Why has your advisor not offered Labour Sponsored Investment Funds to you?

By January 4, 2017SASKWORKS

 

This always puzzles me  …  Especially if you are from Saskatchewan.  

Because Saskatchewan Labour Sponsored Funds have an amazing track record in comparison to their peers nationally.

 

AND…most importantly gives Saskatchewan investors the ability to recapture as much as

$3950 in tax refunds from a $5,000 investment…

I don’t care what

age,

demographic,

culture,

background, etc.,

you are….

 

That math just makes sense.

 

And yet still so many advisors do not discuss these investments with their clients.  

Here may be a few reasons why…

1.

They simply don’t understand:

Believe it or not, advisors are stubborn.   And often, once a particular stereotype enters their brain it is game over…it is very difficult for them to overcome and to be convinced otherwise.

Also unfortunately, the lack of education, may play a significant role in this as well.

Other times it may just simply be the discomfort of the unknown….

Advisors continuously overstate their abilities to provide consistent returns.  Tax refunds and Tax credits are guaranteed ways to save and build wealth.  Investment returns often are NOT.  So be sure to reach out and pick the low hanging fruit first.  It’s far easier in the long run…trust me

2.

They misunderstand the fee structure:

 

Some advisors often criticize Labour Funds for their higher than average fees.  But higher than what?  In comparison to other mutual funds?  They are not the same as mutual funds.  So again this is an apples to oranges comparison

Private investments take MORE time to analyze and perform due diligence and there is no easy way to obtain information and purchase them.  

This differs from a standard mutual fund that buys only publicly traded securities such as stocks and bonds.  There are legal fees, appraisal costs, and other expenses that are very necessary when assessing the viability and quality of a private investment.  Secondly, the execution of purchasing private investments are not as straightforward and efficient as those within public markets.

However, obviously the effect that these investments have on growing investment assets and net worth should always be considered after fees.  

 

For example, SaskWorks Venture Fund has not had a single negative return within the last 10 years  Source: Morningstar.ca & Saskworks.ca

….and yes, after fees. ☺    

3.

No Access:

Many advisors, banks and credit unions are not offering these products on their shelves anymore.  This is unfortunate but the push towards more and more proprietary management is the recurring theme in Canada and throughout the world.

Full service brokers and portfolio managers are no longer able to carry these types of investments in client name accounts and therefore have begun to unfortunately not even recommend them to clients.

 

4.

Proprietary Pressure from their Company / Firm:

 

Most Banks, Credit Unions, Insurance Companies, Non-Independent Mutual Fund Firms cannot even recommend this to their clients.  

Reason being….  The particular company did not “manufacture” the product.  

There is HUGE profit margin within internally structured investment products and every bank and company is moving further and further towards these types of solutions.

Quite simply….If there name is not on it….They often simply aren’t interested in providing it as a solution to their clients.

 

Again the client loses out.

 

“It’s like walking into a Ford car dealership and asking them if they recommend a Chrysler product… Pretty certain we all know what the answer would be!”

 

All in all, Labour Funds truly are an excellent way to leverage against the highest expense that us as Canadians have….INCOME TAX

And although they very specific risks that must be clearly understood by every investor, they still should at least be considered as a solution to building wealth.

 

Because the math never lies….

 

Written by:

Todd McLay

Precedence Capital / Gravitas Securities Inc.

Disclaimer

The views, opinions and positions expressed by the author and those providing comments on these blogs are theirs alone, and do not necessarily reflect the views, opinions or positions of Gravitas Securities Inc. This Blog is provided for informational purposes only and is not a solicitation or an offer to sell securities.

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