There's chatter in the investment industry that new rules requiring better disclosure of advice fees and portfolio returns have been a non-event with investors.
That's wrong. In the 18 years I've been personal finance columnist at The Globe and Mail, I have never received as many queries from readers about fees and advice. Now that they know what they're paying in dollars and cents to their advisory firms, investors are taking a more critical look at the advice they're receiving. A good example is this comment from a reader: "I have approximately $80,000 in a registered mutual fund at one of the Big Five banks for which I have not received any advice for over three years."
Can this mutual fund invested be converted to an exchange-traded fund, this person asks. Answer: You bet. Have the fund transferred to a registered account at an online brokerage account, place a sell order and then buy ETFs. Or, see if there's a D-series version of the fund. D-series mutual funds are for do-it-yourself investors – they have reduced fees to reflect the fact that the client receives no advice.
One of the most common questions I'm getting from readers today is whether it makes sense for them to convert mutual funds with an adviser to a ETFs in a do-it-yourself account. The question I always toss back is this: Are you getting useful advice from your adviser? Managing your portfolio is just part of this analysis. You should also have a financial plan that maps a route from your current situation to where you want to be in retirement and beyond. Tax, insurance and estate planning might also be part of the package.
If you own mutual funds and haven't heard from an adviser in years, you're way overpaying for investments. Low-cost ETFs are one alternative – others include a robo-adviser or a human adviser who actually advises. People assume the alternative to a do-nothing adviser is going the DIY route with ETFs. Not so.