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Slip into something more comfortable and delve into personal finance with Josh Sheluk and Colin White, experienced portfolio managers at Verecan Capital Management. Each episode demystifies complex financial topics, stripping them to their bare essentials. From investment strategies and financial planning to economic headlines and philanthropic giving, delivered with a blend of insight, transparency, and a touch of humour. Perfect for anyone looking to understand and navigate their financial future with confidence. Subscribe now to stay informed, empowered, and entertained.
Verecan Capital Management Inc. is registered as a Portfolio Manager in all provinces in Canada except Manitoba.
Welcome to Barenaked Money, the podcast where we strip down the complex world of finance to its bare essentials, with your hosts, Josh Schallick and Colin White, portfolio managers with VariCam Capital Management Inc.
Josh Sheluk:Catherine said there's a couple of the intermediary segments that she thinks might be interesting. So I don't know. She'll maybe capture some of the chitchat in between.
Colin White:I I told you that our best stuff is completely unscripted.
Josh Sheluk:That's for sure. That's for sure.
Colin White:Hi. The man Smith's the legend, mister Colin Smith.
Colin Smith:Good day, sir.
Josh Sheluk:Once again, I'm surrounded by Collins. There's too many Collins on this team. We gotta come up with better nicknames for everybody.
Colin Smith:I think we should hire more. That way, we'll be able to make up all the other names.
Colin White:That's right. Only Collins get to vote. We'll have a new system.
Josh Sheluk:It would certainly make our our job search a little bit easier. We're only searching for Collins.
Colin White:You wanna do the intro, mister mister Shulik?
Josh Sheluk:Yeah. Sure. So we have Colin Smith today checking in from New Brunswick. So after these segments, we'll have just about, all the provinces I think covered in Canada, which is pretty awesome. So unique perspectives in calling you always come with some great stories.
Josh Sheluk:Why don't you give our audience the 32nd overview of your background and your history?
Colin Smith:So I come from, Manulife Bank, was where I started in the financial industry about 20 years ago. And so I had a I have a very strong lending background. Then I switched over and we opened up our own mortgage company, and I moved on to become a financial advisor after that. So, that's where I come from, for my background.
Josh Sheluk:Amazing. And with all of that that varied experience in the finance industry, I'm sure you will have some pretty awesome stories because you always do. And so why don't you kick us off? Or, Colin, go ahead. You have something to share.
Colin White:I was gonna say before you get started, how hard was this for you to come up with, like, the one absolute worst? Like, was there, like, a top five that you really struggled with, or is there one that really completely stood out for you?
Colin Smith:No. Actually, I think it's, my actual comments are not a scenario and but it's many, many in general. So I see this all the time. And at the end of the day, it's probably the worst advice that you can get financially in my opinion. And that's, purchasing a vehicle on an 8 year on an 8 year term.
Colin White:Well, you know, and I I can chime I can chime in personally before you flesh this out a little bit more because that was advice that my mother gave me as as a teenager. When I was looking at cars, she looked at me and said, you're always gonna have a car payment. And when your mother tells you that, it must be true. So yeah. I but please please do go on with with the 8 year amortizations because that that is a really good piece of the equation.
Colin Smith:Absolutely. And I think the worst one that I saw was a gentleman who did an 8 year lease on a on a truck. It was an $85,000 truck, and he put a 20 year lease on his truck trailer so that he bought the truck so he could pull the 20 year lease on the trailer. In both cases, neither one of those are gonna make it to their amortization period. And my opinion is if you can't afford to buy it in a 5 and a half year period, then you probably can't afford to buy it.
Josh Sheluk:So so what makes the 8 year so bad? Like, okay. You're at the end of your amortization period. 8 years in, you have this truck that or you no longer have the truck. Why is that such a a problem?
Colin Smith:It's basically because of compounding interest. I mean, at the end of the day, you're paying interest in advance, and most most lenders will when they do lend, it the amortization is the interest is charged in advance. So the first three and a half years of your payments are generally interest only payments, and that's why people get to the end of their 4, end of 4 years when you really should be looking for a new vehicle or purchasing a new one, and they still have full amounts owing on their loans and can't understand why.
Josh Sheluk:Yeah. Okay. So yeah. Early on in the or early on in the borrowing, whatever it is, whether it's a mortgage, a vehicle payment, or or something like that, a lot of your payment or more of your payment goes towards interest than paying down the principal. So I I see what you're saying there.
Josh Sheluk:And and that you're right. A lot of people are looking to turn over cars in a fairly short time frame, 3 years, 4 years, 5 years. So you're saying that in your experience, you've seen these people show up with, a surprise look on their face maybe when they realize that a good chunk of their loan is still outstanding and the vehicle at that point, with the vehicle especially, is probably worth less than the loan payment. Is that right?
Colin Smith:That's absolutely correct. That's absolutely
Colin White:correct. But you guys don't understand how it works. You you just don't get it because it's dead easy just to go lease another vehicle because you just roll that shortfall into the next vehicle. And in in fact, I was at a conference where a institution that rhymes was Smoshastank, announced that they were willing to go up to 225% of the purchase price of a new vehicle on a vehicle lease. So you could go so far completely underwater that you owed over 2 times the actual value of your vehicle, and they would do an auto lease for you.
