04/17/2014 06:02 EDT | Updated 06/17/2014 05:59 EDT

Advisor, Salesman or Thief?

If you like rants read on...

I've had it with an industry that screws young people because of its own greed. Why is it that the government has absolutely no concern for the well-being of the next generation? Is it because most of them don't vote? If that's the reason it's a cop-out (not by the young, but by the older ones who should know better)!

Now that you know I'm annoyed, let's be specific about who is upsetting me. Yet again, it's the mutual fund industry. This $1 trillion industry has become so powerful that no one provincially or federally is "big" enough to stand up to them. They are free to abuse and steal from people however they see fit. Here's another example of how they do it ...

A nice young person, aged 22, wants to start saving for her future, so she agrees to sit down with a financial planner (read: mutual fund salesman). She has an old vehicle and lives with her parents. Her new job affords her the opportunity to save $1,000/month, so her financial advisor gets her to invest the $1,000/month into 3 different mutual funds all with deferred sales charges (DSC). The $1,000 was further split $500/month to an RRSP and $500/month into a non-registered cash account.

When she was 25, she wanted to buy a new truck and called her financial advisor about taking the money out of her cash account. She was told that there was going to be a very substantial withdrawal fee and that she should make arrangements with her bank for a loan. She acquiesced.

I got a call yesterday from this young lady, now 27, crying because she didn't know what to do or who to call. Her employer, who is a client of mine, had suggested she contact me for advice. She is newly married and she and her husband were trying to buy their first home.

What had upset her so much was the conversation she had just had with her financial advisor. He had told her that if she wanted to use the money in her RRSP under the first time home buyers plan she was going to have to pay a very substantial withdrawal fee and that the same fees would apply to her cash account.

The reason the withdrawal fees are still high is because the DSC fee schedule, which in this case goes on for 7 years, is applied to each deposit. Her $1,000 monthly deposit into the DSC mutual fund had started a new 7 year cycle each time. This is insane.

I've said it over and over again. There is not one thing about a deferred sales charge that's in a client's best interest. This financial advisor (read: mutual fund salesman) wasn't an advisor at all - he was a thief, and so was the company for which he worked. Young people have dreams and goals and should be helped to achieve them. Allowing sharks to prey on these young people is disgusting.

For the sake of the uninformed and vulnerable, ban deferred sales charges and stop the abuse.