The financial industry

The financial industry cannot compete because CPP Investments has many investment advantages over them. The financial industry knows that, with CPP Investments’ likely ongoing return of 11.6%,

a 25-year-old Canadian would have $1.7 million by age 65 with just a $2,000 annual investment.

For example, investing just $2,000 at 11.6% gives the investor $161,000 at age 65. Investing just $2,000 at 4.4%, what the CPP gives us, only gives the investor $11,200 at age 65, 7% as much.

Moreover, investing with CPP Investments would be low risk, fraud-free and simple. Who would want to invest with what the inferior financial industry has to offer - much lower profit, considerable risk, potential for fraud, confusing complexity and high overheads?

The financial industry has both the motivation and the resources to prevent even a discussion about any change to the CPP.

Toronto Financial International (TFI)

TFI is a public-private partnership between Canada’s largest financial services institutions and our governments. Its members include all the large financial institutions in Canada, Finance Minister Chrystia Freeland, Ontario Premier Doug Ford, and Toronto Mayor John Tory. Roughly 99% of Canadians like you and I cannot be members.

The TFI website states “more than $10 trillion in assets” are held by the Canadian financial institutions that they represent. For perspective, if we gave $10 trillion to every one of 38 million Canadians, we would each receive $263,000. Likely no other organization in Canada has a small fraction of the resources available to maintain their huge profit stream.

TFI boasts that Canada is “Third globally in pension assets”. And Toronto is the “Second largest financial centre in North America”.

Is this colossal financial industry profitable? In 2020, the industry had $125 billion in profit, 47% of all corporate profits in Canada. Meanwhile, the industry only contributed 7.4% to Canada’s GDP that year.

I personally know three colleagues from university who are likely worth $100 million each today, thanks to their involvement in the financial industry.

Even though the big six banks are facing challenges, a December 2nd, 2023, article in The Globe and Mail stated,

"All six institutions collectively set aside $21.2 billion for bonus pay in the fiscal year ended Oct. 31."

Suspiciously, TFI.ca is no longer an available website possibly because of the incriminating details here. Using the wayback machine (http://web.archive.org/), the reader can verify the above details. Moreover, in 2016, the Toronto Financial Services Association was represented by the website TFSA.ca. It was later replaced with TFI.ca. By far, the biggest industry in Canada now has no website and has come and gone with two websites over the last seven years.

Few Canadians realize how big the mammoth banking industry is in Canada. If you invested in the Canadian S&P/TSX index, 20% of your investment would be in Canadian banks. If you invested in the US S&P 500, only 4.1% of your investment would be in US banks.

Millions of Canadians are sacrificing huge CPP benefits so that a handful of wealthy Canadians can keep their grotesque incomes flowing. There are 23,000 Certified Financial Planners (CFAs) in Canada. For a fee, they are the experts who will help you invest your savings, including any contributions to pension funds. Their average income is $281,000 per year. I personally know two who are now probably worth $100 million. Millions of Canadians and our Canadian economy are being deprived of huge needed and deserved benefits so that these 23,000 Canadians can continue to earn grotesque incomes.

COVID has led to even more profits for the financial industry. Because most middle and high-income Canadians have had no income interruption, they have not been able to spend on travel, dining out, theatre, etc. Instead they have invested. “Mutual funds surged in 2021, surpassing $2 trillion in total assets.” according to the Globe and Mail. At a 1% fee, mutual funds will now bring the financial industry $20 billion in fees per year.

How much are financial industry executives earning? Ms. Freeland writes on page 267 of her book, Plutocrats,

“The publisher of the Financial Times once remarked to me ruefully that in a very good year the media group’s entire profit was equal to one midlevel Wall Street trader’s bonus.”

Because Bay Street is second in size to Wall Street, Canadian members of the financial industry are likely similarly rewarded. Their income is probably many times the income of most lawyers and doctors. For them, paying a small amount to TFI to keep their gigantic income intact is likely justifiable.

Membership for TFI is not trivial. It starts at $5,950 per year for a one-person company. It may be worth it because their website states members will be able to

“shape policy and regulation”.  

TFI is hypocritical. They have

“called for a more targeted approach to an expanded CPP, aimed at groups living below the poverty level and modest-income Canadians.”

