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Wealth Professional | 22 Jul 2016, 08:15 AM Agree 0
Randy Cass of Nest Wealth reveals limitations of CRM2 and why Canadian investors are paying far too much in mutual fund fees
  • Dan J | 22 Jul 2016, 12:20 PM Agree 0
    Who believes $323,654.40 in fees for the average Canadian household over a lifetime is accurate?

    If those fees are 3% of assets, that means the average Canadian household invests $10,788,480 in mutual funds over a lifetime.

    What sample was used to represent the average Canadian household?

  • Steve | 22 Jul 2016, 01:47 PM Agree 0
    Its not a one time fee of 3%. Mgmt fees are charged daily, weekly or monthly on funds...never stops.

    $323K is probably a very low estimate. Likely low because "Average Cdn Households" includes a large percentage of households with low income and hence very low savings.

    Using an average management fee of 2% per year over 40 years on an average balance of $400K you get to about $320K. A $400K average balance would mean both spouses saving from the age of 25 to 65 a combined $800K or $400K each. That is only $10K savings per year each on average, assuming no growth in the account and income only covering the fees. Realistically, there will be income and growth so a lower savings of san average of $5K per person per year for 40 years will easily get you to $323K in fees.

    I think an average client is not a low income household and they would have both spouses saving about $800K each over 40 years, the fees the average client household will pay are around $700K combined.
  • Steve | 22 Jul 2016, 02:04 PM Agree 0
    To add...using Robo-advisors like JustWealth or Wealthbar reduce the fee to about 0.70% per year (0.4% for the account and 0.3% MER in the ETFs they invest in). The average household retires with at least $250K in fee savings. Plus they get professional and unbiased financial planning, unbiased insurance planning, estate planning for free. Makes a lot of sense for portfolios that are less than $1,000,000.
  • Bob White, CLU | 25 Jul 2016, 06:51 PM Agree 0
    Good call Dan J.

    It is interesting in the fabrication that is taking place to think that ETF's are better than managed money. I di not see anything about RISK of the leveraging that often takes place in ETF's , and if everything is in EFT's then there are no investors investing money, so there can be no ETF' if there is no managed money.

    Since robots do not live in the real world, then there is no advise, Canadian's will not pay for advice, so that means the robo advisor will be a crap shoot as to if Mom and Dad Canadian will pay more or less tax on the growth of their investments and when to sell what assets, and how to estate plan with those assets.

    Oh, yes it is the BIG BROTHER syndrome,

    Be careful and advise your clients as to what get communicated to them and what they believe.

    The bottom line is what the clients get to keep and the value they accumulate.

    My minimum dealer fee I can charge is 1%, and that is what I charge and is paid to the dealer, not what I get paid, so clarify the language.

    My wealthiest clients, and I do not have a bunch of high net worth, pay about $20,000 per year. And they have made it very clear they have no problem with that, because of the value added in the planning process.

    They and their siblings havesignificanly more assets because of the work I have done for their parents. They have had income for 5 years at a decent amount and paid no tax, due to the planning and income structure.

    Let see RObo advisor learn about the family, into 4 generations and the planning and gifting and corporate decision making.

    The real world for Robo is for people who think they can look after their own funds or think the Robo advisor will make them rich with no worries and no hassles. I say good luck, you we what you pay for.

    Bob White, CLU
    member of Advocis since 1976
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