# MER's



## noahbaby (Feb 18, 2011)

Hi,

My account manager has invested a large portion of our portfolio in a bank-run balanced fund. The MER is around 2%. The fund invests mainly in other mutual funds run by the same bank - various equity and bond funds. Obviously, these have their own MER's.
My question is ...to figure out the total fund expenses I am paying, are these MER's added together?? 
Are these expenses justified? It seems like a lazy way to charge investors a relatively high MER, when the funds within the fund already have their own expenses. 
Thanks


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## m3s (Apr 3, 2010)

Does this account manager remind you of a salesperson? MER on top of MERs is criminal imo


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## plen (Nov 18, 2010)

No, the mer on the single fund include the mer on the underlying funds. At least that's the case with TD.

Usually you're better off to buy the underlying funds though as the weighted mer added up for those is usually less than the consolidated mer for the fund of funds.

Which fund is it?


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## noahbaby (Feb 18, 2011)

Thanks,

it is RBC Select growth.

I have asked RBC if that is how they calculate the MER; it does not clearly say anywhere.


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## HaroldCrump (Jun 10, 2009)

You pay the MER of the fund your bought, not the underlying MERs.
Your fund pays those MERs.
Which is why your MER can never be lower than the average of the underlying MERs, but is often actually higher.
These days mutual funds are like cakes of soap - there is nothing to differentiate one from another, except the fancy packaging - and that's what you are paying for.
Under the covers they are all a mix of vegetable fat, foam agent, and color - not much different from what we made on our own in Grade 9 chemistry lab.


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## the-royal-mail (Dec 11, 2009)

Yeah I used to have those funds. They were ok at times but nothing can beat the results of choosing your own low-fee index funds. I did this last year and my account value took off. I would suggest that you stick around CMF and try to build up a little confidence. There is no reason you can't enjoy some good performance and lower fees at RBC.


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## Belguy (May 24, 2010)

I would hazard a guess that most investors' portfolios have done quite well over the past few months because the general trajectory of the markets as a whole have been up. When the markets change direction, your index funds--and most managed funds--will change direction as well.

In other words, when your account value took off, it was not likely a result of your decision to switch investments as most indexes and most managed funds have done very well lately but the markets never, ever go up forever.

That said, it is always a good idea to keep your fees as 'little' as possible rather than helping to support the hugely profitable financial services industry.

Isn't it interesting that your RBC salesperson sold you an in-house product as if it were the best of all options out there for you!! Or, maybe he was instructed to sell such propietory products.

Consider the impact of high fees on your long term results. For example, a $1000 investment in a fund with an annual return of 8 percent over 20 years would produce a profit of $3,661 without fees--but only $1,807 after a typical 2.6 percent MER.

On a $100,000 portfolio, a 0.31% annual fee comes to $310 whereas a 2.25% annual fee costs $2,250. That's a difference of $1,940 charged year after year after year ad infinitum. Even worse, the dollar value of the fee grows as the portfolio grows. That sort of scratch could buy you a pretty nice vacation every year.

When your portfolio value reaches $500,000, a 2 percent MER comes in at $10,000 per year, year after year after year but even more over time as your portfolio further grows.

Imagine the long term effect on your portfolio considering what would have happened had you kept those monies yourself and allowed them to take advantage of the magic of compounding over the years!!!

Let others pay those ridiculous management fees. You invest in low fee, broad-based index products.

www.canadiancouchpotato.com

Reference: The Stingy Investor/Rothery Report

FEES MATTER!!!!

By the way, did you ever notice how little time your financial services salesperson actually spends talking about fees and how they will impact your long term returns?

Answer: Precious little time--if any!!!


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## m3s (Apr 3, 2010)

I would consider what services this "account manager" [salesperson] adds by selecting funds that are already managed by someone else for a fee

After that I would consider if paying for active management is worth it when most of the profit/loss is determined by the overall market itself, and fund managers will churn investments just for the sake of earning their pay


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## dogleg (Feb 5, 2010)

Too bad there isn't a 'consumer protection law ' for investors that requires them to at least read "The Naked Investor" (Reynolds) and "Payback Time" (Town) before putting their hard-earned money into mutual funds. Anyway good luck with your investment plans.


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## OntFA (May 19, 2009)

mode3sour said:


> Does this account manager remind you of a salesperson? MER on top of MERs is criminal imo


I have to say that it is comments like this that limit my participation in this forum and, at the same time, motivate me to want to add in my two cents. As a few others have noted, you don't get a duplication of fees in Canada. This wasn't always the case but it has been for almost ten years.



noahbaby said:


> Thanks,
> 
> it is RBC Select growth.
> 
> I have asked RBC if that is how they calculate the MER; it does not clearly say anywhere.