Colin Smith:So is that where you do go for death and your insurance covers it?
Colin White:Well, you know, it's it's tomorrow. Like, we'll we'll deal with that tomorrow.
Colin Smith:Right.
Colin White:So, you know, not only is it that one lease is a is a bad idea like an 8 year amortization. You know, it's the fact that they give you the opportunity to do that multiple times to get yourself so completely underwater that you actually owe twice the value of the actual asset. And, yes, that that's probably going to be only gotten out of at at the time of your death. So
Colin Smith:Well, not only the value of the interest rate side of things, it's also the value of the vehicle. I mean, at the end of the day, the average person puts on anywhere between 30 to 40000 kilometers, and that's average. I put on a lot more than that. So if you average that over an 8 year period, your vehicle has 320,000 kilometers on it by the time you're done paying for it. How many repair jobs do you have to put put in during that period of time?
Colin Smith:And that's the other reason why the 5 and a half year period makes more sense because you're done paying. If you're gonna keep it, and I get that argument quite a bit, well, I drive my car into the ground anyway. Well, if you're driving it into the ground, there's definitely gonna be some some fixing that needs to happen around 200,000 kilometers. I can almost guarantee at 250, there's gonna be some pretty large ones. And at 300,000 kilometers, I can guarantee you're gonna have some problems.
Colin Smith:So at the end of the day, making your usual car payment that has been 8 years long plus paying for repairs, it's just not feasible. It's not a good financial decision.
Colin White:Yeah. No. Absolutely. It it it digs a hole that you you really can't get yourself out of. And the the problem is is that people who do that tend to be paycheck to paycheck.
Colin White:They don't have a lot extra in in their in their day to day. So when those really big repairs show up and you still have a car payment, you're trying to find a 1,000 or 2,000 or $3,000 for your player, the clutch, the transmission, or the the the major, you know, component that needs fixing, And you've strapped yourself so close, you know, because you got a much nicer car because over 8 years, you could afford that payment. It's it's just a compounding problem that's just gonna cause never ending stress for you.
Josh Sheluk:So Colin and Colin Collins, can we say can we chop this up as borrowing long term for a depreciating asset generally a bad idea?
Colin Smith:Absolutely. I would definitely Be
Colin White:aware of the be aware of the hole you're digging yourself. You know, just because you can afford the payment doesn't make it a good financial decision. There's other ways to look at it.
Colin Smith:Or make sure you have a backhoe to fill it back in.
Josh Sheluk:There you go. Best advice ever. Thanks, Colin.
Colin White:We're gonna end this with you and I giving our best pieces. Right? Like, that's how the the big culmination, the big I
Josh Sheluk:don't know. I've I've been debating. Because I you know what? I've really struggled to come up with one of my own that's totally unique. You know?
Josh Sheluk:So I don't know.
Colin White:Well, maybe Steve will inspire you. May may may maybe Steve's story will draw out of you the brilliance that is there, Josh.
Josh Sheluk:Yeah. I'm sure it will. How are you doing? Great. Colin said that you're going to have a full podcast's worth of stories for us.
Steve Sparrow:No. Oh, come on.
Colin White:With the life that you've lived and the things that you've seen?
Steve Sparrow:There's no. I I I I've got just one scenario to kinda share. It's multifaceted, but, yeah.
Josh Sheluk:Do you wanna do the intro, Colin?
Colin White:I don't think I'm qualified to do an intro for Steve. Steve is one of the most experienced people on our team, He's he's he's our our one of our portfolio managers. He is our chief operating officer, and he is a wealth of knowledge that he shares with all the team on a regular basis. So here's the Steve.
Steve Sparrow:Thanks, Colin. It's, a privilege to be included in, in Bear Naked Money. So thanks for the opportunity. I thought long and hard about, that one piece of investment advice. That's the worst that I've ever had.
Steve Sparrow:But as you've alluded to, I've been around for a long time. I've been involved in investing for over 40 years now and finding that one piece of advice, really a bad advice really doesn't work out very well. So I thought I would take a little bit of a different, a different approach and look more at the sources of investment advice that are more likely to bomb than to add value to your portfolio.
Colin White:Nice.
Steve Sparrow:Josh can relate to this. He might be a little bit young because I I don't know if if if his dressing room is the same. But for me, the last 25 years or so, the place that offers the absolute worst investment advice is a senior men's hockey dressing room. Incorrect general information
Colin White:about wealth management that
Steve Sparrow:I've incorrect general information about wealth management that I've heard in that dressing room over the years is mind boggling. And over the last few years, there's more and more guys that are hitting 6065 that I play hockey with. And one of the things that comes up all the time is somebody makes the comment that everybody should take their CPP at 60. You know? And others chime in and they say things like, yeah.
Steve Sparrow:CPP is gonna run out of money or you'll never live long enough to get the value out of waiting to 65 or 70. And, I try and chime in once in a while and straighten them out and explain this is a very personalized decision. But, the power of the group think takes over. And I've seen a couple of guys made some really bad decisions, but it goes way beyond that. And where it really gets crazy is when people start recommending stocks, and it's usually something that's in the news.
