The Scoop On Investment Fees

 Investment Fees FAQ's

What are the different kinds of fees involved? 
There are two main categories of fees, investment management fees and sales charges.

For investment management, also known as a Management Expense Ratio (MER), fees vary depending on the size of your portfolio, the investment company and the product selection. As independent Investment Advisors we are able to find the right investment at the right fee level to fit your needs. A typical MER for an investment we would recommend ranges from 1.2% to 2.5%. There are four main types of sales charge loads

Deferred Sales Charge (DSC): When depositing your money into a DSC investment there is no upfront charge to you, the client, but on withdrawal or transfer out there is a declining scale based on the amount of time the money has been invested. For example: 5-6% in year 1, declining to 0% in years 6-7.

Note: Within the DSC environment, we are often able to switch between investments within the same investment company without incurring a DSC charge. Only for accounts help at Continuum II with less than $100,000 in investments, your funds will likely be purchased on a DSC basis, but with your consent in advance.

Low Load (LL): Low load fund charges operate similar to a DSC but offer a lower sales charge (For example: 2.5% to 3%) and have a much shorter schedule, often 3 years, rather than the DSC schedule of 6 to 7 years. The Low Load schedule is used for accounts held at Continuum II between $100,000 and $250,000 in investments.

No Load (NL): A No Load fund doesn't charge a fee when units or shares are bought and sold.  For accounts between $250,000 and $500,000 in investments, Continuum II is able to offer a no load schedule.

Reduced Fee (F Class): F Class differs from the above examples as it unbundles the advisor commission from the MER and there is no LL or DSC sales charges. For $1 Million + in investments, an example of F Class would work like this: The Advisor compensation of 0.75%, plus the management fee of 0.80%, for a totally cost before tax of 1.55%.

Are F class fees tax deductible? Typically, yes, with certain limitations. Registered accounts (RRSPs/RESPs/TFSAs) F class fees are not tax deductible. For non-registered accounts, investment advice fees may be tax deductible. The fee needs to be in relation to investment advice, and should always be confirmed by your accountant.