I don't want to sound harsh, noababy, but did you read the prospectus for this fund? I looked it up and found the prospectus here. If you go to the page talking about fees and expenses, you will see the following, with my emphasis added:



> _Management expense ratio (MER) for the portfolios and the RBC Target Funds The management fee payable in respect of each series of the portfolios and the RBC Target Funds (other than Series O) is a variable fee and is determined on a basis such that all fees and expenses that comprise the MER, other than the additional cost of the harmonized sales tax (HST), will be equal to a specified percentage of the average net asset value of the
> applicable series of the portfolio or RBC Target Fund. The specified percentage includes the management fee, administration fee, taxes (other than the additional cost of the HST), other fund costs and any fees and expenses of the underlying funds. Since the additional cost of the HST is not included in the specified percentage effective July 1, 2010, the MER will be higher than the specified percentage by a percentage which reflects the additional cost of the HST.
> 
> See Operating expenses – Effect of HST on MERs below.
> *No management fees or incentive fees are payable by an RBC Fund that, to a reasonable person, would duplicate a fee payable by the underlying funds of that RBC Fund for the same service. In addition, the RBC Fund will not pay any sales fees or redemption fees upon a purchase or redemption of securities of any underlying fund which is an RBC Fund or a fund managed by an affiliate. In respect of underlying funds which are not RBC Funds, the RBC Fund will not pay any sales fees or redemption fees to the underlying fund which, to a reasonable person, would duplicate a fee payable by an investor in the RBC Fund.*_


If that's not clear enough, it would certainly give you enough information to ask more direct questions about fee calculations. Even though you use an advisor, you have to take some responsibility for your investment decisions and read what's given to you (I'm assuming, of course, that you were given a prospectus) and ask questions if you don't understand something.

Still, your RBC advisor should be able to answer this off the top of his or her head. Report back with the reply you get.


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## m3s (Apr 3, 2010)

OntFA said:


> I have to say that it is comments like this that limit my participation in this forum and, at the same time, motivate me to want to add in my two cents. As a few others have noted, you don't get a duplication of fees in Canada. This wasn't always the case but it has been for almost ten years.


All I said was duplicate fees are criminal, which clearly they were if they had to stop. Are you saying fees are lower in Canada? A fee is a fee whether it is a duplicate "to a reasonable person" or an additional "admin fee"



OntFA said:


> Still, your RBC advisor should be able to answer this off the top of his or her head. Report back with the reply you get.


Of course an RBC advisor is well trained and armed with such legalese to knee-jerk respond to such common accusations. Are they equally trained to provide actual financial advice? Bank advisors have admitted to me themselves that they sell their soul to achieve sales targets. I think you're still drinking the company kool aid

If you can justify these fees, I'm all ears. "Not a duplication to a reasonable person" is not justification, it's just a new definition help finalize sales


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## the-royal-mail (Dec 11, 2009)

In defence of banks and their fees, I have been with RBC for a very long time and must give them a lot of credit for the level of service they provide. No matter when I call, they almost answer the phone immediately and the people who answer are sharp, intelligent and know exactly what to do. This type of service has gotten quite rare in this day and age of 1-800 buffer zones.

And yes, it does pay for consumers to educate themselves as to what and who they are dealing with. No doubt they are there to make money but if you research on your own or talk to them about your investing strategy you should be able to find some lower-fee or better performing alternatives. It helps your cause to be armed with info for sure.

So I think the bank does a lot to earn those fees, even if we all agree they may be a little high compared to some not-so-pleasant alternatives.


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## Belguy (May 24, 2010)

My two biggest complaints with bank financial services salespersons is that first, more often than not, they promote their own in-house products as if they are the best of a whole universe of investment products out there.

Also, like most such salespersons, they spend precious little to zilch time discussing the fees that you will be charged and how those fees multiply over time, as your portfolio grows, and the long term impact of such fees on your portfolio's growth potential.

Most bank advisors, for example, are not licenced to sell ETF's and so they end up not being promoted at all in favour of higher fee managed funds.

It's just the way that the system works. Never assume that your financial services salesperson is putting the clients' interests first and foremost no matter how friendly their demeanor is.

After all, they are, in the final analysis, working for the BANK and following whatever instructions they receive from their superiors.

