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A simple sorry would have been nice

All Gerhild Somann wanted from her mutual fund company was a sense of accountability for the financial debacle of the past year.

What the Stouffville, Ont., senior got was a year-end "dear investor" letter that focused on the opportunities in the market today. Angry at this, she decided to write the firm's president and copy us here at The Globe and Mail.

"I would have liked to hear some sense of 'we all feel awful about what happened as a financial industry, and here are the steps we will be taking so that this will not happen again," the 67-year-old Ms. Somann explained in an interview that commenced only after she turned the oven down while making dinner for her and her husband, Rolf.

Wasn't she impressed to hear from her fund firm, Franklin Templeton Investments, about how recessions are a time of opportunity, and that now's a great time to buy?

"Most people my age know all of these clichés," Ms. Somann said. "We've heard them all so many times."

A month into 2009, there's a sense that we're beginning to move on from the financial disasters of last year. Governments are spending billions to support the economy and financial system, and the stock markets are weak but much more stable than they were last year. But there's something still missing and Ms. Somann has pinpointed it. The financial industry has yet to accept responsibility for the misery caused through its greed and/or laxity.

We can't pin all this on Franklin Templeton, of course. It's a mutual fund company, not one of the big banks or investment dealers that poisoned the financial system with overexposure to bad U.S. mortgage loans. And while some Franklin Templeton funds fell hard last year, the company didn't do anything different than its peers in sending out a year-end letter that tried to find some positives for clients.

"The lessons of the past often help us gain valuable insights into the future, and this is particularly true during times of uncertainty," the letter, signed by Franklin Templeton president and CEO Don Reed, began.

"Obviously, the valuable lessons of the past have not taught our investment community prudence, watchfulness and responsibility," Ms. Somann countered in her letter.

Mr. Reed said his letter was phrased the way it was because of his firm's sense that investors are wondering what to do next. "I guess [Ms. Somann's] focus is that maybe we should have been more empathetic in the letter," he added. "But we do work very hard to always get the best results for the client, and we take this very seriously. We're not frivolous about it."

The Somanns are immigrants from Europe - Gerhild was born in Graz, Austria, and Rolf in Hamburg, Germany. They came to Canada decades ago and prospered, Gerhild as a marketer with a home decor importer and Rolf as a tool-and-die maker who later moved into management. Today, they live in a retirement community of bungalows built around a golf course about 30 minutes north of Toronto.

"We are living, I can honestly say, a comfortable lifestyle," Ms. Somann said. "But the comfort is no longer something we take even remotely for granted."

With their investment portfolio down about 25 per cent last year, the Somanns have decided to cancel a planned European cruise and forgo their deposit (they'll still visit Europe, though). Meantime, they're noticing something unusual in their neighbourhood. "We don't go south ourselves, and we've never seen so many people at home as we have this winter. We keep hearing, 'Oh no, we're not going south, we're staying here.' "

Ms. Somann said she's not mad at her investment adviser about her losses, and neither is she complaining specifically about the performance of her investments. It just set her off to get a letter about opportunity in the markets that didn't give due recognition to the pain investors have gone through.

In his letter to clients, Mr. Reed included a quote from Sir John Templeton, founder of the Templeton group of funds. It goes like this: "The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell."

Ms. Somann's reply is as neat a dissection of this oft-quoted adage as you'll find. "Where are the advisers that encouraged their clients to sell?" she wondered. "Buy and hold has been the gospel preached to prudent investors."

She continued: "To us senior investors, who are investing their precious retirement holdings so that they may enjoy reasonably comfortable retirement years, such belated sermons are neither helpful nor respectful."

For Ms. Somann, respect means recognition by the financial industry of what investors have gone through and some accountability for what transpired. She's not the only one waiting for this.


Speaking out as an investor

Quotes from Gerhild Somann's letter to her mutual fund company, a reply to a note enclosed with the 2008 annual statement that looked at opportunities in the market.

"Where were the loud voices from the investment community like your organization, that screamed out against the virtually criminal credit activities that took place not only in the U.S. housing market but at all levels of consumer lending?"

"Again, what we need to hear is what your organization and others who share the financial and investment playing fields are doing to work with governments, lending institutions, etc., etc., to avoid a similar disaster in the future - if not for us, then at least for our children and grandchildren."

© 2007 The Globe and Mail. All rights reserved.

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