've heard from current clients, some from prospective clients, some that we've taken over um a client's accounts and we've had to kind of back them out of uh a bit of a tough spot. So we're gonna talk about some of these problems that we've seen. But this first one here, the the main thing that really irked me about the the language in the video was that you know she she had these spectacular returns over a short period of time. She made three grand from a $35,000 investment. I guess she didn't make that. The investments had increased in value by $3,000 over a three-month period. And it's like, oh my goodness, this is spectacular. And so she made the suggestion that if you're not getting returns like this, you gotta shop around for better returns. Any problems with that? Any red flags there, Sam?

SPEAKER_01 3:54

I think, yeah, we could maybe get into a few different ones, but that shopping around for better returns flies in the face of most or all of the evidence-based investing principles we uh ascribe to at Cedar Point Wealth. So I'll maybe just start with one aspect of that, but there's an implication in the statement that by shopping around you can find the place where the best returns will happen. And you can't do that. Right. We don't know what the future is gonna hold. So just by switching to a particular fund that say did well over the last five years, that's no guarantee that the next three months are gonna look that good. Um, so what's the actual strategy kind of being implemented by the fund itself? And does that align with your risk profile, your time horizon, all these different things for sure?

SPEAKER_00 4:42

Like it's it was a big issue for me because there's clearly a lack of understanding of what the investment was and perhaps why the returns were that the way they are. Like there's no just moral standard of good investment and bad investment. You just have to know what it is and when that particular investment might have success and when it might fail. Because that's always gonna be the case. Assuming you're getting returns better than cash, there's some sort of risk in there, you know, decline in value, some illiquidity, all sorts of different potential types of risk that could be in there. But to just say you gotta shop around for better returns kind of ignores the concept of what potential risks are associated with that investment. She doesn't disclose what it is, by the way, so you got a message her and get the, you know, get in the calendar to have a meeting, of course. Like, so it's it's probably some garbage, anyways. But when you're doing this idea of say shopping around for better returns, you know, there could be a situation where you're in something that's seems to be prudent on the surface, and there might be something better, but return probably isn't what you want to be looking for primarily. Again, you need to understand what it is and why it might lead to better returns tomorrow or you know, in the future. Is it more diversified? Is it slightly lower cost? You know, all these different things like that. But absent those, it's just gonna lead to performance chasing because you're never gonna own the thing that's the best all the time. It's impossible. And so if you're just bouncing around from thing to thing, you're gonna find yourself in all sorts of crazy stuff. Because like if you ever look at the the Globe and Mails, I I don't know how often they do this, maybe it's quarterly or something like that. From time to time, they'll do something like top performing ETFs of the quarter or you know, year to date, something like that. And if you look in there, sometimes it's a prudent, you know, broad-based index thing, generally not, because there's thousands of ETFs out there that are in specific sectors, in specific countries, all sorts of different things. So some part of it is gonna rip, and that one's gonna look the best for that period of time. It was gold last year, it'll be like Asian markets. Absolutely, you know, stuff like this. But here's even worse garbage out there. Um Ben Felix, uh, he's he's got a great phrase for this type of product called ETF slop. It's just all sorts of things that that could be inside of an ETF that when people think ETF, they think prudent, they think low cost, they think smart. No, definitely not always. It can be, but not always. And in this case, some of the best performing ETFs over a short period of time are single stock ETFs. Can you believe it? Like an ETF is supposed to be a pooled investment product. It was originally designed to be an index product, it is not that anymore. And in many cases, these funds will own one stock and it could do it on its own, but typically the reason for that is to overlay some options onto it to get double the exposure or triple in some cases, so you can see like I'm making this up, but I bet it exists, like a triple SpaceX ETF. So essentially you own it, and whatever movement the uh the underlying stock makes in that day, it's gonna move three times as much in that direction. So it's triple leverage. There's inverse products where essentially you're shorting it, whatever. And over such a short period of time of a few months, those ones, I call them like lottery ticket types of investments, something is gonna hit at some point. But the times where it doesn't, you could lose everything and then some, right? Like it's this is not something that you want to do. So if you're just gonna be shopping around or looking at these articles for the top performing ETFs and then buying it, you're in for a world of hurt, I think.

SPEAKER_01 8:52

Yeah, I think it's a good point to just to linger on for a second to just say, yes, there will always be success stories coming from some of these different products. As you're saying, it could be single stock ETFs. There will always be certain products that did great for the previous period. That doesn't mean it's gonna continue to do well, and it doesn't mean you should run out and buy those things. Ideally, you'll buy products that are in line with your investment time timeline, your strategy, and all those different things that can give you consistent returns over time and not buy these lottery tickets. There's a fine line between kind of the gambling components of the market and actually an evidence-based strategy that projects to do well over the longer period of time.

SPEAKER_00 9:36

For sure. So if we're trying to avoid this type of behavior, the first thing is you gotta understand what you're trying to accomplish with your money. So again, the same creator, same creator, different problem here. She said, Somebody sent me your TFSA statements and they're only getting 2% per year. Wow, that's so crazy. Yeah, you know, you gotta shop around for some better returns, and she didn't say what they were invested in. Was it, you know, an equity fund that had really underperformed? Or maybe it was like a money market fund. It was cash, like it could have been anything, right? And so you have to understand what the point is of what you're actually doing, and then match the investment strategy to that objective. And what do we actually mean by that? Well, say you are someone that is saving for retirement and your retirement is at least 10 years away. In that case, maximizing your returns is probably something you're thinking about. But at the same time, because retirement is maybe creeping up, you don't want to take so much risk. Perhaps I'm creating this hypothetical person here that um, you know, if if something were to happen in the markets at the wrong time, you might be out to lunch. So let's assume this person has done a prudent financial plan and they understand how much they need, but being in something that's mostly equities seems to make sense to them. Great. Okay, so now we kind of know what we're trying to accomplish. We're trying to make enough money for retirement, but that's a long enough time away from now. Let's pursue something that has a high expected rate of return, but we need to make sure that it's also diversified because we don't know what parts of the market or what countries or whatever is gonna do well over that time period. This is the type of thing it's not gonna make you filthy rich, unlike these lottery ticket type products, but it's a prudent strategy that's gonna increase your odds of success over the timeline that you have for your objective.

SPEAKER_01 11:33

Yeah, and we keep harping on the same point, but marrying that financial plan to your investment strategy is so essential. But in the context of these videos that uh Evan, you came across, that is completely absent. So there's no context for what you're trying to do or what funds you're in and all this information. But going back to the point of it sounds enticing, like it is reasonable that people get excited or kind of motivated by some of these videos because it's it takes some of the complexity out of it and just says, you want to have way more money, do this, but uh, it's missing a few steps along the way.

SPEAKER_00 12:09

Yeah. So just be careful about who you're listening to. The classic line of if it feels or sounds too good to be true, it probably is. Yeah, just be careful about who you listen to online. Um, man, we should do a whole nother segment. This is kind of a sidebar here about like red flags with creators. Here's my big red flag. If you ever hear somebody online talking about ETFs, but they call them stocks. It's like these are the stocks that I buy and they list off ETF tickers. Don't listen to that person because they don't know what they're talking about. That's that's that's one of my big bugaboo red flags, and you see it way more than you think. There's plenty of them, but that's one that I stumbled on recently, too.

SPEAKER_01 12:53

Uh well, maybe maybe moving on to another, another in our list of some questionable advice that we've seen or we've heard about over the last little bit. But yeah, we came across a story about someone seeking out a financial advisor to do a plan, a financial plan for them. And the first recommendation, or one of them, was to commute your defined benefit pension, get rid of it, take the money out, and started investing it with our firm.

SPEAKER_00 13:24

Yeah, and it was a few different layers of it on there that were a bit more troublesome. So these are folks that actually reached out to us personally, so we didn't just read about this on Reddit or anything like that. Like they reached out to us because they had reached out to some other firms just to kind of gauge um what their recommendations might be for their situation. And they said, we kind of got, I forget what the exact phrasing was, but like we got the ick from this place, and that was one of the primary things. And so this was a government pension, so you know, it was a provincial government pension, it wasn't some like private pension or something like that. And their suggestion was to not only invest it just like in the markets with a low-cost, diversified strategy, it was like a really complex insurance scheme. If you know anything about life insurance and my apprehensions around permanent life insurance and all the investing, uh quote unquote investing schemes that are you know involved in it, most of it revolves around the idea that the agent that sells that insurance product gets a massive commission. And the bigger the policy, the bigger the commission is. And so, yeah, this was probably not something where they were just trying to optimize a rate of return, you know, take a present value of the pension and then invest it for a longer period of time to get better rates of return. This was very clearly just a ploy to sell them something that they didn't need to add complexity to earn a commission.

