What is our platform, and how do clients pay for our services?
Transparency and common sense.
There is a popular myth that in the mid 60’s the US Space Program NASA spent millions of dollars and countless research and developing hours on inventing a pen that would work in outer space zero-gravity environment. The Russian cosmonauts opted for another solution to this problem; they simply used a pencil. Sometimes, simplicity works.
Over the many years we have been advising clients, we are always puzzled (and concerned) when new prospective clients come to us with a complicated mix of investments accumulated over the years, and are unsure how they have been paying their current advisors for their services. We acknowledge that the financial services industry can present a complicated array of choices, but it does not need to be that way. Yes, a pencil can get the job done quite well.
The bulk of our clients enjoy the benefits of an all inclusive fee based service platform, and the core components of the investment portfolio are well known and dependable.
Being "all-inclusive” means that clients pay no brokerage commissions when securities are bought or sold, and do not pay an annual administration fee on RRSP’s or RRIF’s. The benefits of this transparent fee also includes the broad financial advice we offer, such as the provision of detailed personal financial projections designed to answer such questions as "Will we be ok when we retire?”.
Fee based approach (named Meridian)
A fee based approach, rather than commission driven, has numerous client advantages, including:
- Predetermined Fees –The fees associated with the services you receive are known up front. ie: Transparency.
- Tax reduction benefits – Fees paid in these accounts may be tax deductible in the year paid on non-registered portfolios.
- Decisions Based on Merit, not Commission - With no costs being associated with a specific transaction, portfolio rebalancing decisions are not impacted by how much commission is charged. Conflicts of interest and perceived conflicts of interest are eliminated. Clients of other advisors who have transferred their accounts to us have told us that they did not like hearing recommendations to "sell this to buy that” because they thought they would be paying two commissions and wondered if the uncertain future benefits of the moves outweighed the commission costs. For the bulk of our clients whose portfolio’s are managed under this transparent fee base approach, our ability to be nimble and efficient leads to more appropriate asset mixes and significantly improved investment performance.
- Expanded service offering – The inclusive fee for services, may include financial, retirement, estate and philanthropic planning, as well as establishing tax funding strategies where required.
- Fees based on asset levels – We are also able to structure your fees based on the assets we oversee for you and your extended family.
- Online access to your account – Real time account monitoring through BMO Nesbitt Burns Gateway system allows you to access account information rapidly, with full access to research.
Quite simply, the fee-for-service approach is better. Under this approach, the interests of the client and the interests of the advisors are the same – to grow the accounts in an appropriate manner.
New clients often ask if we have minimums or maximums ?
We are proud to say that we have all sorts of clients, who all have different objectives and goals. Our fee platform is therefore not rigid, as a client with a greater Fixed Income need may have a slightly lower overall fee schedule, and a multi million dollar portfolio is also provided with a preferential fee schedule.
For those new potential clients interested in a rough benchmark, we provide the following sample. One of the largest "balanced” mutual funds in the country, the Royal Bank Balanced Fund, has a Management Expense Ratio (MER) of 2.25%. A typical $1million account under our fee based platform would be in the 1%~ range.
We note that in our team, we factor in many things. We consider the long time relationships of our legacy clients, as well factor in the historical activity and time devoted by the lead advisor and our support staff in managing all aspects of the client relationship. New clients are often surprised at our seemingly low fee levels compared to the "invisible” fees charged by others in our industry. Typically, given our conservative approach, our fees are significantly lower than industry standards, while our clients enjoy premium service and advice.