# Introduction and a question



## Slim1950 (Apr 25, 2013)

It's been a long time since I peeked into these fora. Let me introduce myself and my situation.

I am 65 years old. I intend to work till I am 70.
I have an RRSP under the care of a financial adviser who is a partner or VEEP with Richardson Brs.

I was self directed for years, and wasn't doing so hot, so I went to my adviser and asked him to care for my funds.
3 years later, I am still "under water". Not by much, but here's my concern.

In last week's teleconference with his clients he said that 'we are at the end of a bull market, and are entering into a bear market.."

SO my logic with him was as follows. If the mutual funds I am in have not gained any value during the last three years in a bull market, what makes you think it will not lose value in a bear?"

To which he responded with verbatim - "the funds you have now actually have very low correlation to markets/indexes and have a track record in down markets."

The 2 funds I am in -
SENTRY SM/MID CAP INCM FD-FE

LYSANDER CANSO BLNC FD SR A-FE

Can someone who knows this stuff better than I do confirm this? 
I looked at three years of performance, and it seems to me that those funds do indeed track with the market..

Is my adviser blowing smoke?


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## mordko (Jan 23, 2016)

@Slim - Had a look at the Sentry fund you referenced. It's an equity fund with a particularly high management fee (2%, 2.76% MER). 

The fee alone tells me that it's not a good investment. 

And the claim that shares have no correlation to markets/indeces... Fascinating. It's like claiming that the performance of your favourite hockey team has no relationship whatsoever to the performance of individual hockey players. 

The question you should be asking is "what the f-ck"???


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## Beaver101 (Nov 14, 2011)

^ LOL! But +1 to mordko's finishing remark ... yep, either the VEEP (some fancy executive salesman title) is blowing smoke or he needs investment re-education. 

The total fund expenses for the SENTRY SM/MID CAP INCM FD-FE is 2.81% and there is a potential 2% fee for switching - refer to the Fund Factsheet. Not sure what the second fund is about - LYSANDER CANSO BLNC FD SR A-FE - other than can guess it's a BLNC =balanced fund and usually these have an equity component in them, nothing to say about high MERs too, especially with an "advisor". What do they really advise these days?

You can probably do better, returning with a DIY ... and where is Belguy, the mutual fund switched to DIY investing senior on this forum?

Or perhaps ALTARED- a DIY investment expert can help you out here.


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## Slim1950 (Apr 25, 2013)

Beaver101 said:


> ^ LOL! But +1 to mordko's finishing remark ... yep, either the VEEP (some fancy executive salesman title) is blowing smoke or he needs investment re-education.
> 
> The total fund expenses for the SENTRY SM/MID CAP INCM FD-FE is 2.81% and there is a potential 2% fee for switching - refer to the Fund Factsheet. Not sure what the second fund is about - LYSANDER CANSO BLNC FD SR A-FE - other than can guess it's a BLNC =balanced fund and usually these have an equity component in them, nothing to say about high MERs too, especially with an "advisor". What do they really advise these days?
> 
> ...


So I found Altared's posts, but cannot PM him. Is it because I am a junior member?
Hopefully he looks at this thread..


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## Beaver101 (Nov 14, 2011)

Slim1950 said:


> So I found Altared's posts, but cannot PM him. Is it because I am a junior member?


 ... could be or that his PM function has been turned off.


> Hopefully he looks at this thread...


 ... hope so too as he's very helpful .. and mostly objective. :encouragement:


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## chantl01 (Mar 17, 2011)

You should really take a close look at the Fund Fact sheets for these two mutual funds you are invested in:

https://sentry.ca/en/documents/stat...p_Income_Fund/165/scif_Fund_fact_document.pdf
http://files.lysanderfunds.com/LYZ800_Q4-2015_0.pdf

They are classic financial-advisor sold mutual funds with high MERs that are, in fact, pretty much tracking the index in performance (and thus pretty much closet indexers). The Lysander has a slightly less egregious MER of 1.82 but that is still way high for a balanced fund.

