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Wealth Professional | 22 Sep 2014, 11:54 AM Agree 0
CSA awards two contracts to conduct research on mutual fund fees.
  • David McDonald | 22 Sep 2014, 07:04 PM Agree 0
    The short comment for Professor Cumming with regard to determining if fee-based advice yields better, or worse, results than commission based advice is to remember: Past perfornamce does not guarantee future performance.
    I admit that, in late 2007, if I had been able to
    transfer my 135 clients - simultaneously - into Money Market Funds and kept them there until March 9, 2009 they would have more than doubled their money. I, of course would have gone out of business since a) MMF paid, at best, 1/10 of the trailer fees of equity funds and 1/6 for some income funds and ,at worsdt, 0%. Since I live off trailer fees, I charge my clients 0% Front End Load (and, no, I did not sell RC or IA Clarington funds which paid 1.15 and 1.25% trailers), I require the status quo to continue. I only have -after 19 years in the business as an independent - 4 clients with > than $250,000 invested with me. I serve quite a few clients who regularly contribute, $20, $40, $50 or $100 monthly to RESPs or RRSPs. How could I possibly bill them 1% annual fees (my income would increase considerably as I have clients with High Interest Savings Accounts and GICs as well as some segregated funds - about 12.5% of my AUM) and when would I bill them?
    Fees are only deductible for non-registered accounts and are non-starters foor people without earned income. how would the "little" people hope to enter the game?
    Can I charge some clients fees and some clients imbedded fees (trailers) as an MFDA person in Alberta?
    Turned out to be longer than I thought but I could go on at great length.
  • ADvisor | 23 Sep 2014, 01:00 AM Agree 0
    David, I think the point is, you have a fiduciary duty to your clients which you ignored to make sure you had a pay chq. If you protected the clients assets and not your paychque...would that not drive more clients...it sure has for me. I'm sorry but there is no place for DSC, and disclosure is necessary.
  • Frank | 23 Sep 2014, 08:38 PM Agree 0
    Mr. McDonald, I empathize with your comment. However, I wish to direct my comments to Mr./Mdm ADvisor:

    Mr. McDonald utilizes the FEL structure at zero percent. There is no mention of DSC structure in his remarks. This is very generous to his clients and it also places him at risk of having his book disappear on him.

    ADvisor, your comments are irrelevant and flippant to furthering this topic. You seem to indicate that you are willing to work for nothing during market upheaval in the name of Fiduciary Duty and that this act will drive clients to you. By some magical potion you insinuate that full transparency and the removal of DSC fees will help in the name of Fiduciary Duty. Nonsense.

    To paraphrase your statement: "..If the “Fund Company” protected the clients' assets and not “its” paycheque.......would that not drive more clients......."

    So, before you start with Fiduciary Duty, let's start at the top. Are the big boys willing to work for nothing as you suggest doing yourself?

    If the fund manufacturers wanted transparency, why are they excluded from detailing their fees in client statements next year whereas the MGA’s and advisors will have to. Their cut of the pie is larger and will be hidden from view.

    Did the manufacturers steer client monies away from harm’s way in 2008? No. They kept to the scope of their prospectus knowing full well what was coming. Here lies the flaw. If they were required or allowed to protect client assets, we would not be discussing this matter of fiduciary duty because it is misplaced onto the advisor. Who in the market has the resources, the capital and the vast intelligence to make a call of 2008? I argue the fund manufacturers and their managers are best equipped yet they are not inclined nor care.
    News Flash: They don’t care to know because it’s not their problem. Manufactures hide behind their prospectus and off-load FD onto the advisor. So, buyer beware! To suggest the removal of DSC fees and more transparency improves Fiduciary Duty is horse water. Skip mutual funds altogether and buy a GIC’s because fund companies only care about making money and not protecting yours.

    The fact is Fund Companies only have a fiduciary duty to their shareholders and their wallets. Profit is the agenda, not protecting clients’ money. How can you hold out that Fiduciary Duty, DSC elimination and Transparency can achieve anything when the entire Mutual Fund Structure is flawed at the top? All it will do is wipe out the small advisors with small clients. Advisors will leave, as they have in England, and the clients will have to fend for themselves. Are you coming to their rescue Knight is shining armour? Are you going to work for nothing, or next to nothing because the client only has a $10,000 account?

    Spare me, please. You have no concept of what’s coming or who is driving this twisted agenda.

    ADvisor, if you want fiduciary duty, put it on the shoulders of the fund managers and manufacturers. Force them to protect assets like a pension manager does. Force them to disclose their fees with the rest of us. Straighten out the foundation of this industry first.

    Only then will you have fiduciary duty, transparency and protected capital versus stunned decimated investors wondering how anyone can win the Lipper Prize Award in 2008 and 2009.

    From a sound foundation, the advisor can do the work she is meant to do and well. To this valuable work, compensation is owed. As it stands, the advisor is holding the bag while the manufacturers are making off like bandits. In the interim, academic masturbation presides and comments like yours are as fruitless.
  • David | 24 Sep 2014, 01:15 PM Agree 0
    To Frank. I agree with all you said in your comments to the "Advisor". I am not sure where the reference to DSC came from: perhaps he didn't read my comments properly.
    I am happy to say that not one of my clients has been "poached". I think that I give very good service to my clients: maybe I am naive.
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