The client is not their prime consideration and that's just the way that it is.


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## OhGreatGuru (May 24, 2009)

Belguy said:


> My two biggest complaints with bank financial services salespersons is that first, more often than not, they promote their own in-house products as if they are the best of a whole universe of investment products out there.


Isn't that a bit like walking into a Ford dealership and complaining because they didn't advise you to go and buy a GM or Chrysler?



Belguy said:


> Most bank advisors, for example, are not licenced to sell ETF's and so they end up not being promoted at all in favour of higher fee managed funds.


Same comment. If you want a truly independent financial advisor you need to go and pay one. Mutual funds serve a legitimate purpose for some clientele.



Belguy said:


> ...
> It's just the way that the system works. Never assume that your financial services salesperson is putting the clients' interests first and foremost no matter how friendly their demeanor is.
> 
> After all, they are, in the final analysis, working for the BANK and following whatever instructions they receive from their superiors.
> ...


There is some truth to this. Bank mutual fund salespeople are given titles that suggest they are "financial advisors". When really they are only going to advise you on which of their products you should buy. Consumers need to be aware of this.


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## m3s (Apr 3, 2010)

The thing is that banks market themselves deviously as a service

People falsely think that because they pay a monthly fee and because they loan them their money, these people are actually working for them..

When someone walks into a car dealership, they are not paying them a monthly fee, they have no such financial relationship and have no such false expectations


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## Eclectic12 (Oct 20, 2010)

mode3sour said:


> The thing is that banks market themselves deviously as a service
> 
> People falsely think that because they pay a monthly fee and because they loan them their money, these people are actually working for them..
> 
> When someone walks into a car dealership, they are not paying them a monthly fee, they have no such financial relationship and have no such false expectations


Do they? 

Or is it more like the variety store clerk asking if you want a soda with your sandwich? Or better yet, the electronics store guy "advising" the best printer to go with your desktop/laptop?

With widespread complaining people do about the banks, I don't know how they could be thinking the bank is "working for them".


Interesting with the car dealership. Yes - there is no initial financial relationship but to me it rasises a question. Most people I know shop around for post-sale items for the car (ex. oil changes, tires) so why wouldn't they treat the bank the same?


Cheers


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## slacker (Mar 8, 2010)

I think most people are just afraid of making a mistake with their money. They feel hopelessly incompetent, and don't want the responsibility of managing it themselves.

The banks know this, and helpfully market their "services" to take the burden off people's shoulders. I'm not defending the banks for offering a bad deal to consumers, but it is a fair exchange.

At the same time, I think our society will be better as a whole if regular folks become more knowledgeable about their personal finance. I see financial literacy as a public good.


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## Financial Cents (Jul 22, 2010)

Just remember, fees are forever.

You could probably get better long-term returns (10+ years) with ETFs with paying 1/5th the fees.


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## larry81 (Nov 22, 2010)

Get this:

http://www.amazon.ca/Carricks-Guide-Downright-Canadian-Investments/dp/0385667450


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## OntFA (May 19, 2009)

mode3sour said:


> All I said was duplicate fees are criminal, which clearly they were if they had to stop.


Putting myself in the OP's shoes, your reply clearly states that the account manager is a salesperson that is selling a product illegally layering fees. Clearly you don't know the rules around fund of funds and fee reporting so speaking with less certainty would be more helpful to the OP.



mode3sour said:


> Are you saying fees are lower in Canada? A fee is a fee whether it is a duplicate "to a reasonable person" or an additional "admin fee"


Fees on top of fees are not illegal they just have to be disclosed in a manner that counts fees at all levels so that investors know what they pay. True, the text I pasted from the RBC prospectus may not be crystal clear but it does imply that there will be no duplication of fees where the fees are charged for the same thing. For example, no management fees of a "top fund" in addition to a management fee of a "bottom fund". So what happens is that they charge the full amount on the top fund and nothing on the bottom. The total is the same but transparency is better.

That's reasonable.



mode3sour said:


> Of course an RBC advisor is well trained and armed with such legalese to knee-jerk respond to such common accusations. Are they equally trained to provide actual financial advice? Bank advisors have admitted to me themselves that they sell their soul to achieve sales targets. I think you're still drinking the company kool aid


Choose any occupation or profession and you will find a segment of them that are useless and a drag on the reputation of the industry. The financial advice industry is no different. There are some terrific bank advisors. I have met some. And there are those, like the people you refer to, that have to sell their souls to succeed.



mode3sour said:


> If you can justify these fees, I'm all ears. "Not a duplication to a reasonable person" is not justification, it's just a new definition help finalize sales


I'm not hear to justify anything. I don't need to. Sounds more like you're looking for justifications for your advisor-bashing whether founded on fact or fiction. I'm up front with my clients and have never worked for a big company so I've never been in a position where I've worked under some quasi-dictatorship regarding how I run my business. In fact, I've always challenged the regulations and have always tried to offer clear and full disclosure. I have nothing to hide.