Instead, it is possible they paid the media, actuaries and politicians to remain silent on the CPP’s surplus and potential.

Did the financial industry silence a harmful, upstart magazine for a relatively minute amount?

In 2011, James Dean acquired the website money.ca for $20,000 and started the subscription magazine Money Magazine. He also registered the trademark “Money” in Canada. The magazine published many valuable articles that went against the grain of the traditional financial industry and probably cost them profit. Subscriptions were increasing rapidly and the financial industry must have felt threatened.

In 2015, Mr. Dean was offered $500,000 for the rights to the website and the trademark. The offer came from an anonymous group based on Jersey, a tiny island near Britain that boasts a “large financial services industry”. Recognizing a huge return on investment, Mr. Dean took the offer. For eight years, both the magazine and the website have remained inactive.

Is it possible the Canadian financial industry, threatened by the honest, money-saving advice the magazine and website provided, sacrificed a relatively miniscule $500,000 to make the magazine inert? Then Canadians would need to acquire their financial advice from the financial industry, usually with a considerable price tag attached.

In summary, TFI

• Possibly because of adverse conclusions drawn by the Canadian public, TFI.ca no longer exists. It has not been replaced.

• Represents organizations and the 1% of Canadians who generate huge profits for their companies and themselves,

• Has a leadership council that includes Finance Minister Chrystia Freeland, Ontario Premier Doug Ford and Toronto Mayor John Tory,

• Boasts of a collaboration between financial companies, government, and academia, but not citizens like you and me,

• Tells prospective members they will be able to “shape policy and regulation”,

• Knows that voluntary contributions to the superior CPP Investments could make low-income investors much wealthier and thus decrease their profits substantially,

• Collects huge dues from their members who want to keep their lucrative industry as profitable as possible,

• Has a huge war chest of funds available to achieve their goals. Most organizations publish audited financial statements. Suspiciously, TFI does not.

• May have purchased money.ca and the trademark Money to silence financial advice that would help struggling Canadians but harm the huge profits of the financial industry.

Who should be undermined?

There is proof that the financial industry is worried regarding the threat of voluntary contributions to the CPP. In 2016, Finance Minister Morneau legislated a more-of-the same “enhancement” to the CPP. The enhancement basically forced Canadians to contribute a little more today in return for a slightly larger pension at age 65.

The financial industry was relieved. Regarding this “enhancement”, their TFI representative, Janet Ecker, stated in June 2016,

“The worry was it would undermine a lot of successful, legitimate (retirement savings) products in the investment industry.”

Who should be undermined? Struggling Canadians or the lucrative investment industry?

Should low-income Canadians forfeit a chance to turn $80,000 into $1.7 million so the financial industry will not be undermined?

Mr. Morneau disgracefully chose to undermine struggling Canadians instead of undermining the investment industry. He had the motivation. When he passed his unimpressive CPP legislation, he owned Morneau Shepell, a firm that employs 150 actuaries. Billed at roughly four times their salary, their employment probably brought millions of dollars to Mr. Morneau. If the CPP’s large surplus became known in 2016, the demand for these 150 actuaries might plummet.

The passing of a politician who cared

The finance minister preceding Mr. Morneau, Conservative Jim Flaherty, seemed to have the best interests of Canadians in mind. Back in 2011, the CPP fund had just 4% of the surplus that it has today and CPP Investments had a mediocre track record. Nevertheless, Mr. Flaherty investigated the possibility of voluntary contributions to the CPP. Through an Access to Information and Privacy (ATIP) request, it can be determined that the financial industry supplied him with vacuous reasons against voluntary contributions. They claimed voluntary contributions would be “too confusing”.

Regrettably Mr. Flaherty passed on in 2014. The Conservative Party, possibly influenced by generous donations from the 1% (See Democracy is failing us), have not continued investigating any form of voluntary contributions.

The financial industry has little to lose

The financial industry is likely wary of a policy that would allow voluntary contributions to CPP Investments. They shouldn’t be. If CPP Investments allowed, for example, a $1,000 maximum per year and one million Canadians invested, only $1 billion would be invested in the $550 billion fund. The financial industry would only lose roughly $10 million, a mere 0.01% of their annual profits. Moreover, at a $1,000 per year maximum investment, most wealthier investors would not even bother using CPP Investments.

