by Tom Bradley

I love the Questrade TV ads. This one and this one are personal favourites. And I saw a new one while watching football the other weekend.

In an entertaining, yet poignant way, these ads bring attention to the high cost of investing with full-service advisors. And they highlight the disdain with which wealth management professionals hold their clients.

Good, transparent, reasonably-priced advisors will scream “exaggerated” or “unfair”, but believe me, there are many advisor/client relationships that are exactly like these vignettes.

I only want to clarify one thing with respect to these ads. They all refer to mutual fund fees as being the culprit. That’s not quite right.

Yes, professional fund management costs something. It’s more expensive than indexing (ETFs) or buying individual securities, but … mutual fund fees aren’t the problem in each of these situations. It’s the cost of lacklustre, patronizing service.

The cost of money management has come down over the last decade. People now have good indexing options with ETFs, and the fees on F-series mutual funds, which don’t include a charge for advice (trailer fee), are quite reasonable. What hasn’t come down is the fees charged by full-service advisors. They’re the last holdout. Despite the scale of the banks, a proliferation of managed products and an explosion of technological advances, brokerage fees haven’t budged. Indeed, for some investors, they’ve gone up.

So, go for it Questrade. Keep the ads coming. We love them.

Note: Our fees are in the neighbourhood of other F-series funds – our average fee for a household is 1% all-in (after reductions based on portfolio size and loyalty). But there’s a hitch. With Steadyhand, fees include investment management, all fund and account expenses, and all the service and advice a client wants.