Again, you're speaking about things of which you have inferior knowledge. The law for mutual funds changed eight or nine years ago to require reporting of the full MER, counting any underlying funds. So similar law exists, as far as I know, for advisors who charge fees separate from products, which makes the client fees seem artificially low.


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## m3s (Apr 3, 2010)

OntFA said:


> Choose any occupation or profession and you will find a segment of them that are useless and a drag on the reputation of the industry. The financial advice industry is no different. There are some terrific bank advisors. I have met some. And there are those, like the people you refer to, that have to sell their souls to succeed.
> 
> I'm up front with my clients and have never worked for a big company so I've never been in a position where I've worked under some quasi-dictatorship regarding how I run my business. In fact, I've always challenged the regulations and have always tried to offer clear and full disclosure. I have nothing to hide.
> 
> Again, you're speaking about things of which you have inferior knowledge. The law for mutual funds changed eight or nine years ago to require reporting of the full MER, counting any underlying funds. So similar law exists, as far as I know, for advisors who charge fees separate from products, which makes the client fees seem artificially low.


I would think that as an "independent" financial advisor, you would be more offended by the salesmen advisors dragging down your rep than anyone. In any profession you have bad weeds but this is not certain individuals it is the banks themselves

I'm glad I motivated you to post and I think more financial advisors should participate. I see lots of other professions and occupations posting on other forums, but seems like certain ones don't want to offer their knowledge because that is what they charge for. I think financial advisors still have a key role even with the freedom of information, so why do they need to block it like real estate agents

I have no problem with good financial advisors but I also think people need to be aware of how banks actually operate.


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## Four Pillars (Apr 5, 2009)

OhGreatGuru said:


> Isn't that a bit like walking into a Ford dealership and complaining because they didn't advise you to go and buy a GM or Chrysler?


+1 

I was going to use this exact same analogy.


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## the-royal-mail (Dec 11, 2009)

That isn't a very good analogy though. A better one is that my friends and I are a bit more offended that we were sold Avalons when all we really needed (and could afford) was Corolla. We knew full well to expect Toyota product.


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## OntFA (May 19, 2009)

mode3sour said:


> I would think that as an "independent" financial advisor, you would be more offended by the salesmen advisors dragging down your rep than anyone. In any profession you have bad weeds but this is not certain individuals it is the banks themselves


I am equally offended by lazy and irresponsible advisors as I am people that bash the industry with a disregard for facts.



mode3sour said:


> I'm glad I motivated you to post and I think more financial advisors should participate.


You can't have the anti-advisor tone I've witnessed here and expect advisor participation. I'm a glutten apparently but still limit my participation.



mode3sour said:


> I see lots of other professions and occupations posting on other forums, but seems like certain ones don't want to offer their knowledge because that is what they charge for. I think financial advisors still have a key role even with the freedom of information, so why do they need to block it like real estate agents.


You've got to be kidding me? No other industry I can think of is as open as our industry is. Prospectuses are highly standardized - i.e. you find fee and commission info under the same sub-heading in EVERY mutual fund prospectus. Financial websites offer lots of free information. Discount brokers allow DIY investors to by-pass advisors and access anything they want for dirt cheap fees. And they offer free research.

And the disclosure is there for all to see if investors are diligent. Besides, why should I be obliged to share my knowledge for free? The information is there for all to see. The insights gleened from such information are a different story and that costs money, which is one of the reasons I try not to frequent discussion forums anymore. (I used to frequent the old FundLibrary where I spent way too much time. Lessons learned. Clients come first. Then me. Then DIYs online, if I have time.)



mode3sour said:


> I have no problem with good financial advisors but I also think people need to be aware of how banks actually operate.


Okay but I think it's dangerous to assume that we've been given all of the information necessary to judge this bank advisor, regardless of what you think of banks. We don't know if this has already been explained and the OP forgot it altogether (I've seen it first hand). We don't know if the OP ever cracked open the prospectus. We don't know if the OP has it in for the advisor. We don't know a lot of things unless it's been mentioned on several other threads, in which case I'd have missed it because I don't read too much here.

