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by Scott Ronalds

Rarely is there a dull day in the stock markets these days. Especially with a Twitter-happy American president, new wave of “unicorn” IPOs, abundance of mergers & acquisitions, and mounting tensions in the Middle East.

But this piece is about an asset class less flashy — bonds. More specifically, it’s an update on our Income Fund.

As a refresher, the Income Fund is a diversified portfolio of bonds (75% target weight) and dividend-paying stocks (25%). We structured the fund this way with the goal of providing bond-beating returns over the medium to long term (which it’s done over the past 3, 5, and 10 years) along with a more well-rounded stream of income. Some of our retired clients use it as a “paycheque” fund and it’s also the largest holding in our Founders Fund.

While bonds don’t get the same attention that stocks do, it’s interesting times in bondland nonetheless and an update is timely.

After steadily raising interest rates last year, the Bank of Canada has pumped the brakes this year and bond yields have fallen back, leading to strong returns over the past six months (recall that when yields fall, bond prices rise). The 10-year Government of Canada benchmark bond yield reached 2.6% last October but has fallen to 1.7% today. This may not sound like much of a decline, but it’s a big move in a low rate environment. In fact, it’s led to a 6.3% gain in the bond market over the six months ending April 30th. This type of return isn’t sustainable with rates as low as they are, so we’re more cautious than normal.

We’ve had the fund positioned quite defensively over the past few quarters, as our manager (Connor, Clark & Lunn) has felt that bond yields aren’t particularly attractive and risks are building in some segments of the market, notably the corporate sector. Global economic growth is slowing which could spell trouble for more leveraged companies (those with high amounts of debt). More recently, we’ve “buttoned down” the fund even further. Here’s what this means in plain English:

  • We have a larger-than-normal position in Government of Canada bonds, which now make up 30% of the fund (in the past, they’ve comprised less than 5%). These securities offer lower yields than other types of bonds, but they provide the greatest safety. As Tom said in a recent post, government bonds are the best diversifier a portfolio can have.
  • The fund’s weighting in corporate bonds is close to an all-time low (25%). Our focus here is on high-quality companies such as utilities (e.g. Hydro One) and banks.
  • High yield bonds make up only 2% of the fund, which is also close to an all-time low. What’s more, our high yield investments are focused on higher-rated securities (we’re giving up some yield for greater safety) and those that have good liquidity, meaning they’re easy to buy and sell.
  • Stocks make up 22% of the fund, which is modestly below our long-term target.
  • Our stock strategy has become more defensive, with a focus on larger, more stable companies. Examples include food retailers such as Loblaw Companies and Metro, telecoms including Rogers and Telus, and utilities such as Fortis and Brookfield Infrastructure Partners.

The fund is more positioned for capital preservation than growth right now. It’s still earning a steady stream of income from diversified sources (federal & provincial bonds, corporate & high yield bonds, dividend stocks, and real estate investment trusts), but we’re less likely to see similar price gains in the fund’s bond investments than we did over the past half year (the fund gained 7.0% after fees over the 6 months ending April 30th).

We’re confident that the Income Fund will continue to be a bond beater going forward. Our caveat to investors, though, is that it may not take much to beat bonds in a world of low interest rates.

Management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.

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by Salman Ahmed

You may recall a feature in our Quarterly Reports known as the 'Stock Snapshot' where we featured a company in one of our funds. We've moved the feature from the Quarterly Report to our blog. Below is a snapshot of Philips, which is held in our Equity Fund.

Overview

Most of us have bought a Philips light bulb at some point. Today, however, Philips is more of a healthcare company than a consumer electronics manufacturer. The company is headquartered in the Netherlands and its annual revenues exceed $25 billion (CAD).

Philips offers health technology products and services. Its offering includes everyday health items like electric toothbrushes to complex diagnostic devices like magnetic resonance imaging machines (MRI) and computerized axial tomography scanners (CAT). It also provides informatics and consulting services to health care professionals.

One third of Philips’s sales come from the U.S. and more than 20% come from western Europe. Emerging economies account for another third of sales with the balance coming from other mature economies.

Investment Case

Philips has made a successful transition from a wide-ranging conglomerate to a company focused in the growing healthcare segment. An aging baby boomer population and growing middle class in emerging economies is seen as supportive to the long-term grown prospects of the industry.

