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GIC Wealth Management Broker Rates
July 6, 2022
7:20 am
Norman1
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savemoresaveoften said

To me that makes no sense when the person is "suffering" at work to earn $$, and then so easily "give it away" just for being lazy or not interested... sigh

If one is not interested in addressing one's cluelessness about investing, then the 2%/year in fees is nothing compared to the damage clueless investment decisions can have.

S&P 500 total return (around 13% per annum last 10 years) less 2% per year is still respectable.

July 6, 2022
9:04 am
Bill
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True, but not only cluelessness, disinterest also was mentioned, and that's a big one. I know a lot about investing but currently, for example, outdoor sports/activities, creating music with friends and family, and puttering/maintaining my stuff is higher on my daily to-do list than time spent on my money, just don't get down that low all the time. So for me it's worth it to pay for the time freed up. And I notice the vast majority of folks I know similarly just get busy with life stuff, so I've been happy to invest in the big banks who profit specifically from that apparently large group of us.

July 6, 2022
12:44 pm
Norman1
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As well, it may not that interesting saving the 2%/year management fees with $5,000. Just $100/year.

My experience is that lots of people are not even interested in saving the $10/month fee on their chequing account.

July 6, 2022
1:34 pm
savemoresaveoften
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Norman1 said

savemoresaveoften said

To me that makes no sense when the person is "suffering" at work to earn $$, and then so easily "give it away" just for being lazy or not interested... sigh

S&P 500 total return (around 13% per annum last 10 years) less 2% per year is still respectable.  

13% - ~10bps ETF fee = 12.9% vs 11%. That extra 1.9% each year compounded = an extra 23% over 10 years.

I maintain advisor fees are NOT worth it no matter how one looks at it.

Hedge fund / private invesment fees that gives you access to asset classes that are inaccessible to a normal Joe are may be worth something.

July 9, 2022
7:45 pm
RetirEd
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savemoresaveoften: Financial planner fees might be worth it IF they could be trusted not to put their own interests ahead of the clients'.

Norman1 and Loonie: Sadly, Phillips, Hager, North (PHN) isn't taking new clients any more, as far as I can tell. I heard about them and was about to buy one of their more enduringly productive products when Royal Bank bought them out - so I held off to see what they'd do with PHN.

After about a year - and I already had my document package studied and my forms filled out - RBC closed all the PHN products to new customers, letting their existing ones continue to do business. At the time I think their minimum investment was only $3K.

PHN was an quiet institution with excellent advisors for the semi-independent investor who sometimes wanted a bit of assistance. They lived by word of mouth among the genteel rich for years, and they still outperform RBC stuff by up to double! Their fees on many items are often over 1% less.

Anyone here a PHN client?

RetirEd

July 9, 2022
7:59 pm
Loonie
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That's a shame. Sounds like RBC wants to phase PH&N out. I wonder why. Maybe they make more money off RBC funds. Another case of buying out the competition so you can wreck it. They probably bought it for the customer list.

I never held any of their funds but often considered it. They were particularly strong for bond funds.

July 9, 2022
10:22 pm
Norman1
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That doesn't sound like Phillips, Hager & North.

I'm a PH&N client. I never heard that all the PH&N funds are now closed to new investors. As well, their minimum account size was never as low as $3,000. It was $25,000. They experimented with a $10,000 minimum for RRSP accounts. But, I don't think it was a successful experiment.

RBC bought PH&N in 2008. That's fourteen years ago. Not sure how I could have missed such a major development for so long!

July 10, 2022
5:30 am
savemoresaveoften
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RetirEd said
savemoresaveoften: Financial planner fees might be worth it IF they could be trusted not to put their own interests ahead of the clients'.

2% fee a year is just a lot to pay year after year, even if they act in your best interest. It is 2% a year on total asset, on both good AND bad years ! Even worse when they put your money into mutual funds, which you pay another 2% away each year to the fund manager !

On the other hand, a hedge fund will charge you 1-2% plus performance fee (10-20% on return), but they dont get paid the performance fee unless they meet the high water mark. So their incentive is aligned with the investor, and more importantly, the hedge fund manager is deep in it too in terms of his/her own money.

July 10, 2022
9:11 am
Norman1
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savemoresaveoften said

2% fee a year is just a lot to pay year after year, even if they act in your best interest. It is 2% a year on total asset, on both good AND bad years ! Even worse when they put your money into mutual funds, which you pay another 2% away each year to the fund manager !

That's not the case. The 2% is inclusive.

If money is placed in mutual funds, then one pays whatever the series A units are charged by the fund manager (around 2%). The planner collects the 1% trailer carved out of what the fund manager is paid.

There's no misalignment in interests. The 2% charged on the current market value of the assets and not the original cost. If the planner screws up and the portfolio loses 25%, then the 2% management fee also drops by 25%.

As I wrote before, 2% per year is not a lot in contrast to the damage that can be done by incompetent do-it-yourself management. People who have lost over 85% of their money since the 2000 tech bubble now have a 23-year record of around -8% per annum.

Don't believe those Questrade commercials. I think they are garbage. It doesn't always cost 2% per year. The 10-year performance of the PH&N Canadian Equity Fund series D units I own trail its TSX 300 Capped Total Return Index benchmark by 0.4% per annum. 0.4% per annum is the cost of the active management and of the personal advice through PH&N Investment Services.

