In March, I wrote about a Victoria-area financial planning firm that has caused its clients a whole lot of financial grief.
Wealth by Design describes itself as a "financial services education and capital-raising company." It holds seminars and "boot camps" where it purportedly teaches attendees how to become "financially free within 10 years or less."
Not coincidentally, it offers an array of investment products that will purportedly help attendees achieve that goal.
At the time of my column, the firm's chief executive was Stephen McClure, who was supposedly so financially adept that he "became financially free at the age of 32."
I found this puzzling, as many of the investments he recommended were disasters.
One was Merendon Mining, which was part of an alleged Ponzi scheme perpetrated by Milowe Brost and Gary Sorenson, who are now facing criminal fraud charges in Calgary.
Another was a charitable donation tax-deduction scheme called the Canadian Humanitarian Trust, which was disallowed by Canada Revenue Agency.
Yet another was an investment in Ontario-based Borealis International Inc., which was shut down by the Ontario Securities Commission.
With a string of losers like this, I wondered how McClure could have achieved financial freedom at such a young age.
Alas, he confessed, it was all a mistake: he was not "financially free" after all. He had invested in the same deals and had suffered similar losses.
McClure recently told me he was "laid off" as the firm's CEO on April 20, the month after my column was published. One client told me McClure is now claiming to be on the verge of personal bankruptcy.
I wanted to ask Denise Andison - the founder, owner and chief operating officer of Wealth by Design - how her chief executive could sell so many bad investments and make such bogus claims about being "financially free" with no apparent repercussions until he was outed by The Vancouver Sun, but she never returned any of my calls.
Wealth by Design is now promoting another questionable investment offering. It's a Victoria-based company called One World Polymers Corp., which purportedly purchases and ships waste plastic to recycling plants in other countries.
Or at least that's the plan. It's not clear that One World is actually in business. The company was only incorporated in March, which suggests it is still in the development stage. I repeatedly requested a copy of the company's offering memorandum, which would presumably tell the tale, but neither Wealth by Design nor One World responded to my queries.
I am not surprised that neither firm responded. They are not operating at arm's-length. Andison, who runs Wealth by Design, also serves as chief operating officer of One World. Gary Lahnsteiner, who works as a "wealth coach" at Wealth by Design, also serves as chief marketing officer of One World. The two companies also share the same office in Victoria. They are also jointly promoting the investment. In March, they held a dog-and-pony show for about 100 prospective investors at the Grande Pacific Hotel in Victoria. Another investor meeting was held at the Victoria office on April 30.
Stocks to watch Wednesday: H-P, Dell, RailAmerica - Marketwatch
By MarketWatch
WASHINGTON (MarketWatch) — Among the stocks that could see active trade in Wednesday’s session are Hewlett-Packard Co., Dell Inc. and RailAmerica Inc.
Blue chip Hewlett-Packard /quotes/zigman/229301/quotes/nls/hpq HPQ -0.50% leads the Wednesday earnings parade, along with Synopsys Inc. /quotes/zigman/78740/quotes/nls/snps SNPS 0.00% , NetApp Inc. /quotes/zigman/109935/quotes/nls/ntap NTAP -0.66% and Semtech Corp. /quotes/zigman/77847/quotes/nls/smtc SMTC -1.67% from the technology sector. Rounding out the results roster are Hormel Foods Corp. /quotes/zigman/227790/quotes/nls/hrl HRL -0.31% , Toll Brothers Inc. /quotes/zigman/243733/quotes/nls/tol TOL +1.77% , PVH Corp. /quotes/zigman/5785329/quotes/nls/pvh PVH +2.07% , Shiloh Industries Inc. /quotes/zigman/54287/quotes/nls/shlo SHLO -2.56% , Bristow Group Inc. /quotes/zigman/406397/quotes/nls/brs BRS -0.33% , Eaton Vance Corp. /quotes/zigman/225518/quotes/nls/ev EV +1.98% , Apollo Investment Corp. /quotes/zigman/92665/quotes/nls/ainv AINV +0.74% and AFC Enterprises Inc. /quotes/zigman/85194/quotes/nls/afce AFCE -0.89% , with HHGregg Inc. /quotes/zigman/462162/quotes/nls/hgg HGG -0.81% , Zale Corp. /quotes/zigman/131594/quotes/nls/zlc ZLC +3.56% and American Eagle Outfitters Inc. /quotes/zigman/183513/quotes/nls/aeo AEO -2.66% represented from the retail sector.