And why would the financial industry want to deal with clients who can only afford to invest $1,000 per year? At a 1% commission, an investment advisor would only earn $10 from these novice investors, many who might require a time-consuming overview about investing.

The industry may be worried that pressure from Canadians to increase the annual maximum of $1,000 might result in many billions of investment dollars flowing to CPP Investments.

There is a solution that would be a win/win for millions of Canadians and the financial industry. Let the CPP automatically contribute the first $2,000 of our mandatory contributions directly to CPP Investments. This would mean:

• almost all 25-year-olds, for example, could likely have $1.7 million by age 65,

• almost all 45-year-olds, for example, could likely have $100,000 more at age 65,

• no contributor would need to contribute one penny more than already scheduled,

• wealthier Canadians would have just as much cash available for investment with the financial industry.

The financial industry is very greedy if they cannot accept this compromise that would help solve income inequality, reduce elder poverty, and leave their lucrative industry untouched.

Pension progress is giving the financial industry a huge boost anyway.

There is a growing move from private sector Defined Benefit (DB) pension plans to Defined Contribution (DC) pension plans. Private sector DB plans, where actuaries and a handful of investors are involved, will be near extinction by 2026.

With the replacement DC plan, companies simply match their employee’s contribution to a limit and usually let the employees invest the total contributions. Companies thereby avoid risk, future obligations and the bad publicity that bankrupt Sears and Nortel recently received.

With emerging DC plans, billions of dollars will soon be controlled by individual employees who will need investment advice. This means the financial industry will enjoy substantial increased demand.

Nevertheless, the financial industry is probably concerned that any news of the investing prowess of CPP Investments could someday lead to a dent in their lucrative industry. They are likely controlling the entire Canadian media because the news of the CPP’s huge surplus has never been published in the Canadian media.

The injustice of income inequality

Consider an extra $10,000. If given to a millionaire, he would likely invest it and never spend it. His quality of life would probably remain the same. His children might someday inherit, for example, $5,010,000 instead of $5,000,000.

Meanwhile, giving $10,000 to one of the two million seniors who now live near the poverty line might multiply her (2/3 are women) income remaining after rent and day-to-day expenses by 10. Her quality of life and longevity would soar as she could then probably afford purchases like a cellphone, internet, TV, travel, dining out, visiting grandchildren, golf, tennis, etc.

How cowardly and greedy are the members of the financial industry who condone this cover-up? They are likely increasing their substantial wealth while depriving millions of low-income Canadians of billions of deserved dollars. What would their mothers, wives, and children think?

As this website shows, some lead organization has convinced all political parties, all actuaries and the entire Canadian media to never mention the CPP’s “gigantic” surplus and potential. Moreover, the evidence is strong that this organization’s tentacles extend to CPP Investments, CARP and several Think Tanks. The only organization with the resources to engineer such a massive cover-up is the TFI.

The evidence is strong that TFI, because of their unlimited resources, is the backbone of this cover-up.

This evidence makes them hypocrites because, in 2016, the TFI called for

a “more targeted approach” to an expanded CPP, aimed at groups living below the poverty level, modest-income Canadians, and encouraging workplace retirement savings”.

A deserved surplus distribution of $170 billion and an annual $2,000 direct investment with CPP Investments would perfectly produce what TFI is seeking. It appears that TFA’s true mantra is:

"Keep the news of the CPP’s gigantic surplus suppressed so that TFI members can continue to collect huge profits at the expense of the gullible 99% of Canadians. Provide any funds necessary to muzzle the entire Canadian media, all actuaries, politicians, and several other organizations. Be sure there is no trail that leads back to the TFI.”

Whether the TFI is involved in a cover-up or not, observant Canadians, by a process of elimination, will likely conclude that they are. No other organization in Canada has 10% of the TFI’s financial resources, motivation and political partners.

If the TFI wants to doff this suspicion, they could use their considerable influence to tell their partners, Ms. Freeland, Mr. Ford, Mr. Tory and others to introduce appropriate CPP legislation.

Your author personally knows two presidents of investment firms who are members of TFI. Both presidents do a great deal of work for charities and are considering withdrawing from TFI because of the above evidence.