Admin Fees for Mutual Funds Financial Services | GTAMotorcycle.com

Admin Fees for Mutual Funds Financial Services

sburns

sburns

Well-known member
Hey gang

So I've been caught off guard on one of the Financial companies I deal with for handling some mutual funds. They introduced an admin fee ($50) per year. I've been with them for 10+ years and they had no fee's (I'm sure they are skimming off the top to making their money). They state this fee will help prevent charging other fee's such as mailing statements, dealer fees... etc etc.

I don't fee good about this, just opens the door for more fees and padding their bottom line.
Is this normal or become the new normal?

Should I shop around and move my money? Would it be worth it.
 
Yes, definitely shop around for the lowest MER, admin fees, etc.

There are a few ways MF companies make money: through front-end loaded fees (commission charged when you buy shares of the fund), back-end loaded (commission charged when you sell shares), constant-load (annual charge of % of your portfolio), annual admin fees. Some of this is baked into the Management Expense Ratio (MER), some of them are tacked on after.

Sometimes you really have to dig deep to find out exactly what all the fees and charges are.

IMO, your best bet to reduce expenses is to get a Self-Directed Account, and invest in exchange-traded funds (ETFs) which track various stock market exchanges. Since there is minimal work in picking which stocks go into these funds, the expense ratio should be pretty close to 0%. Also, for the Self-Direct accounts, if you keep a minimum balance, the annual admin fee should be waived, so your cost of ownership for Mutual Funds should be very cheap.

So many people are laser-focused on returns that they forget that fees, interest and taxes will erode a lot of those gains unless you have a good handle on what your true costs are, as well as have a strategy on how to minimize those costs.
 
Lightcycle said:
Yes, definitely shop around for the lowest MER, admin fees, etc.

There are a few ways MF companies make money: through front-end loaded fees (commission charged when you buy shares of the fund), back-end loaded (commission charged when you sell shares), constant-load (annual charge of % of your portfolio), annual admin fees. Some of this is baked into the Management Expense Ratio (MER), some of them are tacked on after.

Sometimes you really have to dig deep to find out exactly what all the fees and charges are.

IMO, your best bet to reduce expenses is to get a Self-Directed Account, and invest in exchange-traded funds (ETFs) which track various stock market exchanges. Since there is minimal work in picking which stocks go into these funds, the expense ratio should be pretty close to 0%. Also, for the Self-Direct accounts, if you keep a minimum balance, the annual admin fee should be waived, so your cost of ownership for Mutual Funds should be very cheap.

So many people are laser-focused on returns that they forget that fees, interest and taxes will erode a lot of those gains unless you have a good handle on what your true costs are.
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My wifes pension from a previous employer (which we are transferring out) played many games. They had funds in their portfolio which on the surface appeared to have a low MER (relative to their other options, not low at all compared to self-directed ETF). A little more digging showed that the low MER options were funds of funds so company was making a few percent off the funds and then another percent to hold five funds in single option. Turds. Happy when we can get rid of them.
 
Lightcycle said:
Yes, definitely shop around for the lowest MER, admin fees, etc.

There are a few ways MF companies make money: through front-end loaded fees (commission charged when you buy shares of the fund), back-end loaded (commission charged when you sell shares), constant-load (annual charge of % of your portfolio), annual admin fees. Some of this is baked into the Management Expense Ratio (MER), some of them are tacked on after.

Sometimes you really have to dig deep to find out exactly what all the fees and charges are.

IMO, your best bet to reduce expenses is to get a Self-Directed Account, and invest in exchange-traded funds (ETFs) which track various stock market exchanges. Since there is minimal work in picking which stocks go into these funds, the expense ratio should be pretty close to 0%. Also, for the Self-Direct accounts, if you keep a minimum balance, the annual admin fee should be waived, so your cost of ownership for Mutual Funds should be very cheap.

So many people are laser-focused on returns that they forget that fees, interest and taxes will erode a lot of those gains unless you have a good handle on what your true costs are, as well as have a strategy on how to minimize those costs.
Click to expand...
Thanks for the info.

Reason I got caught off guard on this, I kinda ignore looking at this stuff. I thought the mail I got was statements so I put it onto a look at later pile (6 months ago). And I was also dealing with other stuff due to the Pandemic.
As you can see I'm not sure self-directed would work for me as I take no time to look at this stuff. Unless they can be set on auto-pilot then it might work. I'll look into in, and the MER etc.
 
sburns said:
Thanks for the info.

