Biases are the reality with many commercial sites

When it comes to investing, the Internet is a classic example of a double-edged sword. It's potentially a wonderful source of investor education but is also rife with misinformation and sometimes outright fraud.

Half of all Canadians saving for retirement now use the Internet to help them make investment decisions, says a poll released yesterday by Microsoft Canada's MSN.ca site. It found the Internet is behind only the banks and financial planners as a source of financial information.

Every bank and mutual fund company has its own Web site but few expect their content to be truly objective. What appears may be little more than electronic product brochures. The better single-vendor sites may include financial tools such as retirement calculators and links to other sites but seldom are their major competitors included.

More broadly based commercial sites focused on mutual funds or individual stocks may be less vendor-specific but have biases of their own.

For example, if a site is sponsored by fund companies, there may be an implicit endorsement of mutual funds as a mode of investment.

Even broadbased industry association sites like the fund industry's www.IFIC.ca can hardly be expected to link to sites like www.iunits.com, which promote exchange traded funds.

Similar criticisms are sometimes levelled at the financial press too, particularly magazines overly dependent on financial advertising. In some cases, the derogatory term "financial pornography" may well apply. But in my experience working for mainstream newspapers and their cyber-spinoffs, the editorial church is effectively and rightly separated from the advertising state.

Which brings us back to dedicated financial Web sites. Much information targeted at individual investors on the Web is "uninformed and some is spread maliciously and is dangerous to your financial health," warns veteran financial writer Hugh Anderson in Second Wave, a new book on online investing (Warwick Publishing, Toronto, 2003).

Or as Rob Carrick wrote a year earlier in The Online Investor's Companion (Wiley Canada, 2001), it's hard to cut through the Web's "information overload, the slush, and the hucksters."

The trick is to separate the wheat from the chaff, which such books attempt to do.

Another starting point for independence and objectivity are Government-run financial Web sites.

At the federal level, the Financial Consumer Agency of Canada web site (http://www.fcac-acfc.gc.ca/) has been running for more than a year. It's strong on broad consumer issues like bank credit cards, insurance, mortgages and bank service fees.

But for the nitty-gritty on more sophisticated investments, including investment funds, individual stocks and other securities, a better site is the Ontario Securities Commission (www .osc.gov.on.ca).

This week the OSC relaunched its investor education web content under the banner www.investored.ca. It includes content from other provincial securities commissions, known collectively as the Canadian Securities Administrators, thereby making the site a national, not just Ontario-based, source of objective investor information.

It also incorporates the Investor Education Fund, a not-for-profit organization funded by the OSC, says Terri Williams, the Fund's newly appointed president. She describes Investored.ca as a "one-stop shop for investors looking for unbiased information about investing from a source they can trust is not giving them a sales pitch."

The site is worth visiting for its Mutual Fund Fee Impact Calculator alone, found in the site's Interactive Centre. The Library section is also valuable, since it contains an overview of financial dealers and advisors and complaint procedures. This is where investors can check the registration and qualifications of securities salespeople or prospective new advisors.

There are also useful non-commercial financial sites run by individual Canadian investor advocates who are relatively objective. These include Joe Killoran's www.investorism.com, which urges full disclosure on mutual funds; Bylo Selhi's www.bylo.org, which is strong on indexing; and Shakespeare's Primer, aimed at Canadian do-it-yourself investors (http://www.telusplanet.net/public/kbetty/retireinvest.htm).

These sites in turn link to other useful sites. To some extent, there is a virtual community which puts a collective thumbs up or thumbs down on various sites and products.

This informal democratic cyber community constitutes the real power and value of the Internet. But as with the film, Six Degrees of Separation, only six links may separate the most objective sites from the financial cesspools of the Net.

Surfer beware.