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It's important to know how much your investment fees are and what they get you

Understand investment fees

“What are the fees?”

That is often the first question people ask when they are looking to invest.

This is a fair question and something that should be understood by the investor investing their hard-earned dollars. However, when you look at fees, a lot more should go into your consideration than just that alone.

You may pay a low fee, but a lot of the time that means you’re investing it on your own or you’ve selected a set-it-and-forget-it, one-size-fits-all portfolio. It’s not uncommon to see, for example, a fund called Fund2045. All that means is it is built for someone intending to retire in the year 2045. This portfolio isn’t designed for a low risk or high-risk investor, and it is not actively managed. So that means lower fees.

Does this seem like something that is going to obtain substantial returns throughout the life of the investment? Unlikely. There are many other pre-built portfolios you can invest in that aren’t rebalanced constantly by an advisor that is closely following the markets and economic conditions.

Like every profession, advisors get paid for their skill set and education. They are not paid directly from their clients’ investments, but they are instead paid by their carrier based on how many assets they hold as a firm. Kamloops' Wealthy Roots Financial, for example, does not believe in deferred sales charge funds or any other type of platform that doesn’t benefit its clients. The firm’s platform is designed to protect the client—not the company—and feels that’s how it should be.

So what should you be investigating to know if you’re getting real value for the fees you’re paying? Consider the following questions:

• Does your advisor do income projections for you as you near retirement?
• Does your advisor often rebalance your portfolio as economic conditions are changing?
• Does your advisor see you a minimum of once per year?
• When you reach out to your advisor can you expect a quick response?
• Do you receive investment summaries consolidating all your accounts on one page for easy viewing?
• Can your advisor offer all insurance products, travel insurance and health and dental benefits in one place?
• Can they provide Estate planning that protects your hard-earned assets?
• Do they provide advice when it comes to your Canadian Pension Plan payment, pension options and Old Age Security?
• Is it hard to make an appointment with them or do they address your concerns and get you in for a meeting or phone chat?
• Do they review your beneficiaries to ensure you’ve thought of all the tax implications?
• Can they work with your accountant and lawyer to ensure a cohesive relationship?

When you look at picking an advisor, it’s easy to hyper fixate on fees, but you really need to focus on the value-added services they should be providing you.

If they provide solid returns in the years they should be, coach you during the negative years, and provide next level service, you’ve probably found a great advisor.

The mother-daughter duo of Sandy Vollo and Shelby Seath at Wealthy Roots Financial have the experience, knowledge and compassion to guide you on your retirement path. To set up a meeting with the dynamic financial tandem, visit the Wealthy Roots website here.

This article is written by or on behalf of the sponsoring client and does not necessarily reflect the views of Castanet.



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