Case Studies - Investments

Ms. X worked at a large technology company that had a close business relationship with Company A. As an employee benefit, she received shares of Company A and transferred them to a self-directed online account at a DIY investing firm.

Mr. Y was a novice investor with financial assets of nearly $400,000, a net worth of $1.7 million and an annual income of $124,000 from his healthcare sector job. 

Mr. G, a conservative investor with a modest income and limited investment knowledge, wanted to see growth on his retirement savings. His investments were initially held at Bank ABC where Mr. G thought the fees were too high and the returns were too low. When Mr. G met Mr. U socially, Mr. U said he was an advisor at Firm XYZ, and convinced Mr. G to switch to his firm by promising lower fees and the potential for better returns. Mr. G trusted Mr. U because he was an advisor at a credible firm. In the summer of 2016, Mr. G opened two accounts at Firm XYZ. He transferred $44,000 into a LIRA (locked-in retirement account) and $121,000 into an RRSP (registered retirement savings plan). 

Ms. W was the executor of her father’s estate and was required to file his final tax return. After filing the return in late May, Ms. W received the Notice of Assessment which indicated that her father’s estate owed taxes to the Canadian Revenue Agency (CRA). The estate included several investment accounts at Firm A and Firm B, both of which held securities and cash. After withdrawing the full amount of cash available in the accounts, Ms. W needed to sell more securities to cover the remaining balance owed to the CRA.

Ms. L had set up Registered Education Savings Plans (RESPs) for her two daughters, Ms. J and Ms. K. These accounts were set up as a family RESP with their investment firm with the understanding that if one child did not go to or complete post-secondary education, the other child would be entitled to the full amounts of the plans.

Mr. Z was concerned that his Guaranteed Investment Certificates (GICs) earned very little interest due to low interest rates at the time and decided to look for better investment options. He sought the help of Mr. F, a registered investment advisor, to explore investment products that could provide a higher rate of return. Mr. Z wanted his investments to grow over the long term. He had a low tolerance for risk and no immediate need for the money in his investments. To guide their discussion, Mr. F documented Mr. Z's investment goals and risk preferences in his file.

Ms. R was an older investor who held equities in her Registered Retirement Savings Plan (RRSP) at an online investing firm. She turned 71 in 2020 and was required to convert her RRSP into a Registered Retirement Income Fund (RRIF) by the end of the year.

Ms. A was a senior with serious health issues who had given one of her three daughters Power of Attorney (POA). Ms. A’s daughter arranged a time for them to meet with Mr. G who was Ms. A’s long-standing mutual fund representative at her bank branch.

Mr. F was a healthcare professional and wanted to invest his savings. He was contacted online by someone who claimed to represent online investment company Firm X. The representative said the firm offered investing opportunities with high returns and advisory services to help investors.

All investors should understand that higher potential investment returns come with a higher risk of investment losses, but most people find it much easier to consider potential investment gains than to deal with investment losses. Before committing to any investment plan with medium-to-high expected returns, consider: If your investments were to lose half their value, how would you feel? How would your short- and long-term financial well-being be impacted? Could you stick to your plan? Discuss these issues with your advisor to help them understand your risk tolerance.