INVESTMENT FEES & CRM2
I’m a huge fan of transparency…..always good to know all pertinent information upfront to make an informed decision. 😉
No one likes being kept in the dark (although I’m a huge fan of dim lighting and its effect on the aging process)!
And now you won’t be kept in the dark when it comes to the fees you are paying in your investment account.
Here’s the deal: As of next year, July 2016, every statement you receive will disclose all your management investment fees, administration costs, commissions paid front and center on all statements. In the industry we are calling it CRM2 (Client Relationship Model Phase 2 amendments to NI 21-103) and the Canadian Securities Administrators (CSA) to enforce it among all investment dealers across Canada.
This most likely includes you, considering 4.6 Million households as of 2010 (or over 10 Million Canadians) hold mutual funds or equities in one form or another.
Trust me when I say, this is a good thing for you, the client. Transparency is always a good thing.
However, you may be surprised by the ‘sticker shock’ of this – warning: investment fees listed on your statements may appear higher than my 7-year-old on laughing gas at the dentist this week.
What you need to know is that the investment fees are not changing. However, the way in which they are presented to you is. It may appear that fees have increased or are changing simply changing because they will be bold and in your face, whereas before they were simply dealt with behind the scenes, talked about once and for the most part forgotten about.
It’s also important to note that investment fees have always been disclosed in the prospectus given to you when you purchased the mutual funds or other investments originally.
Also, it’s essential to know that your advisor doesn’t keep all that money. The pie gets split by many different hands; similar to realtor fees.
I think the more I live, I learn first hand; you always get what you pay for. Same goes for the value of investment advice. Even if it ‘feels’ you aren’t getting any value, there is lots going on everyday behind the scenes to bring you your investment. And at the end of the day, there’s no free lunch when it comes to our capital markets.
In the end, you may be shocked to find out what’s behind the sheets (…of paper), just be glad you now get all information upfront and can go forward and make informed decisions.