Investors should discuss fees and services when first meeting with a new advisor and expect to see a transparent breakdown on statements, says Kelowna-based financial advisor Tanya Wilson, right, and Mallory Pearson.

Investment fee transparency: Are you overpaying?

Tanya Wilson of Raymond James shares advice on choosing a financial planner

Do you feel you’re not getting good value for the investment fees you pay? If so, you’re not alone.

“A lot of investors out there, especially retirees, don’t understand the fees they pay and the services they receive for those fees,” said Kelowna-based financial advisor Tanya Wilson.

“There’s a lot of variation in fees charged for various investment services and many are often not fully disclosed,” Wilson said, adding she wishes there was more education for investors about appropriate costs for services.

Without a standard in place, Wilson shared some advice for people looking to invest without paying an unfair toll on their return.

Transparency is key

First, discuss fees and services when first meeting with a new advisor and expect to see a transparent breakdown on statements.

“At Raymond James we have the utmost transparency,” the certified financial planner said of herself and her client service specialist, Mallory Pearson. “People know exactly what they’re paying for, exactly what they’re getting.”

Fees do depend on the account size but should also reflect the sophistication and complexity of services provided, such as financial, tax and estate planning, tax optimization strategies and behavioural coaching.

“I’ve taken on many new clients who questioned their old advisors once they realized the fees they were paying for inadequate service,” Wilson said.

Culture of independence

When Wilson started in the financial industry, she worked within the bank/credit union system.

“I used to say that I felt I was a product distribution channel for the bank’s profit centre,” she said.

With that in mind, she encouraged would-be investors to seek out an independent advisor who could provide unbiased advice.

For example, since Raymond James doesn’t have proprietary products to sell, their advice is completely focused on the needs of their clients, rather than hitting sales quotas. “We are not subject to the issues that bank employees have, where they have targets for products to sell,” she said. “Instead, we have full autonomy to truly understand our clients and to provide the most appropriate strategies, solutions and investments, from a completely open and unlimited product shelf.”

Thoughtful, deliberate approach

Creating a financial plan is an important opportunity to get to know clients personally and build trusted, lasting partnerships.

“We don’t follow a cookie-cutter investment approach, we cater to each individual’s needs,” Wilson said of her team. “Developing your plan requires a solid understanding of your goals, investment experience, risk tolerance and more. Most importantly, your required rate of return to achieve your objectives.”

For example, Wilson said a client in his 70s recently considered a high-risk investment opportunity he’d learned about through a friend. “He was blinded by the high return potential but didn’t have a clear understanding of the risks.”

Because of her client-focused, caring approach, Wilson knew the retiree’s unique situation and felt the high-risk investment was unsuitable. “The five years before and after retirement are known as the ‘retirement risk zone,’ and they’re the most important years to make sound investment decisions.

“He can’t return to work at this point in life if he experiences significant losses and the investment wasn’t liquid to allow for retirement income withdrawals, so simply couldn’t meet his needs,” Wilson said. “His biggest focus should be on ensuring he has enough money to live the retirement lifestyle he wants to live for the rest of his life. Too often I see investors allowing emotions to dictate their investment decisions.”

Working together, Wilson created a budget outlining his projected expenses until he turns 100. Then, she determined his required rate of return to achieve that lifestyle, and recommended a structured income plan and balanced investment portfolio.

To schedule a consultation or learn more about Wilson’s hands-on, holistic approach to retirement and investment planning, or to risk management, tax-efficient investment strategies, estate preservation and transfer, or corporate investment strategies, fill out the raymondjames.ca/tanyawilson/contact-us.aspx or call 250-869-2447.

Finance

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