As I caught up on my reading this weekend, I was perusing an advertising feature that the Investment Fund Institute of Canada (IFIC) placed in the papers last week. The lead article was a review of a survey that IFIC conducted with individual investors. Not surprisingly, the survey confirmed “the commitment and confidence investors have in their mutual funds and advisors.”

Some of the findings of the survey are:

  • Investors are more confident in mutual funds and their primary residence than other investment vehicles.
  • The vast majority of those surveyed (83%) rely on advisors.
  • Investors were highly satisfied with both their advisor’s original assessment and ongoing understanding of their risk tolerance.
  • 63% of investors report that their advisor discussed sale commissions with them. 54% discussed advisor compensation (TB: the other 46%?).

Coincidentally, just minutes after I’d put the IFIC piece aside, an email popped up on my screen. It was from Ken Kivenko, a self-proclaimed investor advocate, and it was titled “IFIC wins 2007 Lump of Coal for Canada’s Most Baffling Investor Survey.” The story needs no further explanation. We’ve reprinted it below.

News Release

IFIC Wins 2007 Lump of Coal Most Baffling Investor Survey Award

Toronto, Nov. 5, 2007 - the Fund OBSERVER today announced the winner of the 2007 Lump of Coal Award for Canada’s Most Baffling Investor Survey.

Lump of Coal Awards recognize managers, executives, organizations, companies and regulators for attitude, performance, action or behavior that is offensive, duplicitous, disingenuous, reprehensible or just plain stupid. Based on an idea from Chuck Jaffe.

The Most Baffling Investor Survey must meet stringent criteria:

1. Must be incongruent with at least 3 other recognized surveys
2. Should have an underlying political motive
3. Should exclude survey details and sampling methodology
4. Must omit obviously critical questions that are “hot” spots
5. Timing should link to a current regulatory matter

The Award goes to...the Investment Funds Institute of Canada 2007 Investor Survey, the mutual fund industry lobbyist, for setting a new low in survey integrity, a truly difficult feat given the other surveys distributed by the financial services industry.

Here’s some of the unique IFIC Survey features:

  • The timing and focus judiciously coincides with an ongoing proposal by regulators to impose better POS disclosure on the industry
  • Key questions, like those on fees and complaint systems, are excluded
  • How investors were selected for inclusion in the survey is a mystery
  • Making conclusions from a sample population that regulators put at the Grade 5 reading level and others conclude is among the least financially literate
  • Using slick language in formulating the questions
  • Not highlighting obvious contradictions between responses to different questions
  • Breaking survey continuity by selectively omitting questions from the 2006 survey
  • Not acknowledging that some of the findings are at variance with virtually all other independent studies, regulator research , academic research, complaint statistics and the May, 2005 OSC Investor Town Hall results.

Despite fierce competition from other controversial surveys, our Panel believes these factors make the IFIC Investor Survey the unquestioned choice for the 2007 Award.