As with many other types of services delivered, there is a cost for the value of financial advice. This is true regardless of the investment solution (or investment plan) you may have and regardless of the institution where it is held. The cost you incur will vary from advisor to advisor and from institution to institution.  There are various factors that influence the fees or commissions you pay an advisor. Among other factors, advisor compensation will differ based on:

It is important that you understand the difference between each advisor compensation option, recognize how advisors are paid and know exactly what services you will receive for that fee.

When you invest in a mutual fund, you pay a fee known as the management expense ratio or MER. In short, the MER represents the costs associated with managing and operating a mutual fund and sometimes includes the advisor compensation. MERs are reported annually as a percentage of a mutual fund’s assets and they are deducted before the mutual fund’s return is calculated. 

The MERs of different mutual funds vary according to the complexity of managing the fund. For example, the MERs of bond mutual funds, which generally have lower research and trading costs, will typically be lower than the MERs of global equity mutual funds, which typically have higher research and trading costs. Advisor compensation often remains the same regardless of the MER being charged within the fund, so a fund with higher MER does not necessarily mean the advisor compensation is higher.

Determining an advisor compensation structure that’s right for you will depend on your personal investing preference -- do you prefer to ‘buy and hold’, do you intend to actively trade and be personally involved in the day-to-day management of your portfolio or do you prefer to have a portfolio manager manage your investments? Your personal preferences, asset size and investment objectives will help us determine which option is best suited to you.

Click here to learn more or call our office to discuss your personal situation in more detail.