Fee Transparency:

Don’t be afraid to ask questions of your advisor! Remember, it is your money and they are legally obligated to explain the fee to you even though most don’t because clients don’t want to take the hours it would take to have it explained.

Types of Fees – On-Going or 1 time

There are 3 main types of fees an investor can pay for their investment portfolio and most Canadians are paying all 3.

They are:

  1. Fees in the investments themselves. Ex. A Mutual Fund has a built-in ON-GOING fee of say 2%. Whereas, if you own an individual stock, like in Royal Bank of Canada, then there are no on-going fees for owning that investment year over year.
  2. Fees to buy or sell the investments. Ex. Trade fees at a securities firm and Front End and Back End fees on some Mutual Funds. 1 Time Fees
  3. Advice fees – who is picking, reviewing, and buying and selling the investments. Can be either On-Going Advisory Fee or 1 Time Trade fee.

TOP

The Investment Institution type you choose dictates your Fee Options

There are 2 main types of investment institutions in Canada and they are the Mutual Fund Dealers Association (MFDA) and the Investment Industry Regulatory Organization of Canada (IRROC).

  1. MFDA – these are places that only sell mutual funds. KEY POINT – It really is only mutual funds with built in fees that can be in these accounts. You can’t even ask your investment advisor at your bank or credit union (because they are all MFDA) to move some of your mutual fund money to cash for a few months for safety; the accounts can’t hold even Cash! They must hold a mutual fund charging you constant on-going fees. A mutual fund account at a bank (no matter if it is a RSP, TFSA, RESP, or Non-registered) can’t hold Cash just like the Bank Account thy sell you can’t hold a mutual fund. eg. Investors Group Financial, RBC Bank, Credit Unions
  2. IRROC – these are places licensed for securities and the KEY POINT here is that securities accounts can hold almost all types of investments. You can buy Stocks, Bonds, Exchange Traded Funds (ETF’s), hold Cash, and even buy traditional style high fee Cdn mutual funds available at MFDA firms; though there are two opens available of them the A Class (regular) and the F Class which is half the MER fee. eg. Hampton Securities, RBC Securities

TOP

Long term effects of fees

End of Year One

Mutual Fund

Securities – Advisory Fee

Securities – Trade Fee (8 Trades)

Average MER fee 2%
First Year Fees: $5,300

Advisory Fee: 1.5%
First Year Fees: $3,750

Trade fee: $200 per trade
First Year Fees: $1,600

Total Return after year 1:
$259,700.00

Total Return after year 1: $261,025

Total Return after year 1: $263,400

Savings: $1,325

Savings: $3,700

End of Year Five

Mutual Fund

Securities – Advisory Fee

Securities – Trade Fee (40 Trades)

Average MER fee 2%
Cumulative Fees: $28,637.75

Advisory Fee 1.5%
Cumulative Fees: $21,707

Trade fee $200 per trade
Cumulative Fees: $8,000

Total Return after year 5:
$302,412.48

Total Return after year 5: $310,206.21

Total Return after year 5: $325,537.05

Savings: $7,793.73

Savings: $23,124.57

End of Year Twenty

Mutual Fund

Securities – Advisory Fee

Securities – Trade Fee (160 Trades)

Total Return after year 20:
$535,277.30

Total Return after year 20: $592,627.67

Total Return after year 20: $742,926.92

Savings: $57,350.37

Savings: $207,649.62

TOP

Jaret’s knoweledge of the markets and outstanding. He is always available and contacts me when my portfolio needs adjusting. I recommend him.

L.C.

I really appreciate not being charged on-going fees. Even though my portfolio is largely buy-and-hold, Jaret is always on top of things. I feel like a high-net worth client even though I’m not.

B. Allen

Jaret really helped get our family’s assets in order. RRSPs and RESPs are in good hands. Thank you Jaret.

Kurt

GET IN TOUCH

I would love to hear from you! Let me know what what services you are interested in or if you just want to have a chat about your current financial circumstances. I’m here to listen and then give you my professional feedback.

If you have any immediate questions about my services, feel free to give me a call at 604-816-5988 or send me an email! Prefer to schedule a call ? Add yourself to my calendar on a date and time that works best for you.

Fields marked with an * are required