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Roughly half of Canadian investors aren't even aware they are paying fees. The Canadian Securities Administrators could easily change that, says this investor advocate.
In the above scenario, the InvestRight calculator compares the total return on a $100,000, 20-year investment earning an annual average of 5% before fees. Assuming a 0.5% annual fee, the total end value to the investor is $252,023 ($100,000 in return of principal and a $152,023 net gain). Assuming a 2% annual fee, the total end value to the investor is $186,031 ($100,000 in return of principal and a $86,031 net gain). This analysis excludes any consideration of tax and inflation.
The study is in and the results are clear. Investors need fee transparency and the CSA has the power to make it happen. Mr. Morisset, Canadian investors deserve nothing less.
Larry Bates is the author of Beat the Bank: The Canadian Guide to Simply Successful Investing.
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Great article Larry.
In my experience very few people are aware of the fees they are paying and even fewer understand how the effects of compounding work against them in terms of fees.
warm regards,
Mike Bayer, CFP, CIM, FCSI
Very good point, transparency must be imposed to all financial institutions and the client must be posted that his funds eventually cost him 50% of his assets, after a number of years.
In the case of discount brokers, there is also a large anomaly for mutual funds holders, because they pay continuously trailing commissions although they get zero service.
At least on this subject, 2 major class actions are in the process of being certified in Court to correct unfair treatment (Siskinds and Koskie Minsky firms). The amounts involved over the last 40 years are extremely substancial, ever if they represent only a small part of MERs.