My focus is simply to share some knowledge and provide some facts and some opinion and let the posters work it out from there.


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## andrewf (Mar 1, 2010)

Saying that it's the hapless investor's fault for not cracking open the 80 page prospectus of each fund and fully understand them from cover-to-cover is like expecting people to read and understand the EULA for every piece of software they use. It's cynical and disingenuous. 

I saw a summary of fees provided by one of the bank's wealth management services with fees in the form of a chart based on assets. In 6 point font at the bottom of the page is the disclaimer that these fees are for advice only and do not include fund fees. The bank representative represents these fees as the cost of the service, which is dishonest. Why not present the MERs of the constituent funds in the same chart? Why ask a relatively unsophisticated investor to search for the prospectus of each of these funds on the bank's site? No fiduciary would treat a client like this. I am constantly appalled by this kind of behaviour.

Financial advisors have a place--even for most investors. I wish they'd be more up-front about the fees they collect as well as the other hidden fees (and buried in the prospectus is essentially hidden from the perspective of most investors) of the products they sell. They should be up-front and clarify that they are not fiduciaries in the same way that your car dealer is not. 

If you're expecting clients to learn enough to be able to read and understand a prospectus, you're asking them to learn enough not to need your services.


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## m3s (Apr 3, 2010)

andrewf said:


> If you're expecting clients to learn enough to be able to read and understand a prospectus, you're asking them to learn enough not to need your services.


Nice!

Also it is known that legalese is purposely written by the marketing department to either confuse or bury information



OntFA said:


> I am equally offended by lazy and irresponsible advisors as I am people that bash the industry with a disregard for facts.
> 
> You can't have the anti-advisor tone I've witnessed here and expect advisor participation. I'm a glutten apparently but still limit my participation.


You can come on here and post the facts and I'll stop bashing. Financial advice seems very non factual to me though. I find your tone fairly condescending myself.

I don't see how it would hurt financial advisors to make informative posts. I'm sure they could pick up come clientele if they show their knowledge. That's what I was meaning to say before. They seem to safeguard their information


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## Plutos (Nov 28, 2010)

Interesting discussion ...

The problem with the financial services sector is that they are not fully forward with all the information that an average person would need to know when they make investment decisions (giving you an 80-page fund prospectus which sounds like Greek to an average Canadian and/or requires economics degree to understand is not what I would consider “disclosing,” regardless of the fact that they might meet the disclosure requirements stipulated by law). If they were, it would hurt their bottom line.

Another problem is that an average investor is less than knowledgeable as to where they money goes and how the financial services are structured and function. I can't count the number of times my coworkers have told me that they put money into RRSP’s but they have no clue if their money is in stocks, bonds, mutual funds, etc. etc. Most people don't even know that RRSP is just a vehicle and not a form of investment, or what TFSA is. I think that if people were more educated in personal finance, perhaps things would be more difficult to hide. However, the complexity of the whole thing scares people away because it’s all very hard to understand and requires a lot of reading, research and time. 

Maybe it’s just me, but part of me thinks that the reason why it’s so hard to understand is because it was set up to be that way. If selecting financial institutions, mutual funds, personal advisers was as easy as choosing between Loblaws or Metro or buying car ... then big banks perhaps wouldn’t be so big and fund managers wouldn’t be making $500,000 a year regardless of how their fund performed. 

Dont you guys think that a little more decency from the financial sector and a little more effort by people to educate themselves would bring us to a scenario that’s more fair?


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## Belguy (May 24, 2010)

My experience with financial services salespersons is that they seldom explain the long term effect of fees on their clients' portfolios in very clear language and do not go out of the way to explain to naive clients how they are compensated as a direct result of the products that they recommend.

My experience specifically with those financial salespersons employed by the banks is that they promote and sell in-house products knowing full well that there are often better products out there for their clients.

When dealing with a financial services salesperson, trust but verify!!!

Perhaps the best approach is to deal only with fee-only advisors who do not receive compensation from any of the products that they recommend. That way, you avoid any potential conflicts of interest.

Buyer beware!!!


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## larry81 (Nov 22, 2010)

For a dose of reality about the financial industry and their practices:

http://www.amazon.com/Naked-Investor-Almost-Everybody-Gets/dp/0143016237


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## OntFA (May 19, 2009)

andrewf said:


> Saying that it's the hapless investor's fault for not cracking open the 80 page prospectus of each fund and fully understand them from cover-to-cover is like expecting people to read and understand the EULA for every piece of software they use. It's cynical and disingenuous.


