# Where to hold Mawer MFs?



## james4beach (Nov 15, 2012)

Asking this on my behalf of my parents. They have decided to go with Mawer funds (mostly MAW104). Currently they are talking with Mawer about opening accounts directly with them, with the idea being that distributions and sales from the funds get sent to their linked chequing account.

Currently a lot of the money lives at Investors Group. They met with their IG salesperson and mentioned that they are considering transferring assets to Mawer. The salesperson responded by saying that IG can also offer a "self-directed" account where they could hold the Mawer MF. He was apparently a bit vague on how exactly this works, but the salesman suggested that he could also "help them out" with the account to some degree.

I gave my feedback to my parents that I don't like this idea. IG isn't going to do this at no cost, and I don't trust IG's practices about fee disclosure or salesmen incentives. I also said that they are not known for self-directed accounts. Why would someone hold a third party mutual fund within IG when they can do it at a broker discount brokerage like TDDI ?

I pointed out to my parents that they do in fact have a discount brokerage account at a big bank, and could hold the Mawer MF in there. This, however, is entirely do-it-yourself (which they aren't comfortable with). What seems to have hooked them on the Investors Group idea is that their favourite salesman has suggested that he can help them out.

Thoughts? Is it a reasonable idea to hold a Mawer fund within IG self-directed? Is it likely that the salesman will actually help them with things, like executing instructions to buy/sell, and providing required documentation that someone would have to do entirely manually at a typical discount brokerage? And if the salesman is going to help in that way, why is he doing the work for free?


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## OnlyMyOpinion (Sep 1, 2013)

I think your spidey senses are correct. 
I don't believe that liquidating IG products to hold Mawer in an IG self-directed account (who knew?) would be successful.
You either maintain both your relationship and investments with them or you make a clean break.


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## AltaRed (Jun 8, 2009)

I agree. I doubt the middleman approach comes without consequences and fees. 

Make a clean break and go with Mawer directly IF the account is big enough. Mawer will likely assign someone (seniority) based on account size. I had a friend in Calgary who had gotten almost to the point of signing on with Mawer (in Calgary) directly but was not satisfied with the seniority of the Mawer individual that was going to be assigned to him. I don't know any of the details.


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## james4beach (Nov 15, 2012)

Thanks! Any idea at what point you get some attention from Mawer? Is there a dollar threshold below which you shouldn't even bother transferring into Mawer?

Also generally curious how various people invest with the Mawer funds.


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## Eder (Feb 16, 2011)

IG is Isis for Canadian investors...run even if they don`t go with Mawer...pay any penalties


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> ...Also generally curious how various people invest with the Mawer funds.


6 figures in MAW104 with TDDI.


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## AltaRed (Jun 8, 2009)

james4beach said:


> Thanks! Any idea at what point you get some attention from Mawer? Is there a dollar threshold below which you shouldn't even bother transferring into Mawer?


Don't know but from http://www.mawer.com/individual-investors/ways-to-invest/ it would seem to me, $500k might be a number to get adequate attention..... and then you get real attention with $1 million plus.


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## Mookie (Feb 29, 2012)

Eder said:


> IG is Isis for Canadian investors...run even if they don`t go with Mawer...pay any penalties


+1


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## james4beach (Nov 15, 2012)

I asked, and my parents have been assigned someone at Mawer who was recommended to them by their local fee-only advisor. Whether that advisor is secretly a salesman for Mawer, I don't know, but I've vetted their funds enough at this point to see that they're a good idea.

My parents haven't pulled the trigger yet on the transfer into Mawer, but I'm really hoping they get out of IG. I was hoping they'd be comfortable using their discount brokerage, but I realize that isn't for everyone and so far they haven't had the time/interest to delve into the DIY.

(I did set up an ETF portfolio for them at their discount brokerage, and it's performed very well -- actually beating MAW104 this year, but I understand how they really want an advisor and representative to interact with... not DIY)

Regarding IG... my opinion on them soured about fifteen years ago when I tried to withdraw my money. At first they refused, then asked me to write a letter explaining why.