Steve Sparrow:And I haven't come across one that's worked out yet in all the years. And we can just, you know, we Josh might not remember Nortel. He's read about it in the history books, but Colin was around then. I know at least 10 guys in the past, back when Nortel went bust, that when it went below $20, they were buying it up like crazy thinking that it was such an incredible bargain because it had been trading at 6 or 7 times that price a few months earlier. Nortel went to nothing.
Steve Sparrow:Another one that was even more mind boggling was Briax. Again, that that one dates way back, but Briax was a high flyer. Many of you probably remember the story. The news came out about the fraud that had taken place. The stock went and dropped off, but it was still trading for a period of time in penny stock range.
Steve Sparrow:And there was all sorts of people singing its praises, how it was gonna come back and and and jumping in on it. But I think the absolute worst scenario that I've ever experienced in all those years isn't that far back. And that was the pot stock sector and the buzz on pot stocks and the hockey dressing room was like nothing I had ever heard before. And we all knew where that one ended up. And this extends beyond hockey dressing room.
Steve Sparrow:You know, my cautionary note to to to to anybody that's listening is cocktail parties, dinner parties, anywhere where you've got a where you have a group scenario and the excitement is building and there's not a lot of rational investment thesis behind that excitement, that's probably one to sit back and listen and not pay too much attention to, and certainly not take any action on it. There has been one positive, suggestion that came out of a hockey dressing room, But I have to admit, I was the perpetrator of turning the mind shift of the dressing room on that one. And this goes back to when COVID hit and it was just before the lockdown. So we still had a couple of hockey games. The markets had had dropped off by 30%, but, everything hadn't been locked down yet.
Steve Sparrow:And the dressing room was all a buzz. And a few guys started saying, you should sell out your portfolio. Things are going to get so much worse. We were already down 30%. I couldn't let that one go by.
Steve Sparrow:I chimed in. I started citing some historical information, and then a couple of other guys that were on the team kinda jumped on the bandwagon with me. And, thankfully, I do not believe that anybody on our team that you're bailed out of the markets. And, I did have a couple of guys actually thank me 9 months later when they were up in their portfolios versus sitting there wondering when they're gonna get back into the market.
Colin White:For the forces of good. We used to we used to refer to it as the taxi driver test. If the conversation you had could be plausibly had with your taxi driver, it's probably not good financial advice. And, you know, because back in the day, you know, my any cab driver or Uber driver you got to do a vehicle with would pitch you their you know, what how they were gonna get rich off of pot stocks or Nortel or BRIX. That's where those conversations are happening.
Steve Sparrow:Oh, that's hilarious that you mentioned that because I happened to take a shuttle from the car dealership when I was getting my, back to the office when I was getting some repairs done on my car. And the shuttle driver asked me what I did. I told him and he said, oh, I wanna tell you about what I've done. He liquidated our his RSP, rolled it all into a TFSA, and has invested 100% in Tesla. It gets worse.
Josh Sheluk:And when was this, Steve? How how many months ago?
Steve Sparrow:I'm not sure. I didn't ask him what his timing was on it, but it didn't sound like it was a recent decision. But what gets worse is he had locked in a mortgage, and he was expecting the Tesla to go through the roof so that when his mortgage came due, he was going to be able to pay it off. This gentleman is 80 years old. And for the life of me in that 20 minute ride, I could not talk him out of that that position.
Steve Sparrow:But, yep, the the the cab driver story is a good one. It it ties in.
Colin White:Yeah. No. It's it's something that could stick in your head. If this is a conversation I could plausibly be having with my Uber driver, my cab driver, or my shuttle driver, probably, just probably, is not a sound financial decision.
Steve Sparrow:That's a good rule, Colin. We'll mark that down as one of the other, number one rules of investing.
Josh Sheluk:And I think I know the answer to this one, Steve, but has the chatter around the dressing room got better or worse over the years? And what I mean by that is have people made incrementally better or worse decisions, or has it stayed exactly the same? Worse. Because I think one of
Steve Sparrow:the things that happened is this guy start to retire. They start dabbling in other things that they may not have had time to while they were working. So more crazy ideas have a tendency to come out. They don't yeah. They don't get more intelligent about investing.
Steve Sparrow:They spend more time reading chat boards and stuff like that to come up with ideas that they think are the next big thing.
Colin White:And and the tragedy in this is when as you go into retirement, you should and you will find things to fill your time. Now if you can find nice nondangerous things to play with other than your financial future, that's better. Like, you know, yes, have to spend time reading stuff, but don't put your financial future at risk based on you're just nattering around with something.
Steve Sparrow:Good point.
Josh Sheluk:Well, that's awesome, Steve. I think you have a lot of examples over the years, and to come up with that one, I think, is is a good one. So we appreciate the time.
Steve Sparrow:My pleasure. Thanks for the opportunity, guys. Alright.
Colin White:Steve's good at that. We should have him on more podcasts.
Josh Sheluk:We should. Yeah. He seemed to be actually thankful that we would have him on, but it's it's a privilege to have him.
Colin White:He felt he should say that, I think. Yeah. Yeah.
Josh Sheluk:Alright. Hello. Amanda, welcome.
Amanda McKenna:Hi. How are you guys doing?