You should do some reading on the Canadian Couch Potato website: http://canadiancouchpotato.com/

do-it-yourself investing based on the couch potato approach is actually not that hard and will greatly improve your results since you won't be having 2%(+) of your investment return skimmed off by a mutual fund company/financial advisor each and every year.


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## Slim1950 (Apr 25, 2013)

chantl01 said:


> You should really take a close look at the Fund Fact sheets for these two mutual funds you are invested in:
> 
> do-it-yourself investing based on the couch potato approach is actually not that hard and will greatly improve your results since you won't be having 2%(+) of your investment return skimmed off by a mutual fund company/financial advisor each and every year.


Thanks for the pointers. I have bookmarked the couchpotato website.

So am I being charged a management fee PLUS the MER? 
I just emailed my guy to ask him what the management fee was for the Sentry fund. He wrote back citing 2%, with no mention of MER.


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## mordko (Jan 23, 2016)

Slim1950 said:


> Thanks for the pointers. I have bookmarked the couchpotato website.
> 
> So am I being charged a management fee PLUS the MER?
> I just emailed my guy to ask him what the management fee was for the Sentry fund. He wrote back citing 2%, with no mention of MER.


MER includes the management fee. MER is what really matters to you as it is inclusive of all costs. 2% does not seem like a lot, but it's charged on the whole amount year in, year out. 

"For example, a $100,000 portfolio that earns 8% before fees, grows to $320,714 after 20 years if the client pays a 2% MER each year. In comparison, if the investor opted for a fund that charges a 1% MER, after 20 years, the portfolio grows to be $386,968 – a difference of over $66,000"

Or you could pay MER of just 0.05% with a broad ETF and save yourself >>$100K.


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## Spudd (Oct 11, 2011)

But he might be paying his advisor some fee on top of the MER? Hopefully not!


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## Slim1950 (Apr 25, 2013)

Spudd said:


> But he might be paying his advisor some fee on top of the MER? Hopefully not!


No. I think my advisor gets paid a commission by the fund. I am not altogether sure.. But I have never seen anyting in my statements indicating that there was money going to the advisor.


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## humble_pie (Jun 7, 2009)

mordko said:


> MER includes the management fee. MER is what really matters to you as it is inclusive of all costs.




actually the MER does not include all costs. It does not include what is often called the TER, or trading expense ratio. These are the internal commissions & fees paid by the fund as it buys, sells, trades & maintains its investment portfolio.

you can find the TER amounts spelled out in the Notes to audited financial statements from the funds. There is no other source for this information. Some fund salesmen do not even know about TERs, so it would be fairly common to never mention this expense to their clients.

an active equity fund will often have a TER of .50% or higher. This fraction has to be added to the MER. In the case of your Sentry fund, if its MER is 2.76%, the total fee per annum when the TER is included could be north of 3%.

Slim, may i say something in an effort to comfort you. It does sound as if, with a fair amount of painstaking planning & work from yourself, your portfolio could end up being better managed at lower cost. A number of folks here are going to point this out to you & i am concerned that you might be feeling badly over the sad news.

the rest of the sad news is that it won't be easy or quick to change everything. A lot of work will be involved. You would want to plan everything first. If it were someone in my own family i would expect that planning & carrying out any major changeover would take at least six months & could easily take an entire year.

the good news is that there are advisory & investment management services available that are both low cost & high quality. Ballpark rates are roughly 1% of MI (money involveod.)

other good news is bittersweet. It's a silver lining to a cloud. You mention that your saga with the advisor has left your funds still slightly underwater. But the silver lining says that, at least, the advisor did not cause you to lose money bigtime. If i follow your original post correctly, there has only been failure to perform, not a hemorrhage of losses.

more silver lining: it's never too late


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## mordko (Jan 23, 2016)

humble_pie said:


> actually the MER does not include all costs. It does not include what is often called the TER, or trading expense ratio. These are the internal commissions & fees paid by the fund as it buys, sells, trades & maintains its investment portfolio.


Good point but unless we are talking about something exotic, hyperactive or option-related, TER should be <<MER and is usually not worth bothering about.