Diagnostic and treatment devices have the added benefit of allowing Philips to build long-term relationships with clients. For example, MRI machines are complicated devices that require significant outlays by healthcare providers. The machines can last more than 10 years and require ongoing training and maintenance, which Philips provides. Once trained on a Philips product, customers are less likely to switch to a competitor.

The growth profile is supported by Philips’s research and development initiatives. 60% of its offering in 2018 came from products introduced within the last two years, reflecting the innovation drive at the company.

Management has sold most non-healthcare assets. It spun off the lighting business into a separate company in 2016 and continues to own a 16.8% stake. It has also made strides in running the company more efficiently. Customer service centres have become centralized, and manufacturing is less spread out allowing for savings on procuring materials.

Risks

Procter & Gamble, Siemens, GE, Toshiba and Hitachi are all involved in health technology. These peers have not made healthcare their focus but could disrupt Philips's leading position if they decide to.

Government budgets also present a risk. In mature markets, healthcare spending is often driven by politicians. Slowing economies and political shifts can impact spending patterns.

Interesting Fact: PSV Eindhoven, one of the Dutch “big three” soccer clubs was founded in 1913 as a team for Philips employees. PSV stands for Philips Sport Vereniging (translated Philips Sports Union). Brazilian legends Romario and Ronaldo are among the many famous players to have played for PSV. Today PSV is a separate company but retains strong ties to Philips.

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by Scott Ronalds

I’ve come across a few interesting articles over the past week that I thought were worth sharing.

Tech’s raid on the banks. This piece from The Economist looks at how digital services have transformed our lives over the past two decades. Industries from retailing to media to carmaking have been disrupted by scrappy new entrants. Yet, one industry has stood still: banking. Is it next?

How the new plant-based burgers stack up to beef. Meatless meat is taking North America by storm (we wrote about the trend the other week here), with companies such as Beyond Meat and Impossible Foods selling their plant-based products to the likes of A&W, Burger King, White Spot and Carl’s Jr. But what’s in these patties and are they healthier than beef? This CBC piece explores.

The $100 trillion question: What to do about wealth? Economic inequality is growing, particularly south of the border. This Washington Post piece looks at the distribution of wealth in the U.S. and just how gigantic the numbers are.

Why you’ll never invest in the next Big Short. Ben Carlson, an American portfolio manager and writer, looks back at one of the most profitable trades in a generation: betting against the U.S. housing market in 2007. If you’re looking for the next big short, Carlson suggests you forget about it.

How not to die with a big RRSP. Having an RRSP that grows too big is a nice problem to have. But it’s a problem for many investors nonetheless (for tax and estate reasons). This Globe and Mail article suggests some strategies to consider if you’re concerned about dying with too much money in your registered retirement account.

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by Neil Jensen

Are you passionate about helping Canadians be better investors and achieve better returns?

Do you want to help change the landscape in the wealth management industry?

Are you comfortable being David in a world of Goliaths?

Do you want to invest alongside your clients?

Are you willing to get a tattoo that reads 'Concentrate Dammit'?

Do you want to be part of an energetic, talented, and supportive team?

If you can say yes to all these questions, you should check out this job posting for an Operations Specialist at Steadyhand (Vancouver office).

If you meet the criteria above, submit your resume to Alana Briggs at McNeill Nakamoto Recruitment Group by emailing your resume and cover letter to alana@mcnak.com. For questions, Alana can be reached at 604-662-8967 ext. 103 in confidence. While we thank all candidates for their interest, only select individuals will be contacted for follow-up.

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Republished courtesy of the National Post
by Tom Bradley

When stock markets are hitting new highs, there always seem to be more articles on downside protection. Which stocks will hold up when the rocket ride ends? Is there an industry that does better in tough times? Are ETFs a good place to hide?

There might be a stock or industry that does better but, short of timing the market and selling everything, a portfolio that’s designed to grow with the markets will also retreat with the markets. There are no free lunches in investing.

There is one strategy, however, that comes close. By owning a broad mix of assets, you can smooth out your returns and eliminate the risk of permanent capital loss, without meaningfully reducing your long-term growth. Diversification doesn’t eliminate the downside, but it softens the blows and ensures that you’ll recover.

