With more and more myths floating around about DSCs, supporters of those funds are now fighting back against industry players wanting to kill them off.
Advisors who use DSCs are now standing up against some of the myths swirling around an industry increasingly bearish on those funds.
Under particular scrutiny are claims that advisors can’t move clients between differing DSC funds without the client incurring a penalty.
“All of the major fund companies allow transfers between funds of the family,” one reader wrote in a response to a recent WealthProfessional.ca story. “DSC to DSC without incurring any DSC charges and without starting a new DSC schedule. This is a totally unfounded concern in most cases.”
Clients can incur unnecessary fees if an advisor moves investments from one DSC fund to another before the DSC schedule has matured, but aren’t restricted in moving investments from equities to cash or bond or balanced funds if market conditions dictate.
“If you are a credible and ethical advisor you would not churn a client’s investments and you would see your clients on a regular basis because, yes, markets do change,” Susan McArter wrote on the website. “In the IIROC world every time a change is made a fee is paid by the investor. This does not happen in my world. All the nonsense concerning fees and DSCs that is not accurate needs to stop.”
In fact, not only is the claim you can’t transfer DSCs bunk, but you can actually remove a percentage per month.
“Not only can you transfer DSC to DSC of any fund we carry but you can also take out 1% per month,” writes respected industry veteran Donald Demchuk on WP. “That is $2,400 on a modest $240,000 retirement portfolio, if the need arose.”