First of all, I did NOT say that it was ALL the investor's fault but left open the possibility that the investor could be at least partly at fault for not understanding what he or she has invested in. And I don't expect any investor to understand every word of a prospectus cover to cover. But the two paragraphs in the fees & expenses section is not too much to ask.

As for the length of prospectuses it's a no-win situation for the industry. Give too little information and the industry is hiding something. Give too much and it's overwhelming and poor little investors can't grasp legalease. Now that's condescending. Investors are generally smart people but they have to step up and be engaged in the process. My favourite clients are the ones that are most interested and ask the most questions.



andrewf said:


> I saw a summary of fees provided by one of the bank's wealth management services with fees in the form of a chart based on assets. In 6 point font at the bottom of the page is the disclaimer that these fees are for advice only and do not include fund fees.


Unless you can produce more specifics or a sample, I cannot comment on it. But a chart is not an offering document or an investment management agreement. Those official documents will have the required information in the same size font as all other information.



andrewf said:


> The bank representative represents these fees as the cost of the service, which is dishonest. Why not present the MERs of the constituent funds in the same chart?


That sounds like a fee-based platform where the advisor charges for advice separate from product fees. But that's the method everybody wants the industry to move to. It is, they say, more transparent. I think I commented on that earlier today in this thread. Because the fee isn't comparable to mutual fund MERs, it can make fee-based structures seem cheaper than they are. So I agree that it can be misleading but if we follow in the footsteps of Britain and Australia, that will be the prevailing fee structure.



andrewf said:


> Why ask a relatively unsophisticated investor to search for the prospectus of each of these funds on the bank's site? No fiduciary would treat a client like this.


Wrong. I didn't ask the investor to do anything. The investor's advisor should hand the investor a prospectus. In case you didn't notice, I found the prospectus, told the investor where to find the section relevant to his question and then pasted the relevant section in my post.

Wrong on what fiduciaries expect. A fiduciary is not going to ask a client to sign something without the client having read the document (or with the client acknowledging that they've read and understand the document).



andrewf said:


> I am constantly appalled by this kind of behaviour.


I know how you feel 



andrewf said:


> If you're expecting clients to learn enough to be able to read and understand a prospectus, you're asking them to learn enough not to need your services.


I don't see it that way. I see it as investors taking some responsibility. I explain things to clients. I send them home with documentation of what I've explained. They don't read what I send them home with and forget what I've told them by the time they see me next time. It's what happens. And that's okay. I consider this kind of repitition part of my job to keep hammering home certain key concepts and disclosures.

But if any of my clients decided to complain that I wasn't up front or anything to that effect, I'd be pissed and they'd be wrong. But they don't. My clients simply ask questions that I've answered for them before and that's okay...so long as I don't get complaints and accusations.



mode3sour said:


> You can come on here and post the facts and I'll stop bashing. Financial advice seems very non factual to me though. I find your tone fairly condescending myself.


I've racked up 100+ posts before today. I've already shared what I consider to be factual information and opinion based on facts and data. And yet that's not enough. Not quite the attitude that will inspire me to continue participating. And it's not going to be real inviting for other advisors who have been thinking of participating.



mode3sour said:


> I don't see how it would hurt financial advisors to make informative posts.


Well, speaking for my experience I offer informative posts that pretty much go unnoticed, which is okay. But the minute I disagree with something, I get unwanted attention and asked why I don't offer more informative posts. Perhaps you've answered your own question.



mode3sour said:


> I'm sure they could pick up come clientele if they show their knowledge. That's what I was meaning to say before. They seem to safeguard their information


I refuse clients from discussion forums because it's just not the way I want to get any business. I haven't had any inquiries from this forum but I used to get lots from FundLibrary and I refused every one. Any advisor has the right to share or safeguard the knowledge they've spent years (sometimes decades) accumulating. To suggest otherwise is ludicrous.



Plutos said:


> The problem with the financial services sector is that they are not fully forward with all the information that an average person would need to know when they make investment decisions (giving you an 80-page fund prospectus which sounds like Greek to an average Canadian and/or requires economics degree to understand is not what I would consider “disclosing,” regardless of the fact that they might meet the disclosure requirements stipulated by law).


