This episode was brought to you by Transcend. To learn more about investing, fees, and anything in between, visit Transcend.ca.
This episode is all about fees because even though paying fees on investments may seem like a little thing…it’s not. As my guest Chris Ambridge, president of Transcend Private Client, mentions in the episode, surprisingly 2/3 of Canadians don’t know their paying fees.
Reality-check people, you are paying fees! Everyone pays fees on investments. How else do you think banks and wealth management firms make money?
But even though we are paying fees, and there really isn’t any way around that, it’s important to know how much you’re paying. That’s why we also discussed CRM2 and how this will help clients like us know exactly how much, in dollars, we are paying.
It’s great to see a percentage, but I think seeing the dollar amount will really help us all know whether we’re paying too much for what we’re getting.
Hey, I’m fine with paying high fees, if I’m getting a high return. But that’s usually not the case. That’s why it’s important to look over your investments every once in a while to check if you’re really getting any bang for your buck. If you’re paying 2.5% on a mutual fund and only seeing a 4% return, it might be time to look into something else (perhaps Index Funds and/or ETFs?).
More Helpful Info About CRM2
We talked quite a bit about the Client Relationship Model – Phase 2 (CRM2), but I wanted to make sure you really understood what all this is all about. CRM2 came into effect July 15, 2013, and has been phased in these past 3 years. Essentially, what these amendments mean is that beginning July 15, 2016, registered financial firms will need to:
“Provide an annual report on charges and other compensation that shows, in dollars, what the dealer or adviser was paid for the products and services it provided – Ontario Securities Commission”
Basically, these amendments are a way to evoke more clarity when it comes to fees, instead of making it hard for clients to truly understand how much they’re paying for their investments.
If you want to go further down the rabbit hole, here are some good websites to check out that go more in-depth about CRM2.
- Cost disclosure, performance reporting and client statements
- 7 myths about CRM2
- Performance Reporting & Cost Disclosure
Learn More About Transcend’s Pay-for-Performance Service
- New pay-for-performance funds to offer investors something different
- Transcend offers performance-based fee structure