Fee based financial manager costs

[kaput]

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[Sugarphreak]

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[89coupe]

Originally posted by Sugarphreak

Besides, if there ever was a good stock manager who really knew his shit, he'd be filthy rich and retired on a beach... not screwing around trying to make other people money.

I have three very successful friends who day trade for a living and they all say exactly this.

All three a multi millionaires and all 3 are retired technically.

[Sugarphreak]

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[kaput]

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[max_boost]

Originally posted by Sugarphreak
Never used it myself, but lots of stories from people I know who have

A good friend of mine invested with a fee based manager, and he did a great job setting up a portfolio to pay dividends. The problem was the dividends were just enough to cover his fees, and then the stocks he picked tanked about 30~40% over the next 2 years

I always like to say... nobody cares more about YOUR money than YOU.

Besides, if there ever was a good stock manager who really knew his shit, he'd be filthy rich and retired on a beach... not screwing around trying to make other people money.


That said, I do actually have a managed account I've been trying out since May of last year. It is the Questrade Portfolio IQ, which sounded really promising. It sucks balls ... I was just testing the water with a 40K investment, and I just checked today, it is worth $40,416. Basically another complete shit investment vehicle.

While true and perhaps there's a min to access the higher ups. There are people who come across millions daily whether it's lotto or prof athletes signing new contract. There's someone looking after their money.

Or are we just all too small time to know these people? haha

[91_Integz]

This is a tough question to answer without knowing a little more detail. Typically firms will charge fees based on a tiered schedule, which reduces as overall portfolio size grows. It will also depend on the investment strategy being utilized - typically the higher the equity allocation, the more the fee will be.

Do you have an idea on what $ amount the portfolio is? Or do you know which firm they are using to manage their portfolio?

[kaput]

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[91_Integz]

2.2%-2.4% is high. Personally I think anything over 2% in an A-class mutual fund is high, let alone in a fee based account holding individual stocks.

In a fee based account you should be getting advice on how to properly construct a portfolio (100% Cdn dividend stocks is not proper advice, assuming these assets represent all of this persons investable assets). The fee should basically include everything, including any trading costs (based on this size of account I would think the amount of trades per year may be limited to a certain number).

So generally speaking, if you're in a fee based account with 300k, you should be getting a fee under 2% for an all equity portfolio, and you should expect that fee to reduce as your portfolio grows.

Hope that helps.

[Sugarphreak]

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[91_Integz]

Originally posted by Sugarphreak


I doubt there is even somebody located in Calgary with this kind of caliber

IMO if you have a million dollars to invest, you invest in commercial real estate. That or go to New York and look for the guys from Suits.

This statement couldn't be farther from the truth. I work in the high net worth investment space (typically $2M+ in investable assets) and one of the common mistakes I see regularly is this type of behavior.

Does commercial real estate play a part in a diversified portfolio? Yes it does. But, for example, would you want to own a piece of commercial real estate right now in Calgary with 100% of your investment assets?

[sputnik]

I have a good friend that is a fee based financial advisor for RBC Wealth Management.

Generally speaking his clients pay about 1.5% (he gets a fraction of that) and it takes a portfolio of at least $500k before he will take you on as a client. Most of his clients are in the $1-2 million range.

That said, he works REALLY hard for his clients. All of his income comes from commission and if he isn't treating his customers well, they walk and he loses money. Needless to say he cares a LOT about YOUR money. Since your success equals HIS success as many of his clients also are referred to him from his other clients.

You don't want to get confused with the typical financial advisors or are really just mutual fund salespeople. They will sell you a mutual fund, collect their commission and not care about your future. They already made most of the money they are going to make from you and could care less what happens afterwards.

[s2k_boi]

Originally posted by kaput
They didn't give me much detail, but it sounds like they are paying somewhere between 2.2 and 2.4% for a company to manage about $300k of Canadian dividend stocks (not mutual funds or ETFs, and yes I know those are probably better options in this circumstance so please don't sidetrack the discussion). I can't remember the name of the company but it wasn't one I had heard of before.

I've seen numbers ranging from 1.5% down to 0.85% for large portfolios on other sites but they didn't mention the size of portfolio or specific services provided for those costs.

I would agree with the range depending on $$ amount in account and firm. An all equity range should be in the .75 - 1.50% range. - generally this includes a specific number of trades per year too.

However, if it's fee based funds it could be say 1.75% depending the fund used.

