Managing your Investment Costs
With the recent pullback in the financial markets, it is understandable that some people
are beginning to question the costs they pay for their investments. We believe this is
healthy, considering that most investors don’t know what they are paying or, in some
cases, don’t think they are paying anything at all.
There are basic costs associated with investing money that even a do-it-yourself
investor must pay. They include: trading; custodial charges; trustee fees for all accounts
registered with the CRA (RRSP, LIRA, RRIF, LRIF, RESP & TFSA); administration
expenses (employee compensation & benefits, office space, business systems, monthly
statements, etc,); and of course a profit for the financial institution engaged in delivering
these services to you.
Regulatory changes will be coming soon that will require the investment industry to
disclose all of these costs, but these rule changes will not require banks and investment
dealers to disclose imbedded fees or trailer commissions on mutual funds paid to the
advisors. The reason you should know this is to point out that the onus is on your
advisor to justify why he or she keeps you invested in some of these products even
though they may be underperforming or no longer suitable for you.
Paying a commission or imbedded fee to buy or sell an investment product from
someone who is financially motivated to make the transaction for you may not be the
wisest investment strategy to follow. Fortunately, it is not your only choice.
Receiving investment advice from someone who has a fiduciary responsibility to serve
your best interests on the other hand, is a far more prudent approach. The big
difference is that this individual is not just a salesperson but rather someone who has
the skill set and experience necessary to help you manage all aspects of your financial
circumstance, including those important goals in your life that require time, planning and
money to accomplish. As private wealth counsel, we are proud to endorse this fiduciary
standard in all our client dealings.
We will continue to provide you with an annual billing summary as we have done in the
past noting that these costs are tax deductible for non-registered accounts. Our billing
schedule remains unchanged since 2014 and we would be pleased to provide you an
estimate on your current costs with a detailed breakdown of what they cover including
the management expense ratios (MER’s) on the ETF’s and mutual funds in your
portfolio.
As always, please contact us if you have any questions or wish discuss this in more
detail.
Raymond James Ltd.
Suite 5300, Scotia Plaza, 40 King St W., P.O. Box 415 | Toronto, ON| M5H3Y2
Member of Canadian Investor Protection Fund