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DIY Doesn't Mean Do-It-Alone

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In the investment business, everyone makes money off of YOU, the individual investor. Since everyone is taking fees off your money, the advice you receive from everyone is inherently biased.

We are not saying professionals in the industry are cheats - although some clearly are - we are just saying that as soon as someone gets paid - by a company or client - then their advice is automatically suspect. We eliminate that, as we don't take a percent of assets or get a fee if you buy or sell any investments. 

Let’s look at some of the players in the investment industry and how their advice is conflicted:

Broker or financial planner

Your advisor makes money off you in several ways: By commission, on new issues, and via trailer fees from mutual funds he/she sells to you.

Often, your advisor makes the most money on new issues of structured products, where they can make 5% commission up front. To a broker, 5% commission can make ANYTHING look good, so they will often try and sell you something that may not be good for you. New issues are particularly bad, because your advisor legally can’t give you research on new issues that they are involved in.

5i Research fills that void, offering you independent opinions for members only.

Fund manager

Your fund manager gets paid by you. A lot. Does the manager spend any time at work investigating personal stocks? What about that fund manager on TV? Is that stock he is talking about really that good? or does he just want it to go up so his fund looks better?

If a fund manager touts a stock, when are they allowed to sell it? Will they tell you they are selling?

If a fund manager is performing poorly, will he increase the risk of a fund in order to try to ‘save’ his yearly bonus? What happens if that doesn’t work out?

Still considering leaving some of your money in mutual funds? Here’s our CEO and Head of Research, Peter Hodson on the “Top 5 Problems with Mutual Funds”: you. New issues are particularly bad, because your advisor legally can’t give you research on new issues that they are involved in.

Investment banker

We could fill a hundred pages on these guys. Investment bankers care about fees, period.

They package things up and push them out to clients, and could care less whether they are good or bad investments.

We only need to bring up the disaster of 2008 to make this point, where investment bankers packaged garbage loans and sold them, almost sending the world economy into another depression because of it. Enough said about them.

A Trader

Traders work for fund managers or sell-shops. Thus, they are loyal to their employers (and not you the investor). They also might trade their own stocks (which inherently creates potential conflict when they recommend investments). You may, or may not hear about these private trades so can you really trust that their recommendations aren’t biased?

They may not be the worst in terms of conflicts, but conflicts definitely do exist with traders.

Newsletter writer

We like writers, except when they:

(a) Trade in the names they write about

(b) Get paid by companies in exchange for coverage

(c) Earn shares from companies for articles

(a)(b)(c) are all conflicts, obviously. Most newsletters will also want to connect you to their money-management division, because that is more profitable.

Many stock newsletters are also tailored towards day traders. Day trading is not the focus of 5i Research. We focus on fundamental research instead of trying to time the market and make a quick killing (which typically only kills your net worth).

We are not paid by companies.

Stock analyst

Stock analysts are generally pretty smart people. But let’s face it, they are not working for you. Their 50-page glossy research report is designed to impress the companies they are following, so those companies give more business to their employer, usually a bank or brokerage company.

Target prices and changes in recommendations are usually designed to generate commissions on trading activity. We have seen analysts change a target price from a SELL at $10 to a BUY at $300 in less than 16 months (Credit Suisse on Netflix). What value does that serve?

Plus, analysts use generic terms so as to not offend companies. “Accumulate” “Market Perform” “Equal Weight”. How about just telling us if a company and/or management is good or bad?

At 5i Research, our reports are short, and are in easy to understand terms so you can take away what you need to know, quickly. Nobody reads 50-page reports, anyway. If a company is lousy, we tell you. We don’t need to impress anyone. We don’t care if we rate a company “F”. That company doesn’t pay us, so who cares if they don’t like us? We work for our members only.

Public relations firm

These companies are paid, sometimes tens of thousands a month, by public companies who want them to spread the word of their company and drive their stock up.

While they do provide a service, obviously if you are paid this much you might present a company only in the best light possible.

In our years as a Portfolio Manager, we have learned to be careful with PR and investor relations firms, as their conflict is just too great. All the companies they represent sound like the next greatest thing, which we know from experience is not true.

Financial websites

Almost every financial website out there (except ours!) will either want to connect you with someone who will charge you more fees, seek to eventually manage your money; seek to sell you some other service; seek to promote a company, or seek to somehow get more of your money or promote a stock.

5i Research’s site will only - ever - analyze stocks and new issues. We do not want to manage your money. We do not own positions in securities we follow (a potential conflict). We do not recommend financial advisors. We do not promote companies. We work exclusively for you.

