Rob Carrick gives us an excellent perspective on how the mutual fund fee structure was formed. One quibble I have with his prescription for the future is that I don’t see why trailing commissions should be replaced “with a fee that is set by the adviser as a percentage of the client’s assets.” Separating out the fees for advice makes a lot of sense, but I don’t see why these fees should be directly proportional to the size of the client’s portfolio. It isn’t 10 times more work to provide advice on a million-dollar portfolio rather than a $100,000 portfolio. Some costs are variable, such as potential liability for mistakes, and richer clients may have higher expectations. But, many costs are fixed. Rather than a fixed percentage advice fee, it makes more sense to charge a fixed dollar amount plus a smaller percentage. Advisors aren’t likely to think much of this idea much because dollar amounts sound big to their clients and percentages sound small.
Canadian Mortgage Trends reports that RBC and TD are competing a little harder with their advertised mortgage rates. The big banks tend to advertise mortgage rates well above competitive rates. I can see two advantages of this. One is that some people wander into a bank and actually pay the posted rate. I did this when I was young. Another reason is that tinkering with posted rates affects some interest rate differential formulas the banks use to decide how much they’ll charge you to break your mortgage. Hopefully, Canadian Mortgage Trends is right that today’s competitive pressures will force big banks to post more competitive mortgage rates.
Gail Vaz-Oxlade describes some interesting RRSP tricks for those under 19 and over 71.
Canadian Couch Potato explains how to compute your U.S. ETF returns in Canadian dollars. It’s nice to see writers show the correct way to “add” percentages when they need to be compounded.
Big Cajun Man has some fun with some sarcastic New Year’s resolutions.
Preet Banerjee explains why he mentioned the male appendage to Peter Mansbridge in his Mostly Money Mostly Canadian podcast.
The Blunt Bean Counter explains the value of maintaining separate credit cards for business and personal purchases.
Million Dollar Journey explains some of the ways that pension schemes calculate your starting benefits. Commenters added more useful insights into pension levels.
My Own Advisor is making steady progress toward his goal of earning $30,000 per year in dividends. I suspect he will have to increase this figure over time to compensate for inflation.
Retire Happy Blog suggests 3 financial resolutions.