Reason I got caught off guard on this, I kinda ignore looking at this stuff. I thought the mail I got was statements so I put it onto a look at later pile (6 months ago). And I was also dealing with other stuff due to the Pandemic.
As you can see I'm not sure self-directed would work for me as I take no time to look at this stuff. Unless they can be set on auto-pilot then it might work. I'll look into in, and the MER etc.
Click to expand...
My self-directed is basically autopilot as I buy and hold. If you wanted to, you could rebalance on a schedule (say once a year) but I normally passively rebalance. If an item has grown a lot, instead of dividends being reinvested, I let them go to cash and use them to buy something else once there are enough of them. If I add new money, it goes into a sector/product that I am light in.
 
sburns said:
Reason I got caught off guard on this, I kinda ignore looking at this stuff. I thought the mail I got was statements so I put it onto a look at later pile (6 months ago). And I was also dealing with other stuff due to the Pandemic.
As you can see I'm not sure self-directed would work for me as I take no time to look at this stuff. Unless they can be set on auto-pilot then it might work. I'll look into in, and the MER etc.
Click to expand...

I don't have a lot of MFs in my Self-Direct account, but what I have is pretty hands-off. I think I may have rebalanced once in the last 15 years (right after the GFC).

GreyGhost said:
My self-directed is basically autopilot as I buy and hold. If you wanted to, you could rebalance on a schedule (say once a year) but I normally passively rebalance. If an item has grown a lot, instead of dividends being reinvested, I let them go to cash and use them to buy something else once there are enough of them. If I add new money, it goes into a sector/product that I am light in.
Click to expand...

Also to add to this, most banks have an brokerage arm and if you tie your accounts together, it's possible to have systematic withdrawals from your savings account for regular purchases of mutual fund shares.
 
Don't buy bank product (mutual funds) buy the bank (stock). Unlike you paying MERs for mutual funds the bank pays you dividends.
Think about it, banks make money from MFs. If you buy bank stock you're just moving up the food chain..
 
Well it comes down to how much is invested and how much they make for you per year.

I will gladly pay them $50 on a million invested paying say 25% or more per year.... Not so much if it is 5K and they are in the single percentages in gains (or they have losses). Where in between determines the answer.

Even many ETFs actually have fees, specially ones that track markets etc.
 
backmarkerducati said:
Well it comes down to how much is invested and how much they make for you per year.

I will gladly pay them $50 on a million invested paying say 25% or more per year.... Not so much if it is 5K and they are in the single percentages in gains (or they have losses). Where in between determines the answer.

Even many ETFs actually have fees, specially ones that track markets etc.
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The problem is the fees never die. Many are charging 2-3 %. They take that money whether the investments they pick returned 10% or -5%. Paying a huge price for a company to give pics that return less than the market average is what really burns. Buying S&P 500 ETF by definition gets you market average return and is reasonably low MER as they dont have to pick anything just rebalance when required.
 
Great summary @ Lightcycle,

A good option for “hands off” investment is Questrade (Questwealth portfolio) and others offer “Robo Investors” that set up a mix of ETF Index and other ETFs based on your risk and keep the portfolio balanced. The fees vary but are considerably cheaper than the 1.7 - 2 % charged on Mutual Funds.

Questwealth Portfolios | Questrade

Reach your goals faster with Questwealth Portfolios. Low cost ETFs. Diversified. Actively managed.
www.questrade.com www.questrade.com
 
backmarkerducati said:
Well it comes down to how much is invested and how much they make for you per year.

I will gladly pay them $50 on a million invested paying say 25% or more per year.... Not so much if it is 5K and they are in the single percentages in gains (or they have losses). Where in between determines the answer.

Even many ETFs actually have fees, specially ones that track markets etc.
Click to expand...
True, I thought about that too, but then there is this..

Well these MF's with this company lost about 4k from the last statement in 2022. (not a large account, but that loss represents about 11% of it's total value). Not sure if it's because 2022 was bad for stocks/MF's or something else. Still adding a extra fee's doesn't help win my continued business with them. The other guys I have money with didn't add new fees or can operate without them.
 