/quotes/zigman/229301/quotes/nls/hpq HPQ 21.78, -0.11, -0.50%
/quotes/zigman/6015521 HWI 365.84, -5.96, -1.60%
Dell /quotes/zigman/27952/quotes/nls/dell DELL +0.73% reported a profit of $635 million, or 36 cents a share, for the first quarter ended May 4, down from $945 million, or 49 cents, earned in the same period during fiscal 2012. Quarterly revenue sank to $14.42 billion, down from the prior year’s $15.02 billion. On an adjusted basis, profit for the latest quarter would have been 43 cents a share. Analysts had been looking for Dell to show a profit of 46 cents a share on revenue of $14.9 billion, according to a poll of estimates compiled by FactSet Research. Dell also provided a weaker-than-consensus forecast for revenue in the second quarter. Read more about Dell.
The board of RailAmerica /quotes/zigman/570891/quotes/nls/ra RA +2.69% is studying strategic alternatives including a potential sale of the company, the operator of freight railroads said late Tuesday. Along these lines, “preliminary discussions with third parties” have taken place about a sale, according to RailAmerica. The Jacksonville, Fla.-based company, which hired Deutsche Bank Securities Inc. as its financial advisor said that it made the announcement “in response to market rumors” but that it would make no further comment.
Guess Inc. /quotes/zigman/166567/quotes/nls/ges GES -0.12% presented investors with a mixed bag late Tuesday. The Los Angeles-based company adjusted its full-year profit outlook on the heels of reporting lower results for the first quarter ended April 28 that nonetheless exceeded analysts’ consensus forecasts. As revised, Guess now sees earnings for the year in a range of $2.50 to $2.65 a share and pegged revenue at $2.7 billion to $2.74 billion. For the second quarter, Guess projected earnings at 48 cents to 52 cents a share on revenue of $625 million to $635 million — both less than the average forecasts in a survey of analysts’ estimates by Thomson Reuters. During the first quarter, the company generated weaker revenue from Europe as North American same-store sales fell 5.5% and gross margin narrowed to 40.6%. Net revenue for the April quarter fell 2.2%, to $579.3 million.
A better gross margin and higher same-store sales propelled financial results for PetSmart Inc. /quotes/zigman/54520/quotes/nls/petm PETM -0.20% in the first quarter ended April 29. The Phoenix-based retailer also revised higher its full-year forecast, estimating earnings in a range of $3.19 to $3.31 a share on projected sales growth of 9% to 10%, due in large measure to a 53rd week in the current fiscal year.
The board of Principal Financial Group Inc. /quotes/zigman/289371/quotes/nls/pfg PFG +0.58% has authorized the Des Moines-based company to buy back up to $200 million in outstanding common stock. Repurchases will be made from time to time in the open market or via private transactions, depending on market conditions, Principal Financial said. “We remain on track to deploy $800 to $900 million of excess capital in 2012,” said Larry Zimpleman, chairman, president and chief executive, in a statement. The company’s board also declared a regular quarterly dividend of 18 cents a share, payable June 29 to stockholders of record as of June 4. Principal Financial had just over 300 million common shares outstanding as of March 31.
Taking advantage of the low-rate environment, Covidien PLC /quotes/zigman/4475320/quotes/nls/cov COV -0.24% said it’s priced an underwritten offering of $1.25 billion in debt — $600 million of 1.35% senior notes due 2015 and $650 million aggregate principal amount of 3.2% senior notes due 2022. Net proceeds will be applied toward redeeming in full the Dublin-based company’s outstanding 5.45% senior notes due October 2012 and for general corporate purposes. The offering’s expected to close May 30, Covidien said.
Barclays Bank PLC /quotes/zigman/152323/quotes/nls/bcs BCS +1.73% priced at $160 each the more than 26.2 million shares of BlackRock Inc. common stock that will up for sale in via underwritten public offering announced earlier this week. Underwriters have the option to buy up to 10% in additional shares of BlackRock /quotes/zigman/249424/quotes/nls/blk BLK -2.60% at the same price within 30 days. If they fully exercise this option, Barclays said it would mean the disposal of its entire 19.6% economic ownership interest in BlackRock, as BlackRock has agreed to buy back nearly 6.4 million shares from Barclays for $1 billion, at a price of $156.80 a share. BlackRock Series B convertible participating preferred stock will automatically be converted into common stock upon sale, Barclays said. New York-based BlackRock won’t receive any proceeds.
