Most investors have a good understanding of how mutual funds work, but ironically, very few understand the fee structure behind these investment products.
Look at it this way, when was the last time you purchased a car or a computer without fully knowing its purchase price? Hopefully, never.
With the intent of reducing conflicts of interest and stimulating confidence towards retail investment markets, financial authorities in Great-Britain and Australia will lead the way by banning conflicting remuneration structures as of 2012. Consumer advocates have long denounced fund commissions for providing a skewed incentive for financial advisors to favor funds that pay them over those that do not, regardless of performance. The bottom line is that advisor compensation will not be dictated by product manufacturers but by clients themselves.
Canadian authorities are still in observation mode. In Quebec, the adoption of such a system is not in the Autorité des marchés financiers (AMF) plans.
At Claret, we believe that transparency is crucial for any relationship built on trust. Our compensation is therefore directly aligned with our client’s objectives, which eliminates any possible source of conflict of interest.
Your questions or comments are more than welcome.