I received an email from an investor today relating to my column in the Globe last week.  With her permission, I’ve posted our correspondence below.

Mr Bradley,

Our investment advisor is trying to sell us PPN's which we are refusing to buy.

When I showed him your article from the Globe and Mail he said that you had got all your information from an out of date web-site which described only early PPN's and not the latest superior models which he is shilling.

I don't believe this; would you care to tell me where you got your information?

Thank you,

Sandy

My response was as follows:

Sandy,

Your email made me smile.  I know it’s not a laughing matter for you, but I couldn’t help it.

I don’t know how he knows how I do my research.  I don’t have one source...far from it.  In reality, I have been following the development of these products for 10 years.  My colleagues and I (previously at PH&N and now at Steadyhand) have deconstructed many of the products by analyzing the sales document (similar to a prospectus).  At PH&N, we did the deconstruction with good intentions.  We wanted to see if there was something that made sense for our clients. Needless to say, we have yet to find a product that makes any sense to the client whatsoever. 

At Steadyhand, this isn’t a part of our business and our clients don’t tend to own PPNs elsewhere, so now we do the analysis more for amusement and to stay on top of what the industry is currently “shilling”.  

In fairness to your advisor, we don’t look at all the products that come out.  Perhaps this one is better, but I doubt it.  Our observation is that the new generation products are more abusive, not less.  

You might ask him a couple of things:

  • Is he investing in it?
  • Get him to take you through the math.
  • Ask if you get to keep the dividends.  Many of these products say there is no fee, but they don’t tell you that you’re not getting any dividends from the stocks you own.  

I don’t think you need to read more, but if you do, you can search for ‘PPN’ on www.steadyhand.com and you’ll find plenty.

Good luck with your investing.  It’s great you are pushing back on this.

TB