Dec 2016 statements at TDDI & Qtrade look exactly like they always did. I can't see any evidence of CRM2
CRM2 and new statements from discount brokerage?
How do you like the new statements from your discount brokerage that was mandated as phase 2 of CRM practice?
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Different brokerages handle things differently it appears. BMO IL says their December statements will be issued 3rd week of January (this week) with the new reporting stuff included. Scotia iTrade issued their December statement first week in January as normal but said that the additional reporting requirements would be issued circa Jan 17th. This week should see a flurry of activity.
That said, both websites already show quite a bit of performance reporting, including annual and cumulative returns going back to 2013, charting capability with indices, portfolio growth, etc. Just don't how complete it is, nor are costs posted. Curious about seeing what these 2 companies report.
That said, both websites already show quite a bit of performance reporting, including annual and cumulative returns going back to 2013, charting capability with indices, portfolio growth, etc. Just don't how complete it is, nor are costs posted. Curious about seeing what these 2 companies report.
Same here at TDDI. Preet Banerjee was on Global's Morning Show this AM discussing the new reports. He said the new reports should be out within 2 weeks, one for each account. I got the impression they would be new reports that are separate from the standard monthly statements.Dec 2016 statements at TDDI & Qtrade look exactly like they always did. I can't see any evidence of CRM2
From the OSC. http://www.osc.gov.on.ca/en/Dealers_crm2-faq-planning-tips.htm
Sounds like issuing reports once per year would suffice.Beginning July 15, 2016, registered firms will need to:
- provide an annual report on charges and other compensation that shows, in dollars, what the dealer or adviser was paid for the products and services it provided; and
- provide an annual investment performance report that covers
- deposits into, and withdrawals from, the client’s account;
- the change in value of the account; and
- the percentage returns for the previous year; and the previous three, five and ten years.
Everyone responding to this thread should indicate what broker and the date they received the reports.
^ Received these 2 reports today (finally) from CIBC IE and performance reporting is just for 1 year - the previous 2016 ... and now "monthly" statements will reduced to "quarterly" if there's no transaction to report ... dividends, interest and cash disbursments do not count as transactions.
Received e-notification from National Bank Discount Brokerage that these were available on January 12.
Despite being a long-time customer, only 1 year returns were provided. Time-Weighted and Money Weighted returns were shown for each of my accounts. A total return for all my accounts was not provided.
Fee disclosure was interesting, especially as it relates to the disclosure of trailing commissions. I have mostly transitioned to an ETF portfolio, but still hold some actively managed mutual funds (~20% of my portfolio) for various reasons (i.e., ease of small monthly investments / parking of ETF distributions and areas where I feel that active management can add value like small caps / emerging markets / Asia-Pacific, etc.). Intuitively, I knew that I was paying the full MER of the mutual funds I own and that part of the MER (i.e., the trailing commission) is there to go to my advisor - but, since I have a self-directed account, there is no advisor to send the trailer to so my brokerage just pockets it. I knew this.
However, seeing trailing commissions being disclosed - $X per year in a DIY account with no advice brought some clarity of vision. I'm paying full-service rates, but am pumping my own gas. It is irksome. At least I'm not alone - the issue of brokerages pocketing the trailer in DIY accounts was raised in the recent Canadian Securities Administrators consulting paper 81-408 (released January 10) on eliminating embedded commissions in mutual funds:
* "discount brokers who provide execution-only services often distribute fund series that pay them the same trailing commission that would be paid to a full service dealer. The ‘one-size-fits-all’ nature of the trailing commission payment therefore seems misaligned with the provision of services and advice customized to the investor’s specific needs, expectations and preferences." page 15;
* "Those investment fund managers that do not offer a discount/DIY series typically make their regular retail series available for purchase through the discount channel. These series pay full unreduced trailing commissions of 1% to the discount brokerage for execution-only services" (page 125);
* some dealers offer lower fee funds for DIY investors [e.g., Series D at RBC] , but availability is limited; and
* the bulk (roughly 84%) of mutual fund assets held in the online/discount brokerage channel remain invested in the regular retail fund series paying full unreduced trailing commissions to the discount broker (page 121).
For what it's worth, I've emailed my broker and asked them what relief they can provide vis a vis trailing commissions on my mutual funds.
Despite being a long-time customer, only 1 year returns were provided. Time-Weighted and Money Weighted returns were shown for each of my accounts. A total return for all my accounts was not provided.
Fee disclosure was interesting, especially as it relates to the disclosure of trailing commissions. I have mostly transitioned to an ETF portfolio, but still hold some actively managed mutual funds (~20% of my portfolio) for various reasons (i.e., ease of small monthly investments / parking of ETF distributions and areas where I feel that active management can add value like small caps / emerging markets / Asia-Pacific, etc.). Intuitively, I knew that I was paying the full MER of the mutual funds I own and that part of the MER (i.e., the trailing commission) is there to go to my advisor - but, since I have a self-directed account, there is no advisor to send the trailer to so my brokerage just pockets it. I knew this.
