Ascending to the role of British Columbia Financial Education Moderator, the representatives for the Canadian banks applauded tepidly—if not a bit nervously—when Harry Hall took the podium to field questions from reporters earlier this week.
Tanya Rakethem, from The Royal Bank of Canada, was the first to offer congratulations in the public forum at Takeback High, in Mission, B.C., but she quickly launched into the question that every banking rep wanted to hear:
“Mr. Hall,” she asked, “Could you explain this part of the new C.R.A.P.P. curriculum on mutual fund education to us?”
“No problem,” smiled Hall, “The acronym itself comes from the old C.A.P.P. program, Career And Personal Planning, and we’ve added the “R” to cover “Retirement.”
“Fair enough sir, but what’s the curriculum going to teach about mutual funds? We’ve been hearing that something revolutionary is coming down the pipeline.”
“Oh, of course,” Hall responded, “It’s a set of role playing units that we start in the fifth and sixth grade and carry through to the students’ senior years. One student plays the bank representative, and the other student plays the investor, putting away money for their retirement. As kids get older, we structure it more formally, and we assess them based on a set of criteria: a rubric, if you will. Those playing ‘bank reps’ or ‘advisors’ are given points for their convincing voice, ability to scare or confuse, and their professional demeanour. Students playing ‘investor’ are given points for playing good defence, while trying to stickhandle their investments (politely and assertively) into the products the banks don’t want them owning—like low cost index funds, for example.”
“But what exactly are kids supposed to get out of this?” asked Ms. Rakethem.
Pulling up his sleeves and looking intently into the camera to answer her question, Mr. Hall responded:
“We want students to know that if the stock market makes 5% per year for a 5 year period, that’s what the average stock market mutual fund will make, before fees. And because the average Canadian mutual fund takes 2.5% annually in fees, people need to know that Joe the logger will have 50% of his profits chopped by the financial institution. If the markets make 2.5% a year for the next 5 years, Joe will be giving 100% of his or her profits away—it might as well be campfire fodder“
“But you can’t do that,” responded TD Bank’s John Fleecer.
“Why not?” replied Mr. Hall. “Canadians are world leaders in hockey and mutual fund fees.
The average Canadian needs to know this—it’s part of being Canadian. And the C.R.A.P.P. program is going to teach everyone.”
CIBC’s Lisa Shaft was the next to call out a question. “Mr. Hall, we’re in the professional wealth management business. You should have consulted with some of us before implementing this program.”
“No Ms. Shaft, you’ve had plenty of time to clean up your act. I’m going public with my own personal portfolio next week. It’s balanced, between stocks and bonds, much like your balanced mutual funds are. But my fees are low. I’m the average man climbing up a Whistler ski run with a daypack and a couple of Kokanees. And your team of all-stars are strapping empty refrigerators to the backs of investors, and cheering them on from the chair lifts above. Don’t think we’re not putting a glossy picture of that in our textbook.”
Harry Hall’s threat to go public with the “toe to toe” performance of his balanced portfolio versus the bank’s best balanced funds sent quiet chills through the crowd of bankers.
Our kids will have Harry Hall to thank. Long live Harry.