Show Me The Return (Petition)

[Feeonly.ca]

http://www.showmethereturn.com/petition.aspx

Viewers may find this petition of interest:

For Immediate Release

Show Me the Return: Finance Industry Insiders Demand Clear and Useful Investment Account Statements

TORONTO, ON -- The people of Canada are almost all united by one puzzling, monthly ritual that leaves most frustrated and perplexed.

It goes something like this:
• Get mail from mailbox.
• Open monthly investment account statement.
• Read statement looking for some indication of the rate of return earned by investments.
• Scratch head and gnash teeth.
• Add statement to pile of previously received incomprehensible statements.

A number of fee only financial planners are currently mounting a public campaign to change this scenario by encouraging the Ontario Security Commission (OSC) to mandate statements that are easy to understand.

Warren MacKenzie of Second Opinion Investor Services Inc and an informal association of fee-only financial advisors are urging investors to visit their website, www.showmethereturn.ca, and sign a petition urging the OSC to change its statements.

The group is marshalling support for the performance reporting recommendations by the Working Group of the Canadian Securities Administrators (CSA) and the Registration Reform Project (RRP). These recommendations are that clients be provided with annual performance numbers compared to a benchmark.

MacKenzie and the informal association of fee-only financial advisors fear that without public support the recommendations will never be implemented.

When the ‘Fair Dealing Model’ committee made the same recommendations in 2002, the finance industry lobbied against the change citing the extra expense as their reason, and this caused the OSC to shelve its good intentions. Now however, the group will send the petition to the OSC as soon as 100,000 signatures are confirmed and take up the call for action once more.

Investors can get a glimpse at the clarity obtained through this new reporting style by using the free rate of return calculator on the showmethereturn website. By entering their opening balance, the dates of deposits or withdrawals, and their ending balance, the calculator will display the actual rate of return they made during that period.

MacKenzie says it’s high time for the monthly ritual to change, “Investors should be able to open their statements, see exactly how their investments are doing, and then determine what actions they should be taking – whether rebalancing their portfolios, changing their asset mix, or making reservations for a nice celebration.” `

For more information please contact:
Ms Parmjit Parmar, Montana Ridge, t:416-750-0966 email: Parmjit@montanaridge.com

[yielder]

http://www.showmethereturn.com/petition.aspx

Viewers may find this petition of interest:

Good stuff Graham. Can you link to the performance reporting recommendations by the Working Group of the Canadian Securities Administrators (CSA) and the Registration Reform Project (RRP). ?

[Bylo Selhi]

Good stuff Graham.

Can you link to the performance reporting recommendations by the Working Group of the Canadian Securities Administrators (CSA) and the Registration Reform Project (RRP).?

Show Me the Return: Links

[ghariton]

Good stuff, guys.

The extra expense would be, what, a dozen lines of extra code?

Monthly account statements have ballooned to one or two dozen pages, without adding any information I find useful. They can cut back on all that, and give me some stuff I want to know instead. Unless, of course, the information would be embarrasing to them.

Georges

[NormR]

Humm, the Fair Dealing Model suggests using CFA Institute (formerly AIMR) standards (now Global Investment Performance Standards). However, these standards would, if I recall correctly, be violated by other provisions of the Fair Dealing Model. The AIMR standards tend to be very strict.

[NormR]

The extra expense would be, what, a dozen lines of extra code?

Not for the CFA Institute / AIMR standards.

[Bylo Selhi]

The extra expense would be, what, a dozen lines of extra code?

Not for the CFA Institute / AIMR standards.

Nah. Any program can be written in one line of code in APL

(And the banks will love it. Invented by a Canadian and it runs on big IBM iron )

[brucecohen]

A worthy cause. There was a push to do this years ago. Altamira got tired of attending unproductive meetings at IFIC and went ahead and started printing account returns on its statements. I don't remember any company following their lead though several -- if not most/all -- now do that for their pricey wraps.

[IdOp]

BMO and Royal mutual fund statements also showed some return info at one time. I don't know if they still do or not, as I no longer have accounts there. I noticed on my last Altamira statement (March '06) there were no longer any returns on it.

A few years ago I looked at the IFIC web site, which Royal referred to on their statements, and was appalled by what I found there.

[Feeonly.ca]

Great supportive remarks!

I agree, it's a very worthy cause and something that is long overdue.

The petition and the "Show Me The Return" web site is the work of Warren MacKenzie of Second Opinion Investor Services Inc.

He made contact with several fee-only planners across Canada (including myself) looking for support and help to spread the word. I'm happy to be able to lend a hand.

[OtherWise]

He made contact with several fee-only planners across Canada (including myself) looking for support and help to spread the word. I'm happy to be able to lend a hand.

Me, too! You can find a list of the supporters here: http://www.showmethereturn.com/whoweare.html

We've long supported this initiative. As part of our service to our clients, we prepare quarterly statements showing return (since inception, most recent year, most recent quarter), relative return against benchmarks, asset allocation, ytd realized gains, unrealized gains and ytd income.