It's partly because of what the law requires that prospectuses are so long. But when I started in this industry, prospectuses were much worse. Today, they're a relatively easy read and well organized. You want to know about fees, look in the 2-3 page summary at the very beginning or look at the table of contents and look up "fees & expenses". Not so hard to figure out. If you're a DIY you're expected to know this. If you don't, don't invest. If you have an advisor, the obligation is on the advisor to point out and explain the important details contained in the prospectus.



mode3sour said:


> I think that if people were more educated in personal finance, perhaps things would be more difficult to hide. However, the complexity of the whole thing scares people away because it’s all very hard to understand and requires a lot of reading, research and time.


The presumption is that the industry has lots to hide. It doesn't - at least not at the advisory level. If you go to higher levels of investment banking and the like, that's where it's less ethical.



Belguy said:


> My experience with financial services salespersons is that they seldom explain the long term effect of fees on their clients' portfolios in very clear language...


Fair comment. Disclosing fees and showing explanations of how fees erode returns are two different conversations. I don't explain this but wouldn't shy away if asked.



Belguy said:


> ...and do not go out of the way to explain to naive clients how they are compensated as a direct result of the products that they recommend.


I think this still needs improvement but I also think it's really tough to distinguish between advisors who have explained all of this - and the client grasps and forgets the info, or never grasps it at all - and those who haven't. To the client, the three scenarios I just described are equal in the client's mind. But that doesn't make it equal in reality.



Belguy said:


> My experience specifically with those financial salespersons employed by the banks is that they promote and sell in-house products knowing full well that there are often better products out there for their clients.


Well, if Joe Advisor works for RBC Bank in the branch, he ain't recommending TD products. The issue of whether there are "better" products elsewhere is not as simple as it appears. Better how and based on what set of criteria? Better based on what kind of fee structure?



Belguy said:


> Perhaps the best approach is to deal only with fee-only advisors who do not receive compensation from any of the products that they recommend. That way, you avoid any potential conflicts of interest.


I don't think you can fully avoid the potential for conflict. Different fee structures simply create different conflicts. Buyer beware indeed. The lesson: don't be afraid to ask questions, even if they seem silly or obvious.

Good night folks.


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## andrewf (Mar 1, 2010)

OntFA, don't take my comments personally. You sound like one of the good guys. I've seen a few too many smash-and-grabs where an advisor signs up a client, transfers them into something with a large DSC and stops returning their calls. The end result is investors who are suspicious of everyone in the industry because they don't have the confidence in their ability to discern the honest advisors from those who just want the commission.


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## m3s (Apr 3, 2010)

andrewf said:


> OntFA, don't take my comments personally.


I agree. I'm just playing devil's advocate most of the time. It's fine if I have "inferior knowledge" but I would rather you enlighten me than make such accusations 



OntFA said:


> I've racked up 100+ posts before today. I've already shared what I consider to be factual information and opinion based on facts and data. And yet that's not enough. Not quite the attitude that will inspire me to continue participating. And it's not going to be real inviting for other advisors who have been thinking of participating.
> 
> Well, speaking for my experience I offer informative posts that pretty much go unnoticed, which is okay. But the minute I disagree with something, I get unwanted attention and asked why I don't offer more informative posts. Perhaps you've answered your own question.


I was referring to you original post that you don't want to post here because of FA bashing. I don't see why that would stop you from participating, if you have informative posts to make. I didn't say you don't provide information. Anyways this is just going in circles



OntFA said:


> I refuse clients from discussion forums because it's just not the way I want to get any business. I haven't had any inquiries from this forum but I used to get lots from FundLibrary and I refused every one.


Well if you don't want the clients you can at least be in touch with the common complaints and opinions of lost/potential customers. I think you're over reacting a bit to the "FA bashing" and even though you make informative posts, so I don't think you should limit participation just because of that. Anyways


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## warp (Sep 4, 2010)

"Financial advisors". ( and I use the term loosely), are neccessary for people who either do not have a grasp of the financial markets, or simple dont want to know.

These days any person with some basic understanding of their money and the bond and stock markets are almost always better off by doing it themselves and buying broad based ETF's

Read a few books or internet articles on Asset Allocation,,( where and what percentage of your assets to put in each class)..and away you go.

One of the best books, and a very easy read is "How a Second Grader Beats Wall Street"

"Financial Advisors" are best for saving clients from their own stupidity and greed, assuming the advisor is honest...( not an easy assumption by the way)

Keep your emotions in check...if you are a nervous Nelly,,,buy GIC's and forget about it.