Josh Sheluk:Excellent. How are you?
Amanda McKenna:Pretty good.
Josh Sheluk:Good. So we went from one of the oldest members of our team to one of the newer members of our team, more of a a younger and fresher perspective. But, Amanda, portfolio manager working out of our Nova Scotia offices, we're super excited to have you and and share all of your insights for the worst financial advice that you've ever heard.
Amanda McKenna:I was just gonna stay say that, Steve must have had a really good story because he took my time slot and his time slot to tell it.
Josh Sheluk:Well, it tends to be that Colin and I, usually chitchat back and forth a little bit, with Steve or whoever else as well. So these things have consistently gone a little bit over the, the 5 minute time slot allotted to each individual. So, we have all the time in the world, Amanda.
Amanda McKenna:Okay. Okay. No pressure. So I was thinking about my story. And so before I got into, the wealth industry, I worked in the car industry for about 7 years as a financial services manager there.
Amanda McKenna:So I have my fair share of interesting stories, from that world, but one of them that really stuck out for me was one time I had, a young man in my office applying for a car loan. And we're going through the application process, and he lets me know that he has just filed for bankruptcy at the age I believe he was maybe 20 years old. He explained that it was from just credit card debt. So it made me think, you know, how much credit card debt could you accumulate at that point that you feel or you were advised that you needed to file bankruptcy at that point? And then it was a conversation of saying, you are not approved for this car loan because of your you just filed bankruptcy and the shock on his face when you realize that when you file for bankruptcy, it's not, oh, you have a clean slate now, and, you know, you can just forget that that ever happened and carry on with your life.
Amanda McKenna:So that was that was mind blowing to me. I was quite shocked that that happened and that somebody advised him to do that when there probably were the was other options that he could have taken at that time.
Colin White:Yeah. That that is one of the the uglier sides, you know, because you take a look at the amount of advertising you see from insolvency trustees and the number of accounting firms that have purchased insolvency practices. It's actually high margin work. You know? But if you go to see somebody for credit counseling, well, they're gonna get paid if they put together a proposal.
Colin White:So it's it's one of those conflicts that's inherent in the system that's not as well understood. So, yes, I've run across quite a few people in their early twenties that have been advised accordingly when they really didn't need to. Like, you actually took a look at their finances, and it wasn't necessary. But at that age, they just don't have the perspective. Mhmm.
Colin White:And for someone to come in and say, hey. You can go bankrupt, and we'll get rid of all this debt.
Amanda McKenna:All your problems will go away if you just do this. Yeah.
Colin White:To a to a 20 year old, it's like, well, probably god, like, my problems went away. This sounds like fun. Yep. You know, but not understanding consequences. Yeah.
Colin White:That's that's also part of being a 20 year old. So
Amanda McKenna:Yeah.
Josh Sheluk:In a previous job, I would regularly get bankruptcy filings coming in. I worked for an insurance company. So when the individual was unable to pay their premiums for their insurance policy or whatever it was, we get the bankruptcy filing coming in. And the, the claims were almost always for people between, I would say, 2035, and it was always unsecured consumer debt, almost always. That was the cause of the issue.
Josh Sheluk:You never see people that are bankrupt because of a mortgage or any business loan or anything like that. At least the ones that I was seeing, it was more so you had $20,000 of credit card debt, $15,000 of student loans, an unsecured line of credit for $10,000, and here you are with $45,000 of debt and no way to to get above it. So, really interesting that that this experience is is kinda similar on your side, Amanda. And do do you think did you ask the guy if he had got any advice who had recommended this, or did he just decide, oh, bankruptcy sounds cool?
Amanda McKenna:I'm not sure, you know, where he got the advice from or how he came across that this was the decision that he had to take in order to solve his problem. I don't remember, but I think it was from I remember speaking to him, and and I think this happens with a lot of young people. It's just not being educated and and longer. So I think it was just him looking for an out and just being uneducated about how to do it.
Colin White:Well, we have to understand how important that is to the system because if we didn't have people overspending their means, then the economy wouldn't grow. So we need a certain number of people to behave like this for the overall society to work as we currently have it set up. Mhmm. So there's a vested interest in keeping the status quo moving. And also having a dreaming teenager who, you know, really wants to be something or make something of themselves, yeah, that's gonna lead them down this path for sure.
Josh Sheluk:Well, that's great, man. It's a second it's a sad yes, but second car related, one that we've had. Yeah. Interesting. May maybe a trend.
Josh Sheluk:Careful of your buzzer out there.
Amanda McKenna:Yeah. I'm interested to hear the other stories.
Devin Cattelan:Yeah. Thanks for your time,
Amanda McKenna:Awesome. See you guys.
Devin Cattelan:Thanks.
Josh Sheluk:Alright. Devin's up next.
Devin Cattelan:Hey, guys. How's it going? Great. How are you?
Josh Sheluk:Am I being recorded?
Devin Cattelan:No. Just just a
Colin White:few days
Josh Sheluk:while I get calls. You'll be recorded for quality control purposes.
Colin White:Yeah.
Josh Sheluk:But, yes, you're being recorded. Okay. Sounds good. Record.
