Top ten things securities commission wants investors to know

(Submitted by Michelle Robichaud - New Brunswick Securities Commission Spokesperson)

SAINT JOHN- The New Brunswick Securities Commission (NBSC) issued the provincial results of the 2012 Canadian Securities Administrators Investor Ideas today.

The study was conducted in May 2012 and highlighted investment knowledge, investor behavior and incidence of investment fraud as key areas of research.

"We know that in order for investors to protect themselves from fraud and prepare them for their financial future, they need to have a firm grasp of basic investing concepts," NBSC executive director Rick Hancox explained in a press release issued by the NBSC. "The study allows us to review areas for improvement and to develop programs that help investors make [more] informed investment decisions."

The ten most important things for New Brunswick investors to consider and possibly improve are listed on The Shiretown Blogger.

1. Save for the Future: Roughly one third of New Brunswickers, or 36 per cent, reported having no savings or investments set aside for the future. People who did report having savings for the future are most commonly saving their money through an RRSP, RRIF, or pension plan (54 per cent of people) or a TFSA (24 per cent).

2. Make a Financial Plan: Only one in five New Brunswickers have a formal written financial plan with clear goals for investing. Financial plans can help investors to set goals and determine how they will achieve them. However, 81 per cent of those who have not had a financial plan have considered the option over the past year. 

3. Know What You Are Paying Your Financial Adviser: Two thirds of New Brunswickers, or 64 per cent, are unaware of the amount they have paid their financial adviser over the past year. 

"Adviser fees sometimes affect portfolio returns," Hancox noted. "Investors should know how much they pay and how their adviser is being paid for all investments." 

4. Do a Background Check on Your Adviser: One third of those who have an investment adviser, or 35 per cent, have not done a background check. The top sources for those that have done a check into their adviser's history included other clients (12 per cent), the adviser's firm (11 per cent), online sources (10 per cent), and 10 per cent depended on word of mouth and the adviser's reputation. 

5. Understand How Investments Work: Though the most commonly held saving methods are mutual funds, only 45 per cent of New Brunswickers are aware that mutual funds do not have a fixed return rate. 

6. Consider Average Rate of Return: A reasonable annual rate of return for the market is considered less than four per cent. New information found in this study shows that six out of ten New Brunswickers are unaware of the annual return rate of the investment, and three out of ten had unreasonable expectations of market returns. 

7. Recognize Warning Signs of Investment Fraud: Nearly 60 per cent of New Brunswickers did not understand that investments offering an above market return rate and little to no risk are almost always fraudulent. 

"Investors need to be aware of current market conditions and investment fraud warning signs so they can ask the right questions of those selling investments," Hancox said. "Investors should be suspicious of all offers that seem too good to be true." 

8. Be Aware that Email Investment Fraud is Increasing: The most common ways that New Brunswickers were approached with investment fraud is via email (42 per cent), over the telephone (39 per cent) or by someone they are familiar with (4 per cent). 

9. Report Investment Fraud: Only 30 per cent of New Brunswickers reported the most recent suspected investment fraud attempt. Thirteen per cent of New Brunswickers knew to report investment fraud to the NBSC.

10. Exercise Caution When Using Social Media as a Source of Investment Information: Though most investors depend on financial professionals for information about investing, five per cent have begun using social media for information. Over one in five people have seen investments advertised on social media, with the most popular social networking sites being Facebook and Google.

"Social media is changing the way people obtain information," Hancox said. "But investors must still take the time to review all investment opportunities carefully."

"No matter what the source, it is your money, and no one cares more about it than you."

The study results for New Brunswick are available online at the NBSC's website (www.nbsc-cvmnb.ca). The 2012 CSA Investor Index is also available online at the CSA's website (www.securities-administrators.ca).

The NBSC is an independent Crown corporation which oversees capital markets in New Brunswick and regulates those who sell or manage securities.