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## humble_pie (Jun 7, 2009)

^^

to say it's not worth bothering about is only a single point of view each:

i have another point of view, which is that most traditional equity funds run a MER of 2.25-2.75. Once that TER gets added in, the total management/operating costs can rise north of 3%. This total figure is almost never disclosed to investor clients.

the total percentage is painfully high, especially when one considers that many mutual fund investors are perhaps not very knowledgeable & they are relying on an advisor to look out for their best interests. For such reasons - novice investor, beginner investor, elderly investor, disinterested investor - often the funds sold to them have large proportions of conservative securities.

from year to year, these conservative holdings do not change much. The client pays 2.50% for a basic balanced portfolio of funds. The following year, the advisor meets to say we-still-like-a-balanced-approach-for-you-especially-since-you're-not-getting-any-younger-we-still-like-these-funds-because-they-hold-bank-stocks-railroads-telcos-some-health-care-software-so-we're-not-recommending-any-changes.

having delivered this short speech, advisor then presents another billl for another 2.50% of capital. The following year, rinse & repeat.

i belong to the school that says all financial fees need to be out, transparent, open & easily accessible to the investor client.


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## Pluto (Sep 12, 2013)

chantl01 said:


> You should really take a close look at the Fund Fact sheets for these two mutual funds you are invested in:
> 
> https://sentry.ca/en/documents/stat...p_Income_Fund/165/scif_Fund_fact_document.pdf
> http://files.lysanderfunds.com/LYZ800_Q4-2015_0.pdf
> ...


I'm interested to know why, if what he has, despite the MER, is tracking the index, would he benefit by switching to an etf that tracks the index? You see, you wrote that what he has are "in fact, pretty much tracking the index in performance". Isn't that what index etf's are do? And what would he gain at this late stage? If he has to pay a 2% exit fee, and commissions to buy an etf, isn't he losing? 

Don't get me wrong, I do not really see benefit in high mer mutual funds and don't advise people to go that route. But if he is already in them and they are giving equivalent performance and he is 65....?


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## twa2w (Mar 5, 2016)

Pluto said:


> I'm interested to know why, if what he has, despite the MER, is tracking the index, would he benefit by switching to an etf that tracks the index? You see, you wrote that what he has are "in fact, pretty much tracking the index in performance". Isn't that what index etf's are do? And what would he gain at this late stage? If he has to pay a 2% exit fee, and commissions to buy an etf, isn't he losing?
> 
> Don't get me wrong, I do not really see benefit in high mer mutual funds and don't advise people to go that route. But if he is already in them and they are giving equivalent performance and he is 65....?


I think what he meant when he said it tracks the market is that it goes up and down when the market does but does not necessarily match the market returns. Meaning correlation with the market. His comment was that the veep said there was low correlation with the market. Which apparently isn't true for the funds in question.
I may stand corrected on this as I haven't looked at the funds in question.
Also not sure what market he was referring to in the Lysander case as it is a global balanced fund. Says it is medium risk but two big stock bets are blackberry and bombardier.

BTW How does the veep know we are entering a bear market? No one can predict the market. Did he say how long it would last?
So yes this guy is blowing smoke big time.


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## Pluto (Sep 12, 2013)

twa2w said:


> I think what he meant when he said it tracks the market is that it goes up and down when the market does but does not necessarily match the market returns. Meaning correlation with the market. His comment was that the veep said there was low correlation with the market. Which apparently isn't true for the funds in question.
> I may stand corrected on this as I haven't looked at the funds in question.
> Also not sure what market he was referring to in the Lysander case as it is a global balanced fund. Says it is medium risk but two big stock bets are blackberry and bombardier.
> 
> ...


OK, I see. 

Bear market: TSX dropped 24% from Sept 2014 to jan 2016, so it already fit the definition of a bear market. 
maybe the guy meant the S&P 500 which appears to be teetering on the edge. Then again, maybe the guy was giving him market babble to keep him as a customer. 

Anyway, the OP seems interested in self direction and learning and that's a plus.


