One by one the independent stock investment firms are disappearing. 

This trend has been going on for many years, but the consequences for the investing public have been largely ignored.

It should be noted that this columnist was a partner in a Canadian investment firm for decades. That organization recently was at the end of a long line of such institutions that were absorbed by a larger company. 

Over the past couple of decades such well known companies as AE Ames, Greenshields, Pitfield, Midland Osler Securities, and now MacDougall, MacDougall and Mactier, a 168-year-old company, have disappeared.

What are the reasons for this, and what are the consequences for the investing public and the entire economy?

These amalgamations have taken place by present-day requirements.  The companies have been devastated by such new rules that MacDougall told this writer that it had to hire two lawyers to ensure compliance with all the regulations.

These organizations have had difficulties to meet many of these government requirements. That has meant an absence of concentration on finding the best investment vehicles. Our banks have been able to take over from the investment firms as they now have a staff of experts whose only function is to observe all the rules. That added significantly to the costs of each transaction.

Now all the banks seem to follow each other in their recommendations.  Long gone are the new ideas of a smallish investment firm uncovering a different hitherto ignored investment object.

Some banks, therefore, have branched out to invest in non-North American organizations with all the pitfalls of a foreign company whose operations cannot be accurately determined.

That explains the rise of exchange traded funds (ETFs) that combine a bundle of companies. With money increasingly flowing to these non-Canadian enterprises, Canadian firms are the losers. New enterprises here are starved for investment recognition.

Banks seem to copy each other and ignore something altogether different.

Banks too have spent additional efforts on developing mergers and acquisitions, for which they charge exorbitant fees. In too many instances these mergers have not been successful. Also, foreign takeovers of Canadian companies have become ever more commonplace so old standbys such as our steel and mining companies have disappeared.

The market for investment innovation has been diminished and the investing public thus is being shortchanged.



Bruce Whitestone