Devin Cattelan:Yeah. I'll try not to say anything stupid then.
Josh Sheluk:No worries about that. I'm sure. I'm sure. But, by way of introduction, we have Devin Catalan here. He's a portfolio manager and partner with the firm and been in the wealth advisory business basically since you graduated.
Josh Sheluk:Isn't that right, Dev?
Devin Cattelan:Yep. That's right. Yeah. Just, around 10 years now.
Josh Sheluk:Awesome. So you you've you've seen a lot of bad financial advice, I'm sure, in your 10 years. What do you have to to share as the worst piece of advice you've heard about?
Devin Cattelan:So probably the the piece that's most relevant at the moment because we're we're just we just purchased the property. So we're moving from a house from a condo into a home. And, so the the the piece that's most relevant to me is when people say real estate's the best investment. And so real estate is a good investment. It can be a good investment, but it's not the best investment out there.
Devin Cattelan:We went back and I looked at some numbers in terms of how it's actually performed over the 6 years that I owned it. And a lot of people forget about some of the major costs that you incur when purchasing a a real estate property or when making a move. So some some quick ones that came up that are significant expenses are real estate brokerage commissions. Right? So, I mean, those are anywhere from 4 to 6% depending on what you you negotiate with the broker.
Devin Cattelan:So that's a significant chunk of your of your profits from a property being sold that aren't accounted for. There's land transfer tax, which in Toronto is between 1 2%, which is pretty significant. So that adds up as well.
Colin White:Oh, they
Josh Sheluk:have a double land transfer tax in Toronto as well, Dev?
Devin Cattelan:Yeah. Yeah. So we get the pleasure of paying higher prices for our real estate, but then also getting slapped with higher taxes as well. So it's, just to make sure you have no money left over and all your money's in the home.
Colin White:Well, it's all it's all for the proper urban planning that keeps traffic flowing so well around Toronto. I mean, it costs a lot of money to get things to that level.
Devin Cattelan:It does. Yeah. And and all the repairing we do on our expressways that, that, never actually get done, but that's a separate discussion.
Josh Sheluk:Sorry. We we we distracted from your point. Carry on, all the expenses you're
Devin Cattelan:going through. Even things like moving costs and legal legal costs for closing. So the the list goes on as you as you, as you actually go through it and you you break it down. And then that's not to incur that's not to take into account all the ongoing cost too, like maintenance and and and interest payments on your mortgage. And and to be fair, some of those expenses, you would be covering, you know, they offset the cost of rent, for instance, that you would be having.
Devin Cattelan:You'd be having to pay for some kind of living expenses. But, but, yeah. So just going through the numbers, it was a little disappointing to see what the return was over the past 6 years. It worked out to less than a 2% return, closer to the 1% mark.
Colin White:I I did way better than you did over 17 years. I was just under the Canadian bond index for the period of time when I held my home. So
Josh Sheluk:Yeah. We actually did, we did do a a forensic accounting of Colin's property purchase and sale as well. That was last year, I think it was. Right, Colin?
Colin White:Yep. About 2 years ago. Yeah.
Josh Sheluk:2 2 years ago. Yeah. So, you know what's funny, Dev? It doesn't surprise me at all that you did this this this exercise.
Colin White:Just to save everybody from looking it up, you know, Devin is one of them, their CFAs and spreadsheets everything and is the most amazing math guy. He's got a degree in math. So this is what we expect from from from Devin when he goes through any experience, and it's fabulous because somebody needs to be doing the math, and we appreciate them for having done the math on this and and sharing because it's very, very valuable perspective. You know, there's this whole trying to debunk the idea that all you need to do is be real estate and your world is fine. You know, I don't it's not we're not calling it necessarily a bad asset class, but it's not the answer to everybody's problems.
Devin Cattelan:Absolutely. Yeah. I had some fun with the exercise. Recommend, recommend people going through it when they buy and sell.
Colin White:We're gonna do a whole separate podcast where you actually walk everybody through the spreadsheet that you developed and know how to use it. Yes?
Devin Cattelan:Excellent. That's my dream.
Josh Sheluk:Stay tuned for that, Dev. We'll call you back shortly.
Devin Cattelan:Sounds good. Sounds good.
Colin White:Thanks, buddy.
Devin Cattelan:Yeah. Thanks. Take care, guys. Bye bye.
Josh Sheluk:Maria up next. She could go a lot of different directions.
Colin White:She could. She could. And it's gonna be from a from a very different perspective.
Amanda McKenna:Hello.
Josh Sheluk:Hi, Maria. How are you?
Amanda McKenna:I'm well. How are you guys?
Josh Sheluk:Very good. We're just saying that we're excited for for yours because we don't really know which direction you're gonna go. I think you come from a bit of a different background than a lot of the other members of our team. Like, I don't we haven't really had a true, somebody that comes from an analyst background, that's talked yet. So so that is your background.
Josh Sheluk:You've been both a credit analyst and an equity analyst in the past, and you're now a research analyst on our team. So I'm really curious to see what your the worst financial advice that you have ever heard is.