Bond-rating agency

Having worked at a rating agency, we know all about conflicts. To get a bond rating, a company PAYS the bond rating agency. Could there be a bigger, clearer conflict?

After the financial crisis of 2008, the rating agencies were taken to task by the government on the issue of conflict, but their basic model of getting paid by issuers still remains the same as before.

CEO of a company

How can a CEO have a conflict, you ask? Well, quite easily. If the CEO owns shares or options, he or she has a clear incentive to promote their own stock.

Now, we want CEOs to own stock in their own company, don’t get us wrong. But, as soon as they do, EVERYTHING they say has to be treated carefully, because they get rich if their stock rises.

We have seen too many CEOs of companies outright lie to promote their own stock positions. Obviously this is a clear, defined and dangerous conflict of interest.

What do fees really cost you?

This graph shows the compounded effect of paying 2.5% management fees on your money over 20 years.

What’s the bottom line? High fees like this can literally cost you hundreds of thousands of dollars over your lifetime.

Fees are by far, one of the greatest threats to your portfolio, and this is why we recommend purchasing your own investments, while utilizing our team of analysts that take care of all the financial research and analysis for you.

Tired of underperforming investments and high fees? Try our 5i Research for unbiased insights on the top stocks and ETFs in Canada, along with answers to over 84,000 investing questions, and model portfolios for growth, balanced, and dividend/income investors.

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Our Team

Peter Hodson, CFA

Peter Hodson, CFA
Founder and Head of Research

Prior to starting 5i Research, Peter was Chairman of Sprott Asset Management LP, a Director of Sprott Inc. and lead portfolio manager for the Sprott Growth Fund. Peter has over 25 years of experience in the investment industry. He began his career as a managing director with Dominion Bond Rating Service, and later became associate director of equities at Mutual Asset Management where he managed over $1-billion in assets in its small-cap fund. He later joined Synergy Mutual Funds in 1997 and moved to CI Investments when it acquired Synergy in 2003. At CI, he was responsible for overseeing the management of various funds as vice president portfolio management. Mr. Hodson holds the Chartered Financial Analyst designation and has a Bachelor of Business Administration in Economics from the University of Western Ontario. Peter owns the majority interest in 5i Research Inc. through the 2014 Hodson Family Trust. 

Ryan Modesto, CFA

Ryan Modesto, CFA
Chief Executive Officer

Ryan is a CFA charterholder and holds a Bachelor of Business Administration at Wilfrid Laurier University. Ryan is a regular guest on BNN, has contributed to The Globe and Mail, been featured in Canadian Business and sits on the Waterloo Economic Development Committee as well as the KW chapter of the Toronto CFA Society.

In addition to being a regular contributor to Canadian MoneySaver magazine and playing a key role in the investment research function at 5i Research, Ryan is closely involved in the production of each issue of the ETF & Mutual Fund Update. Ryan previously worked in High Net Worth Wealth Management at one of Canada’s largest banks and has also held various analytical positions in varying industries.

Moez Mahrez, CFA

Moez Mahrez, CFA
Investment Analyst

Moez Mahrez, CFA, is an Investment Analyst with 5iResearch and Chief Editor of the ETF Update newsletter. Moez conducts analysis on 5i Research coverage companies and markets. He is responsible for the management and generation of content for ETF Update as well as fund and industry research. Moez is also a contributor to Canadian Money Saver magazine and has previously worked as a financial advisor at two of Canada’s biggest banks, specializing in investment advice and fund analysis. Moez holds the Chartered Financial Analyst designation and has a Bachelor of Commerce at McGill University.

Lana Sanichar

Lana Sanichar

Lana Sanichar was the first employee at 5i Research Inc. After running her own Fashion business for 7 years, Lana became an essential support to the operations of 5i Research, the ETF and Mutual Fund Update and Canadian MoneySaver. Lana holds a B.A. from the University of Waterloo.

Barkha Rani

Barkha Rani
Investment Analyst

Barkha previously worked at a private equity firm focused on real estate as well as providing research for the firm's investment portfolio. Prior to joining 5i Research, Barkha also worked at institutional and retail derivative desks at two of Canada's largest banks and had a brief stint with distressed debt investments.

In addition to writing equity research reports on companies covered by 5i, Barkha is a regular contributor to the ETF & Mutual Fund Update and Canadian MoneySaver magazine. She went to Wilfrid Laurier University and attained a Bachelor of Business Administration in Finance and Mathematics and is working towards her CFA designation.