SPEAKER_01 15:00

Yeah, so it's it's just a reminder to be very cognizant of, I guess, of the person you're dealing with and what their potential benefit might be of selling you a particular product or things like that, because in certain cases that can influence some of the recommendations. It shouldn't, but it does in certain circumstances. And this is a situation where you need to have a very compelling reason to give up guaranteed future pension money to take that lump sum out, you know. And there are cases where that might be advisable, but certainly as a an initial suggestion from a from a couple that you don't know very well, it's it's throwing many red flags up. Yeah.

SPEAKER_00 15:42

Just to be clear, commuting a pension, so if you have a defined benefit pension, this is the type of pension that pays you monthly. So as long as you're alive, it'll pay you, you know, paycheck every month. It might be indexed with inflation, it might not be. But the idea is that you've got consistent regular income as long as you're alive. And commuting it means that for most pensions, anyways, you have the option to get a lump sum of cash in exchange for giving up that regular income for the rest of your life. So taking the lump sum up front, usually it needs to stay in something called a Lira, a locked-in retirement account. And then when you want to take money out of it, you have to convert it to a Lyff or a PRIF here in Saskatchewan. There's a few other provinces that have different rules on how all of that works. But in many cases, it is an option. But I just hesitate to do it for so many reasons. But like guaranteed income is really tough to come by. And for most people, it's not the entirety of their retirement income. So they often have some liquidity, some RSPs, TFSAs, whatever, on top of a pension like that. So it's a really nice portion of your retirement paycheck that you can kind of rely on because you've got those regular expenses, it's not all vacations and and you know, having fun in retirement. You still have property taxes, you still have groceries, you still have to insure your car, you gotta put gas in the car, you know, all these kind of things. If you would cover off some of those basic expenses with guaranteed income, like it's really tough to actually make a compelling argument against that because if you're gonna make a better rate of return, now you have to start introducing some risk to it. And risk means this might not work. How about let's just start from it's gonna work, right? And then use the other stuff to to kind of optimize around it. So no, and we we have the the luxury here of of looking at their situation and realizing that that plan actually works quite well for this color commuting. It wasn't even a relevant consideration for for what we were thinking in that case. But yeah, it was it was very interesting to to see that that was recommended to them.

SPEAKER_01 17:45

Yeah, and and I guess one other detail, but just there, it's not that they're absent any risk, like investment risk at all. They had have large savings already, so it's introducing a bunch more risk for this guaranteed income didn't make a ton of sense. But again, just reinforcing the importance of being aware of who you're working with, what their incentives are, and if there's something that doesn't seem quite right, it doesn't make sense to you, then maybe getting a second opinion or those kind of things just to make sure that you know it's really the best course of action for sure.

SPEAKER_00 18:15

So just on this note, it might be worth discussing when it might make sense to commute a pension. There's a number of different scenarios here, and they're always personalized to you, but just in general, ones that we can kind of speak to. If it's a small amount of money very far away from your target retirement date, and you just have to sit on it for like 20, 30 years, and you're expecting to get 200 bucks a month or something like that. It's like, eh, you might want to just commute it and then you could invest it because you have such a long time horizon before the actual date that you're um anticipated to start redeeming from it. Because pensions aren't there to maximize wealth, they're there to meet an ongoing liability. So the investment strategy is designed for that liquidation phase where you're actually spending it. Whereas if you've got 20, 30 years and you worked a job that happened to have some contributions into a defined benefit pension, you don't have that much into it. Transferring your money out and then investing it within that context of Elira might give you some upside that you don't have otherwise, and the guaranteed income probably isn't going to move the needle there necessarily. So that might be a consideration. So small amount of money, long time horizon. But then the last one here is, you know, it's it's one worth considering. But, you know, it's if you have a health concern. Because if you're if you have a shortened life expectancy from a recent or known diagnosis or something like that, a pension with monthly income might not add a whole lot of value to your family's financial life. In many cases, pension payments have some guarantees baked in for a spouse. So if you were to pass away, your spouse might get 60% of it. Sometimes you have the option to take 100% of it. So, like that could be an option. You could still keep it in that case. If you don't have a spouse, you know, that way you could take a lump sum and then be able to pass that off to your kids a little bit easier. Sometimes pensions do have those guarantees where it'll still pay out to somebody if you don't have a spouse to pass it off to. Five, 10, 15 years in some cases. You know, so it still isn't a no-brainer to take the commuted value, but that would be one um where you might want to consider that so that at least your um your beneficiaries could receive a little bit more liquidity if you were to pass away. So pretty extreme scenario there, not super common every day, but those would be the scenarios where it's like, okay, I could see where that recommendation might make sense. But if it's just to uh get into a complex uh insurance scheme, probably not. Probably probably not as compelling. Yeah, probably not as compelling. Not for me, anyways. Um, but but those commission checks sound juicy.

