Trailer fees

Rather, the key question should be: “Are ‘fee-for-service’ arrangements incorporated in the evaluation of the rate of return calculation in some manner?” That’s because there’s a cost to deliver any product, whether it be a trailer fee or a fee-for-service arrangement.

The next question should be: “Does a fee-for-service arrangement have a more negative impact on returns at various investment levels — say, at less than $250,000 in investible assets, for example — than a trailer fee?” I am confident this is a certainty at some dollar value, and that amount may include a majority of Canadian investors, on average.

My position is that removal of trailer fees will hurt those most in need of investment advice. The top 10%-15 % of clients — especially those with more than $500,000 invested — already are either in a fee-for-service arrangement or receiving a zero front load investment.

The commissions structure is fighting a zero-gain battle; it is already coming into balance. Regulators will create a scorched Earth policy with the removal of trailer fees.

Mike Williams
President
Conservest Inc.
Ajax, Ont.

Re: CSA report finds fund commissions have an impact on sales, returns, by James Langton, investmentexecutive.com, October 22, 2015.

This study fails to acknowledge a few important points:

1. You should never buy managed investments based entirely on past performance.
2. Studies show that investors who deal with an advisor do better and end up with a higher net worth in the long run.
3. Trailers pay for ongoing personal service and advice after an investment is made. The investing public that takes advantage of the advice is far better off because of it.

James A. Robertson
Senior Financial Consultant
Investors Group Financial Services Inc.
Calgary