The worst money advice in Canada

Bad money advice is rampant. It’s so common you could print money on it, and there are those that do. And for Canadians like Evans and his family on the wrong end of the bad advice, it can be devastating and stressful. In fact, 69% of MoneySense readers polled say they have lost money from financial advice. MoneySense conducted a seven-question online poll from October 4 to October 30, 2023, with a total of 891 respondents from across Canada on the topic of bad money advice, covering financial trends, scams, FOMO (fear of missing out), and trusted sources for financial information. 

What’s a trend and what’s just bad advice

When asked “What financial trend have you bought into?” the majority of respondents (49%) said these trends didn’t apply to them. But the top three trends included: Heavier allocation in guaranteed investment certificates (GICs) at 16%, tech stocks at 13% and rental properties at 13%. Here’s the breakdown of responses. (Respondents could choose more than one option.)

“GICs are competitive right now,” says Jason Heath, advice-only financial planner at Objective Financial Partners. (He is also a MoneySense consulting editor.) “They can be a good option for a conservative investor or someone with a short time horizon for their money.”

But for crypto, Heath says: “Cryptocurrency is a complicated asset class. The crypto investors I worry about are those with large allocations. They may get lucky. But it’s a volatile investment that may not be suited for young people building their wealth or for retirees drawing it down. I feel like there’s more of a case for people somewhere in the middle who are building a diversified portfolio, with a small allocation, if any.”

For example, MoneySense’s Retired Money columnist and investing editor-at-large, Jonathan Chevreau (who is also CFO of his own site, FindependenceHub.com), has only 1% (2%, if he’s “lucky”) of his portfolio allocated to Bitcoin exchange-traded funds (ETFs). “GICs and crypto are at opposite ends of the risk/reward spectrum,” he says, with GICs being more conservative with locked-in returns. He points to the 5% return on some GICs in Canada right now as a reason these investments are trending. “I’d call GIC laddering appropriate planning. No one really knows when interest rates will top out so just as dollar-cost averaging takes the emotion out of investing in stocks and equity ETFs, so too does GIC laddering take the emotion out of investing in GICs.”

Are pyramid schemes still around?

According to the survey, almost 1 in 10 (8%) have burned money in pyramid schemes. Illegal in Canada, pyramid schemes are described by the Competition Bureau of Canada as “promising big financial returns for little cost.” Too often, people who fall victim to these schemes pay large fees and are told to recruit family and friends. They are promised they’ll get their money back and then some when they get more members. 

“I don’t think pyramid schemes will ever go away,” says freelance writer and former professional investor Stephanie Griffiths, CFA, MFA. “The Internet, especially social media, has given them new life.” Nowadays, though, envelope stuffing has gone the way of fraudulent investments on apps and social media. And it’s even evolved so that accounts are hacked to persuade friends and family to give money. 

Text messages to emails to a knock on the door: What scams look like today

Phishing has become so sophisticated, I cannot think of a week when I didn’t get a suspicious message from a friend saying they made a lot of money through an amazing crypto, forex, whatever advisor. These scams are easy peasy to spot, as that’s not the typical behaviour of folk I know or befriend. But when I get a text saying that I have to deposit a bill from a utilities company I use or that someone logged into one of my bank accounts, that does make me pause. And many Canadians are finding themselves in similar situations.

Sixty-one per cent of respondents admit that it is getting more difficult to identify scams that come from text messages, emails, calls and knocks on the door.  

“There are pros and cons to technology,” says Griffiths. “It gives you instant access to valuable information like annual reports and so forth, plus the ability to check out people and companies with Google. But technology also helps scammers, making it easier to set up businesses and promote sketchy products.” 

A couple of tips: Never opt in for text messaging for financial transactions with your financial institution or with websites, and never trust a text message that requests you to log in or transfer money. Check URLs before signing into any account. And, as always, if the promise is too good to be true, it is. 

Check yourself: Are you being emotional?

Fear of missing out, FOMO as most call it, is a big issue when applied to money. It’s as if the “what if” supersedes the worst-case scenario—lost money. A majority of respondents (55%) admit to having FOMO with investing.