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## Slim1950 (Apr 25, 2013)

Pluto said:


> OK, I see.
> 
> Bear market: TSX dropped 24% from Sept 2014 to jan 2016, so it already fit the definition of a bear market.
> maybe the guy meant the S&P 500 which appears to be teetering on the edge. Then again, maybe the guy was giving him market babble to keep him as a customer.
> ...


I was once self directed but was following a group of guys online (paying $100 per year to follow this group) but our investments did not do very well, and I wanted to stop watching my stocks every day. So I went to this advisor, whom I knew from our church. So I basically don't see him trying to rip me off. I think because he is works with mostly hi value clients, he just isn't paying much attention to my portfolio, worth only 90K.

But now, after watching him seeming to be indifferent to my file, and with him telling me we are heading for a bear market, it made me wonder.. if we are at the end of a bull market and we did so dismally, and yet he wants to keep me in these funds, what makes hime think I should hold the course? So I asked him that question, to which he replied with the remark, "These funds don't track with the indexes, and have a good record in bear market..." (Yes, it also struck me as odd that he says we were at the tail end of a bull)

This seeming contradiction makes me think he is just trying to "hold my hand" without giving me the answers I need. Which causes me to loose confidence in him. He has been a friend in the past - but he can be rather cryptic and unsatisfactory in his responses to my queries.

But yes, I want to learn, and want to eventually move my assets over to go self directed. I am not going to make any sudden moves.


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## Slim1950 (Apr 25, 2013)

*management expense fees*

So you guys are saying these fees are taken off on an annual basis? These fefes don;t just get applied at the point of purchase one time??
I know I am going to sound naive. I know next to nothing about mutual funds.
So if I buy a fund for $1000 and leave it there for ten years, with no additional purchase, I lose 2% every year?


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## GreatLaker (Mar 23, 2014)

Slim1950 said:


> So you guys are saying these fees are taken off on an annual basis? These fefes don;t just get applied at the point of purchase one time??
> I know I am going to sound naive. I know next to nothing about mutual funds.
> So if I buy a fund for $1000 and leave it there for ten years, with no additional purchase, I lose 2% every year?


Yes, the MER (and the TER as noted by h_p) in % are the cost of running the fund on an annual basis. You won't necessarily lose 2% every year, but you have to ask if the manager of an actively managed mutual fund can beat the market by the amount of the MER. If the market goes up 8% in a year, and the fund expenses are 2%, the manager needs to achieve a 10% return before fees, just to keep pace with the market. And 2% fee on an 8% return, means the manager must really beat the market by 2 percentage points or 25%.

Some funds also have a front end sales charge, or a deferred sales charge when you sell the fund, depending on where you purchase the funds. Your advisor can tell you if there are any sales charges.

Of the MER, there is likely a "trailer fee" paid to the advisor, of about 1% annually. Advisor compensation will be specified in the prospectus, or you could ask the advisor how he is paid.

Here is a link that explains MER and the effect on savings over time:
http://www.finiki.org/wiki/Management_expense_ratio


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## mordko (Jan 23, 2016)

Slim1950 said:


> So you guys are saying these fees are taken off on an annual basis? These fefes don;t just get applied at the point of purchase one time??
> I know I am going to sound naive. I know next to nothing about mutual funds.
> So if I buy a fund for $1000 and leave it there for ten years, with no additional purchase, I lose 2% every year?


There will be a deduction equivalent to MER applied every year. In your case they take about 3K per year as this amount is charged not just on the profit but on the whole value. So your capital gets "taxed" again and again and again... It's like you are trying to swim against the flow, there is hardly any chance of your fund doing as well as the benchmark index they are trying to follow.

Canadian Mutual funds have the highest MERs in the world. And most people who call themselves advisors are really vendors of a short list of very specific and very expensive products. It should be a scandal. 

If I were you, I would buy 3 ETFs described in the Couch Potato approach. Those ETFs have MERs of something like 0.05 percent. So rather than 3k, annual deductions will be more like 50 bucks. I would also have some stern words with your advisor so that there are no fees for withdrawing your cash. The advice he gave you was not a good one as these are particularly expensive funds even by the Canadian standards.