Amanda McKenna:I have ever heard. So I think, actually well, it hasn't happened to me directly, but what I've heard from a friend of mine who works in the industry, portfolio manager that he or she used to work for, back in, I think, 2017 when Blockchain was the buzz and all of these companies were doing IPOs off of and having no revenue, was in a part of that craze and got brought into that. He was a discretionary portfolio manager. So took on one of these companies, did a few private placements for it, and essentially so this company, again, had no revenue, no fundamentals, put it in a few clients' accounts. It was fine for a bit.
Amanda McKenna:It kind of hung in there, and then after people didn't care about blockchain anymore, it went to 0 and is now delisted. So a lot of the clients fared fine. They were pretty mad about it, but it was 1 or 2% of their portfolio. But, apparently, one of the clients was who was, I think, 80 or 83, had a 100% of its RRSP in the stock, and he lost everything. Yep.
Colin White:Yeah. That's tragic and a whole bunch of them and more disappointing because it comes with professional advice got them there.
Amanda McKenna:And, like, whatever the PM did or didn't say was wrong, you know, like he if he didn't say anything, he should have and explained to the guy that this is a terrible idea. Or if he was talking to the client and egging him on saying that he's gonna 10 x his money, then that's a massive red flag. So I hope that he had another account somewhere. That's all I'm saying.
Colin White:Well, yeah, there's there's a couple of things to take from your story. And, you know, an IPO that that Ray is referencing is an initial public offering, so it's a company going to market for the first time for the benefit listeners. And a couple of things you said, like, that with no revenue, like, for company, you know, investing in something that has no revenue, that's not a sentence. You can speculate on something that has no revenue, but you can invest in something that has no revenue. You know, so and to watch that go into somebody's portfolio.
Colin White:And it also brings to light the different types of advice because some advisors have a a suitability standard where, you know, is this a suitable investment? And it could be that 80 year old had, like, $5,000,000 and 5% of his portfolio could be high risk. But to have a fiduciary standard, which is the portfolio management standard, That standard would preclude making an investment such as that. In fact, we would not allow something like that to happen. But, yeah.
Colin White:And I've and for the record, because there's a video component to this, it's the person who's who's in charge of paying for heat in the office. Maria has the ability to turn the heat as high as she wants, and she chooses to wear her coat in the office. I just wanna make sure that
Amanda McKenna:goes on over here.
Colin White:I appreciate that about you, but people could look in from the other side and think we're being abusive. So I'm not being abusive.
Amanda McKenna:No. Okay. Yes. I'm kidding.
Amanda McKenna:Well, one
Josh Sheluk:of the sad parts of this as well is you you mentioned the fiduciary standard column, but as Maria said, this was somebody that had that was a discretionary portfolio manager.
Colin White:Mhmm.
Josh Sheluk:So they have a higher standard of care for their clients. They have a higher level of responsibility. They, in theory, have a higher degree of education and experience and should know best to avoid some of these things. But, even even the most experienced and professional and, let's call it, educated or credentialed individuals, in our industry sometimes aren't still providing suitable advice for people.
Amanda McKenna:Yeah. Absolutely. And when I heard this, I was just so puzzled because I was like, there had to be so many systems that failed and overlook this because there's system in place that if anything's a 100% of your portfolio, that should be a flag to your compliance officer. And if you see that that person is 80 years old
Colin White:That should be
Amanda McKenna:with that IPS.
Colin White:I love your face in the system, Maria. I really do.
Amanda McKenna:Well, that yeah. That made me think otherwise. But, hopefully, the guy's doing good, and, the PM paid for it.
Colin White:Well, I but I think it's important because, you know, whenever people are listening to stories like this, how do I protect myself? If anybody brings you an investment and they say there's 0 revenue, it's just say no. Like, no matter what comes after that, just say no. And and your world will be a better place.
Amanda McKenna:Yeah. And I also think that some advisers know that these deals may like, maybe there was some sort of commission structure for this that he benefited from. And then the advantage
Josh Sheluk:I'd say more than maybe. I'd say almost a 100%. Yeah.
Amanda McKenna:Right. And then they kind of look for the people or their clients who maybe aren't as knowledge in investments, and they don't really have to pitch investment ideas, because they don't know the questions to ask, which is fair, but that's why I'm paying you as a portfolio manager. So self fulfilling prophecies are definitely still out there and screw the client over, which sucks.
Colin White:So, yeah, I I love that you still have expectations of the world, but, you know, this this is more common than than you want to believe. But thank you for bringing it forward and shining a light on it because, you know, you you don't wanna give blase about these things. You don't wanna say, well, that happens all the time because that's wrong too. And so to to highlight it now, thank you very much for bringing it forward.
Amanda McKenna:Thank you.
Josh Sheluk:Thanks, Maria.
Amanda McKenna:Alright. See you, guys.
Josh Sheluk:Alright. Last one.
Colin White:Oh, the great Matt is here. He is the, portfolio manager with us here in the heart of downtown Halifax, head office as it were. Been with us for, oh, quite a few months now and brings with him quite a background in the industry, on a few different sides of the industry. So I can't wait to hear how how he's going to come about with the worst piece of financial advice he's experienced or seen in his life. Matt, we saved the best for last, buddy, so don't let us down.
Colin White:You're the you're the you're the big finish.