[yielder]

Perhaps some of the financial journalists in the neigbourhood could lend a hand by publicizing the petition site. I took a quick peek and didn't see a hidden hit counter. You might want to add one.

[Bylo Selhi]

Perhaps some of the financial journalists in the neigbourhood could lend a hand by publicizing the petition site.

I'm not a journalist in any official sense, but I updated bylo.org's home page last night. (Hint, hint. You, Shakes and Norbert might want to do similar.)

My wife and I also "signed" the petition. (Hint, hint: If every FWF poster and their spouse did likewise, we'd be 20% of the way to the target.)

P.S. to feeonly: Does this campaign have a specific period or are you planning to run it until you get the 10,000 petitions?

[uhoh]

BMO and Royal mutual fund statements also showed some return info at one time. I don't know if they still do or not, as I no longer have accounts there. I noticed on my last Altamira statement (March '06) there were no longer any returns on it.

A few years ago I looked at the IFIC web site, which Royal referred to on their statements, and was appalled by what I found there.

BMOinvestorline shows this and I love this feature.

[yielder]

(Hint, hint. You, Shakes and Norbert might want to do similar.)

Yep

[brucecohen]

I wrote several articles about this issue years ago. Will look up the clips later if I get time. IIRC, IFIC created a committee that had a bunch of technical concerns about the AIMR rules. IFIC ended up endorsing a formula called Modified Dietz, but that too had problems. Dave Faulkner, a financial advisor who developed some sophisticated software, developed a formula that produced similar results but was much easier to implement. (Dave subsequently sold his software to CCH and went to work for them but has since left, I believe)

In any event, now that fundcos report returns on wrap statements, they've obviously settled on an acceptable formula and done the coding to support it.

[adrian2]

I noticed on my last Altamira statement (March '06) there were no longer any returns on it.

IIRC, Altamira's policy is to show the returns on the year-end and mid-year statements, and not on the Q1 and Q3.

[Bylo Selhi]

Perhaps some of the financial journalists in the neigbourhood could lend a hand by publicizing the petition site.

Clients deserve to know annual rate of return

The top argument for providing annual rate of return information has to do with basic financial planning. Along with your age, goals, risk tolerance, a key variable in any plan is the rate of return you expect to generate. If your actual results lag your expected return, you'll need to look at any one of several remedies that include contributing more. By this reasoning, it's ridiculous that annualized performance reporting isn't already provided by financial firms. "I can't think of anything more important than knowing how you're doing and being able to take corrective action if you're off track," Mr. MacKenzie said.

[Shakespeare]

Shakes and Norbert might want to do similar

Done

[yielder]

Clients deserve to know annual rate of return

Great. I dropped a note to Don Macdonald at the Montreal Gazette and Larry MacDonald at Canadian Business Online suggesting that despite Carrick's already having run a piece, investors would benefit from as much exposure as possible.

[Springbok]

BMOinvestorline shows this and I love this feature.

Agreed - BMO provide excellent data on returns - It takes into account withdrawal & deposits which would be hard to do on spreadsheet.

I don't recall seeing this from our previous FSB.

[Shakespeare]

It takes into account withdrawal & deposits which would be hard to do on spreadsheet.

I don't see why; I use a spreadsheet to track my own portfolio performance with the XIRR function - which takes into account withdrawals and deposits.

(gummy has several tutorials, including one on XIRR.)

[NormR]

The petition seems to be asking for ...

> reporting annual performance based on Association for Investment management & Research (AIMR) standards
> providing (where possible) an appropriate benchmark against which performance can be measured.

A few notes,

* AIMR is now called the CFA Institute

* The actual standard should be specified. The current one is Global Investment Performance Standards (GIPS - see pg26+ for sample statements)

* GIPS compliance, while laudatory, is nontrivial. GIPS is not just about providing an extra line or two on a statement.

The petition should better specify what is being asked for. I suspect that many would be very happy with much less than a full GIPS treatment. I also very much doubt that a large fraction of the people signing the petition know what GIPS is all about. Aside from the CFA charterholders in the group, has anyone actually read the GIPS docs?

[Springbok]

It takes into account withdrawal & deposits which would be hard to do on spreadsheet.

I don't see why; I use a spreadsheet to track my own portfolio performance with the XIRR function - which takes into account withdrawals and deposits.

(gummy has several tutorials, including one on XIRR.)

Of course it can be done, if you have the time and interest, but I would rather sail and play golf

My present simple spreadsheet would have to be redone, so why bother if BMO does it for me!

[brucecohen]

Clients deserve to know annual rate of return

Great. I dropped a note to Don Macdonald at the Montreal Gazette and Larry MacDonald at Canadian Business Online suggesting that despite Carrick's already having run a piece, investors would benefit from as much exposure as possible.

I dropped a note to Jon Chevreau (Nat Post), Tessa Wilmott (Investment Executive), Darin Diehl (Advisor's Edge), James Daw (Toronto Star) -- whose on vacation -- Michael Kane (Vcr Sun) and Rob Carrick.