SPEAKER_01 20:59

Um yeah, so maybe moving around to our last topic, and this one is pretty interesting. It came up, it's come up a few times recently, but in different ways. In different ways, but it revolves around the types of products you're holding in particular accounts. So some accounts have certain restrictions on time, when they need to be used, and if you if you have um products that aren't in line with those timelines, that is very problematic and can come up uh occasionally.

SPEAKER_00 21:29

Yeah, so we talked about that in the first point here of like products that don't match your timeline. That's mostly from a risk standpoint, but there's products out there that are just straight up locked in that you cannot access for a period of time. So a non redeemable GIC, for example. The whole point of it is that you lock up your money for a rate of return that's slightly better than cash. Where's the risk? This is it. This is the risk that you cannot access the money. This is called liquidity risk, right? It's not even risk, it's just it's it's just Not an option. Like you don't get it. And so that's why you get returns better than the cash sitting in your checking account because the bank's going to hold on to it for a set period of time. Right. And so the the I've got another example here, but but the types of plans that you need to start redeeming money from, these are your we talked about Lyra, eventually it comes to age 71, you have to convert that to a Lyff or a PRIF again, whatever it is in your province. But an RSP, plain vanilla RSP, you have to start taking money out of it in the year that you turn 72. So you have to turn an RSP into a RIF in the year that you turn 71. And then start taking money out of it as late as the year that you turn 72. So money has to come out of these things at some point. However, there are products, so one is like a GIC, and there's some others as well that are, you know, we won't get into all the different ones that are potentially untouchable, but another one that I've seen that's really common here in Saskatchewan in particular are something called labor-sponsored investment funds or LCFs. These are mutual funds that invest in local businesses and you get an extra tax credit for it. There's tons of risk for it because it's like you actually own a fund that owns like a transmission shop down the road, or you know, like sometimes they're not that small, but sometimes they are, right? Like it's some local businesses, some big, some small, and they're all part of this fund. I'm not going to get into the weeds on what LCIFs are, but generally speaking, they provide a pretty um sizable tax credit for investing in it. So you put it into your RSP, you get your tax credit or your tax deduction, pardon me, for that. But then you also get a labor-sponsored tax credit to reduce your taxes even further. However, the money has to stay in the fund in some cases, I think for eight years. I'm sure there's different products in different provinces that have different uh maturity schedules. But that money's got to be in there for eight years because if and once you start taking the money out of there, if you take it before it has matured, you actually have to repay the entirety, not a prorated amount, the entirety of the associated credits with the amounts that you're taking out of there. Berutal, really terrible, and most of these products, this has now changed quite recently, but some people probably are still on schedules that would have these. They have something called DSCs or deferred sales charges baked into them, where there's an additional penalty to you as the investor to take the money out before that maturity schedule has happened. In exchange for that, guess what happened to the person that sold it to? Any ideas? They may have had some benefit. They might have. They got a commission for it, yes. In some cases, this has changed again, and maybe it's not as small or as large or whatever the case is. But commission-based sales has gotten people into a lot of hot water. So here's a situation that I um had to help somebody walk their way through. Their previous advisor sold them a pile of this stuff, one of the labor-sponsored funds here in Saskatchewan. There's a couple of them here. And the reason you would typically buy these types of products is to offset larger than usual taxes owing because of the additional credits and some things like that. I've got some grapes with that, but that was not a match for the client's situation. He had a good job, but there was no like tax problem here. And they were sold to him, I believe, when he was 65 years old. Do the math into an RSP. So Yeah, so it went into an RSP and then the eight-year maturity schedule kicks in. Wait a second, we gotta convert this RSP to a RIF, but we can't take this money out, or else we have to give back the 35% tax credits that came along with it. Oops, don't want to do that. And so, you know, for the longest time we couldn't figure out what to do because, like, by law, stuff has to come out of here, but it was so, you know, it it it worked against the client here. It's, you know, potentially thousands of dollars of taxes that they have to give up to do so. So, anyways, we had to work with their back office and they came up with some sort of system where they could take some of like the minimum amount and convert it to a non-registered account so that the units would still be owned by the client on the same maturity schedule, but it's still counted as a withdrawal. So, what they had to do is they have to issue a T4 riff. So that's a tax slip uh that shows the income coming out of there. So you get taxed on the amount that comes out, but the investment still has to stay in your non-registered account. So you can't spend any of the money still, but you get the tax bill as if you did, and in the meantime, now it's accruing capital gains, we hope, if it's increasing in value, right? So it isn't a very imperfect system. We were able to kind of solve it, but it was a bit of a nightmare. And the benefit of the product for this client was so marginal in the first place. It was, yeah, you know, anyways, this is just a really, really terrible system to have set up that just adds complexity and forces you to an investment that was chosen for tax purposes as opposed to actually something that is properly diversified or anything like that. Generally speaking, when you choose an investment exclusively on the basis of tax, you're letting the tail wag the dog. Like it's not typically going to be something that you know you're gonna come out ahead with when you factor in all the other considerations. This being one of them.

