Investors Group Inc. of Winnipeg is introducing a broad set of changes to its mutual fund lineup including fee reductions and enhancements to some products, particularly in the high net worth category.
“We have decided to reposition our pricing on a number of funds so that we are more middle of the pack than slightly on the high side,” Murray Taylor, president and CEO of Investors Group said in a conference call Friday.
Subject to regulatory approval, starting when fund prospectuses are renewed in early July, fees will be reduced on about two-thirds of the managed assets held at Investors Group. The fee decreases will range from five basis points to 40 basis points and will affect funds across the spectrum, including flagship funds. Some funds, including a few in the international sector, are already competitive with the pack, and will not change, Taylor said.
Low interest rates and volatile equity markets have lead to greater consciousness of fees on the part of clients, and the company is taking action to make its products more competitive in the marketplace. Like all fund companies, Investors Group, is also facing competition from fast-growing exchange-traded funds that promote lower management fees. Lower mutual fund management fees will attract lower GST and HST, resulting in greater reductions to management expense ratios.
“There is no question that price is one of the many reasons why people come or leave, or don’t come to a fund company,” Taylor said. “It is not the dominant issue, but it is an issue on the margin. It’s easy to say a change of this degree will create opportunities with clients we may not have had before.”
The changes are part of a strategy themed “expanding our advantage,” Taylor said. They will include “refinements to consultant compensation” although Taylor stressed that any changes in trailer fees would be only “a small offset to the change in management fees.”
He said enhanced ability to attract new clients under the new pricing regime, as well as to increase sales and stabilize or reduce redemptions, will combine to more than offset any reductions in fees.
As part of the plan, Investors Group will also be introducing new products and pricing designed to appeal to clients with more than $500,000 of household assets held in their accounts. A new series of funds with lower management fees will be available for large accounts, and they will be available for sale to new clients as well as for transfer for existing clients.
“There will be more options for our advisors to use with larger clients,” Taylor said. “We will be able to penetrate the high net worth market in a more effective way.”
He expects the changes to increase Investors Group’s ability to attract new consultants and decrease the number who leave. Growth in the consultant network and greater sales per advisor as they move into the marketplace armed with more competitive pricing and better products and services for wealthy clients will lead to progressively more growth in assets at Investors Group, he said. Currently, the company has 4,500 consultants across Canada.