Personal Investor: Are you satisfied with your investment advisor?
A recent survey released by Environics showing a 97 per cent approval rating for investment advisors seems a little rich.
The survey was conducted last August, just days after the deadline for advisors to comply with new fee disclosure rules called CRM2. Among other things, CRM2 requires advisors to express their fees in dollars as well as percentages. That means a typical and hidden one-per-cent trailer fee on a $1-million mutual fund portfolio translates into a $10,000 annual bill for services rendered.
There is no question there are plenty of good advisors out there. Many Canadians owe their prosperous and secure retirements to the skill and foresight of qualified advisors.
Are you satisfied with your investment advisor? Before you answer that question try asking another question: How much do I pay in total? Add up that one-per-cent trailer fee on your mutual funds plus any other loads, commissions or fees. For mutual fund investors that could be just the tip of the iceberg. CRM2 does not require mutual fund companies to disclose their annual management expense ratios (MER) in dollars. MERs on some funds could exceed three per cent. On a one million dollar portfolio, that’s $30,000 each year.
Contact your advisor and ask – not only their fees in dollars – but how much of your investment is going to the mutual fund company. How much do you pay all in?