I put some money into MF through Scotiabanks investing option and after 10yrs it's made 2%...........
With the fees they're skimming it's not making any money. Since it's in a RRSP I'm unsure how to move it.
 
@ Hardwdkr13. If you have Questrade or other DIY platform you can move the funds to another RRSP account.

Bank MFs are terrible, I am down $2K on a $25 K MF purchased 2 years ago from CIBC instead of an GIC ( Non registered) and will move to my margin account at Investors edge and liquidate and reinvest.

Paid cap gains for it in 2021 and now will have cap losses in 2022 as MF report losses and gains every year on non registered accounts.

Stay clear of Mutual Funds in non registered accounts.

Though not as bad as Insurance Policy Segregated Funds. I will leave them at the insurance company as part of my legacy.

Thanks for the reminder.
 
You can set up a self-directed brokerage account within an RRSP or TFSA. If you have an RRSP in something else, you can transfer that out of that account into another RRSP account.

Arrange for a meeting with a financial advisor at the investment-banking branch of wherever you bank now. They can help you get through this.

I bailed out of mutual funds a decade or two ago. Even a stock-trading account can be (almost) hands-off, you just need to pick a decent selection of dividend-paying stocks and ETFs at the outset, park your money in them and leave it there. My TFSA is like that. I look at it once per year when it's time to invest (i.e. now). It's split up equally between 4 things that pay dividends and aren't conceivably going to go broke any time soon. Whichever one of those 4 things inside the account has the smallest balance at the beginning of the year when it's contribution time, is the one that I buy more of to eat up the previous year's dividends (which are paid in cash into the account) and this year's contribution. That's how I handle the rebalancing - this year's investment in whatever had the smallest balance probably means it's going to be something else the next year. There's no need for the investment balance to be precisely 25% in each of the four. "somewhere in the vicinity of 25%" is the target. Doing the rebalancing as part of a single once-per-year transaction and only to one of the four things, means the transaction expenses are insignificant.
 
Hardwrkr13 said:
I put some money into MF through Scotiabanks investing option and after 10yrs it's made 2%...........
With the fees they're skimming it's not making any money. Since it's in a RRSP I'm unsure how to move it.
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When I wanted money out of bank MF (we've all been there), they wanted $100 to close the account. I asked what happened if I defunded it but left it open. No charge. I went with option two. Idiots.
 
Mutual funds aren't always a bad thing. TD e-Series funds for example have a very low MER and are a decent product. The problem is that it's not in the banks interest to sell you funds with low MERs and they don't make it easy to buy them.
 
Banks and investment houses always win in the sense that they charge fees whether your account is up or down.

Saying that your account is down 11% and this is an indicator that MF's are not good makes no sense. In 2022 the market dropped in March and has not recovered. Virtually all investments have been impacted and may rebound in 2023 or 2024, offsetting the 2022 loss.

Bank MF are not portable. If you want to change financial institutions you, in practical terms, cannot have the TD bank managing your CIBC MF. If the account is registered then you transfer the funds to another registered account with no tax implications. Problem is with non registered accounts in that once you close an account or move funds you trigger a capital gain.

There are dog bank and non bank MF's. If you've had a MF that is up 2% in 10 years then, really, don't blame the bank, you should have moved these funds years ago. If you are making 10% a year park it and forget about it, if you're making virtually nothing then you have to act.

MF are not inherently bad, if you're making an average of 6 - 8% net of fees then I think you're doing OK. In my experience people like to cherry pick the killer investment decisions they made, highlighting the 40% gain on one stock or one fund. My follow up question is what is the long term return on their whole portfolio............. and I usually don't get an answer.

Making Investment decisions is like picking the best oil for your bike, everyone has an opinion.
 
Frak, thanks @sburns for this. Now I remember that I have about 100k (probably 80k now) with an old employer pension account and they MAKE IT SO DAMN DIFFICULT to take my money out.

I want to move it to my Questrade LIRA account, but I may just dump it into my OMERS and 'buy back years' so I can retire earlier. OMERS will probably get this stuff easily taken care of, and the 80k would buy me back about 5-7 years toward retirement.

I'll call them this week. I want that money back in my control. Every single other employer the move was super simple...with this...effing hell.

As for set it and forget it...I'm very happy with my VGRO returns. Buy, hold, profit. Easy.
 
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