SE Asia Stocks-Slide as euro zone worries keep investors away - Reuters UK
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London stocks slide on warning over Greek euro exit - YAHOO!
London stocks sank at the start of trading on Wednesday, mirroring heavy falls elsewhere, after Greece's former prime minister warned there was a risk that his country might leave the eurozone.
The benchmark FTSE 100 index dived 1.25 percent to 5,335.92 points, Frankfurt's DAX 30 recoiled 1.29 percent to 6,352.43 points and in Paris the CAC 40 shed 1.26 percent to 3,050.20.
Lucas Papademos' comments came ahead of a European summit aimed at addressing Athens' debt crisis and tempered optimism after France and Germany said they would do whatever it takes to keep Greece in the bloc.
European leaders will later in the day meet in Brussels to discuss solutions to the Greek crisis as the country prepares to hold a second general election on June 17.
Analysts fear a likely victory for anti-austerity parties will see Athens renege on its bailout terms and eventually leave the euro, which could have a knock-on effect for other troubled economies such as Spain and Italy.
Papademos, who stepped down this month, said in an interview with Dow Jones Newswires published Tuesday: "The risk of Greece leaving the euro is real."
He added that preparations were being made in case Greece exits the 17-nation currency union.
Money becomes new church battleground - The Guardian
The Rev Paul Perkin seemed bewildered by the question: what was his take on the latest scheme for conservative evangelical churches to withhold money from the rest of the Church of England in order to keep it out of the hands of liberals, gay people or women priests?
"I can't talk about that," he said. "You'll have to ask James Paice." Both men are vicars in south London. And both are directors of the company set up last month to implement this scheme, the Southwark Good Stewards Company. It is the latest, and perhaps the most serious, move in a bitter power struggle within the CofE and the wider Anglican communion.
Not contributing to central funds could represent a serious threat to the rest of the CofE, whose cohesion depends in part on a redistribution of money from rich, largely suburban and middle-class parishes to the inner cities and the countryside where congregations are too small and the buildings too old to be economically sustainable.
Although the Good Stewards Company claims not to be separating from the rest of the CofE, this reading is plausible only if you assume it is the rest of the CofE that has separated from Christianity.
The money will be made available only to churches that commit themselves to a rejection not just of homosexuality, but of liberalism: they must sign "in good faith" a declaration that they will "reject the authority of those churches and leaders who have denied the orthodox faith in word or deed … Pray for them and call on them to repent and return to the Lord." Such people include the present archbishop of Canterbury, Rowan Williams.
The involvement of Perkin in this protest brings it very close to the heart of the institutional church. His is one of the most prosperous and well connected parishes in England: St Mark's, Battersea Rise, in south London, which hosted an international meeting of conservative bishops last month. Apart from encouraging others to hold back money, it is also preparing a network of sympathetic lawyers in case the church fights back.
St Mark's has a long history of financial and political links with conservative churches outside England, but it also stands very close to the central networks of the CofE. Until last year, the church's most senior civil servant, William Fittall, who is the secretary general of its governing body, the General Synod, was a regular worshipper there, a licensed reader who sometimes preached for them.
Before last month's meeting, the congregation were treated to a sermon from the archbishop of Sydney, Dr Peter Jensen, one of the leaders of the conservative movement, who said: "The world has invaded the church. So the contest we have, as Bible-based, Bible-believing Christians, is on two fronts. It is against the world, but it is also against those in the church who have come to terms with the world, who have made their peace with the world, who have compromised with the world, who have given up biblical standards in order to be thought well of in the world."
He warned the congregation they would be vilified, discriminated against, and turned into second-class citizens for their beliefs. "Alas, the truth of the matter is that there are occasions in which the church is being used to persecute the church," he said.
Last year, the evangelical parties blocked the appointment as bishop of Southwark of the two liberal candidates, Jeffrey John, who is gay, and Nick Holtam, who is sympathetic to gay marriage. The compromise candidate, Christopher Chessun, has failed to promote any evangelicals in his first year in office. This month 100 of them demanded, and got, a meeting with the bishop to complain about this.
Even those among conservatives who do not support the financial boycott, and they are a majority, now feel aggrieved at the lack of promotion for evangelicals.
And among the others, the dream of financial independence from the rest of the church has been nurtured for years.
