Fees And Costs

If you were able to discern your portfolio's performance relative to the benchmarks from yesterdays blog, how did it stack up?

If you found that you were under-performing or even keeping up with the benchmark (especially over the longer-term), then it may be time to assess exactly what it is you are paying for with your fees and especially the hidden / embedded costs built in to ETF's and mutual funds.

Here are (what I consider to be) some of the key services that you should be looking for in the fees and costs that you incur:

1) Are you getting a financial plan and investing strategy that is specifically tailored to your needs?

• As I have said many times and will continue to say (sorry for being boringly repetitive), you cannot have a proper investment strategy until you define your goals and the time  frame in which you wish to acheive them. In order to do that you need a plan.
• Beware the strategy that tries to force the round peg into the square hole.

2) Are you getting active or passive money management (or a combination of both)?

• If you are getting active money management (from a discretionary portfolio manager), you may be paying a higher fee, which is acceptable as long as they are providing you with better than average returns (added value).
• If you are getting passive management (a diversified group of ETF's, for example), are you getting active regular re-balancing? 
• The difference between discretionary and non-discretionary portfolio management is that portfolio re-balancing is automatic (with discretionary management), but has to be discussed first with non-discretionary advice.
• This can have a significant impact on the timing of any buys and sells and can be instrumental in getting the re-balancing done appropriately and strategically (and fairly for all clients).

3) Are you getting the appropriate amount of communication?

• Weekly updates
• Quarterly reports
• Semi-annual reviews (and plan monitoring, appropriate asset allocation adjustments, strategy modifications, etc.)
• Or do you have to initiate the communication?
• Do you get direct access to the portfolio manager (if you want to address specific concerns)?

Lots of things to think about when assessing what service you receive vs. the price that you pay. 

But most importantly, ask yourself: Is this a good client experience? Am I getting good (or just mediocre) stewardship for my financial future? 

It baffles me how some folks get hooked in to signing up and then are just left to drift in the hope of something better in the future (promises unfulfilled). Actually makes me kind of angry when I hear stories like that.

I say "Client First"!

Thanks for all the recent feedback friends, glad I can be of some help. Keep it coming....

scott@highrockcapital.ca

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