A couple plows its money into ill-advised investments, leaving little for the future.

A couple plows their money into ill-advised investments, leaving little to plan for their children’s future and their own

Sasha and Ellie Symmend* live in Ontario. Ellie, 37, is a salaried civil servant with the provincial government, Sasha, 42, is a self-employed electronics consultant. They are raising three children — ages eight and six-year-old twins — and expect another soon. It’s tough to manage since their monthly take-home incomes, $4,200 from Ellie’s job and $6,000 from Sasha’s work, barely cover their costs. To make ends meet, they live and share costs with Ellie’s sister, who owns half of their house and pays $1,500 each month for food and other costs. Their cash flow is thus $11,700 a month. In spite of that, as they approach mid-life, they are behind their peers in accumulating assets and providing for their children’s future and their own.

Their problems are three-fold. One, their expenses are getting ahead of their incomes. Two, their investments are mostly flops. They continue to pay interest while their net worth sinks. Three, they owe $499,000 on a homeowner line of credit for their house that does not amortize, so there is no end in sight.

You could say that they are victims of the financial services industry. They made several large investments in complex financial products, including mutual funds that have

high fees, universal life insurance policies with investment components and a land development company. The investments were made with borrowed money. In all, they have been paying $1,479 a month in interest for dismal performance, with losses on some investments as high as 60%. Take off the cost of carrying the losers and the total losses approach 80%, since loan costs over the past decade have exceeded the growth in the actual investments.

Worse, they invested $50,000 in a deal that is limited to accredited investors who, in Ontario, must have either net financial assets of $1 million, individual net income of $200,000 or combined spousal income of $300,000 in each of the last two years prior to the investment. They met none of the criteria. They have an understandable feeling that they have been milked for the advantage of those who sold the financial products.

“We entered into numerous investments thinking that it would be difficult to lose,” Ellie recalls. “But lose we did. We put too much trust in our relationship with our former financial advisor and swallowed every pitch that was proposed to us. We want to make decisions, but are not comfortable making any moves in the absence of advice. Our risk tolerance is very low.”

Dan Stronach, head of Stronach Financial Group Inc. in Toronto, says it’s too bad that the Symmends’ financial advisors appear to have been more interested in their own financial interests than those of their clients. “But we can fix the situation by reducing debt, getting rid of old losers, slashing carrying charges and sequencing new investments.”

Bad advice has cost Sasha and Ellie a good