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## rl1983 (Jun 17, 2015)

All solid advice above!

Get rid of these funds as fast as you can. Switch to a Vanguard Couch Potato portfolio and don't worry about it. My Dad is a few years older than you and is invested in Fidelity and Sentry Mutual Funds. A few months ago, he showed me his statement and I ran the numbers on the funds. I couldn't believe how high the MER's were for these funds. Running the numbers, I figure he lost 150-200k in fees over the years. That's a significant amount. 

The problem is, he's retired and taking his Canada Pension Benefits now. I don't want to screw with the formula as the possibility of him needing the cash at some point in the near future is high. So not sure what to do for him, but for you, definitely pull it.


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## twa2w (Mar 5, 2016)

Slim1950 said:


> The 2 funds I am in -
> SENTRY SM/MID CAP INCM FD-FE
> 
> LYSANDER CANSO BLNC FD SR A-FE


My guess is that these are front end loaded fees based on the -FE in the description. This normally means you would have paid a fee to buy them when you transferred the money to this advisor. In other words if you transferred 80,000 to him, you would have seen funds purchased on your statement for a lesser amount - say 76,000. The other 4,000 would be the commission or load which would be shared between him and his firm. Now some planners may put you in a front end load fund snd not charge you a fee. This may be the case with your advisor either because that is the way he runs his practice or because he is a friend. 
The reason some advisors sell front end for no fee, is they collect a bigger trailer fee every year. Usually about 1%, rather than the 1/2% they would make annually on a deferred sales charge fund. So the difference is :
On a DSC they get a bigger commission up front and a smaller annual trailer fee. If you want out of a DSC fund you pay a back end or deferred sales charge. This fee is highest in the first year and declines each year over a 6-7 year period after which it is 0.
On a FE fund, they get a lower or no commission upfront but a bigger annual trailer fee. You should not be charged a commission to transfer out - but you will be charged a transfer fee by your broker.
MERs can sometimes vary with different load structures.
There are also other types of loads like low- loand and no- load.
So it appears you should not have a problem moving these funds but check with your broker or direct with the companies.


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## humble_pie (Jun 7, 2009)

twa2w said:


> ... you will be charged a transfer fee by your broker ... it appears you should not have a problem moving these funds but check with your broker or direct with the companies.




IMHO the OP should not be encouraged to move those mutual funds to any other broker or financial institution. There are even some discount brokers who will not accept them. Instead, i feel the action should be directed at moving the capital out of those funds & into an investment that is more appropriate.

in particular, when the time comes to take action, the OP can avoid transfer fees from the present finance house by redeeming the funds & withdrawing cash to close the account.

the OP says there has been zero performance in the 2 funds since he purchased them, therefore there should be no capital gains. At $90k the total amount is low. The only concern would be a DSC upon selling/redeeming the funds. If applicable, the OP can try to negotiate a lower DSC fee on the grounds that he understood nothing. Or else he would have to suck up the DSC fees.

me i feel that parties here who are lightheartedly advising OP to build a couch potato should take the history into account. There was a prior attempt at self-directed investing which consisted of paying $100 to some internet forum leader. Perhaps not surprisingly, this attempt failed.

the OP next chose a financial advisor who did not serve him well. One could say that this attempt failed as well.

as Pluto suggests upthread, the OP is now 65, it is late in life to suddenly morph into a re-balancing couch potato wizard. Because $90k is a relatively small savings for old age security, personally i feel the OP should be guided towards a GIC product or towards something safe such as 65% GIC plus 35% Mawer balanced fund. The security of this type of investment will far outweigh all the drama that has been going on with his savings throughout these past years.

lastly, the OP says he intends to keep working for the next 5 years, up to age 70. What wonderful news! mille félicitations to him & to all seniors who bravely say, without complaint at the age of 65, that they intend to continue working for the next 5 years!

would there be any possibility of saving more investment $$ from the income he plans to earn from today to age 70? if the work itself has some enjoyable aspects, might the OP consider working to age 71, so as to earn & save more?

lastly, does the OP have a RRSP, a TFSA? will the OP have a pension? what is his long-term financial plan ...