SPEAKER_01 27:46

Well, this is a situation where, yeah, the tail's wagging the dog for sure, because the main concern is the account it's in and the obligations you have with that or the restrictions of that. And he needed the money. Yeah. It's not like he was he had a So it was locked up anyway when the money was needed. So it's yeah, it's it's putting this and the nicest light, it's uh, oh, this is a cool product, you know, you're excited about it all, maybe, but it's not properly considering the implications of the product and that particularly that long of a period being locked in and inaccessible for clients.

SPEAKER_00 28:20

Yeah. So it was a sizable amount. They didn't give up a a ton of it in this case, but anyways. Hassle at best. Yeah. Okay. And then then the other one is an RESP. So there's not technically required withdrawals from it. Again, I won't get into all of that, but the whole point of it is to save money for your kids' education. And if they go to school, guess what you're gonna want to do? You're gonna want to withdraw from that RESP. You are, that's the whole point. That's what you've been doing for call it 20 years, right? And if it's in an investment that you cannot redeem from, oops.

SPEAKER_01 28:59

Particularly when you're specifically in those years where the kids are in school.

SPEAKER_00 29:04

Unbelievable. So we saw a situation here. We do need some more details, perhaps, but on the surface and through our conversations with the client, I we're we're trying to be as generous here as we possibly can. Everything that we've seen and heard from the client suggests that this is a a big problem because in an RESP, there's kind of three components: there's what you've contributed, there's the investment returns, and there's the government grants within there. And so the grants and investment growth are restricted marginally while the beneficiary is going to school. So if you're going to an accredited post-secondary program, that's when you can make um what's called a EAP, an educational assistance payment. And so that is the grant and investment growth that can come out of the account, and it could be it comes out to the beneficiary, they get a tax bill for, or it comes out as taxable income, I should say, to the beneficiary. But because they're going to school, they probably don't have any taxes to pay, so it's a pretty nice, tidy way to do it. Your original contributions, those are pretty easy to get out because you didn't get tax break on the way in, so you can usually get those out. But if you've been doing this for 20 years and you maximize the grants and it's grown in value, but now the person at the bank that was getting a commission, perhaps, for selling GICs that month locks up the money for a duration of time longer than when the student is expected to be in school. Now we got a problem.

SPEAKER_01 30:38

Yeah, big problem. And so if if you're unable to make these EAPs, you need a confirmation of enrollment from your child that's in a post-secondary education to be eligible to make these withdrawals. If you are unable to do that while they're in school and you have to take the money out, and there's still grants and investment growth in there, you lose that, but also you have to pay a penal, well, you have you lose the grants and you have to pay a penalty on the money you're withdrawing because you've gotten the benefit of um allowing these investments to grow tax-free in the RESP.

SPEAKER_00 31:08

Yeah, so it's it's not great here at all. And it it defeats the whole purpose of the the entire account. And so this was just something that we had, I don't know. I ran the general situation by some uh colleagues in the industry here, and the the general uproar was was in line with what we were thinking, so that was um in some cases reassuring, but at the same time, there there perhaps is a path forward here. So, anyways, we're we're hoping that this is able to work out in the client's favor without having to go up the chain too far to make some uh necessary complaints to get this all sorted out. But again, hopefully everything is fine and it's just hassle. Hassle is the best case scenario here, but this is just something you want to be aware of. Finding investments that are locked in, making sure if that's really what you want and what you need, make sure that the timeline that you need the money and the locked-in period are not overlapping. And this is not necessarily your fault or like the other client's fault because it sounds like they were broadly misled or given some bad information and they didn't realize what they're getting into. Same thing with the labor-sponsored funds. He had no idea. It's complicated. This stuff is really complicated. And so if you think that this might be a situation where money might be locked in, just ask the question and then write it down. I asked this, whatever. Make your own notes, and so that way you've got a little bit of, you know, something to fall back on if you ever have to revisit something that maybe uh didn't go your way in hindsight.

