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Wealth Professional | 16 Jun 2015, 09:15 AM Agree 0
The CSA released the first of two reports commissioned on mutual fund fees last Thursday and advisor reaction has so far been less than enthusiastic.
  • Kevin O'Brien | 16 Jun 2015, 10:44 AM Agree 0
    I agree the cost of doing business has been left out of the discussion. Especially when you consider that back in the beginning of this industry the application the trade tickets and the physical trades were executed outside of the advisor's office. Today all the paper, Administration and cost have been downloaded to the advisor with out regard to cost. I can remember when an account application was 3 pages long and had 4 carbon copies. Today it is in excess of 16 pages with a further 20 pages of compliance paperwork. The solution? Perhaps advisor's should be charging the mutual fund company's and ETF providers a fee for office supplies and administration?
  • Terry Lynn Adamson | 16 Jun 2015, 11:15 AM Agree 0
    I was discouraged as well by the report. I am a Financial Planner first and foremost for my clients. Compensation is not how I choose the funds I use, and I always put the needs of my clients ahead of my own, as most of my colleagues do. But we also have costs to run a business, and need to be paid.
    The average Canadian does not want to pay out of pocket for a proper financial plan. Yet it has been proven many times that clients with advice outperform those who do not have good advice. It isn't about which funds outperformed - that doesn't matter if the client doesn't stay invested. The study should compare the actual returns in the client accounts with an advisor versus returns in "do it yourself" accounts at online brokerages, not the fund itself. I'm positive the client accounts with an advisor outperform, and more of those clients actually achieve their goals.
    Of course funds with embedded compensation underperform their no fee version - what a ridiculous conclusion. Don't need a study for that! The client still has to pay for the advice and service. My confidence that the regulators understand this business and understand what Canadians need dwindles more everyday.
  • Ken kivenko | 16 Jun 2015, 04:12 PM Agree 0
    We have had our team review the report on detail.It will be posted on tonight.A recent FPSC return projection for the decade ahead came up about 5% so after fees , taxes and inflation , the advice industry will have to be very,very efficient.
  • Will Ashworth | 17 Jun 2015, 04:46 PM Agree 0
    5% after fees, taxes and inflation seems pretty good to me.
    Are you speaking about 60/40 equities/fixed income portfolios or 100% equities?
  • Robert Roby | 17 Jun 2015, 11:58 PM Agree 0
    How about addressing the amount of money mutual fund mangers make. We could make a solid case that Many do not provide any value or alpha. We are the ones that are on the frontlines providing the real value so let the ivory tower types tackle them for a change.
  • Graham | 18 Jun 2015, 11:27 AM Agree 0
    This report is flawed in so many ways I don't know where to begin. What really surprised me was I didn't even know that there were funds out there that paid 1.25% trailer! Anyway, more of the same for this industry: a few bad apples ruins it for everyone and new regulation does nothing to stop it. People who want to rip other people off will always find a way. I guess next step will be to have compliance sit on my lap while I work.
  • SL | 18 Jun 2015, 12:54 PM Agree 0
    I am in the wrong business. How much did Brondesbury get paid to come to the conclusion that "distribution costs raise expenses and reduce returns".
    That's like saying " including an engine and transmission in the vehicle makes it cost more"
    When I read that report I got the crystal clear message that Brondesbury are trying very hard to take the 'commissions are bad' approach, but could not find any solid supporting evidence. As a result they came up with these wishy-washy, generalized and ambiguous conclusions.
  • Bob White,CLU | 25 Jun 2015, 01:53 PM Agree 0
    I have not read the report, but have spoke to those who have, and the comments above. Actually I do not need to read the report, as it was obvious it would be a pile of nonsense.

    There is no free lunch! Our cost to provide service to clients, and the list of what we do would easily the up 3 pages, and there is a cost of advice and doing business. Like the comment would you like the motor and transmission.

    If Brondesbury, need bypass surgery he could go to a new medical student at no cost. so the student could practice on him, but, he does not have to pay for the Cardiac surgeon and team, because we pay for health care in Canada, not much, but it is the fee, the commission for the bigger bill.

    It is sad to say, but the focus is so narrow, they are looking a weed in the forrest and can not see the trees are still growing.

    Bob White, CLU

    serving clients since 1976
    both commissions and fees!

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