Expert Interview with Ellen Roseman on Safeguarding Your Investments and Being a Savvy Consumer

Safeguarding your investments

Toronto Star columnist Ellen Roseman has made it her job to understand the ins and outs of personal finance and consumer affairs. Which is why we checked in with her to ask about the most common consumer problems seniors and retirees are facing today.

Her response? Fraud.

Scam artists are savvy about finding new easy to trick people, especially with online scams such as brand spoofing.

“I think it’s important to become less trusting and more skeptical when getting pitches through the Internet,” Ellen says. “Check out all the facts before handing over money.”

Another area seniors are often left behind in is negotiating fair prices for service providers every few months. If you don’t ask for a better deal, you won’t get one. And if your providers aren’t being responsive, keep shopping around and threaten to leave.

“Many seniors assume that companies value them for their long-term loyalty,” she adds. “That’s not always the case. They’d be better off brushing up their bargaining skills.”

For more advice from Ellen on saving for retirement and safeguarding your investments, read on:

Can you tell us a little about your professional background?

I have a master’s degree in philosophy, but ended up working in print journalism after volunteering at a university student newspaper. I gravitated to business writing because I loved it, especially personal finance and investing. I also took the Canadian Securities Course, required for stockbrokers.

How did you become a consumer advocate?

Back in the 1970s, when inflation was flying high, the Canadian government appointed a long-time consumer activist to head the food prices review board. So, I started following the consumer movement and seeing progress in beefing up protection for consumers. Later, I had the chance to interview Ralph Nader in Washington. That led to writing my first book, Consumer Beware, in 1974.

What are the most common questions you get from consumers saving for retirement? How do you advise them?

Many people ask me about how much to invest in stocks or equity funds. What percentage of their assets should they put into the stock market and how much should they keep in low-risk guaranteed investments? And at what age should they get out of the stock market altogether?

I tell them about the age rule. It’s a rough rule of thumb that many investors follow. To know how much money to keep in stocks, you should subtract your age from 100. Then, keep that amount in the stock market and the rest of your money in investments that are not exposed to stock market volatility.

So, if you are 40, you keep 60 percent of your investment assets in the stock market. If you are 60, you keep 40 percent in stocks. If you are 80, you keep 20 percent in stocks.

I don’t think older people have to get out of the stock market altogether. They can keep a small percentage of their investments in blue-chip stocks, mutual funds, or ETFs as they age. Over the long term, stocks provide substantially higher returns than do bonds, term deposits, and cash.

Some experts say the rule of 100 should be amended. Since people are living longer, they will need more growth in order not to outlive their savings. There may soon be a new age rule, using 110 as the base. If you are 70, for example, you will keep 40 percent of your assets in the stock market (not 30 percent).

Of course, this is just a guideline. You have to decide how much risk you can handle. If you are not comfortable with stock market investments, you may want to eliminate them at some point during your retirement.

What are some best practices for consumers in safeguarding their retirement investments the closer they get to retirement?

First, you should meet with a financial planner to find out what your retirement income will be. This is not easy to determine, since your income may consist of government pensions, company pensions, your own and your spouse’s savings, plus income from other assets, such as a property you own and rent out. You may also work part time in retirement.

Do this about five to 10 years before you plan to retire. Use a financial planner who has recognized credentials and will try to educate you and not simply sell you investments. You may have to pay a fee to get high-quality advice.

Second, decide what you want to do in retirement. Are you planning to live as you did before? How much will your daily living costs drop once you are no longer working? You may want to work out a budget ahead of time, cutting down work-related expenses, such as transportation and clothing, and adding retirement-related expenses, such as tourism or moving to a warm climate for the winter.

Based on your retirement budget and your financial planner’s calculation of your retirement income from all sources, you can see if you are on track or not. If you find a gap between how you want to live and the money you have to finance your dreams, you will have to make some decisions. You can save more aggressively, retire at later age than expected, or trim your lifestyle costs to meet your financial reality.

What red flags should consumers look out for when deciding how and where to invest?

You have to watch out for investment advisers who tell you to take out a mortgage or home equity line of credit to invest. They also put you into higher-risk investments than you want, asking you to trust their expertise. To protect yourself, you should ask a prospective adviser for sample portfolios and names of clients you can call. If they say no, just walk away.

Google is your best friend when searching for investments. Check out the background of an adviser and his or her firm. Check out the types of investments recommended for you and their risk levels. Keep searching online until you get the information you need.

What seem to be the biggest consumer issues, questions, or complaints that seniors are coming to you with right now?

I often hear from the adult children, asking me to help when their older parents have been ripped off by door-to-door sales of home services. Even my own mother was tricked that way. When living in a retirement home, she had a man show up at her door to clean her carpets. She said yes, not realizing that her rent included carpet cleaning. Luckily, she got a refund, since the man had sneaked by security and should never have been allowed into the building.

Investments also generate complaints. Seniors have to manage their money to last as long as they do. This requires help, since the financial system can be complicated and hard to navigate. But some investment advisers don’t put the client’s interests ahead of their own interests. I’d like to see stronger laws to eliminate the hidden conflict of interests that lead to poor investment advice.

What are some best practices for customer complaints?

When writing to a company, be concise. One to two pages are enough. Double-check your spelling and grammar. Give the facts. Include supporting documents or photos. Be courteous and respectful. Don’t insult a company or accuse it of breaking the law. Say exactly what you want. (It’s amazing how many people forget this important step.) Include contact information and the best way to reach you.

When complaining by phone, keep your cool. Angry customers tend to be dismissed. Take notes of your conversation. Write down the employee’s name and number. Ask for a supervisor if you want to escalate a complaint. And if you don’t succeed, hang up and try again later.

Good luck. Your complaint will go further if you are firm, fair, and flatter the company, instead of trying to tear it down.

Why should consumers be more proactive about alerting business owners and other consumers about their bad experiences with a business?

Consumers don’t always complain about a bad experience. That is a shame. Grumbling to friends and family isn’t enough. It’s important to tell business owners you’re dissatisfied so they can work on the problems you find. If you want to see improvements, write to the CEO or complain to the media about how you are treated on the front lines.

If you get nowhere with a business, try publicizing your story. Post a complaint online. Use social media to let others know. Become a star in your own YouTube video. Talk about your experience on blogs, Twitter, Facebook, and Instagram. Try using online forums where problems get resolved, such as You may just go viral.

Follow Ellen on LinkedIn and Twitter.

NewRetirement Planner

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