[max_boost]

Originally posted by Sugarphreak


I doubt there is even somebody located in Calgary with this kind of caliber

IMO if you have a million dollars to invest, you invest in commercial real estate. That or go to New York and look for the guys from Suits.

I have been saying it for years. The beyond secret society either won't out who their financial mgmt team is or simply don't have one haha

[91_Integz]

Originally posted by sputnik
I have a good friend that is a fee based financial advisor for RBC Wealth Management.

Generally speaking his clients pay about 1.5% (he gets a fraction of that) and it takes a portfolio of at least $500k before he will take you on as a client. Most of his clients are in the $1-2 million range.

That said, he works REALLY hard for his clients. All of his income comes from commission and if he isn't treating his customers well, they walk and he loses money. Needless to say he cares a LOT about YOUR money. Since your success equals HIS success as many of his clients also are referred to him from his other clients.

You don't want to get confused with the typical financial advisors or are really just mutual fund salespeople. They will sell you a mutual fund, collect their commission and not care about your future. They already made most of the money they are going to make from you and could care less what happens afterwards.

This is exactly right. Not all Advisors are created equal, and to be honest most in the industry are sales people, especially the ones charging in the 2.5% range.

Originally posted by s2k_boi


I would agree with the range depending on $$ amount in account and firm. An all equity range should be in the .75 - 1.50% range. - generally this includes a specific number of trades per year too.

However, if it's fee based funds it could be say 1.75% depending the fund used.

This is also true as well. If you are in a fee-based account but holding mutual funds in the portfolio it's likely there is an embedded MER in each fund, adding to your overall total cost. Something to be aware of, as many people think the only fee being charged if the one they see debited from their portfolio every month/quarter.

To provide a bit context, an all equity portfolio with an all-in fee of 1.50% is likely going to need to be in the million dollar range. To get an all in fee of 0.75% it'll need to be in the $5M+ range. This fee should include everything, potentially even private banking fees.

[dezmarez]

What kind of services are you looking for?

Are you looking for investment advice specifically or are you looking for overall wealth management, that includes investment advice but also looks at retirement planning, estate planning, education planning, risk management, tax management etc.

I would take your time to make a decision. As mentioned above, there are a lot of people in the industry, which means there can be a lot of people that are just in it for the sales and commissions.

Look for industry designations. For day to day investment advice, CFA is the gold standard. For financial planning advice, CFP is the industry standard. If you can find an advisor that has both, it is safe to say they will do a good job.

However, these type of advisors typically deal in the $1,000,000+ of assets.

For a fee-based account, that holds mutual funds, there will be an embedded MER in the individual funds, however, the "Trailing Commission" the part of the MER, advisors get paid on, isn't there. They would be compensated from the fee portion.

So you may have a fee based account charging a 1.00% fee, and the embedded MER of each fund is in the 0.5-1.00% range, so your net fee can range from 1.50-2.00%.

They one big benefit for fee-based advisors, is they don't charge, front-end or back end fees, so they are really reliant on giving you great service on an ongoing basis, or else, you can pull your money and go somewhere else.

Also, there are specific, fee for service advisors, that charge fees based on the advice they give. Similar to how a lawyer would charge for their services. You would have to look to take their advice, and then execute everything on your own. Compared to a fee-based advisor, who will also help you execute any strategies.

As you might be able to tell, I work in the industry, so feel free to shoot me a PM if you have any other questions.

[Dycker]

If you don't have more than $1mil in investable assets AND you don't want to spend more than 5 hours a day researching companies, just get a Fee-Only Financial Planner to keep you from doing stupid things ('cause you will do stupid things) and either

1) invest your money in Wealthsimple or another robo-advisor for 0.35% management fees + the 0.05% - 0.50% ETF MERs

2) setup your own ETF portfolio and don't deviate from it with any "HOT STOCK TIP" advice from Beyond, paying only the brokerage trading fees ($9.99) + the 0.05% - 0.50% ETF MERs

[kaput]

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[Prail]

Canadian Couch Potato is a pretty good resource.

[Dycker]

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Originally posted by Prail
Canadian Couch Potato is a pretty good resource.

Originally posted by kaput
How about these guys:
https://www.pwlcapital.com/en/Home

Dan Bortolotti (guy behind Canadian Couch Potato) works at PWL Capital's Toronto office as an Investment Advisor & Financial Planner.

Over $1MM, investment managers start looking into more strategic investing outside of the major stock markets. Same basic ideas (minimize taxes, diversify risk, maximize earnings potential, etc.) just more options with bigger accounts.