The Rev Richard Perkins, who runs a small independent but still Anglican chapel in Southwark, once blogged: "Why would you give money to a corrupt central administration that'll use it to fund ministries which we oppose? … We shouldn't fund heresy. That's disgraceful."
These tensions are mirrored in the wider Anglican communion, which the conservatives hope to control because they far outnumber the liberal churches of the Anglo-Saxon world. They believe they speak for the true CofE, never mind what the archbishop of Canterbury or the synod may decide. They have set up a body calling itself the Anglican Mission in England.
Five retired English bishops, among them Dr Michael Nazir-Ali, the former bishop of Rochester who was the evangelical candidate for archbishop of Canterbury last time, have promised to act as bishops for those clergy who sign up to the pledge not to accept women bishops or tolerate gay people in the church. It is not at all clear that these arrangements are legal, since the authority of the bishops over their clergy is established by the law of England. But any legal battle would be enormously expensive and time consuming. There is no sign that the rest of the Church of England has the stomach for it.
One crisis is approaching rapidly. This summer the synod must decide whether to accept legislation allowing women to become bishops that will not make special provision for their opponents. The present draft is the product of years of wrangling. If it goes through unamended Nazir-Ali predicts that more clergy will come over to his organisation. They will attempt to leave the rest of the CofE, taking their money and their churches with them – all the while claiming, as their rhetoric already suggests, that it is the rest of the church that has left them.
But if the bishops water down the draft to avoid this open split the other side – a great majority of the church – will probably rebel. Campaigners for women bishops threaten to vote the whole measure down rather than accept amendments that would give them a permanent second-class status. The bishops meet later this month to decide and their space for compromise is vanishingly small.
Stocks rally further in run-up to EU summit - AOL News
Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country's membership of the euro as well as the future of the single currency zone.
On Wednesday, the leaders of the 27 European Union countries will hold an informal meeting in Brussels. The summit is expected to focus on ways to kick start the region's faltering economy.
"There have been lots of comments from various officials regarding the wish of the EU for Greece to remain in the eurozone, the need to agree upon a growth agenda to go alongside the austerity agenda and of course on common euro bonds," said Gary Jenkins, managing director of Swordfish Research.
With that backdrop, stocks have recovered this week after a parlous few sessions.
In Europe, France's CAC-40 closed 1.9 percent higher at 3,084.09, while Germany's DAX rose 1.7 percent to 6,435.60. The FTSE 100 index of leading British shares ended up 1.9 percent at 5,403.28, helped by figures showing that the annual inflation rate dropped to 3 percent in April, its lowest level since February 2010. The International Monetary Fund, however, issued a tough assessment of U.K. economic policy on Tuesday, urging authorities to do more to boost demand in the economy.
In Greece, political uncertainty and a gloomy prediction by the Organization for Economic Cooperation and Development pushed shares on the Athens Stock Exchange to their lowest level in 22 years on Tuesday, 1.6 percent down at 536.
Wall Street also advanced following Monday's gains — the Dow Jones industrial average was up 0.3 percent at 12,543 while the broader S&P 500 index rose 0.6 percent to 1,323.
Europe's debt crisis as well as developments in Greece has the potential to knock the rebound in sentiment witnessed so far this week.
"Markets are by no means out of the woods, however, and much uncertainty will remain ahead of Greece's election in just less than a month," said Mitul Kotecha, head of global strategy at Credit Agricole CIB.
If a new government fails to follow through with an austerity plan agreed to by prior Greek leadership, the country could lose a promised multibillion euro bailout from international lenders. Greece's default could send shockwaves throughout Europe. The OECD's top economist warned on Tuesday that the 17-country eurozone risks falling into a "severe recession" and called on governments and Europe's central bank to act quickly to stop the slowdown spilling over into the global economy.
The organization now forecasts a longer and deeper contraction in the eurozone than in its November report, with the eurozone economy expected to shrink in 2012, and only manage a feeble recovery in 2013.
Earlier, Asian markets posted sizeable gains. Japan's Nikkei 225 index rose 1.1 percent to close 8,729.29 and Hong Kong's Hang Seng added 0.6 percent to 19,039.15. South Korea's Kospi climbed 1.6 percent to 1,828.69.
Hopes that China will announce new measures to boost growth also helped push shares higher. Investors were encouraged by weekend statements from Chinese Premier Wen Jiabao, who promised to spur the world's second-largest economy, a shift from previous rhetoric about curbing inflation.
