According to a sheet of paper stuffed in my mail slot, it’s “time to think about being paid what you’re worth.” Investors Group is taking on twelve new “consultants” in my area. This prompted me to poke around the Investors Group web site to look at their investment products. I didn’t much like what I saw.
Presumably, Investors Group (IG) consultants would sell IG mutual funds among other things. The fund selector on IG’s web site showed 84 funds designated as “aggressive growth,” which seems to mean stock funds. The dollar-weighted average management expense ratio (MER) was 2.65% per year!
This is staggeringly high. Most forecasters consider an estimate for the long-term compound return from stocks of 6% above inflation to be optimistic. IG stock funds take away nearly half of this return in MERs.
Actually, it’s worse than the 2.65% I calculated. This percentage is for the back-end loaded version of the funds, where you pay a percentage upon leaving the fund if you leave too soon. Typically, a back-end load starts at 5% or 6% and declines to zero over 5-7 years. The unloaded version of IG’s funds typically had an MER about 0.15% higher than the loaded versions.
What about Canadian money market funds? These are supposed to be ultra-safe funds that give very modest returns. They typically have low MERs. IG has three Canadian money market funds. The only no-load fund has a painfully high MER of 1.13%. The loaded funds have MERs of 0.66% and a whopping 1.27%!
This was enough for me. I have moments where I think it might be fun to be a financial advisor, but I certainly wouldn’t want to do it having to sell mutual funds with such painfully high expenses.