Setting up a RESP

[Slava]

When was that article written? I'm guessing 2003-2004? Thats just plain ridiculous. Most of the points cited and funds its references are at least a decade old and it talks about versions and fee structures that are either (a) no longer used at all or (b) the extreme minority. Its hardly even worth responding to some of those points because they're so far outdated and out of practice.

RBC was cited as somehow not using DSC. I know they do and while I can't prove it because I have confidentiality standards, its the reality across the industry. Every institution charges a fee for clients to move their investments, close accounts and all kinds of things. Its a reality of the business regardless of what firm you invest with.

[macker]

Originally Posted by Slava

I can't recall on TD, but I just transferred an account from RBC that was loaded with DSCs. The banks are no better in this regard I would say.

On another note though, the DSC gets a bad rap. Its not an extra fee for most people, though its branded as one; its only an extra fee if you sell and frankly with an RESP that is a rarity for sure. I can see the objection on TFSAs or non-registered investments but for long term investments its most often a non-concern. I don't use the DSC for RESPs in the vast majority of cases, but I also can see why advisors should. For clients there are cases where the DSC is actually good for them; it keeps them invested where they might otherwise bail at the worst possible time.

This is completely false as the cost is embeded into the management fee and the advisor gets paid a commission. Where does that commission paid to the advisor come from? It has to come from somewhere? You can dismis Canadianfundwatch.com all you want but I just wanted to point this out and people should be more aware of investment fees in Canada. Many people aren't aware of this and are throwing money away in needless fees and in reality for investment fees in Canada not much has changed from 2004 to now.....please point out some specifics of what has changed that you are so dismissive of the article? It could have been written again yesterday.....

[Slava]

Originally Posted by macker

This is completely false as the cost is embeded into the management fee and the advisor gets paid a commission. Where does that commission paid to the advisor come from? It has to come from somewhere? You can dismis Canadianfundwatch.com all you want but I just wanted to point this out and people should be more aware of investment fees in Canada. Many people aren't aware of this and are throwing money away in needless fees and in reality for investment fees in Canada not much has changed from 2004 to now.....please point out some specifics of what has changed that you are so dismissive of the article? It could have been written again yesterday.....

Really nothing has changed since 2004? Nortel was announcing profits in 2004!

Are there any funds or series of funds where the MER is different between a DSC fund and a front-end fund? There were a decade ago, but I can't recall seeing anything like that in at least 6-7 years. Thats probably the most egregious point in your link and its virtually irrelevant. Its akin to someone talking about a new disease treatment today and you posting an article about blood-letting. Sure, its the same industry with the same goals, but aside from that there is nothing to it.

I don't even know where to start with the "where does the money come from to pay the advisor" comment. How does any business pay anybody to do anything? I really don't understand your constant crusade against advisors earning commissions. I think you should post what it is that you do for a living, if for no other reason than so I can expect you to work for free as well.

First its the attack on managed money, and then the posting about your love of vector-vest and your single stock prowess. Now its RESPs and the fees there. I'm going to guess the next shot would be against insurance commission?

[macker]

Originally Posted by Slava

Really nothing has changed since 2004? Nortel was announcing profits in 2004!

Are there any funds or series of funds where the MER is different between a DSC fund and a front-end fund? There were a decade ago, but I can't recall seeing anything like that in at least 6-7 years. Thats probably the most egregious point in your link and its virtually irrelevant. Its akin to someone talking about a new disease treatment today and you posting an article about blood-letting. Sure, its the same industry with the same goals, but aside from that there is nothing to it.

I don't even know where to start with the "where does the money come from to pay the advisor" comment. How does any business pay anybody to do anything? I really don't understand your constant crusade against advisors earning commissions. I think you should post what it is that you do for a living, if for no other reason than so I can expect you to work for free as well.

First its the attack on managed money, and then the posting about your love of vector-vest and your single stock prowess. Now its RESPs and the fees there. I'm going to guess the next shot would be against insurance commission?

