Sep 26, 2019
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78 ALBERT STREET, OSHAWA, ONTARIO, L1H 4P91-800-646-1125 I 1-905-571-7644 I Alana@Capesky.ca
78 ALBERT STREET, OSHAWA, ONTARIO, L1H 4P9 1-800-646-1125 I 1-905-571-7644 I Alana@Capesky.ca
Capesky Insurance and Wealth Management Inc. may also be eligible for additional compensation, such as bonuses and non-monetary benefits, such as travel incentives. This compensation depends on various factors such as the volume of business placed with a particular company during a given time period.
The management fee (as shown in the diagram below) includes two components:
The fee paid to the investment manager: Pays for professional investment management, supervision of the fund, administration of fund operation and service support.
The trailing commission paid to an advisor: Fund companies pay ongoing fees (known as trailing commissions or trailers) to the firm for which your advisor works. A portion of the trailing commission is sometimes paid to be the advisor’s firm to its representatives.
The value-added activities that you advisor provides in exchange for the trailing commission can be summarized under three pillars:
Encompasses a wide range of activities, including account openings/closings, reporting and issuance of quarterly account statements and client communications, and regulatory compliance activities.
Represents the expertise an advisor provides to clients. This expertise can include fund recommendations and portfolio construction; ongoing monitoring and portfolio re-balancing; and retirement, tax or goal-specific planning.
Includes the infrastructure required of your advisor’s firm to support the distribution, sales and servicing of all types of investments.
Retirement savings plan (RSP)
Spousal retirement savings plan
Locked in retirement savings plan (LRSP)
Locked in retirement account (LIRA)
Restricted locked-in savings plan (RLSP)
Retirement income fund (RIF)
Spousal retirement income fund
Life income fund (LIF)
Locked-in retirement income fund (LIRF)
Restricted life income fund (RLIF)
Prescribed retirement income fund (PRIF)
Tax free savings account (TFSA)
With a back-end load, you do not pay a sales commission at the time of purchase; instead, it’s the fund company that pays a redemption fee to the fund company.
A front-end load is a sales commissions paid upon purchase of a fund and is expressed as a percentage of the amount you invest (ranging from 0% to 5%). The commission, which is often negotiated with the advisor prior to investing, is deducted from your initial investment and paid to your advisor’s firm.
No sales commissions are paid when a no-load fund is purchased or redeemed.
Each fund also pays an administration fee that is used to pay for regulartory filing fees and other day-to-day expenses such as:
Accounting and fund valuation costs
Audit and legal fees
Costs of preparing and distributing annual and semi-annual reports and prospectuses
Each fund is required to pay Harmonized Sales Tax (HST) on management fees charged to the fund. In general, the HST rate depends on the residence of the fund’s unit holders at a certain point in time.
The Management Expense Ratio (MER) represents the combined total of the Management Fee, Operating Expenses and Taxes charged to a fund during a given year expressed as a percentage of a fund’s average net assets for that year.
The returns you earn as an investor – weather reported in your statement, in newspaper or in promotional materials reflect performance data that is reported after the fund’s MER is deducted. For example, if your fund’s investments gained 9% last year and its MER is 2%, the reported return would be 7% for that time period.
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