SPEAKER_01 32:40

Yeah, and there's there's something, I mean, there's something in there about this. I think I'm thinking this with the labor fund a bit more, but just you know, sometimes it's not always optimal to go for this super complicated product, right? There's some more commonly used products that are used in certain situations that are often in line with your goals and timeline and all that stuff that are, you know, there's not there may be an allure of something a bit different. It's like, oh, this is something new, but uh oftentimes simple is as effective as you need it to be. For sure. For sure.

SPEAKER_00 33:13

And and there's all sorts of things that get close to what they're trying to accomplish here. So, like, okay, we'll go into school, and you know, we don't need to take a whole bunch of risk now, and we're gonna start withdrawing on this point. GIC is like, yeah, you typically think GIC is like it's a guaranteed investment for a short period of time for a known timeline, but you the timeline has to match. Yeah, you can't go beyond the needed timeline. So using something like what we would use is what we call a money market fund, something like that that's just it's kind of like cash, but it vests in like 90-day bills or shorter typically, so essentially very short-term government debt. So it pays a little bit better than cash in the bank, call it one and a half, just shy of 2% these days, but you can have the money whenever you need it. What a concept.

SPEAKER_01 34:01

Well, and this is also, I mean, there's a different, you know, a one-year GIC could have been completely fine, but these ones were locked up for multiple, multiple years. So that's also where I think there's some sympathy with the clients as well, where you know, maybe you can hear GICs, and even if you're familiar with the concept, be like, oh, those are usually one year, you know, I'll be good. But you know, if you don't cross every T and dot every I, then you're in for five years.

SPEAKER_00 34:26

I do not blame the client whatsoever. Whatsoever. There's so much complexity here and fast talking and forms to sign and all that kind of stuff. It's really tough to really know, you know, without knowing what questions to ask, even. So, anyways, I hope this kind of episode is helpful to just kind of see what's all out there and and you know, maybe bring some of those questions to your own financial situation if if it's ever needed.

SPEAKER_01 34:54

Yeah, I think it's good. I mean, the place to leave it is just we don't want this to strike fear into people necessarily, but it's also good to know that doing your due diligence is is important. And sometimes that is just asking the question of the person you're relying on to give the advice and providing a clear justification for the decision. Your advisor should be able to provide that if you're working with someone. And if there's some struggle to do that, then maybe that's an indication. It's like, oh, maybe we need to take a step back or, you know, uh rethink this, or I need to do a bit of my own research and things like that. But hopefully they would have a strong answer to why a particular decision or product is recommended for you that you can feel confident moving forward.

SPEAKER_00 35:32

I like that optimist answer.

SPEAKER_01 35:34

I like to end on an optimistic note.

SPEAKER_00 35:36

You're more of a cynic. And perhaps that's you know, maybe an experience thing where I've uh I've just been ground down by all the the garbage that's just a plucky upstart who uh is uh more optimistic. That's what I need. I need more of that life. Anyways, thank you so much for listening to the podcast today. If you've got fun stories like the ones we've talked about here, we'd love to hear them. If you want to just leave us a note, you can send an audio message or a text message to us in the show notes of this episode. There's a button that says leave us some fan mail. Uh, you can do that right there. It's totally free. We don't need your contact information or anything like that. You can just send us your story of uh, you know, whatever you got on your mind. But if if this uh episode piqued anything in your own mind of a situation that you've run into, we'd be curious to hear about it. But anyways, thank you so much for listening to this week's episode, and we'll catch you next week with another episode of the Canadian Money Roadmap. Take care. The contents of this podcast do not constitute an offer or solicitation for residents in the United States or any other jurisdiction where Evan Newfeld, Cedar Point Wealth, or Sterling Mutuals is not registered or permitted to conduct business. Mutual funds are provided through Sterling Mutuals Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus carefully before investing. Mutual funds are not guaranteed, their values fluctuate frequently, and past performance may not be repeated. Financial planning services are provided by Evan Newfeld through Cedar Point Wealth and are not the business of or monitored by Sterling Mutuals Inc.