I just started a new job with a large financial planning company in Canada. I'm 2 weeks into training. But I took an 8 month financial planning course at a local community college prior to getting this job.
Hey, congratulations!
It's a commission based job, so I only get paid if I sell mutual funds, insurance products, or mortgages/loans. If I put a client into an ETF, I don't get paid.
Personally, I think that buying index ETFs is probably a much better deal than buying a mutual fund. In many cases, they hold the same stuff, just with a lower fee.
I think you're absolutely right and very wise. Just an index fund with the lowest fee possible seems like the way to go to me, as well. That's a bummer that you don't get commission for that, though.
So my plan is to attract clients by showing them how I can save them money by putting them into ETFs instead of mutual funds.... and then make my commissions by selling them insurance (where the commissions are actually much higher... and it's illegal to rebate, so you can't give them a better price by taking a lower commission).
That's a cool idea. Very creative. And props to you for keeping to your integrity, rather than just lying to them to make the commission.
And I don't really know too much about insurance, but i'm trying to learn as quickly as possible. It seems like there are insurance products where you get your premiums back if you don't file a claim. These products aren't that good a deal in an environment with normal interest rates... but in a low interset rate environment, it might be a good option to consider, even if you have a lot of money. Because you could put your money into a long term government bond and make a few percent in interest per year. Or you could buy an insurance product where you'll either get your money back (so you earn 0% on your money, but it's guaranteed by the government that you get your money back) but if you need to file a claim, you'll come out way ahead. So I need to learn this stuff in much more detail... but it seems like there might be some good ways to invest using insurance instead of just holding cash.
That is a very creative idea, and one I don't remember ever hearing before. I'd be interested to know what you find out. I need insurance anyway, so, who knows? Could make sense.
I do like Harry Browne's Personal Portfolio approach... but I feel as if he is overly concentrated in the US.
I think this is a good point, and one that people would ask him fairly frequently on his radio show. The answer he would give is that when you start investing in foreign things, you introduce
currency risk into the equation. I think the idea is that governments manipulate the exchange rates (and of course they do, he's right, we know that) and they do it in unpredictable ways. A country may be in prosperity and decide to make their currency weak, or they may be in prosperity and decide to make their currency strong. So whether the currency is weak or strong on the exchange market at any given time is up to the whim of the government. Now long-term, it will equilibrate at
purchasing power parity, but waiting for that long term can be a long wait. So investing overseas, in foreign currencies or securities denominated in foreign currencies, severs the tie between what's going on with your investment and how the economy's doing.
The Permanent Portfolio isn't diversification just for the sake of diversification. Harry and his friend (I forget his name) were trying to come up with assets that were
directly,
causally linked to certain economic conditions, so that if the economic condition occurred, the asset would
inevitably do well. They determined there are only 4 economic conditions, and those conditions are all-inclusive (there aren't any others):
1) Prosperity
2) Recession
3) Inflation
4) Deflation
Here's what they came up with:
1) In prosperity, stocks will do well. If the economy is prospering, the companies that make up that economy will of necessity be prospering.
3) In times of inflation, gold will do well. The reason for this is a little more complicated to explain, but I think that here we are mostly familiar with it, at least partially (Harry has the best full explanation I've heard, and it's different than, though compatible with, the standard Austrian story), so I'll just say that there
is an air-tight causal connection between a period of very high
price inflation (different than monetary inflation) and gold going up and leave it at that.
4) During deflation, bonds will do well. The reason for this is also slightly technical.*
You will notice, by the way, that there's no asset for 2). They never could find an asset which was logically linked with recession. Some assets will go up sometimes, in one recession one, in one recession another, but nothing that you can count on that must go up every time. So that's a possibility for making a great leap forward in portfolio theory and a great improvement to the Harry Browne Permanent Portfolio, if anyone is up for a challenge! Find us a recession asset! The best Browne and his friend could do was cash, which at least won't go
down.
Anyway, I'm getting to the point to address your global diversification thought. Let's say you have a big investment in the Indian stock exchange. Let's say India is in a period of prosperity. Sensei is going into the stratosphere! Tata passes Apple and Exxon in capitalization. Is your investment going up?
Not necessarily! 
It depends on what the rupee is doing. It is possible that even though the Indian stock market is way up, the Indian currency has fallen against the dollar even more than the stock market has gone up, so the real value of your investment (to you, as an American, or Canadian) has actually gone down!
And that's the huge problem. During prosperity, stocks are supposed to carry you through. It is supposed to be absolutely inevitable, bullet-proof, that stocks will do well during a period of prosperity. And within one country (or more precisely within one currency sphere) it
is! But introduce currency risk, and that all goes out the window.
If we were all on a single worldwide currency, as we were during the 19th century, global diversification would be wonderful! As things are, not so much. The currency bosses can mess things up, because you have no idea what they are going to do from one year to the next. For 40 years the Mexican Peso is pegged at 8 cents to a Peso, then all of a sudden within a year it's less than 1 cent (true story).
So anyway, are there huge risks with having all your investment tied to the fortunes of one country? Yes! But the Permanent Portfolio isn't about eliminating risk but rather about accepting it,
embracing it, and planning for it in the best, most intelligent way possible. It is about making risk and volatility work for you instead of against you.
and i'm not allowed to make "predictions" about what is going to happen... but I am allowed to explain things.
Probably for the best, since predictions are generally worthless anyway.
* With a US Treasury bond, you have a locked-in interest rate. Let's say it's 6%. If we go into deflation and now interest rates are only 2%, your bond which is still getting 6% is now much more valuable. People will pay a big premium for it, basically three times as much so that its effective rate of return will be the same as the 2% bonds which are all that are available from the Treasury now. You can multiply the effect even more the longer term bond you have. Like if you have a 30 year bond, you have that 5% locked in for
30 years (!!) and so the amount of extra interest for all 30 years will be built into the market price that people will bid it up to, whereas if it's only for 15 years, your leverage and thus your profits will be half as much.
, I must tell you I again see some problems with your strategy, now that I actually understand it better, and so again I shall list them. First, my understanding of your strategy:
