Money About $195 million is going to discount brokers, instead of you and me

15:41  16 april  2018
15:41  16 april  2018 Source:   MoneySense

Why discount investors should hate A class fund fees

  Why discount investors should hate A class fund fees Class action lawsuit signals investor resolve to end trailing mutual fund commissions for online brokers.

If you are constantly making trades in the tens of millions of dollars range, then discount brokers I've never had Interactive Brokers treat me to lunch so that I can gripe about their services, but this If you are a client of a prime broker , you aren't going to be calling the call center, there will be a

The Simple Dollar’s Top Picks for Best Discount Brokers . Best Discount Broker Overall: Ally Back in 2008, the iconic investor bet some bigwig hedge fund managers million that they couldn’t If you ’re a buy-and-hold investor, Fidelity is going to give you the most tools to trade effectively while

a close up of a mans face: iStock© Used with permission of / © Rogers Media Inc. 2018. iStock

Did you notice how virtually everyone on Bay Street was up in arms when Bill Morneau announced recently that the federal deficit for the forthcoming fiscal year would be $18 billion?  The outcry was predictable and enormous:

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In-depth reviews of online discount brokers and their tools, features and flaws. It is beyond me why folks would think this. If I can pay .00 instead of .00 WHY would I NOT pay less? We were going to continually update, but as you can see from all the responses, above it's really hard to get

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  • How is this fair to future generations?
  • When will we ever return to surplus?
  • Notwithstanding the answers to the above, how long will it take to eradicate the accumulated national debt?

Well, I noticed something else…. rank silence on the matter of trailing commissions that are being paid by retail clients at discount brokerages. Specifically, the Canadian Securities Administrators (CSA) now tell us there is about $25 billion in A series mutual funds paying trailer commissions (ostensibly for financial advice) to discount brokers – a group that goes out of its way to inform its clients that it will not, under any circumstances, offer financial advice.

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If you were to do an Internet search for “online brokers ”, you ’d come back with somewhere north of 31 million results. There’s not quite that many online brokerage firms, but there are certain a lot of It is important to note that each discount broker is going to handle commission negotiation differently.

Will Social Security be there for me? Instead , many full-service brokers want to take advantage of beginning investors, making the investing process more opaque and costing you a lot more money The better long-term answer is to pick a discount broker that won't charge you a huge amount in fees.

Here’s a pop quiz: assuming an average weighted trailing commission of 0.78%, how much money is being squandered annually?

The Answer: about $195 million.

READ: Do I still pay fund fees in a self-directed account?

In other words, every year, Canadians pay more than 1/10 of the annual deficit to discount brokers for non-existent financial advice.  Meanwhile, the financial services industry says that our federal government “squanders” far too much in its “spendthrift” fiscal plan.   To put this in perspective, let me ask:  how much would regulators save ordinary investors per day, if it disallowed this usurious practice? The Answer: ($25,000,000,000 x .0078)/ 365… or $534,246 per day.

READ: How mutual fund fees work

My question to the broader financial services industry is simple: why the silence on this?  If you genuinely want people to believe that you are speaking on behalf of the collective welfare of all Canadian citizens, then why do you say nothing when people are being forced to pay for advice that they neither request nor receive?

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Discount Real Estate Brokers - Can You Save Money? Menu. Search. Go . If you agree to buy a home through the listing brokerage instead of hiring a selling agent, many times the broker will reduce the listing commission fee.

If you go in with a discount in hand, you ’re trashing that value and throwing it out the window. When you ’re offering your prospect a discount , you 're going to have to sell a whole lot more in order to meet your monthly quotas.

John De Goey is a Portfolio Manager with Industrial Alliance Securities Inc. and the author of The Professional Financial Advisor IV.  Industrial Alliance Inc.is a member of the Canadian Investor Protection Fund (CIPF).  The opinions expressed herein are those of Mr. De Goey alone and may not be aligned with the opinions and values of Industrial Alliance Securities Inc. or any of its affiliated companies.

MORE BY JOHN DE GOEY:

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Air Canada, WestJet offer cheap basic economy fares for no-frills seekers .
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