Matthew Kempton:Alright. Well, this is a I think this is a very good one. I I hope you enjoyed it. It doesn't actually come from advice that was given to me or certainly not given by me. It was given to a friend of mine, and, unfortunately, he took it for a period.
Matthew Kempton:This is a friend of mine who studied accounting in university and started out at one of the big firms on, you know, in sort of the CPA class to hoping to be on the partner track. And as part of that sort of class, I don't know, Frosh week. I mean, Colin, you might know how they how they do this better than I do. One of the senior partners came in to speak to the group about what it means to be an account, what it means to to be on this path. And part of his advice to this group was you're all going to be partner.
Matthew Kempton:You should begin to spend today for the earnings you're going to have. Live the life style today that you'll eventually grow into. And now keep in mind, this is a group of students who are earning 29,000 a year probably at the time. And I don't have the exact stats, but I think we all know that not everyone in that class makes partner.
Steve Sparrow:It's just it's not a bad thing.
Matthew Kempton:It's just it's just the nature of how it works. So needless to say well, he took that advice from the senior partner. Of course, I I should listen to this person. I wanna be a partner. And, well, he paid the price for doing so.
Matthew Kempton:He had a he had a lot of fun for a period, but it, 29,000 only goes so far.
Colin White:It's escaping me, Josh. Who who was the other person that brought forward this?
Josh Sheluk:I don't know. I I honestly can't remember either. I'd have to go through the list, but there is, somebody else, Matt, who brought forward a very similar similar conversation from somebody, similar recommendation that you should the the other the other one was you should basically always spend above your means. And I don't know I don't know where this idea comes from, but this is very much along the the same lines. I guess, in this case, it's a little bit better because it's not always above your means.
Josh Sheluk:If you do big partner, maybe you're back within your means. But, yeah, seems insane.
Colin White:Well, it's it's all also self gratifying. If you're if you're selling somebody, it's like, listen. You know? Don't worry about it. Just go take that $20,000 line of credit and blow it on your lifestyle because that's what you should do.
Colin White:Oh, okay. Fantastic. I get to spend 20 larger myself. Well, I'm gonna take a trip. I'm gonna do this.
Colin White:I'm gonna do that. The other thing. And you you feel that it's the right thing to do. So you're being given permission to be selfish almost. So there's some people sitting in the room just looking for an excuse to overextend themselves and like, well, the senior partner told me I should do this.
Colin White:Well, obviously, it's the right thing to do, and you're stupid if you're not doing the same thing I'm doing. You're not doing the math, and less than 1% of that room's ever gonna be partner. And it's gonna happen 20 years from now, and, you know, you're gonna have to go bankrupt before you get there.
Josh Sheluk:It it was call and ship that brought the other one forward. Right?
Colin White:Yeah. Awesome. Well, thanks for that, Matt. We appreciate you reinforcing some bad advice and a a different and, actually, honestly, a a more harmful environment because that was coming from a an actual position of power. I mean, that was somebody in a position of power who has say over the future of the people in the room telling them to do that.
Colin White:And so that that that's actually and I'm a score that is way worse than the the Colin just calling Chip story happening at a barbecue because you could pretty easily dismiss that one. It's harder to dismiss it when it's the partner of the firm that's giving the advice. So
Josh Sheluk:Yeah. So how's your friend doing now, Matt?
Matthew Kempton:He he's figured out his ways, and he's gotten back more back on track. Now this partner has he's only gotten more lavish, so I he, I'm sure he's still toting this advice, but, luckily, it didn't do too much harm at least in this case.
Josh Sheluk:It's amazing. That guy, the partner, based on how you're describing him, he's probably one of those people that is living above his means as well still even though he has made partner.
Colin White:Yeah. Misery misery loves company.
Matthew Kempton:Yeah. Yeah. Lifestyle creeps a real thing. Right? Like, it it absolutely is.
Matthew Kempton:So I think he'd be a a good example of that.
Josh Sheluk:Alright. Wonderful. Well, thanks for, for finishing it off on the right foot, Matt.
Matthew Kempton:Alright. Thank you both.
Colin White:Alright, Josh. As as the host of this whole extravaganza, do you have one final thought or piece of advice that you'd wanna share to add even another layer of bad financial advice?
Josh Sheluk:So I I've been reflecting on all of the different pieces that people have brought forward and trying to identify what do I think is is truly the worst aspect of this. Maybe not one specific piece of advice, but the the worst part of the theme. And Okay. One thing that I can point to that I think is almost always going to lead to to just terrible financial advices when there's a mismatch in priorities or misunderstanding of what the individual's priorities are. And you can see this very clearly from something like what Dan brought forward, where the priority is education, but a life insurance policy is put on the table.
Josh Sheluk:There's a mismatch between the actual priority and the advice. You can see this from what Ainsley brought to the table. Somebody who's terminal and just wants to maintain what they have. And next thing, you know, they're in a segregated fund that has a lot of volatility with it. Just time and time again, when there's a misunderstanding or a neglect, which I think is probably just as common of the individual's priorities, that's going to necessarily lead to terrible financial advice.
Colin White:Well yeah. And in in many decisions or many of the situations you're describing, there's there's a conflict somewhere in the system. Like, the person giving the advice Yeah. Is conflicted because, you know and it doesn't have to necessarily be malicious. But, you know, their priorities are overriding the priorities of the client.