However, seeing trailing commissions being disclosed - $X per year in a DIY account with no advice brought some clarity of vision. I'm paying full-service rates, but am pumping my own gas. It is irksome. At least I'm not alone - the issue of brokerages pocketing the trailer in DIY accounts was raised in the recent Canadian Securities Administrators consulting paper 81-408 (released January 10) on eliminating embedded commissions in mutual funds:
* "discount brokers who provide execution-only services often distribute fund series that pay them the same trailing commission that would be paid to a full service dealer. The ‘one-size-fits-all’ nature of the trailing commission payment therefore seems misaligned with the provision of services and advice customized to the investor’s specific needs, expectations and preferences." page 15;
* "Those investment fund managers that do not offer a discount/DIY series typically make their regular retail series available for purchase through the discount channel. These series pay full unreduced trailing commissions of 1% to the discount brokerage for execution-only services" (page 125);
* some dealers offer lower fee funds for DIY investors [e.g., Series D at RBC] , but availability is limited; and
* the bulk (roughly 84%) of mutual fund assets held in the online/discount brokerage channel remain invested in the regular retail fund series paying full unreduced trailing commissions to the discount broker (page 121).
For what it's worth, I've emailed my broker and asked them what relief they can provide vis a vis trailing commissions on my mutual funds.
^ Thanks for reporting this. Still waiting for BMOIL .. not sure what's taking them so long given they have supposedly one of the best brokerage systems in place.
New revelation from CIBC IE on previously undisclosed "fees" - only thing I can think of is trailer fees for the use of their HISA fund (Renaissance) because I picked the A series since it seems the F series should be bought through an advisor (the fund facts doesn't specifically say though).
New revelation from CIBC IE on previously undisclosed "fees" - only thing I can think of is trailer fees for the use of their HISA fund (Renaissance) because I picked the A series since it seems the F series should be bought through an advisor (the fund facts doesn't specifically say though).
... I would be interested to hear about the response/results but not holding my breath in getting a favourable one. It would appears this CRM2 reporting is just a pony show ...For what it's worth, I've emailed my broker and asked them what relief they can provide vis a vis trailing commissions on my mutual funds.
I was mostly stocks and options, a couple of index ETFs so not really expecting any surprises.
I'm more interested in/looking forward to the performance reporting. It would be kind of nice not to have to track myself in excel.
I'm more interested in/looking forward to the performance reporting. It would be kind of nice not to have to track myself in excel.
The regulator is hoping this is a wakeup call for investors to start putting the heat on their financial institutions. The regulator has wanted to cut the trailers for some type but has not had the brass balls to make it happen due to powerful industry lobbying. The hope is that investors will start getting angry too and that will start to tip the scales.....or cause investors to move more aggressively to ETFs and away from mutual funds. Then there will be more momentum to kill trailer fees.It would appears this CRM2 reporting is just a pony show ...
I've been part of the battle for several years lobbying for F series funds at discount brokerages but the mutual fund industry has been very stubborn. E*Trade was the first to allow F series when they first came to Canada in 1998? 1999? and I was able to buy a few F series through them before E*TRade was taken to task by their competitors and had to capitulate and back off.
I am stlll waiting for BMO IL and Scotia iTRade to issue their 'cost' data for my accounts (not that it will be anything much).
^ A truly smart investor ... :adoration:
Actively managed funds and their costs discussed by Vaguard CEO Bill McNabb today (19-Jan-2017):
... By contrast, active management's commercial struggles have reflected its disappointing investment performance. Over the decade ended December 31, 2015, 82% of actively managed U.S. equity funds and 81% of active U.S. bond funds have either underperformed their benchmarks or shut down....
Our research and experience indicate that active management can survive—and even succeed—but only if it's offered at much lower expense. High costs, which limit a manager's ability to deliver benchmark-beating returns to clients, are the biggest reason why active has lagged. Industrywide as of December 31, 2015, the average expense ratio for all active U.S. equity funds was 1.14%, compared with 0.76% for equity index funds. And the expense advantage is even wider for bonds; the average expense ratio for an active U.S. bond fund was 0.93%, compared with 0.43% for bond index funds...
These days, it's not hard to find an index fund that charges maybe 0.05% or 0.10%. So even if you have identified active managers who are skilled at selecting shares and bonds, to match the return of a comparable (much cheaper) index fund would require significant outperformance. Think about it. Any fund that charges 1.00% in expenses—not even the high end of the range—will find it extraordinarily difficult to overcome the index fund's head start...