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## AltaRed (Jun 8, 2009)

james4beach said:


> I asked, and my parents have been assigned someone at Mawer who was recommended to them by their local fee-only advisor. Whether that advisor is secretly a salesman for Mawer, I don't know, but I've vetted their funds enough at this point to see that they're a good idea..


Definitely the Mawer guy is in 'sales' because they sell Mawer funds but I would hope there should be objectivity in which funds best suit your parents' risk profile.


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## james4beach (Nov 15, 2012)

I should have clarified. All of this started with a fee-only advisor (an independent guy they heard about in town), who helped them with some tax strategy and retirement planning.

That guy doesn't manage money himself, so he gave them ideas of a few wealth management co's that he's had positive experiences with from other clients. One place in his list was Mawer and he brought up MAW104 as a one-size-fits-all, but he also listed a bunch of other outfits including Steadyhand.

At the time, I had not heard of any of these. I was asked to research them, and when I did, I thought Mawer stood out as the most attractive among them, especially with MAW104.

So the nice thing is that their fee-only advisor did not push them into Mawer, but listed it as one good option among many. Once they decided to go with Mawer, the originally fee-only advisor referred them to a particular guy at Mawer.


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## newfoundlander61 (Feb 6, 2011)

I have owned the Mawer Balanced Fund MAW104 for 4 years and hold it in my TFSA. Works good for me is with the intial investment of $5k that was needed to get started.MER is good for this type of fund not comparing to an ETF mind you. Have been doing auto-purchases inside my TFSA with Investors Edge.


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## james4beach (Nov 15, 2012)

Interestingly, if you use ETFs to attempt to replicate MAW104, you'll find that the Mawer mutual fund has consistently outperformed the ETF version despite the "handicap" of the higher MER. I think this demonstrates that they're worth the management fee.

Then again, the manager can always leave the company, or might stop working his/her "magic" (assuming there is any, and it's not just random luck). I would happily recommend a globally diversified balanced fund made up of ETFs too, probably:

registered: XIU, XAW, VAB, VSC
non-reg: XIU, XAW, ZDB (using a tax efficient fund and skipping VSC for tax reasons)


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## Walksing (Oct 16, 2012)

Just a question, why ZDB not ZAG, I saw many people recommended ZAG for bond. thnaks


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## james4beach (Nov 15, 2012)

Walksing said:


> Just a question, why ZDB not ZAG, I saw many people recommended ZAG for bond.


For a registered account (RRSP or TFSA), there are several ETFs which are more or less equivalent: ZAG, VAB, XBB. I suggested VAB but any one of these will do just fine.

In a non-registered account, you have to be more careful selecting a bond fund. For this taxable account, the usual three (ZAG, VAB, XBB) are not good options. Instead, ZDB is a tax efficient replacement. Here's an article describing tax efficiency in non-registered accounts:

https://www.pwlcapital.com/en/Advis...der/February-2016/Don-t-discount-ZDB-just-yet


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## humble_pie (Jun 7, 2009)

AltaRed said:


> Don't know but from http://www.mawer.com/individual-investors/ways-to-invest/ it would seem to me, $500k might be a number to get adequate attention..... and then you get real attention with $1 million plus.




$1 million is actually on the low side at investment counsel, i would still expect that clients investing such an amount with most of the noted portfolio managers would find their funds pooled & their contacts handled by middle or junior rankers.

$2 million is a minimum cutoff. The other day i was looking at a highly respected local investment manager & i was surprised to see that their big nobs are presently only available personally to clients with $10 million or more. Time was, not so long ago, when their minimum threshhold was $2 million, but now it has risen substantially. Either inflation is worse than i thought or else there is more serious investment money around, willing to pay top dollar for talented management, than i had realized.

what to do with the $250k accounts & the $500k accounts? for one thing, even the junior staffers at the outstanding firms are well trained & usually believe strongly in the firm's culture. I for one would not feel uncomfortable with one of them.

for another thing, how many complicated questions could jas4's parents really have? they already have what jas4 concurred is an excellent financial planner in their corner, as a resource for the really tough questions.

jas4's parents' investment portfolio would surely be fairly simple, at base. Some well-chosen mutual funds. How many "complicated" transactions would a Mawer representative be asked to handle? for that matter, how many "complicated" transactions would an IG representative be asked to handle?