Colin White:They're not, you know, they're not properly taking that into account. But yeah. No. Absolutely. Those are themes for sure.
Colin White:The the thing that I've watched be the most damaging over time to many people's financial situation is the disproportionate faith they put in real estate. And that affects many different decisions at many different times in life and can cause many different kinds of problems, whether it's the overextending to buy a bigger home and making yourself house poor or hanging onto a property long after it's served its useful life. You know, decisions around paying down mortgages, you know, a rush to pay down a mortgage that you're only paying 1.8% on. You know, the number of different ways I have seen homeownership and or real estate ownership be detrimental to somebody's financial outcome, for me is the biggest theme. And Devin touched on it quite nicely, and we've talked about it in previous.
Colin White:And there's gonna be future talk about this because we were talking the other day about pension funds and some of the stuff that's gone on there. But from a personal financial perspective, the number of bad decisions that are made around the ownership of real estate and the different ways that can come back and haunt you. For me, it's the most most ubiquitous thing and and and has caused. But it it it's some it's maybe a little difficult to say that because it's not often a tragedy. Yeah.
Colin White:But it really does lead to a a much worse outcome than need to be.
Josh Sheluk:Yep. Yeah. And that's that's where you can kinda distinguish between some of these stories. Some of them are are downright, money losing. Like, you just see money evaporating.
Josh Sheluk:Yep. And others are persistently what I would call suboptimal. Yep. And maybe not you know, if you if you bought a property 10 years ago, you're probably doing okay. Yep.
Josh Sheluk:Was it the best absolute best way for you to grow your wealth? Maybe, maybe not.
Colin White:Yep. But I
Josh Sheluk:and I think that's so there there's you're you're absolutely right. There's this this sort of persistence, where a misunderstanding of what real estate can do for you can lead to maybe suboptimal outcomes, but very rarely destructive, I would say.
Colin White:Yeah. No. It it can be destructive. You're right. But but not on the same magnitude.
Colin White:But I think we're kinda kinda drawing a line in the sand between, you know, either borderline or actual fraudulent activity Yeah. That that is malicious and predatory to, you know, somebody making a decision where they're just misaligning. They're not understanding necessarily or acting in their own best interest.
Josh Sheluk:Yeah. The one as I going through my own history and trying to think of what came to mind most for me was, again, kinda along the same lines as you, but life insurance that is used more as an investment product than for actual life insurance purposes. And I have seen, I think, more dollars. It's it's not, like, widely spread, this type of approach, but I've seen more dollars evaporate because of this type of approach than just about anything else. Because typically, when these ideas are put forward, they're for very large dollar amounts.
Josh Sheluk:Yep. People that can probably afford it, quite frankly, but, have a lot of money to to go up in flames. And it's almost always coming back to a mismatch between what somebody's priorities are and what the the person providing the advice or the the the sales approach is. And I I've just seen these time and time again come back to, be built on faulty premises and false promises and, tens or 100 of 1,000 and potentially even 1,000,000 of dollars just just, you know, evaporating again for for things that were poorly designed and poorly thought out of and, maybe not hitting the nail on the head in terms of priorities.
Colin White:Well, I think it's important for us to try to put a bow on this, Josh, and it's it's a difficult bow to put because on one hand, we're saying, don't listen to your friends because they're idiots. You know? Whatever you do, don't go to the locker room after your hockey game and expect you're gonna get advice. And then we have all these examples of people who went to professionals and got bad advice and still lost money. Yeah.
Colin White:So, you know, if you listen to all this, it's like, don't give up hope. Please don't give up hope. You know? There are good people out there giving good advice. We like to think we're some of them.
Colin White:In fact, I will tell you we are some of them. And there are some and we've shared as we've gone along some basic rules that you can you can put in place for yourself to protect yourself from some of these things. Don't stop trying to find the right advice. There are good mortgage brokers out there. There are good accountants out there.
Colin White:There are good lawyers out there. A lot of them. Just because some of them aren't great doesn't mean you should stop looking. You know? You too will find love one day, and, you know, don't don't give up the search.
Colin White:It's it's worthwhile. And if anything that we've talked about here triggers anything for you, if you got questions for us, by all means, reach out. We'd love to engage in a conversation to be further educated in things we didn't think of as being terrible financial advice, or maybe to help steer somebody out of a bad financial decisions if you've got that spidey sensor tingling right now going, maybe this is gonna make the next podcast. And, you know, before you do it, give us a call, and maybe we can talk into it.
Josh Sheluk:Yeah. That's a great wrap up. And, yeah, just to emphasize, we have a dozen or so conversations here with people that have decades decades decades of time in the industry. There's a lot more really good financial advice that goes on than bad financial advice, but we do want you to be aware of some of the the the pitfalls that are out there as well.
Colin White:If you're breaking a sweat trying to figure out what your financial adviser is talking about, you're not getting the service you need. You probably hate trying to get an answer from them, but you also think moving your accounts will be a headache, And it might be. But working with Dontrocktheboatwealthplanning.comor.ru isn't exactly stress free, is it? Call us. We will demystify the world for you.
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