David Swensen, chief investment officer at Yale University, puts it this way in his book, Unconventional Success: “Diversification demands that each asset class receive a weighting large enough to matter, but small enough not to matter too much.”

Building wealth

Every investor should be diversified, but not for the same reasons. For those who are building their wealth and have an emphasis on growth, the primary reason is to avoid a permanent loss of capital. A smoother ride feels nice, but isn’t necessary. Indeed, accumulators should celebrate when stocks are down. They’re buyers, not sellers.

But a significant hit to capital can put a dint in even the longest retirement plan. It’s harder to recover if your portfolio goes off the rails because it’s focused on one type of stock (i.e. technology, cannabis, banks) or perhaps real estate in one city.

Spending your money

Retired investors don’t want to impair their capital either, but they also have to care about volatility. They’re drawing a paychecque from their portfolio and don’t want to sell when prices are down.

For this reason, de-accumulators need to go beyond stocks and hold other asset classes like cash, GICs and bonds for stability and income. Unfortunately, it’s in this area where portfolios are less diversified today. I say that because they’re holding fewer government bonds which are the most reliable diversifier there is.

When stocks are in freefall, you can be assured that interest rates are dropping and therefore, the value of government bonds is increasing. When stocks melted down in 2008, government bonds went up in price as they did during the downdrafts in 2011, 2016 and 2018 (Note: Cash and GICs also held their value but didn’t appreciate).

Extremely low interest rates are prompting investors to look for securities and funds that carry a higher yield. In lieu of GICs and government bonds, they’re holding riskier fixed-income securities, preferred shares and even dividend-paying stocks such as banks, utilities and REITs.

These are all valid investments and play a role in our portfolios, but they don’t provide the same diversification. Take high-yield bonds for instance. In an economic slowdown when government bonds are rising, junk bonds (as they’re known) are likely going the other way. In uncertain times, buyers demand a higher yield on riskier assets, which pushes prices down.

Historically, high-yield bonds have performed more in line with the stock market than the bond market. Dividend stocks are even more closely linked to the stock market. They’re stocks after all.

Unpredictable diversification

To fill the gap, there’s a growing number of exotic products that claim to have low correlation to stocks. In other words, their price movement isn’t linked to what the stock market is doing. These ‘absolute return’ funds focus on generating a positive return by using a number of hedge fund strategies including shorting and arbitrage.

But there’s a catch (beyond their high fees). The relationship to stocks is unpredictable. A fund might perform well in a market swoon, but it might not. These products provide what I call “unpredictable diversification.”

Swensen says that if you’re holding bonds for the purpose of diversification, they should only be government bonds. I won’t go that far but, suffice to say, being measured and balanced is important. When you give up on high quality bonds and GICs in search of higher yield, know that you’re playing offence, not defence.

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by Scott Ronalds

I did three things over the past couple of weeks that I would’ve never thought possible just a few years ago. I test drove a car that drove itself. I ate a burger that looked and tasted like meat, but wasn’t. And I walked by the site where developers are proposing to build a 35-40 storey building made of wood.

The car was a Tesla Model 3. Shortly after we left the dealership and turned onto Granville Street, the salesperson prompted me to switch it into Autopilot mode, and there I was, watching a car drive itself. It braked when the car in front us braked and sped up when the lane was clear. It was amazing. And a little creepy at the same time.

The burger in question was the Beyond Meat Burger from A&W. It looked like a real burger, had the same texture, and tasted pretty close to the real thing. Yet, it was made of peas, beets, potato starch and some scientific words I can’t pronounce.

As for the wood building, a Vancouver firm has plans to build the world’s largest wood tower five blocks south of our office (8th & Pine). The proposal is for a mixed-use tower made of “as much engineered wood as possible, with only a concrete core and minimal amount of drywall.”

The world is an amazing place. And more than ever, it’s changing right before our eyes. Technology and bold thinking are leading to incredible things. Things many of us never thought possible. A car, burger and tower blew me away recently, but they're just a drop in the bucket in relation to what’s currently being developed and built around the globe.

With all these changes come investment opportunities. Oftentimes, the opportunities span well beyond a marquee product or service itself. Take self-driving cars. The microchips, sensors, cameras, materials, and other components that go into a vehicle are frequently built by a company other than the manufacturer of the car itself. Investing in a best-in-class supplier can be as, or more profitable, than investing in the manufacturer itself.