In the oil markets, benchmark oil for June delivery was down 77 cents at $92.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.09 to settle at $92.57 in New York on Monday.
In currencies, the euro slipped to $1.2736 from $1.2793 late Monday in New York. The euro hit a four-month low against the dollar last Thursday. The dollar was up at 79.97 yen from 79.36 yen.—
Pamela Sampson contributed to this report from Bangkok.
Financial advisers: the Good, the Bad, the Ugly - Marketwatch
By Steve Beck
Online portfolio management company, Betterment, stirred up quite a controversy this month brashly challenging both the efficacy and ethicality of the investment advisory business in its blog post, "Financial Advisers Are Bad For Your Wealth".
Possibly, it was their stinging criticism of the industry or their use of an image of a pig with a human face that set off the raucous debate.
Whatever the reason, their opinions didn't go unnoticed as wealth managers across the country responded with ire. Wealth manager Josh Brown from New York City characterized the dust-up as a, "brawl between Betterment and the entire online financial advisory population" and financial planner Roger Wohlner called their comments " immature and stupid ," to name a few.
Behind the controversy was a study performed by the National Bureau of Economic Research (NBER). Researchers sought to determine if advisers would act in the best interest of potential clients, correcting risky and inappropriate investment behavior when contacted for help. Actors posing as vulnerable clients performed nearly 800 visits. The study resulted in the discovery that advisers often reinforced harmful investment behavior and provided advice that benefited their personal compensation in lieu of their clients well-being.
For example, when actors asked about fees, advisers played down their importance. Despite the damaging effect of fees on portfolio growth, the study revealed that adviser said things like, "this fund has a 2% fee but that is not much above the industry average."
Actors, who claimed they were in low-cost index funds, were frequently guided into more expensive, actively-managed mutual funds despite the ineffectiveness.
In addition to financial advisers, brokers too were biased toward methodologies that increased their personal earnings, such as encouraging the actors to concentrate in hot industries which require more buying and selling despite the high-risk, and taxes and fees resulting from such churn.
In light of these findings, what then is the role of an investment adviser if any? At MarketRiders, we often help investors fire their high-price adviser in favor of low-cost, global asset allocation using ETFs guided by an objective and proven software service.
This do-it-yourself approach, however, isn't for everyone. Many investors lack the fortitude and stability to faithfully execute a strategy through the tumultuous machinations of the market. For those investors, a good investment adviser makes tremendous sense, but how do you know if your adviser is a good one?
The Good
The first, ultimate and irreplaceable principle that guides good advisory services is fiduciary responsibility. Not only is this the law, good advisers place the interest of their clients above their own simply because they know it is the right thing to do, even if it means passing on substantial and tempting fees.
In addition, good advisers work intimately with their clients to develop a thorough investment plan favoring low-cost indexing, tax efficiency and global diversification when possible.
Finally, good advisers help their clients stay the course, helping clients manage the psychological roller coaster ever-present when markets swing wildly during economic tumult.
The Bad
Bad RIAs and financial planners are those that fail to use low-cost and tax-efficient indexing as the foundation of their portfolio management. Some of these bad advisers are sincere and good people who are simply uninformed and trained by an industry entrenched in an active management ethos.
Their sincerity, however, is no ethical cover for ignorance. Research has conclusively demonstrated the failure of active money management with irritating redundancy. When it comes to an adviser's resistance to accepting these plain facts, it behooves us to remember what Upton Sinclair said: "It is difficult to get a man to understand something when his salary depends on his not understanding it." If your adviser fails to acknowledge the value of indexing, he may not be as good as you think.
The Ugly
The NBER study sadly revealed that some advisers are actually quite ugly and deserving of the ignominious pig image employed in the controversial article. These debauched advisers place their own interests ahead of their clients, transgressing both law and conscience. T
his offense happens when advisers recommend high-price and actively managed mutual funds, products with high fees, and strategies with high risk and taxes all for the sake of their own pocketbook. When you see such recommendations in play, you can be sure the oinking isn't far behind. Leave these ugly ones to themselves before your portfolio has an ugly result. Find a good adviser or use one of the many quality online indexing services now available for surprisingly low-cost.
Facebook stocks in freefall: Drops from $38 to $31 per share in three days - Examiner
Slideshow: SpaceX Dragon blasts off from Cape Canaveral.
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