A management expense ratio (MER) is the cost to invest in a standard segregated fund, and it’s where we’re paid from. 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.

How your money gets split out in an MER
You invest $10,000 in a standard segregated 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 goes to:
o Insurance company to cover the guarantees you’ve chosen, administration, operating expenses, compliance and oversight
o Fund manager for investment management expertise like research, analysis and insight
• $100 for the distribution cost, of which a portion goes to financial advisors, like us, for the services provided to the client, which may include:
o Advice and a plan, which can help you stay on track
o Adjusting your plan as your life evolves
o Helping you create savings habits that can pay off in the long run
• $33 for taxes
Realizing the value of the right advice
We all have long-term goals. We can help by looking at your personal situation and the factors that may make significant impacts to your retirement lifestyle and income years down the road. We 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 Shannen or Adriann to review your investment needs and to get started on your retirement journey.
*An economic analysis of the value of advice in Canada, by Claude Montmarquette, CIRANO, 2012
Source: The Canada Life Assurance Company

Investing In Segregated Funds. Why Is There A Fee?

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