it's very understandable that jas4's parents have formed a relationship over the years with a particular IG representative whom they have come to know & respect. It does seem that this should not be severely interrupted.

it's also understandable that the IG representative would offer a counter-plan which he wants to call a "discount" relationship. I suppose that means charging the parents less commission or even rebating some of the outrageous fees that IG typically levies.

james4beach, would a 50/50 solution work for the time being? put half into a Mawer planned account & keep the other half at IG for the time being.

then it would be a question of how the Mawer relationship would develop. It would - i imagine - be true that both accounts would kind of duplicate each other, so this might not be a brilliant idea going forward for the next half-century. Still, it might serve as a way to gradually wean one's parents away from IG.

.


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## james4beach (Nov 15, 2012)

My folks don't have the multi-millions to demand individualized attention. It's true that IG gave them pretty good attention and face time with smaller amounts of money. In my opinion, that's the only respect in which IG was better.

I think they've transferred nearly everything out of IG to Mawer. They are already set up to receive withdrawals via transfer their chequing account. So far, so good. Mawer has answered all the questions they had. There is a possibility they will continue with IG but as I understand it, the current idea is to completely move assets to Mawer.

I continue to have some concern about high concentration, putting all your eggs in one basket (by which I mean one firm -- the underlying investments are of course very diversified). This is a concern about things like fraud and crooked operators. I think they are on track to have something like 80% of their entire net worth administered by Mawer. Personally I would hesitate to do this with my own assets... 80% feels high ... so I have encouraged them to keep a healthy hoard of cash & GICs at their Big Five bank.

In the end it's mainly a tug of war between mom and dad. Dad just wants to minimize the maintenance work and upkeep, and centralize the assets for convenience. Mom is *much* more cautious, is a big fan of not putting all your eggs in one basket, and doesn't trust the Mawer people too much. They both make strong arguments. Between the two of them, mom is more "street smart" and has great gut instincts.

For my part, I continue to encourage them to keep lots of cash & GICs at their Big Five bank. Since they already have this account anyway, it doesn't add to their maintenance burden. It's a totally separate, second institution, so it will protect them from the (very low probability) of an outright Mawer fraud/disaster.

Based on the theory of SWR, it's known that there isn't too big a difference in long term outcomes between a 60/40 allocation and 50/50 or even 40/60 during withdrawal phase. So, I think my advice to keep significant cash & GICs is fine and should not hurt them.


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## humble_pie (Jun 7, 2009)

james4beach said:


> I think they've transferred nearly everything out of IG to Mawer. They are already set up to receive withdrawals via transfer their chequing account. So far, so good. Mawer has answered all the questions they had. There is a possibility they will continue with IG but as I understand it, the current idea is to completely move assets to Mawer.
> 
> I continue to have some concern about high concentration, putting all your eggs in one basket (by which I mean one firm -- the underlying investments are of course very diversified). This is a concern about things like fraud and crooked operators. I think they are on track to have something like 80% of their entire net worth administered by Mawer. Personally I would hesitate to do this with my own assets... 80% feels high ...
> 
> I have encouraged them to keep a healthy hoard of cash & GICs at their Big Five bank ... so it will protect them from the (very low probability) of an outright Mawer fraud/disaster.[




jas4 i'm taking the lazy route here because i'm pretty sure that the following is correct: it is not Mawer itself that is holding the securities in its various mutual funds. Instead, securities are being held by 3rd party professional custodians. 

in the event of Mawer collapse or Mawer rogue trader, Mawer could theoretically disappear but the securities would go on living at the custodian. Eventually trustees in bankruptcy would be able to patch at least the value of the assets back together with the firm's clients.

jas4 i haven't taken the time to examine mawer documentation to find the relevant line items because you are such a whiz at this kind of research, while over here in my corner, i am only a poor dumb crumb. But if you look in the audited financial statements, you should see a debit item for custodial fees.

lastly, to relieve your mind & set your heart at rest, why not give Mawer a call to discuss their custodial fee protocols? such a conversation may only serve in the end to show that everything is disclosed in the official documentation, namely, in the prospectus & in the ongoing financial statements.

dinna fret ye

.


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