And that meatless burger? All those plant-based ingredients need to be grown and harvested efficiently. If the product takes off, the companies behind the agriculture could represent a big opportunity. Similarly, if high-rise wood towers prove to shake up the construction industry, the businesses involved in engineering wood may be the real winners.

When looking at the broad investment universe, these are some of the things our managers consider. They look for well-established leading brands (such as Novartis, Walt Disney, CN Rail, and Visa) as well as companies that make inputs or provide services that enable other businesses in emerging industries to prosper. This is where some real gems can be found. Below are a few examples (all of which are held in our Founders Fund and Builders Fund).

  • Altran Technologies is a Paris-based leader in engineering and R&D services for industries including aerospace, autonomous driving, fintech, cyber security, life sciences, railway, and renewable energies. In a nutshell, Altran provides end-to-end consulting and research services to clients that are inventing the products and services of tomorrow.
  • Keyence is a Japanese supplier of sensors, measuring systems, barcode readers, and machine vision systems used in the design and manufacture of products in a number of industries. Its sensors have become the standard for machine builders and its vision systems can help manufacturers detect nearly invisible defects.
  • Novozymes is a Danish pioneer in developing biological solutions for the agriculture, bioenergy, household care, and food & beverage industries. Its enzymes and microorganisms help companies make more sustainable and efficient products. Those cold water laundry detergent tabs you may use, for example, work because of Novozymes.
  • Charles River Laboratories is a Massachusetts-based company that provides products and services that help pharmaceutical, biotechnology and agrochemical companies expedite the discovery, development and manufacture of drugs, therapeutics and other products. The company helped support the development of roughly 85% of the drugs approved by the FDA last year.

We note at times in our communications that new investment opportunities are few and far between. This has more to do with valuations being too high (the price we’re willing to pay for a stock) than a scarcity of intriguing businesses in the marketplace. Indeed, there’s never been more innovative entrepreneurs and companies pushing boundaries than today.

A few years from now, I’m sure I’ll be in awe again of the latest technologies and innovations and their trickle-down effects into our daily lives. It’s an exciting time in the world — and it’s an exciting time to be an investor.

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Republished courtesy of the National Post
by Tom Bradley

“Past performance is not indicative of future results.”

This warning label is required for investment products, but like the ones on cigarette packages, it’s rarely heeded. In fact, it’s quite the opposite. Past performance, or more specifically, good recent returns, are like a magnet for investors. They overwhelm the other factors that should go into a purchase decision such as quality of the people and firm, investment approach and fee.

If the label is to be believed and the past doesn’t predict the future, why does performance carry so much weight?

The main reason is that outstanding recent returns are hard to ignore. Fund managers who are riding high look smarter. Their words, body language and the suit they’re wearing oozes it. The fear of missing out is overwhelming.

To fight FOMO, my partner, Salman Ahmed, and I select and monitor fund managers using an analytical framework called the 7 Ps. We look at People, Parent (organization and ownership), Philosophy, Process, Price, Performance (long term) and Passion. The last one refers to the fact that I prefer to hire geeks who live and breathe the portfolio rather than portfolio managers who are more media-friendly and have extensive marketing duties.

It’s important to remember that active managers go through cycles just like the stock market. An excellent 10-year record will include three to six subpar years. This makes it tricky to use short-term returns as a decision criterion. The Ps approach, in my view, is a better predictor of future results, although it’s hardly foolproof.

In the institutional arena, pension and foundation committees use similar criteria, although if recent performance isn’t near the top of the charts, the other 6 Ps don’t usually win the day. Managers almost never get hired when they’re going through the down part of their performance cycle.

The pattern is the same when it comes to managers being fired. The decision is overwhelmingly based on recent returns. Managers who are performing well are rarely let go, even if a key person leaves, the firm gets sold and changes direction, or the decision-making process changes. But a poor five-year return is often enough for a committee to fire a manager and hire another who has done better over that period.

But is five years long enough? Disappointingly, the answer is, it depends. A performance drought may feel like it’s gone on forever, but what really matters is how the manager or fund has performed over a full cycle — i.e. good and bad markets.

