Q: I met with my adviser and asked about the fee she charges to oversee my mutual fund account holdings. I was told she’s paid by the MER and that was it. I believe I should be asking more questions but would like to do so without sounding like I’m on the defence.
A: Don’t worry about sounding defensive. You wouldn’t have the same concern with your barber, but we can get weird with advisers. You’re the client after all—you get to ask whatever you want. Besides, great advisers aren’t fussed by these questions, especially in this era of fee transparency. Here are 4 key financial adviser questions to ask: 1) What do fees add up to in dollar terms each year? For example, if you have a $200,000 portfolio and the MER is 2.5%, you’re paying about $5,000. Are you getting value for that price? 2) How are your funds performing versus their benchmark index? Fees are an issue because they eat into your performance. 3) Is there any way to bring your fees down—if you’re in a commission structure, perhaps a move to fee-based would be cheaper. 4) How can you get the most value for your money? I love advisers who communicate well, think holistically about your life, provide advice rather than just sell products, and hold you accountable to achieve your goals. Those benefits come for a fee, but the fee might well be worth it.
Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal finance question? Write to us at firstname.lastname@example.org