28% of B.C. clients don’t know how advisors are paid

Just in time for RRSP season, many investors will receive new information about the fees they pay for investments and advice, courtesy of CRM2 fee disclosure regulations.

In preparation, the British Columbia Securities Commission launched its Take a Look campaign last October, intended to encourage investors to pay attention to the fees they pay.

According to a recent BCSC study, B.C. investors still have significant gaps in fee knowledge.

Read: Investors to feel ’empowered’ by CRM2, survey indicates

Of investors surveyed, 28% don’t know how their advisor is paid and 36% aren’t familiar with the types of fees they pay for their the investments. Only 44% agree that paying 1% more or less in fees will make a difference to their returns.

And, while 83% of investors say they know whether the value of their portfolio went up or down over the last year, only half (51%) know the total amount of direct fees they paid in the past 12 months. And only a small group of investors (34%) know the impact of the indirect fees they pay from their investments.

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“Fees impact your returns over time. Fees are a fact of investing, and we want to empower investors to discuss them with their advisors,” Pamela McDonald, director of communications and education at the BCSC, says in a statement. “This is why we created a number of new online tools, like our fee calculator, to help make this important information more accessible.”

Read: MFDA releases CRM2 client guide

The BCSC released the new tools as part of the Take a Look campaign, including a fee quiz, fee guide and investment fee calculator. The latter allows users to directly compare different fees and see their impact on investment returns.

Innovative Research surveyed 804 B.C. investors for the BCSC in November and December 2016. For the full findings, visit the BCSC’s investor education website.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.