Consider our current circumstance. We’re in a 10-year bull market that’s been fuelled by a few persistent themes. Interest rates have been low and/or declining. Debt markets have been strong. The U.S. stock market has consistently smoked the rest of the world. And growth stocks have had an extended period of superior performance compared to value stocks. It’s hard to assess how a manager or fund will do through all seasons when there hasn’t been a severe winter in a decade.

In my past life when I was working with pension clients, the best relationship I ever had was with a committee that selected our firm when we were going through a tough period. When I voiced surprise that we’d won the mandate, I was told they really liked the firm, the people and the long-term returns. They viewed the recent lull as a great opportunity to get in. By the time the paperwork was completed, and money invested, our performance was on an upswing and a lasting relationship had been established.

I’m not suggesting that you should avoid a manager or fund because the last few years have been good. Not at all. But you need to guard against the tendency to chase performance. Your odds of long-term success (all seasons) improve significantly if you have other good reasons for investing. Those other reasons will come in handy when the inevitable weak, ‘not-so-smart’ period hits.

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by Scott Ronalds

A number of high-profile tech start-ups are planning to go public this year. Among them are the ride-sharing firms Uber and Lyft (the latter is now trading on the NASDAQ), and digital pinboard creator Pinterest (which started trading today). Home-sharing pioneer Airbnb is also considering filing for an IPO (initial public offering).

These “unicorns” (the urban definition for a privately held start-up that has achieved a market value of more than $1 billion) have big names, big money and big ambitions behind them. They’re great companies, but the million-dollar question is whether or not they’ll be great investments (the two don’t always go hand in hand). With all the hype around these California kids (all four start-ups are based in San Francisco), you may be wondering what our position is on them.

First, some numbers you might find surprising. Two of the more high-profile names, Uber and Lyft, don’t make any profits. In fact, they’re currently losing millions of dollars. According to a New York Times article, Lyft lost over $900 million last year while Uber lost north of $800 million in the fourth quarter alone. These two companies are spending big money in the hope of one day making big money. But that day isn’t today. And indeed, it may be never. Pinterest also lost money last year, although to a lesser degree. The managers of our funds stay away from companies that haven’t proven they can consistently make money. This means you likely won’t see these businesses in your Steadyhand portfolio any time soon.

As for Airbnb, it has turned a profit over the past two years. Like the others, though, it comes with a premium price tag, with its most recent valuation exceeding $30 billion (according to Forbes). Which brings us to another key attribute that our fund managers focus on — valuation.

We focus on buying companies that trade at reasonable prices relative to their earnings, underlying assets and future growth prospects. It’s difficult to assign a price tag to tech start-ups because much of their value is based solely on their future growth. And if you get this wrong, look out below. Speculation and frenzy can also build quickly as a company’s IPO date nears, driving its price — and risk — higher.

If most of these companies aren’t profitable, why are some investors drooling over them? Because they’re growing their revenues at a good clip. And the hope is that these fast-growing revenues will eventually lead to outsized profits. Google and Facebook were once in the same category, after all, and they now make billions of dollars. But it will be tougher for this new generation of start-ups to build wide moats around their businesses or reach monopolistic status. Governments and regulators are taking a tougher stance on companies seeking to dominate an industry. And let’s not forget, for every Google and Facebook, there’s a Snap and Blue Apron.

Snap, the parent of messaging app Snapchat, went public in 2017 and now trades 30% below its IPO price and more than 75% below its high. Blue Apron, the meal prep delivery company, went public the same year and stumbled out of the gate. It currently trades almost 90% below its IPO price. Needless to say, neither company has lived up to its lofty expectations and investors have been burned. It’s also been a rough start for Lyft. The company went public at the end of March and was trading 20% below its IPO price at the time of writing.

Our investment process doesn’t preclude us from investing in IPOs entirely. If a private company that we like has a history of profitability and its shares are being offered to the public at a reasonable price, our managers are free to participate in the initial public offering.* An example is Aritzia. The Vancouver-based fashion house went public in 2016 and our Small-Cap Fund participated in the IPO (we’ve since sold our shares at a profit).

The great IPO show of 2019 will be interesting to watch. Millions of dollars will be made, and millions lost. Given the uncertainty and risk associated with investing in these unicorns as they become public companies, we’ll be watching this fantasy from the sidelines.