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## Slim1950 (Apr 25, 2013)

I am the OP of whom you speak 

Yes, I can see myself working till 71 or even beyond, so long as health remains. I ahve no real health issues right now.
Secondly, I have these funds under cover of an RRSP. And I can see myself contributing 20K every year till I am 71. hopefully I can double the nestegg before I retire. (I don't have to worry about capital gains even if there were some profit here). Yes, I am now drawing both CPP and OAS, which I am socking into the RRSP.

Re the advisor - if I start directing him, and telling him what I would rather do, am I not giving him a vote of non-confidence? And if that is the case, why stay with him? 

Finally, I have a small place, mortgage is paid, and am able to live on just the pension that my wife and I get if I have to. The extra that I will draw from the RRIF will be gravy.. so I am able still to handle a small degree of risk.


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## mordko (Jan 23, 2016)

@Slim1950:

1. I am furious with your adviser. What he did works great for him (regardless of whether your funds grow or not), but not at all for you - and was never going to. Clearly he has not informed you what the charges are and how they work; you may have a case against him. 

2. You have to make your own decision. There is no way around it. You ask 10 people, they will each give you a different recommendation. My suggestion is Couch Potato. You will not "beat the market", but over 5 years you will beat 95% of active mutual funds and 100% of superexpensive ones like the ones recommended to you by your advisor. 

3. In order to make an informed decision you need to do some reading. If I were you, I would invest in this book: 

https://www.amazon.ca/The-Value-Sim...ect=true&ref_=as_li_ss_tl&tag=canacoucpota-20

This is also worth reading to start with: http://www.moneysense.ca/save/investing/couch-potato-portfolio-frequently-asked-questions/

And this is what I would pick in your position: http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdf

"Balanced" is probably the right option in your position, but you can go a bit more or less aggressive - depending on your temperament. 

4. If you do select couch potato, it is up to you if you decide to rebalance or not. Rebalancing it once a year may enhance returns a bit, but it is not strictly necessary. If it is what you want to do, rebalancing can be done easily by adding the bulk of your annual 20K contribution to the funds that are "short" of your target fractions.


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## humble_pie (Jun 7, 2009)

Slim1950 said:


> I am the OP of whom you speak
> 
> Yes, I can see myself working till 71 or even beyond, so long as health remains. I ahve no real health issues right now.
> 
> ...




what a lovely story. It's awesome that you plan to work on without complaint, beyond awesome that you're planning to save such a large part of your income over the next 5 years so as to build this into the RRSP. I'm happy to hear about all this. Also happy, of course, to hear that you will have an adequate pension.

a big part of success in senior years, i think, is coming to terms with What Is. Far more successful is the senior who keeps himself in good health & deals contentedly with his modest portfolio, than the one who frets incessantly & keeps craving more.

on a practical note, it's regrettable but the writing does seem to be on the wall that you could & should leave the present advisor.

however, i was pleased to see upthread that you are not in a rush to do anything.

the first order of business imho is to discover what kind of deferred sales charge might be waiting for you with each of your 2 funds.

hint: please don't let on to the advisor that you are thinking of leaving, at least not yet. Often such an action will trigger an even greater drop in service from an advisor. If it were myself, i'd inquire discreetly at the 2 fund companies themselves, rather than convey to my advisor that i'm thinking of selling.

after discovering what the exact exit procedures will be, there will be plenty of time to consider a choice of new investment strategies. Couch potato is only one of them. It's probably a bit too soon to make up one's mind definitively. Some study is required ...


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## Slim1950 (Apr 25, 2013)

> 2. You have to make your own decision. There is no way around it. You ask 10 people, they will each give you a different recommendation.


Mordko, thanks for your advice. I fully realize that I have to take responsibility here and make my own decision. 
What I am doing here is taking my time, and looking at all the options. I cannot be aware of all the various options out there unless I ask. I will have a thorough look at Couch Potato..

One more question that occurs to me - does anyone have experience with Questtrade's Portfolio IQ? That is their managed portfolio vs DIY.


