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April 6, 2017 | Financial Expertise? Proof Comes When the Speculative Tide Recedes Once More

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

This statement on a real estate agent’s blog last month caught my eye:

“In Canada, the middle class are relying more on real estate agents for retirement advice than licensed financial consultants.” –March 3, 2017

Since our homes represents the lion share of net worth for Canadian families, this statement is undoubtedly accurate.  It’s also true, that realtors and mortgage brokers (aka “mortgage architects”), like the vast majority of those working as financial consultants/investment advisors today, are licensed sales people who earn fees on transactions, and owe no fiduciary duty to put the best interests of their customers ahead of their own profits.

We also know that a frenzy of borrowed money, speculation and money laundering has driven a massive surge in price and transaction volumes over the past few years.  The cash flow running through the broker/dealer/financial sector has boomed along for the ride.  But for all their self-proclaimed expertise and savvy, as this cycle moves toward its inevitable conclusion, the defining question, as always, will be this:

The answer as usual, will be, not many.  As the bubble tide recedes, truth will be revealed once more.  As cash flows plunge, foreclosures and loan/lease defaults rise, repo men will be coming to take back a fleet of the fanciest autos and gizmos.  Lawsuits, investigations and charges for illegal activities will follow.  Same story, every cycle.  Stay tuned.

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April 6th, 2017

Posted In: Juggling Dynamite

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