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## HaroldCrump (Jun 10, 2009)

^ agreed, well said.
We should distinguish between _financial_ advisors and _investment_ advisors.
To me, a financial advisor can provide all-round value in terms of tax planning/efficiency, estate planning/efficiency, mortgage help, etc. and not just mutual fund salesmanship.
Again, an investment advisor can provide a wide variety of investment options, such as mutual funds, ETFs, individual stocks or bonds, etc. and asset allocation services.

Unfortunately, in our world this entire profession is mostly nothing more than mutual fund salesmanship.
The only thing many financial advisors are interested in is getting you into high fee, low return, DSC, locked-in mutual funds that generate fat commissions/fees for them.


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## Belguy (May 24, 2010)

The very last financial advisor that I had, or will ever have, stated that he provided a whole suite of services but then proceeded to spend all of his time recommending expensive managed mutual funds and then subsequently churning them at his whim.

He took advantage of the fact that I knew virtually nothing about investing at the time.

That was when I decided to educate myself and take responsibility for my own life's savings.

Nobody cares about your money as much as you do---or should!!!


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## Brian Weatherdon CFP (Jan 18, 2011)

noahbaby said:


> has invested a large portion of our portfolio in a bank-run balanced fund. The MER is around 2%.
> Thanks


Besides the other clear comments above, I wonder why so many peoples' accounts lead toward balanced funds. Your MER may well be reasonable for the account size you're at currently....but I find it strange how advisors don't start with a mandate on dividends. Isn't it pretty obvious dividend-yields today are very strongly positioned compared to the cash/bond components of a balanced fund! 

Cheers.
B


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## the-royal-mail (Dec 11, 2009)

Hi Brian, you make a good point about balanced funds. In my clueless days before I found CMF, I had the approach of just giving the bank $x at RRSP time so they could give me a receipt for tax purposes. I answered the investor profile questions and they picked various funds, including a balanced fund with an MER approaching 3%. I have since sold those off and instead chosen my own sector and index funds, but when I did so recently the bank once again suggested those same balanced funds I had sold off a year earlier. Their logic was that I could make it easier on myself if I were to simply buy one of these, which had components of many sectors.

I thanked them for the comments but picked my own index and sector funds all the same. My decisions were based on MERs and long term performance and I've enjoyed double digit increases in account value as a result.

I think the bank balanced fund market is quite different from many of the investors in CMF.


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## warp (Sep 4, 2010)

dogleg said:


> Too bad there isn't a 'consumer protection law ' for investors that requires them to at least read "The Naked Investor" (Reynolds) and "Payback Time" (Town) before putting their hard-earned money into mutual funds. Anyway good luck with your investment plans.


Every investor should read:

"THE NAKED INVESTOR"

Its a good book, easy to read, and its about the Canadian Financial System and how it mistreats investors,

Educate yourselves, people.


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## larry81 (Nov 22, 2010)

Belguy said:


> The very last financial advisor that I had, or will ever have, stated that he provided a whole suite of services but then proceeded to spend all of his time recommending expensive managed mutual funds and then subsequently churning them at his whim.
> 
> He took advantage of the fact that I knew virtually nothing about investing at the time.
> 
> ...


similar experience here !

you can add insurance snake oils in the mix too.


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## dubmac (Jan 9, 2011)

*Mawer*

Check out this article on MER's by Rob Carrick in the GAM Report on Business.

http://www.theglobeandmail.com/glob...mutual-fund-fees-more-visible/article1927443/

I moved a bunch of my RRSP assets over to Mawer Investment Management -the funds have low MER's especially the Mawer Canadian Balanced Retirement Savings Fund (MAW104). The MER is "more reasonable" than most others at 0.98%. 5 star fund as rated by morningstar.ca.

Anyone have expereince with Mawer?


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## Belguy (May 24, 2010)

I am not currently invested with Mawer but you could do much worse. They charge low fees and most of their funds are highly rated.

Advisors generally don't like them and so that is another reason to consider them. 

I like their Canadian equity and World Investment funds.


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## Brian Weatherdon CFP (Jan 18, 2011)

the-royal-mail said:


> Hi Brian, you make a good point about balanced funds. ... ... ... I think the bank balanced fund market is quite different from many of the investors in CMF.


Thank you Royal, I know what you mean. You get to choose the perspective you want, with the expense ratio you find reasonable. That works.

Banks as you say, and many advisors default to balanced funds. Why in this era wouldn't they default to a higher "dividend yield" & less "interest"! It would be easy to do, and over reasonable periods would profit their clients.

Cheers!


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