The socio-economic impact of traler commissions
Mutual fund trailer commissions create a conflict-of-interest between a dealer representative ( "advisor") and a mutual funds client. This can impair client retirement accounts due to mis-selling and over-selling. With $1.5 trillion of mutual funds having been sold to Canadians , billions of dollars are involved.
Read the article to better understand how your retirement income security may be jeopardized by the nasty advisor behaviours such commissions stimulate.
If you want to see the long-term impact of fees on returns try the fee impact calculator at www.getsmarteraboutmoney.ca .
Don’t forget you can reduce up to 10% as “free
units” each year .By actively redeeming the units that don’t attract redemption
fees each year, investors can get out of DSC funds more quickly. Setting
distributions in cash is another way to do it but you can’t do both (i.e. cash
distributions typically count toward an investor’s free units) .
Other trailer related issues that have unduly cost Canadians hundreds of millions of dollars include mutual fund churning and the impact of paying for advice to discount brokers who could not and did not provide that advice. We have covered those abuses in previous posts. Caveat Emptor.
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