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## mordko (Jan 23, 2016)

I don't use it, but it's a reasonable option. There are a lot of comparatively cheap computer driven "advisers" popping up. This is one of them. The advantage is not just the price, but they also take direct human interference out of the equation, not subject to panic or exuberance. Obviously more expensive than DIY but you won't be charged thousands of dollars year in year out.


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## Slim1950 (Apr 25, 2013)

Alright. I'm a slow mover. Finally got out of those funds. My financial adviser made it easy for me. He is a "high value" adviser and sent me an email suggesting that I was not a match for him and that I should find another place to park my money. I think he anticipated my discontent after I sent him a few emails questioning the cost of those mutual funds. I was suggesting that a 2.5% mer was too high.

So I am now at QuesTrade, all in cash, and now the work begins to decide what to do.

I have 5 years of earning power yet before retiring. My goal is to see 10% growth in my portfolio.


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## Pluto (Sep 12, 2013)

Well that's excellent. I think you are on your way to building a bigger nest egg.


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## Ponderling (Mar 1, 2013)

Congratulations on acting on your concerns. 

Yes, it takes time to get going on your own again. I was with an advisor while my kids were young, and, along with working full time, taking up gobs of my time.
I figured out that the new annual funds to holdings were going to advisor more than growing the balance every year, since we had a good 'nest egg' pre kids. 

Yes, it is a bit of something to get your head around, doing ti yourself, but the 'price' of the headspace for me is worth it.


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## humble_pie (Jun 7, 2009)

Ponderling said:


> Yes, it is a bit of something to get your head around, doing ti yourself, but the 'price' of the headspace for me is worth it.



this must mean congratulations to yourself as well. I remember a few years ago, perhaps 2-3 years ago, you were saying how you'd reached the point where you could easily detect weak & strong aspects of different investments & investment possibilities, even better than could your advisor.

and i remember asking why you still had an advisor ...

so where your head is now is great news!


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## humble_pie (Jun 7, 2009)

.
expecting 10% return over the next 5 years is perhaps a tad ambitious, unless Slim is going to include the savings contributions that he's planning to make from salary ...

i confess i'm a bit worried for Slim because he has twice known setbacks in the past. In Slim's case, i think it's important to guard against another disappointment. It's wonderful what he has accomplished in finance & in life - a job still worth working at, good health to do so, good cheer, a good home already paid for, pension, a nice wife. Everything has added up. Only the advisors have been off the mark.

to start with, me i'd rather see something like 60% GIC ladder & 40% Mawer balanced RRSP fund. Since the latter has a .95% MER, this would mean a MER fee amortized across portfolio of roughly .45%, which is comparable with median couch potato.

alternatively, since the funds are already at questrade, it would be possible to roughly duplicate Mawer balanced with ETFs. Those no-commission ETF purchases at questrade are mighty appealing. I don't know what questrade offers in the way of fixed income or HISA accounts, but to guard against market Black Swans i would be happiest seeing, at least for now, well over half the portfolio sitting in 2.50% GICs (notice that to approximate GICs plus Mawer balanced, it's necessary to set up roughly 70% GICs & only 30% basic equity ETFs.)

later, since Slim is planning to work & save new funds to contribute to RRSP, there could be departures into securities that are a little more daring, provided that markets hold up. Right now there are many serious voices who are concerned by high levels of risk present in the ever-rising global markets we are witnessing, even while economies are not performing to match. This is why i believe that a priority for the first year or so should be to protect capital.


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## Slim1950 (Apr 25, 2013)

Thanks humble-pie. BTW, I like your handle. I think one must be humble to be in the markets. If not, the markets will humble you  You've given me some things to think about. I will be mulling your suggestions over. Thanks.


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## lonewolf (Jun 12, 2012)

Slim your right regarding being Humble I don't ever want to think I m smarter then the market. We are living in an age of big egos that think we can even control climate. Galileo telescope/commitmentoreason was needed to see the universe never revolved around us. Big ego causes man a lot of problems though we still need to have confidence to do our own thinking using the laws of logic & principals of thought to gain truth.

