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Investing in segregated funds policies. Why is there a fee?

A management expense ratio (MER) is the total* fee you will pay to invest in a standard series segregated fund policy. It’s important to note that you do not pay the MER directly; rather it’s paid by the fund itself, which reduces the value of your investment accordingly.

Seg funds

How your money gets split out in an MER

You invest $10,000 in a standard series 75/100 version of a typical Canadian balanced fund with an MER of 2.9 per cent. Through the fund you will pay a total of $290 in fees for the year, which may be broken out as follows:

  • $157 for the management of the fund, fund operating expenses and the capital guarantee provided on your investment
  • $33 for taxes
  • $100 for administration, compliance and oversight provided by the investment manager, of which, on average in the industry, $80 goes towards paying the financial security advisor for the services provided to clients, including financial advice, and operating and overhead expenses incurred by the firms while providing those services.

Realizing the value of the right advice

We all have long-term goals. I can help by looking at your personal situation and the factors that may have significant impact on your retirement lifestyle and income, years down the road. I work to help ensure your investments are chosen within your risk tolerance to help make the journey comfortable.

A recent report from CIRANO has shown that financial advisors contribute significantly to the accumulation of financial wealth and that the value of advice increases over time. With seven to 14 years of professional advice, the difference in household financial assets attributable to financial assistance is 1.99 times greater than to those households with no assistance – and that difference increases to 2.73 times more after 15 years of advice.**

The CIRANO research further shows that having advice positively impacts retirement readiness and is an important contributor to satisfaction and confidence in long-term planning.

Contact us to review your investment needs and to get started on your retirement journey.

**CIRANO, An econometric analysis of the value of advice in Canada, Claude Montmarquette, 2012


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Content provided courtesy of London Life Insurance Company

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