The Big Deal About Smaller MERs

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My friends over at EdgePoint Wealth posted a piece on their website titled The Big Deal About Smaller MERs that I thought would be a good topic to discuss in this month’s issue of the Martens Report. Their main argument is that lowering your management fees, even as small an amount as 0.25% on your investments, can add up to a significant savings over time.

One of the main principles EdgePoint continues to deliver on is their commitment to lowering the cost of investing for their unit holders. Establishing higher minimum investment requirements ($15K per fund) and having a significantly smaller marketing budget are some ways they have achieved this.

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One area I have done a lot of research on over the past few years is finding out what programs there are in place to lower the fees with some of the other mutual funds companies I regularly use. I should note that many mutual fund companies have become increasingly competitive over the past few years, and these programs continue to improve. Every few months someone has a new or better offer to lower fees to account holders who carry a higher balance. I feel this has created an opportunity for investors to enjoy the same high quality management they are used to, with reduced fees. Whether it is Invesco’s ‘P’ series, Dynamic’s Altitude program, CI Funds’ PIM (Private Investment Management) platform or Mackenzie’s Private Wealth, what has been the most interesting for me is that all of them have a different set of rules for what qualifies and how the programs are structured. The minimum investment for these programs can range from $100K - $250K and I have found the savings can range from 0.15% to 0.70% depending on the fund. Some companies also offer family pricing meaning they will ‘household’ accounts together for investors residing at the same address. To take advantage of these programs we have been looking at consolidating client accounts to run with fewer investment firms. We are still using the same management teams we did in the past, so you are not giving away the quality of your management, but getting it at a lower cost. Here is my exercise for you. It is no secret that many people use multiple advisors, whether you have an investment through the bank, an old plan from a former employer or perhaps your spouse uses a different advisor than you. Take a moment and add up all the various investment accounts you have and see what they come to. Multiply this amount by 0.25%. This could be your savings over one year if you bring all your accounts together with one advisor and we are able to utilize these programs. If you think this is important, book an appointment with my office and I will see if there is a way we can lower your fees, without compromising the quality of the management you are getting. Thank you, Andrew & Peter

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