Blogs & Comment

Canadian fund fees “in line:” study (II)

Just to follow up, as promised, on the MacKenzie Financial-commissioned study of U.S-Canada mutual-fund fees, it does look like there are some methodological issues. A few were raised in my previous post, for example, the assumption of a 5-year holding period for back-loaded funds, which would mean the cost of deferred sales charges were not considered (favoring Canada since the U.S. has much fewer DFC funds).
I need not go into detail and repeat what many other bloggers have pointed out. Instead, I would like to make a more general point. It’s all well and good for studies to compare the cost of owning U.S. and Canadian funds with “advisor fees” in them. But another issue is: to what extent “advisor fees” provide value added. Many people would argue “financial advisors” are salespersons and the trailer fees are “commissions” paid by fund companies to promote their product. Indeed, in the U.S. fund salespersons get most of their renumeration through front-end sales loads
I have written about this before. As noted in one particular post, several academic studies have found advisors do not add value in the selection of mutual-fund portfolios and other aspects. As for ancillary services such as retirement and tax planning, the Financial Planners Standards Council (FPSC) showed only 40% of certified financial planners did financial plans for most of their clients in 2006, down from 53% in 2002.