*Note: It can be difficult to receive a meaningful allotment of shares in an IPO, as investment bankers typically have a large list of clients they offer shares to.

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by Scott Ronalds

From our Quarterly Report:

The cover of last quarter’s report read, "In weak markets investors should be raising their expectations for stock returns, not lowering them as is so often the case."

In that report, we told you that we were shifting from defense to offense. Valuations were reasonable again and investor sentiment was extremely bearish. Both factors were conducive to good future returns.

As it turned out, bond and stock markets rallied dramatically in the first quarter. To be clear, our more upbeat advice to clients and asset mix shift in the Founders Fund in no way anticipated this market turnaround. They were based on an improvement to our medium-term return expectations.

Read Tom's full brief and the rest of our Report here.

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Republished courtesy of the National Post
by Tom Bradley

I was asked last week to do a media interview on investment fees. I agreed to do it because the fee landscape is particularly interesting right now. Investors have an increasing array of options as to how they invest and what they pay.

I also did it because fees matter. Paying an extra one per cent is a big deal in an environment where interest rates are one to three per cent. For example, $100,000 that earns a gross return of six per cent over 20 years builds to $265,000 at a one per cent fee but only $220,000 at two per cent. Vanguard has it right when they refer to fees as “lost return.”

Unfortunately, the trends in wealth management fees are not easily defined. As I told the reporter, there are cross currents — some are bringing costs down, while others are pushing them up. To explain, I’ll break it down into two parts — products and distribution.

Products

The emergence of exchange-traded funds (ETFs) has had a positive influence, with management expense ratios (MERs) as low as 1/10th of a per cent for broad-market index funds (S&P/TSX, S&P 500). ETFs have particularly been a godsend for fixed-income investors who previously had few cost-effective ways to buy bonds.

ETFs are not yet a big part of Canadian portfolios, but their low fees are setting the tone. Indeed, I’m happy to report that there’s been a decrease in mutual fund fees over the last decade. The moves haven’t been substantial and have favoured larger clients (through increased use of premium pricing), but the direction is right. And importantly, fees have become a bigger differentiator, as lower-priced funds are garnering most of the new money.

Slowing the progress, however, is the growth of more exotic products such as liquid alternative funds which charge a base fee plus a performance fee (the manager receives 10 to 20 per cent of the return). These funds, along with structured products like index-linked notes and principal protected notes, are considerably more expensive than ETFs and conventional mutual funds. Also, the fees on segregated funds, which are essentially mutual funds with insurance features added, remain extremely high.

Distribution

On the distribution side, fee trends are also a mixed bag. There are more low-cost options today, but investors looking for personal service and advice are paying as much or more than ever.

For those who can do it themselves, there’s a plethora of options. Discount brokers compete vigorously on trading commissions and are offering more on-line education and tools. For those who need a little help, there are a number of robo-advisors to choose from.

There used to be more competition from direct-to-client mutual fund companies, which provide investment management and advice (the space where my firm operates). Unfortunately, this low-cost category has been hollowed out by mergers and strategic repositioning (higher minimums), such that there are few players left.

On the higher end of the service spectrum, there’s been a lot of change but little fee relief. Most brokerage firms are moving clients from commission-based accounts to ones that charge an annual fee based on assets. These fee-based accounts have less inherent conflicts of interest (advisors don’t need to trade to get paid), and they’ve opened clients up to non-commission products such as ETFs.

Unfortunately, this shift has led to many investors paying more for a comparable service because the annual fee is considerably higher (1.25 – 1.75 per cent plus tax) than what they previously paid in trading commissions and trailer fees.

Other costs

There are other costs to consider including administration and transfer fees, and of course, taxes eat into returns on non-registered accounts. But the biggest loss of return, which isn’t shown on any account statement or tax form, has not changed.

I’m referring to investors’ habits and behaviour. Not having a plan or target asset mix can be very expensive, as can delays getting money invested and hyper-active trading.

My message to the reporter was that the wealth management industry hasn’t done enough to reduce costs. That shouldn’t stop you, however, from asking your provider how they can increase your returns by reducing your costs. Hopefully, you’ll get a clear and helpful answer. If all you get is squirming and obfuscation, then you, like the industry, have more work to do.

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