I find it funny how you think everything is a personal attack on you and your living etc. Its not and the links are meant to try to help people decide for themselves. Put me on ignore as this would work best for both of us. This happens way too frequently to the point where I don't even like to give stock recommendations anymore because you are so immature about it. I feel strongly about RESPs and investment fees because I have seen people get messed over pretty badly in this area over the years and things are rarely properly disclosed. It has nothing to do with you and you said that you don't really use DSCs anyways.....In eight years from now I will be shocked if DSCs are still around....carry on....

[Slava]

Originally Posted by macker

I find it funny how you think everything is a personal attack on you and your living etc. Its not and the links are meant to try to help people decide for themselves. Put me on ignore as this would work best for both of us. This happens way too frequently to the point where I don't even like to give stock recommendations anymore because you are so immature about it. I feel strongly about RESPs and investment fees because I have seen people get messed over pretty badly in this area over the years and things are rarely properly disclosed. It has nothing to do with you and you said that you don't really use DSCs anyways.....In eight years from now I will be shocked if DSCs are still around....carry on....

Really, you don't think I should take it as an attack on how I make my living? That's exactly what it is. I'm not putting you on ignore though, I want to see the 10-15 year old links for myself to see the points you're trying to prove.

[macker]

http://www.theglobeandmail.com/globe...rticle2029571/


http://www.theglobeandmail.com/globe...rticle1618665/

[MoneyGuy]

Originally Posted by macker

http://www.theglobeandmail.com/globe...rticle2029571/


http://www.theglobeandmail.com/globe...rticle1618665/

One of those articles talks about churning. I can guarantee you Slava is not doing that.

The other refers to DSCs. All load options have a place. If you think you're capable of being a DIY investor, go for it. Most people are not cut out for it. I can argue that point all day. Advice has its place.

[Slava]

http://www.theglobeandmail.com/globe...rticle1659403/

[MisterJoji]

Just to keep in mind. I noticed the OP was contributing the 100.00/month of the Child Tax Benefit and planned on doing so for the next 18 years. You no longer get that $100 a month once your child turns 6, you'll have to put that money all on your own.

[cSpooge]

Originally Posted by MisterJoji

Just to keep in mind. I noticed the OP was contributing the 100.00/month of the Child Tax Benefit and planned on doing so for the next 18 years. You no longer get that $100 a month once your child turns 6, you'll have to put that money all on your own.

the 100/month is the Universal Child Care Benefit, they will still get CCTB if they are entitled to it based on income up to and including the month the child turns 18.

[MisterJoji]

Originally Posted by cSpooge

the 100/month is the Universal Child Care Benefit, they will still get CCTB if they are entitled to it based on income up to and including the month the child turns 18.

Good to know. Thanks.

[macker]

Originally Posted by MoneyGuy

One of those articles talks about churning. I can guarantee you Slava is not doing that.

The other refers to DSCs. All load options have a place. If you think you're capable of being a DIY investor, go for it. Most people are not cut out for it. I can argue that point all day. Advice has its place.

I agree I am sure that he doesn't do that but the system is set up in a way that there are many that do. Most people would be better served in my opinion to pay less than 1% MER and buy ETFs today more than ever. It is a short time horizon investment and paying up for a 2.5% MER or 3% in some cases just drags the performance of the RESP. At 2.5% MER with an average return of 5% per year the advisor is getting 50% commission on all profits. Maybe people do need to take charge and educate themselves to be able to DIY through broad based low fee asset allocation by using ETFs stocks and bonds. It is not entirely the advisors fault that the system is set up so that advisors favor overpriced mutual funds and not individual stocks/bonds or ETFs as this is how they get paid. For many people DIY is a wise gamble but you are right not for everyone. I am convinced that many people ignore examining not only their rates or returns but also the fees they pay to get or in many cases not get those returns. Too busy.....

