I have been vocal about our high cost wealth management industry and cynical about pronouncements of fees coming down. 

There have been some fee reductions, but for the most part the adjustments have been on small, unpopular funds and/or funds with exorbitant fees (the poster boy for high fees in Canada, the $11.4 billion Investors Group Dividend Fund, still has an MER of 2.69%).  While we have made progress on some fronts – the emergence of low-cost ETFs being notable – the gains have been overwhelmed by the popularity of structured products, which lack transparency and have very high fees.

Over the last two weeks, however, there has been some good news in the area of advisor-sold mutual funds.  An old veteran, PH&N, and a newcomer, EdgePoint Wealth Management, made announcements that will help to reset the bar on MERs (management expense ratios) for these types of funds.

As part of its integration into the Royal Bank, PH&N has made adjustments to its fund classes.  In aligning the funds with the bank’s existing lineup, it was revealed that the PH&N ‘C’ Series will now pay a full 1% trailer fee to advisors, but will keep its equity funds’ MERs close to 2%.  Generally, funds of this type are well above 2%.

EdgePoint, a new firm founded by three former fund managers from Trimark, rolled out its fund lineup this week.  They will offer four funds with management fees ranging from 1.7% to 1.8% (1.8% to 1.9% for the low DSC versions, which also pay a lower trailer fee).  After operating expenses are factored in, the MERs should also be close to 2%.

These firms are small players in the advisor channel at the moment, but if they manage to build some sales momentum, the impact of their lower fees will be felt.  Along with other fee-conscious players like Capital International, PH&N and EdgePoint are chipping away at the edges of the mega fund companies’ pricing power.  We can only hope.