According to Certified Financial Planner and Certified Financial Behaviour Specialist Shaun Maslyk, money can bring out some deep emotions and reveal our true selves. “FOMO isn’t really about money itself, but more about the feelings and stories we connect to it,” says the host of The Most Hated F-Word podcast. “For many, FOMO is driven by a desire for recognition and value, which we can often try to solve with our financial decisions.”

And Heath reminds us: “It’s important to be intentional with your financial decisions. If you’re reactive rather than proactive, you’re more likely to fail. Asset bubbles, ranging from Dutch tulips in the 1600s to NFTs in 2021, are like musical chairs; except the last person sitting tends to lose instead of win.” With rising rates and a weakening housing market, Heath says he hopes there is less real estate FOMO. “A home shouldn’t be an investment. It should be a place to live with prices tied to incomes. And although a rental property can be a good investment, the returns should probably be similar to a stock and bond portfolio in the mid-single-digit range.”

Where to get good advice

Cause for a big sigh of relief—Canadians are not limiting themselves to a single source for money and investing advice. With many respondents picking multiple resources, the top three picks are: Specialized media (79%), financial advisor or planner (53%) and books (45%).

But watch for the quality of your sources. Chevreau recently wrote about getting bad advice from investing newsletters. “Some may be appropriate for risk-tolerant younger investors with a long time horizon, but I realized that many of the losses on speculative stocks in my own portfolio could be traced back to those letters. And I probably subscribed to them in the first place via email pitches on the same get-rich-quick theme.” He adds: “As the late Jim Croce once sang, ‘I learn the hard way every time’.”

Why do we fall for bad advice?

It’s just what humans do. “We all seek validation, and bad advice tends to play on our desires, making big promises like financial freedom, quick wealth or overnight millionaire status—you’ve probably seen it a lot on TikTok,” says Maslyk, who integrates psychology into financial planning and writes it about it for the MoneySense A Rich Life column. But we also have the ability to question, critique and pull out the BS-metre. 

To be in the right space for financial decisions, Maslyk says to look at why you think, feel and act as you do with money. “This understanding can help us reduce the urge to use money as a remedy for combating FOMO.”

Bad advice isn’t just about losing your shirt

If you’re wondering about Evans and his mother, you will be relieved to know she found the documents she needed. And in 2005, the Manitoba Securities Commission found that the advice to use leverage to invest was unsuitable for his mom. She didn’t lose the house. Evans describes his mother as an “unsophisticated investor” who did what she felt was best so she could stay home to raise her family as a single mother. 

Evans’ mother passed away in 2006 from cancer, but she had found a good planner who set up a trust for the kids. “That situation—that left a mark on me,” Evans says from his office in Winnipeg, where he is a Certified Financial Planner and owns his own company, Evans Retirement Planning. Before becoming a planner, he approached a local firm to learn about the career, but was asked to contact 50 people he knew and sell them investments and decided his career needed a different path. The situation was all too-familiar to what happened to his mother. “It’s not something I’ve talked a lot about, but I’m realizing I have to tell people. By being aware, they can take action to increase their financial literacy and know what to watch out for.” 

50 pieces of the worst financial advice

Survey respondents submitted the worst money advice they ever received, totalling almost 900 pieces of bad money advice. But for you, we rounded up 50:

1. “Just about everything. No one knows how the big picture will unfold.”
2. “Everyone lives in debt.”
3. “Don’t worry the dividend is safe.”
4. “Renting is throwing away money instead of buying a residential property.”
5. “Buying a stock on a hot tip that was BS.”
6. “You can time the market.”
7. “Trust this person because someone else does.”
8. “An advisor who wanted me to switch investments, in order to buy low and sell high. Of course it did not work too well. No one can time the market consistently.”
9. “Sell because the market’s going to crash.”
10. “That there is ‘safety’ in blue chip stocks.”
11. “Talked into buying risky mutual funds for RESPs when this should have been placed into safer investments.”
12. “Borrowing money to buy an RRSP with the intention of withdrawing to purchase a home.”
13. “Keep cash in a defined benefit.”
14. “Some of the worst advice I’ve ever received has been from myself. Oh, I’ve dodged bullets from advisors, but, as I’m certain the experiences of others will confirm, most often I am my own worst enemy when it comes to financial wellbeing. I have sold on the way down, bought at the peaks and, far too often, held on to a loser. The worst I’ve done is not properly planning an escape route when things go south.”
15. “Advisor tried to convince me to take a home equity loan to use in my investment portfolio. Good thing I didn’t, since the loss would have been horrible at approximately 22% since the market problems in 2009.”
16. “Buy Nortel.”
17. “Investment advice from a friend who turned out to be a scam artist.”
18. “I invested in penny stocks once and lost most of my investment. Thankfully I didn’t invest much.”
19. “Don’t invest until your debt is paid off.”
20. “When I was 20, I went to invest and was told to wait until I had six-months savings. So, I didn’t invest for 30 years because of that one sentence. I should have invested small amounts years ago to start the momentum.”
21. “Pay off the mortgage ahead of savings, when I was in my 30s.”
22. “To buy mutual funds with deferred fees when I was new to investing and this wasn’t explained to me by the financial advisor. They were shocked when I decided to exit.”
23. “Not really advice but a lack of advice. My parents didn’t teach their kids about money. They decided to protect us from those worries instead. That led to a son who has no idea how to manage money and a daughter who obsesses about it. Me.”
24. “My father thought it was a good idea to invest in a micro-brewery started by a family acquaintance. Although the brewer’s family had operated a brewery in the past, the family’s success wasn’t hereditary. I listened to my father, and paid the price.”
25. “To invest in a friend’s company because it was a sure thing.”
26. “Just about anything my husband suggests.”
27. “Marrying a big spender.”
28. “I took 20 years off work to raise my kids. What about my pension, now that I am a 64 year old widow? And, not forcing my dead husband to have a will. Oh, and letting him take out bigger mortgages to pay off his debts. […] So, trusting someone else is the worst thing I ever did financially. But, I’ll be OK!”
29. “Colleagues advised us to invest in rental properties in the building phase in order to reduce our taxes. We bought at an inflated price, the rental market slumped, and we eventually sold at a loss.”
30. “Not to purchase a rental property many many years ago. As a young woman and advice from an older male agent. For clarity—35 years ago.”
31. “Buy a rental property—what a headache.”
32. “Not cashing in BlackBerry stocks when the company was at a high.”
33. “Chasing the next best thing, fad ‘investments’.”
34. “Index funds always beat GIC rates.”
35. “Buy crypto. If you look at it, it’s really a giant pyramid scheme. It only increases as long as more people put money in it.”
36. “Hang on to everything, the market will soon rebound.”
37. “Buy weed stocks.”
38. “Invest in cannabis and invest in veggie/vegan burgers. Both were trendy at the time.”
39. “Meme stocks to the moon.”
40. “Investing in a timeshare.”
41. “Buying high-fee bank mutual funds.”
42. “The government will take care of you when you retire.”
43. “To buy term insurance when I was 22 years old, and I had a whole life policy since I was a child. I didn’t follow said advice, instead maintained my whole life which is now worth a fortune.”
44. “‘Join my program/course/membership’ to escape the matrix.”
45. “Moving all our money into one brokerage and allowing them to make suggestions on share purchases. We should have taken more time to check the suggestions and not feel guilty about refusing to follow the suggestions. It has cost us greatly in losses and continues to be a burden.”
46. “Buy more shares in the startup company I was working at. It went under.”
47. “Don’t invest in your company stocks. I did not listen and made $60K.”
48. “Lend me money, I’m good for it.”
49. “Put all purchases on a credit card to earn points.”
50. “To build your credit score, one should take out as many credit cards as possible, and then max them out, making the minimum payments.”

Read more about financial literacy:

• The MoneySense Glossary for personal finance and investing terms—for Canadians
• The best free personal finance and investing courses in Canada
• How to deal with money and your finances when the economy is stressing you out

About Lisa Hannam

Lisa Hannam is the editor-in-chief at MoneySense.ca. She is an award-winning editor with over 20 years of experience in service journalism.

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