[MoneyGuy]

Originally Posted by macker

I agree I am sure that he doesn't do that but the system is set up in a way that there are many that do. Most people would be better served in my opinion to pay less than 1% MER and buy ETFs today more than ever. It is a short time horizon investment and paying up for a 2.5% MER or 3% in some cases just drags the performance of the RESP. At 2.5% MER with an average return of 5% per year the advisor is getting 50% commission on all profits. Maybe people do need to take charge and educate themselves to be able to DIY through broad based low fee asset allocation by using ETFs stocks and bonds. It is not entirely the advisors fault that the system is set up so that advisors favor overpriced mutual funds and not individual stocks/bonds or ETFs as this is how they get paid. For many people DIY is a wise gamble but you are right not for everyone. I am convinced that many people ignore examining not only their rates or returns but also the fees they pay to get or in many cases not get those returns. Too busy.....

Many who churn? Nope. It's illegal and gets your license yanked. Branch managers are constantly looking for this. I know because I am one. it exists but is exceedingly rare.

I won't argue the rest with you. No point. Manage your own own money without advice I hope you do well. I doubt you'll be better off.

[8sPOT]

Having recently exited the financial industry, I know first hand that the majority of Canadians are just not capable of maximizing their money. Whether it's a TFSA, RSP, RESP, RIF, LIF, or whatever, people generally don't have the knowledge or interest to properly plan ahead. I know a lot of people that have no problem paying an advisor a fee if that advisor does what's best for the client, and in my opinion, most of them do.

Not all doctors, mechanics, and lawyers are equal. So you need to find an advisor you can relate to and trust. Once the trust is established that advisor can do great things for you, if you let them.

[MoneyGuy]

Originally Posted by 8sPOT

Having recently exited the financial industry, I know first hand that the majority of Canadians are just not capable of maximizing their money. Whether it's a TFSA, RSP, RESP, RIF, LIF, or whatever, people generally don't have the knowledge or interest to properly plan ahead. I know a lot of people that have no problem paying an advisor a fee if that advisor does what's best for the client, and in my opinion, most of them do.

Not all doctors, mechanics, and lawyers are equal. So you need to find an advisor you can relate to and trust. Once the trust is established that advisor can do great things for you, if you let them.

Quoted for truth

A good advisor is very important. They're out there.

[macker]

Originally Posted by MoneyGuy

Many who churn? Nope. It's illegal and gets your license yanked. Branch managers are constantly looking for this. I know because I am one. it exists but is exceedingly rare.

I won't argue the rest with you. No point. Manage your own own money without advice I hope you do well. I doubt you'll be better off.

Today there is more advice out there and everything is available to you so you can manage things and the average advisor contacts their clients once or twice a year and don't really offer advice other than "stay the course" "keep paying fees" and even if you saw something like the flight to quality we are seeing this morning in the markets with the German and American bond yields most wouldn't first have a clue what you were talking about and second have a solution to manage the situation. You are stuck paying fees and getting advice that doesn't really make you money. I do manage my own money and and unless you offer some advice of a specific investment I guess we will never know if I am better off or not. I do see value in advice in most areas in financial services but the fees on investments when they can't beat the index just doesn't make sense to me. So basically you are saying that you have an active solution that can beat the index including all fees and you have access to advice that I don't. I am not buying it.... When someone comes to you for advice do you have a low cost option such as ETFs/Stocks/Bonds or is it one size fits all 2.5% MER mutual funds. Either way the client is getting advice so why not offer both options? That would be my advice.

[GP_Matt]

My adviser recommended a portfolio of Canadian and US stocks as well as an emerging markets ETF. Not a single product has hidden commissions and the ETF is the only one with an ongoing fee. For the rest I pay him a transaction fee and an annual fee.

Out of curiosity macker, how valuable was your portfolio the last time you interviewed an adviser? I can understand your adviser not providing you highly customized advice if you came to him with $20000 and a plan to contribute an additional $100 a month. I would imagine that the better advisers focus their time on the higher net worth clients. I know with my adviser I can walk into his office unannounced and he will be up to speed on most of my positions already, implying that he monitors my account more often than annually as you suggest.