July 10, 2022
9:31 am
Norman1
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RetirEd said

…After about a year - and I already had my document package studied and my forms filled out - RBC closed all the PHN products to new customers, letting their existing ones continue to do business.…

I just checked and found no evidence of that.

Scotia iTRADE recognizes and accepts orders for, for example, PH&N Canadian Equity Fund Series F units (RBF5130). Latest fund information sheet is dated June 27, 2022.

No indication that the fund wouldn't be available through PH&N's own fund dealer, PH&N Investment Services.

July 10, 2022
9:53 am
Bill
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RBC Wealth Management site shows about 30 PH&N funds available. I checked my TD Dir Inv accounts and I could purchase from 13 of them, probably similar for any big bank discount broker. Seem pretty easy to get still.

July 10, 2022
10:26 am
Loonie
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Maybe the change is that you can't buy them directly at a branch, so you have to set up brokerage account? I'm pretty sure you used to be able to buy them directly from PH&N.

July 10, 2022
11:00 am
HermanH
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savemoresaveoften said

RetirEd said
savemoresaveoften: Financial planner fees might be worth it IF they could be trusted not to put their own interests ahead of the clients'.

On the other hand, a hedge fund will charge you 1-2% plus performance fee (10-20% on return), but they dont get paid the performance fee unless they meet the high water mark. So their incentive is aligned with the investor, and more importantly, the hedge fund manager is deep in it too in terms of his/her own money.  

If a hedge fund must meet a certain mark in order to collect performance fees, wouldn't that incentivize them to take additional (possibly unreasonable) risk (especially if they are far from the mark and need great leaps to cover the gap)?

July 10, 2022
11:33 am
savemoresaveoften
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HermanH said

If a hedge fund must meet a certain mark in order to collect performance fees, wouldn't that incentivize them to take additional (possibly unreasonable) risk (especially if they are far from the mark and need great leaps to cover the gap)?  

Well hedge funds are usually leveraged to begin with, and most will have it in writing in terms of max leverage allowed etc. Having said that, nothing is stopping a hedge fund manager from getting carried away and max the risk, whether to try to extend a winning streak, or to climb out of a hole. But at least the fund manager's own money is taking the risk alongside the investors.

Re Norman's comment about the 2% is all-in including mutual funds, so am I correct to say if a mutual fund MER is 2%, the advisor get 0% ? Since the MER applies for every single investor, whether its thru a advisor or not. And if that is true, a "smart" advisor will only pick funds <2%. I never use an advisor, so not familiar how that break down works.

July 10, 2022
12:50 pm
Bill
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MERs include all the various costs, fees, salaries, etc involved in the fund. If the MER excludes anyone from getting paid I'd assume that person, "advisor" or otherwise, wouldn't bother spending time on the fund. For example, RBC Direct Investing doesn't carry the Mawer family of funds because RBC doesn't think it's worth their while, TD Direct Investing does as likely for reasons of its own TD thinks it's still worthwhile.

If avoiding any fees is paramount in your investing decisions I'd suggest GICs as they carry the impression of fee-free.

July 10, 2022
2:29 pm
Norman1
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If the equity mutual fund MER is 2%, the advisor is likely receiving 1%. No advisor receives 2% per year for selling equity mutual funds. That's only justified if the advisor is both selecting the individual stocks in the fund and dealing with the investors.

No, a 2% MER does not apply to all the investors of a mutual fund. It would apply to the series A investors with advisors paid by a 1% trailer from the fund manager. Series D investors in the fund, with discount brokers that used to be paid by a ¼% trailer, would be charged an MER of 1¼%. Series F investors in the fund, who pay their advisor directly, would be charged an MER of 1%.

Roboadvisors seem to charge differently. When a roboadvisor advertises as charging 0.4% per year, the client is actually paying more than 0.4%. The 0.4% is only what the roboadvisor charges, not including the underlying MER of the ETF's.

An unscrupulous advisor can rip clients off by charging the client 2% per year directly and also collect a 1% per year trailer by placing the money in series A units of a fund instead of series F units.

July 10, 2022
3:23 pm
savemoresaveoften
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I would bet 100% of those who hire a financial advisor AND allow the advisor to invest in mutual fund would have no clue re the existence of different series of the same mutual fund.
After all those are people who are either too lazy to learn or don’t care to learn…They won’t know the details….

July 10, 2022
4:39 pm
COIN
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"Roboadvisors seem to charge differently. When a roboadvisor advertises as charging 0.4% per year, the client is actually paying more than 0.4%. The 0.4% is only what the roboadvisor charges, not including the underlying MER of the ETF's.

An unscrupulous advisor can rip clients off by charging the client 2% per year directly and also collect a 1% per year trailer by placing the money in series A units of a fund instead of series F units."

Just buy the Index (KISS principle).

July 10, 2022
5:56 pm
Loonie
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I believe that trailer fees have to be disclosed under recent regulatory changes, don't they?

July 14, 2022
6:42 am
gicjunkie
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Today's new rates up again:

1 year 4.32%*
18 month 4.50%***
2 year 4.60%*
30 month 4.70%***
3 year 4.90%*
4 year 5.00%*
5 year 5.10%**

* Minimum Investment $25,000
** Minimum Investment $50,000
*** Minimum Investment $75,000

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