Despite the well-deserved reputation of indexing and the challenges for active managers, there's still a place for traditional active strategies that are low-cost, diversified and highly disciplined, and are run by talented managers who focus on the long term...
https://www.vanguardcanada.ca/advisors/articles/research-commentary/markets-and-economy/Chairman-perspective-on-the-markets.htm
... By contrast, active management's commercial struggles have reflected its disappointing investment performance. Over the decade ended December 31, 2015, 82% of actively managed U.S. equity funds and 81% of active U.S. bond funds have either underperformed their benchmarks or shut down....
Our research and experience indicate that active management can survive—and even succeed—but only if it's offered at much lower expense. High costs, which limit a manager's ability to deliver benchmark-beating returns to clients, are the biggest reason why active has lagged. Industrywide as of December 31, 2015, the average expense ratio for all active U.S. equity funds was 1.14%, compared with 0.76% for equity index funds. And the expense advantage is even wider for bonds; the average expense ratio for an active U.S. bond fund was 0.93%, compared with 0.43% for bond index funds...
These days, it's not hard to find an index fund that charges maybe 0.05% or 0.10%. So even if you have identified active managers who are skilled at selecting shares and bonds, to match the return of a comparable (much cheaper) index fund would require significant outperformance. Think about it. Any fund that charges 1.00% in expenses—not even the high end of the range—will find it extraordinarily difficult to overcome the index fund's head start...
Despite the well-deserved reputation of indexing and the challenges for active managers, there's still a place for traditional active strategies that are low-cost, diversified and highly disciplined, and are run by talented managers who focus on the long term...
https://www.vanguardcanada.ca/advisors/articles/research-commentary/markets-and-economy/Chairman-perspective-on-the-markets.htm
National Bank responded within a business day, saying (my paraphrasing):... I would be interested to hear about the response/results but not holding my breath in getting a favourable one. It would appears this CRM2 reporting is just a pony show ...
* Options on our platform to reduce trailer fees include buying Series D funds from providers (i.e., series with significantly reduced trailers)
* Some mutual funds are available without trailers, but may require a commission to buy them (but most mutual funds can be bought on our platform with no commission)
* National Bank has no plans to change its pricing [which I interpreted to mean no plans to rebate trailers a la Questrade and no plans to offer Series D for its National Bank line of mutual funds]
* ETFs are cheaper than mutual funds, and we have a groovy managed solution using ETFs called InvestCube that you should check out
... so funny on just more sneaky marketing ... why don't they suggest that their sister discount brokerage now offers purchasing + selling of ETFs (Canadians only?) to be commission-free?National Bank responded within a business day, saying (my paraphrasing):
* Options on our platform to reduce trailer fees include buying Series D funds from providers (i.e., series with significantly reduced trailers)
* Some mutual funds are available without trailers, but may require a commission to buy them (but most mutual funds can be bought on our platform with no commission)
* National Bank has no plans to change its pricing [which I interpreted to mean no plans to rebate trailers a la Questrade and no plans to offer Series D for its National Bank line of mutual funds]
* ETFs are cheaper than mutual funds, and we have a groovy managed solution using ETFs called InvestCube that you should check out
Right now, I'm abit ticked off that there is a trailer fee on HISA (of at least 25bps) regardless which series you pick ... ie. one gets dinged for DIY parking and allowing the brokerage to use your money!
I don't know that is true. F series HISAs do not have a trailer fee but they can only be purchased through an advisor with whom you have a fee arrangement. AFAIK, all the in-house HISAs at the discount brokerages are Series A which carry a 25bp trailer fee. I've been through that with both BMO IL and Scotia iTrade where I've argued time and again that I receive no advice on these things and how can they possibly charge a fee?Right now, I'm abit ticked off that there is a trailer fee on HISA (of at least 25bps) regardless which series you pick ... ie. one gets dinged for DIY parking and allowing the brokerage to use your money!
FWIW, I have stopped using discount brokerage HISAs in my non-registered accounts.... and rarely have a need to hold cash in a registered account either.
You seem to believe that the trailer fee is a payment for advice. I am sure your discount broker would say that it is a payment to use their platform, since the equity trade commissions are pretty much a loss leader for the lion's share of investors. Try to buy a mutual fund without going through someone's investment platform and see how far you get. If your broker did not get some fees like that from someone they literally would go broke.
That being said. You don't need a survey of results to know that managed money will underperform the index. Think about it. What exactly is the index. It is pretty much the average results of all the stocks on the stock market. Sure it is a representative sample but I suspect it correlates to the total market of stocks pretty closely. Now ALL stocks are owned by someone and the lion's share of them are owned by institutions. The institutions, for the most part, are the managed money and the mutual fund managers are part of the institutional group.
So if the institutions own all the stocks and the index is the average of all the stocks, then the institutions average results will be the same as the index average results. Now if the institutions have a 2% fee and the index is measured without one, then it is an ABSOLUTE CERTAINTY that the average institution will underperform the index by exactly 2%.