[Slava]

Originally Posted by macker

I agree I am sure that he doesn't do that but the system is set up in a way that there are many that do. Most people would be better served in my opinion to pay less than 1% MER and buy ETFs today more than ever. It is a short time horizon investment and paying up for a 2.5% MER or 3% in some cases just drags the performance of the RESP. At 2.5% MER with an average return of 5% per year the advisor is getting 50% commission on all profits. Maybe people do need to take charge and educate themselves to be able to DIY through broad based low fee asset allocation by using ETFs stocks and bonds. It is not entirely the advisors fault that the system is set up so that advisors favor overpriced mutual funds and not individual stocks/bonds or ETFs as this is how they get paid. For many people DIY is a wise gamble but you are right not for everyone. I am convinced that many people ignore examining not only their rates or returns but also the fees they pay to get or in many cases not get those returns. Too busy.....

This is just so wrong though. No wonder you think that the fees are too high, because this isn't how they're calculated at all. Advisors do not get the full MER, that's completely off base.

The whole ETF industry has done an amazing job marketing though. If an investor had put money in at this point in 2008 they haven't made a dime. In fact the TSX is what 25% off the levels seen four years ago? So sure, maybe you saved a percent a year in fees (if that), but you haven't made any money for that either.

[Slava]

Originally Posted by macker

Today there is more advice out there and everything is available to you so you can manage things and the average advisor contacts their clients once or twice a year and don't really offer advice other than "stay the course" "keep paying fees" and even if you saw something like the flight to quality we are seeing this morning in the markets with the German and American bond yields most wouldn't first have a clue what you were talking about and second have a solution to manage the situation. You are stuck paying fees and getting advice that doesn't really make you money. I do manage my own money and and unless you offer some advice of a specific investment I guess we will never know if I am better off or not. I do see value in advice in most areas in financial services but the fees on investments when they can't beat the index just doesn't make sense to me. So basically you are saying that you have an active solution that can beat the index including all fees and you have access to advice that I don't. I am not buying it.... When someone comes to you for advice do you have a low cost option such as ETFs/Stocks/Bonds or is it one size fits all 2.5% MER mutual funds. Either way the client is getting advice so why not offer both options? That would be my advice.

To the first point, neither would anyone doing it themselves. The reality is that if you try to trade these headlines you are going to get destroyed. I follow things really closely and frankly my money is caught today along with everyone else. I'm fine with that, but I am curious what you could do to miss this once the news breaks for this morning though.

To the second point, I can't speak for everyone, but I do a lot of investing outside mutual funds for clients. The thing is there are situations where funds make sense though. I've noted before there are taxation issues that make funds very attractive and frankly there are situations where buying single stock or ETFs are just not sensible. I also think that for some clients who hardly understand the stock market to begin with that trading securities on the exchange is not prudent to get an intro to investing.

[macker]

Originally Posted by GP_Matt

My adviser recommended a portfolio of Canadian and US stocks as well as an emerging markets ETF. Not a single product has hidden commissions and the ETF is the only one with an ongoing fee. For the rest I pay him a transaction fee and an annual fee.

Out of curiosity macker, how valuable was your portfolio the last time you interviewed an adviser? I can understand your adviser not providing you highly customized advice if you came to him with $20000 and a plan to contribute an additional $100 a month. I would imagine that the better advisers focus their time on the higher net worth clients. I know with my adviser I can walk into his office unannounced and he will be up to speed on most of my positions already, implying that he monitors my account more often than annually as you suggest.

I haven't had one since I was 90% invested in the AIM Global Technology fund. Lost over 75% of my money on that fund alone and never "took advice" from that point on. So to your point this was back in June 2000 and I finally bailed out June 2002. This was a case of bad advice and reason to be more careful with my money. I guess you have a good advisor! Good for you! If you are happy paying fees and are getting results that are positive that is great! Maybe drop us some hints in the stock thread sometime or let everyone know who you deal with!