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The Real Meaning of "Private and Exclusive" in the Banking World

03/25/2013 05:43 EDT | Updated 05/25/2013 05:12 EDT

When it comes to marketing, a name can mean everything. When it comes to investing, it means absolutely nothing.

Over the last year, for example, there has been an increase in the number of firms that are offering Private Investment Council or Private Investment Pools. Why? Because people are foolish enough to believe that these things are special. What a load of crap!

When I started in the life insurance business, I remember a trainer saying that if you packaged it right you could sell 'sh#!'. I had forgotten about that until the day I was driving down a rural road and saw bags of the stuff for sale. Of course it was horse manure, but I had to smile when I recalled the lesson I had been taught two decades before. You really can sell anything if you package it the right way. Nobody knows this better than the financial services industry.

How do you feel when someone tells you you're special or important? Most people feel happy and privileged. Have you ever gone to a private party? Do you feel a little different when you walk past the sign that reads "Closed for Private Party"? I think most people do. So how does this relate to investing money? Well, it doesn't, and that's the point. Just because a company promotes something as "Private" doesn't mean it's special or better.

Earlier this year, I was sent a promotional brochure for Manulife's Private Investment Pools. A week before that, I received some information about MD Private Investment Council, soon after I received information on Fidelity's Private Investment Pools and before that, RBC Private Investment Management. Shall I go on?

Every major financial institution has a "Private" something. The only thing that makes them different from all the other stuff they have to peddle is the entry level. Most require a minimum deposit of $150,000. That's it, nothing more -- nothing less. What makes them private is that not everyone can come to the party because they can't afford the minimum buy in.

Most people are likely to equate private with better, so I went through one of these "Private Investment" packages to see what was so special. Here are the different fees that were listed:

• Management Fees

• Derivative Expenses

• Operating Expenses

• Sales Charges

• Switch Fees

• Redemption Fees

• Registered Tax Plan Fees

• Short Term Trading Fee

• Frequent Transaction Fee

• Expenses for Special Services

• Taxes

Funny, it doesn't look any better than most other crap being sold. As a matter of fact, in many cases, it costs more. Maybe that's what makes it special.

After looking at all these "Private" opportunities, I've concluded that this is one party you don't what to attend.