Method must be in harmony with ones nature. Everything has a precise nature & must act in accordance with its nature. To be a successful investor a nature of a successful investor must be required. High degree of intelligence or knowledge is not really needed to be successful investor. Commitment to reason is needed from my experience to be successful.


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## DavidW (May 27, 2016)

Nice post lonewolf. I found I needed to have a plan and focus on it, to help me take the emotion out of the fluctuations in my trading positions. My plan does change as I go but that is mostly goal post related as the main objective remains.

Slim and I are at different points in our lives and I'm not sure I would recommend 'my plan' for someone his age but it is nice to see someone making a plan.


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## mordko (Jan 23, 2016)

Slim1950 said:


> Alright. I'm a slow mover. Finally got out of those funds. My financial adviser made it easy for me. He is a "high value" adviser and sent me an email suggesting that I was not a match for him and that I should find another place to park my money. I think he anticipated my discontent after I sent him a few emails questioning the cost of those mutual funds. I was suggesting that a 2.5% mer was too high.
> 
> So I am now at QuesTrade, all in cash, and now the work begins to decide what to do.
> 
> I have 5 years of earning power yet before retiring. My goal is to see 10% growth in my portfolio.


This is what I would do if I were you, given that you are with Questrade. I would go for the balanced version.

http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdf

The key is to stick to a very simple allocation and stay the course. Don't change the strategy and only rebalance annually, unless it's via contributions. 

5 years is a bit short for investment, it is possible for you to be incredibly unlucky and lose over this time horizon. The chance is small, but it's possible. As long as you realize this and are ok with it, this balanced fund is a good approach. And whatever happens you will beat 95 percent of balanced funds because your charges would be much lower.

If you are not comfortable then get GICs. You won't lose but you won't gain either. The interest will be offset by inflation.


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## Slim1950 (Apr 25, 2013)

I am ready to jump in, so this is my last ask.. is there any sense in trying to time the purchase? Mordko, I think I will go for the balanced fund, as you suggested.


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## mordko (Jan 23, 2016)

Slim1950 said:


> I am ready to jump in, so this is my last ask.. is there any sense in trying to time the purchase? Mordko, I think I will go for the balanced fund, as you suggested.


No. Timing is a no-no if using a Couch Potato strategy. It's a sure way to reduce returns. You may however want to avoid investing all your cash at once. Some recommend splitting it into two or three portions and investing at monthly intervals. This averages your cost basis and avoids scenario where the fund suffers if 100 percent of the purchase is made a day before a major fall. On average it is better to just take the plunge, but investing in stages does cut down the risk a bit.


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## Slim1950 (Apr 25, 2013)

mordko said:


> No. Timing is a no-no if using a Couch Potato strategy. It's a sure way to reduce returns. You may however want to avoid investing all your cash at once. Some recommend splitting it into two or three portions and investing at monthly intervals. This averages your cost basis and avoids scenario where the fund suffers if 100 percent of the purchase is made a day before a major fall. On average it is better to just take the plunge, but investing in stages does cut down the risk a bit.


I took the plunge. Vanguard, balanced.


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## mordko (Jan 23, 2016)

Now leave it alone for a year. Then rebalance back to the original allocations. Good luck.


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## lonewolf (Jun 12, 2012)

A robo advisor (auto rebalance) might be a good fit for slim


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## Slim1950 (Apr 25, 2013)

lonewolf said:


> A robo advisor (auto rebalance) might be a good fit for slim


Please enlighten me. How does a robo-advisor work?


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## mordko (Jan 23, 2016)

Slim1950 said:


> Please enlighten me. How does a robo-advisor work?


Like portfolio IQ in Questrade. Software decides how you allocate assets. They are more expensive than the Couch Potato but cheaper than human advisors. The other advantage is that they take human emotion out of the equation.

Given that you "took the plunge", this shouldn't concern you too much.


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## My Own Advisor (Sep 24, 2012)

MER TER and more.
http://www.myownadvisor.ca/mer-ter-money-management-fees-fwiw/


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