by Odette & Terry

 The other day, we opened our investment statement and it showed us how much of an investment fee we paid.   Though we know that we always paid for investment management and advice, it was still a change to see the dollar figure versus the previously reported percentage of assets.  It’s the same fee that had always applied to our accounts in the past, but now we see it as a dollar figure rather than a percentage that was simply deducted.

This full disclosure of the actual fees is part of the evolution of the mutual fund industry. Whether a fee is imbedded in a percentage or outlined in a separate dollar figure, the key question is, am I getting value for my money.  A lower fee does not necessarily mean a bigger return and a higher fee does not necessarily mean a lower return.

A recent research study shows that households with financial advisors have more than 4 times the assets of households without a financial advisor and as well, households with advisors save at twice the rate of non-advised households (source: “New Evidence On The Value of Financial Advice 2012” by Dr. John Cockerline, PH.D., Investment Funds Institute of Canada and former Director of Research at the Toronto Stock Exchange).

A few months ago, we wrote a detailed Infokit on the subject of fees.  In a nut shell, there are two sets of fees that Canadian Investors pay in investment funds; the management fee paid to the investment company which is typically 0.80% to 1.5%, and the advisory fee you pay to us and FundEX for advice and service.  This fee ranges from 0.50% to 1%.  The more money invested you have, the lesser the fee. Read the two information bulletin here.

FundEX bulletin “Understanding Mutual Fund Fees” and

Our detailed infokit About Investment Fees & Disclosure 

So, what do you get for these two fees?

The investment company fee is used to pay the investment managers, analysts, traders, statements, tax slips and client services.  The advisory fee is used to pay for investment mix selection, asset allocation, investment trades, financial planning which includes tax, retirement and estate planning.

Please remember that we are very sensitive to MERs. Frank and Anthony are very much on the look out to find ways to reduces fees. We are paid on your account value. So the less management fees you pay, the better it is for us as well.

We welcome the new fee transparency because it puts pressure on investment companies to reduce their MERs. You can expect to see a downward trend going forward. The infokit also shows that at You First/FundEX, we tend to charge less and do a lot more with regards to planning and advice.

We feel that our job is to make sure that your retirement cash flow analysis is on target. We want to make sure that your money will last until age 90. We try to get the highest possible rate of return of course and lower fees but want to make sure that your retirement assets are safe and you can enjoy a stress-free retirement.

Please contact us if you have any questions or concerns about this subject or any other aspect of your plan.

(i) Ontario Securities Commission Investor Advisory Panel 2013

(ii) Canadian Investors Perception of Mutual funds and the Mutual Fund Industry, Pollara, 2014.