What do you do to make fees more transparent?

March 10, 2017 | Last updated on March 10, 2017
2 min read

Jane Alm

Jane Alm

senior investment advisor, National Bank Financial in Edmonton

We carefully explain fees—for management expense ratios (MERs), advice and transactions—in both percentages and dollar amounts. If a client is on a transactional account, we explain costs before the transaction occurs, because that sometimes changes the client’s buy strategy.

When clients see dollar amounts, they tend to pay greater attention and subsequently understand fees better. You may get clients trying to pick and choose services, but it’s up to advisors to explain their holistic approach: pricing isn’t piecemeal; it’s all-in, covering a full range of services.

Brad Brain

Brad Brain

senior investment advisor, Aligned Capital Partners in Fort St. John, B.C.

For larger accounts, I’m transitioning to a fee-for-services model. Those clients will know exactly what they’re paying, but that model’s not inherently superior.

I want clients to know total costs regardless of the billing model, because they need complete information to make sound decisions. That means focusing on total expense ratios (TERs), for instance, not simply MERs.

But the efficiency of fee-for-service keeps costs down, and that’s what I care about more than billing models or transparency. On large accounts, I can deliver high-quality financial products at a lower cost—a win for clients.

Stephen Jones

Stephen Jones

senior financial advisor, Assante Wealth Management, Waterloo, Ont.

We’ve shown costs on investment statements for many years. Now, we’re telling clients to expect a letter about costs; however, we explain costs to them in advance of the letter.

In the last several months, ahead of CRM2, I’ve spent about 15 minutes doing a one-time presentation and discussing costs with each client—how costs aren’t changing but are more transparent—and then I show those costs on a spreadsheet.

I disclose both the cost of advice and of investing. For non-registered accounts, I show any tax-deductible costs. The spreadsheet shows each individual cost, as well as the total, in both percentages and dollars.

I’m fee-for-service, so I also show clients what I don’t charge: fees for commissions, for buying and selling, and for rebalancing.

Finally, I discuss with clients the value I offer, such as tax and estate planning. [Then,] we both sign the document to indicate we’ve had the discussion, and I add a cover letter encouraging them to call if further explanation is needed.

Agree? Disagree? Have your own question or answer? Write us at news.advisor@tc.tc

by Michelle Schriver, assistant editor of Advisor Group.