Why people and reporters continue to go find data to prove that this certainty still exists, is simply beyond me.
That being said. You don't need a survey of results to know that managed money will underperform the index. Think about it. What exactly is the index. It is pretty much the average results of all the stocks on the stock market. Sure it is a representative sample but I suspect it correlates to the total market of stocks pretty closely. Now ALL stocks are owned by someone and the lion's share of them are owned by institutions. The institutions, for the most part, are the managed money and the mutual fund managers are part of the institutional group.
So if the institutions own all the stocks and the index is the average of all the stocks, then the institutions average results will be the same as the index average results. Now if the institutions have a 2% fee and the index is measured without one, then it is an ABSOLUTE CERTAINTY that the average institution will underperform the index by exactly 2%.
Why people and reporters continue to go find data to prove that this certainty still exists, is simply beyond me.
The trailer fee has always been in place as a means to pay sales advisors (and their brokerages). Worse, when FE or DSC funds ruled the roost, it was graft piled on top of graft. The banks are taking care of this latter perversity with no-load funds. Discount brokerages don't get paid trailer fees for stocks or ETFs. Why should they get paid trailer fees for mutual funds? Bottom line is they should not.You seem to believe that the trailer fee is a payment for advice. I am sure your discount broker would say that it is a payment to use their platform, since the equity trade commissions are pretty much a loss leader for the lion's share of investors. Try to buy a mutual fund without going through someone's investment platform and see how far you get. If your broker did not get some fees like that from someone they literally would go broke.
We would be much better off if mutual funds followed the same model as stocks/ETFs. Charge commissions of $5, $10, 1 cent/unit (aka Questrade), or better yet, no commission to purchase (aka Questrade for ETFs). What makes a mutual fund different from an ETF from a discount broker's perspective? Even more so, discount brokerages don't even manage the tax slips for mutual funds like they do for stocks and ETFs. They have even less work to do with mutual funds. I've made a number of submissions to the CSC on this matter when public input has been 'invited' and will continue to push that agenda.
I am just saying that if all a discount brokerage did was offer equity trading, which includes ETFs, most would simply go out of business. They need investors in their own manufactured funds and they need them in funds that pay them trailers. What the fees were originally meant for has very little to do with it, at this point.
If my memory is in working order I seem to recall one fund company deciding to NOT pay trailers to discount brokers. I think it was TD that immediately removed them from their offered funds and wham bam, they were back to getting their trailers again.
The trailer goes to the dealer. What the dealer does for it does not seem to be as important to the fund companies as bringing them an investor with money, is.
If my memory is in working order I seem to recall one fund company deciding to NOT pay trailers to discount brokers. I think it was TD that immediately removed them from their offered funds and wham bam, they were back to getting their trailers again.
The trailer goes to the dealer. What the dealer does for it does not seem to be as important to the fund companies as bringing them an investor with money, is.
My case was one where the discount broker (and I imagine the fund company) was quite happy to allow me to buy F series funds. I believe it was the full service commission companies that put the pressure on the fund company to stop that when they found out and the mutual fund company caved.If my memory is in working order I seem to recall one fund company deciding to NOT pay trailers to discount brokers. I think it was TD that immediately removed them from their offered funds and wham bam, they were back to getting their trailers again.
The trailer goes to the dealer. What the dealer does for it does not seem to be as important to the fund companies as bringing them an investor with money, is.
I don't think the discount brokers care as much about the trailer as do the full service companies. After all, most DIYers with discount brokerage accounts do not buy many mutual funds in the first place, Mawer is one key exception, and in that case, some discount brokers will allow Mawer funds. IOW, the argument that the discount brokers need mutual fund trailer fees has holes in it.
The December 2016 statement is there today at BMOIL. It shows time weighted and money weighted return for 2016 and "Fees you paid" which were zero for my account which has only ETFs.
Still nothing new at TDDI or Qtrade.
Still nothing new at TDDI or Qtrade.
I don't use discount brokerage HISAs very much either. The rates just aren't there. The only reason I keep some cash in our registered accounts is to make purchases every few months.I don't know that is true. F series HISAs do not have a trailer fee but they can only be purchased through an advisor with whom you have a fee arrangement. AFAIK, all the in-house HISAs at the discount brokerages are Series A which carry a 25bp trailer fee. I've been through that with both BMO IL and Scotia iTrade where I've argued time and again that I receive no advice on these things and how can they possibly charge a fee?
FWIW, I have stopped using discount brokerage HISAs in my non-registered accounts.... and rarely have a need to hold cash in a registered account either.
Otherwise, I think it's good in your asset accumulation years to use PCF, EQ Bank, Tangerine, etc. to park cash. Just me.
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