WHITE Paper : The "Advice gap"?

This paper discusses the postulated " advice gap" from an investor's viewpoint. Read the paper here

The Advice Chasm

Industry participants have predicted an " Advice gap" for small investors if needed regulatory reforms regarding the advice process are introduced. Investor advocates have argued that unless the prevailing " Advice chasm" is resolved millions of Canadians face challenges in retirement . This chasm is the huge gap between what Canadians need in the way of trusted advice and what they are actually receiving. There is no question that the conversion from a sales based advice system to a professional system will be disruptive but the end result will benefit Canadians Other jurisdictions have decided reforms are necessary and are dealing with the bumps in the road. The status quo is no longer a viable alternative. Read the article .

The socio-economic impact of traler commissions

Mutual fund trailer commissions create a conflict-of-interest between a dealer representative ( "advisor") and a  mutual funds client. This can impair client retirement accounts due to mis-selling and over-selling. With $1.5 trillion of mutual funds having been sold to Canadians , billions of dollars are involved. 

Read the article  to better understand how your retirement income security may be jeopardized by the nasty advisor behaviours such commissions stimulate.

If you want to see the long-term impact of fees on returns try the fee impact calculator at www.getsmarteraboutmoney.ca  .

Don’t forget you can reduce up to 10% as  “free units” each year .By actively redeeming the units that don’t attract redemption fees each year, investors can get out of DSC funds more quickly. Setting distributions in cash is another way to do it but you can’t do both (i.e. cash distributions typically count toward an investor’s free units) .

Other trailer related issues that have unduly  cost Canadians hundreds of millions of dollars include mutual fund churning and the impact of paying for advice to discount brokers who could not and did not provide that advice. We have covered those abuses in previous posts. Caveat Emptor.