Why is breaking up so hard to do?

Of course the above headline is borrowed from a hit song co-written and voiced (wonderfully) by Neil Sedaka. It’s a playful little love song, or let’s say a song about love gone wrong. Love on the rocks. Here’s a sampling of the lyrics. You’ll notice that they don’t quite resemble how a 2018 hip hop artist might string words together.

They say that breaking up is hard to do
Now I know
I know that it’s true
Don’t say that this is the end
Instead of breaking up I wish that we were making up again

Now of course, I am not writing about breaking up with a loved one. But I am writing about ending a relationship – with your advisor that put you in high fee mutual funds. That relationship is too much of a one way street. You’re doing most of the giving. They’re doing too much of the taking. Isn’t a relationship supposed to be a two-way street? Sometimes for all you do, all you get is one call or one card a year. That card likely reads …

“Hi, I hope you are well, and that you’ve had a great year. As you know, your investments are up. Please call me if you’d like to add more monies, or need any assistance.”

For those with very large portfolios, well, they might get one dinner a year. Well that might be one very expensive dinner. The advisor is picking up the tab right? Sure, it looks that way, but that dinner comes out of the several thousand to tens of thousands of dollars you give them in fees, every year. And for my ad friends, and as the famous MasterCard commercials would frame the rendezvous …

  • Dinner: $6,000
  • Wine: $1000
  • Tip: $900

A night out with your advisor, Priceless.

Of course it’s not priceless. Keep in mind that Canadians pay the highest mutual fund fees in the developed world at an average of 2.2%.


Now your advisor does not get the full 2.2% but they might get the typical 1% from the trailing commissions of the mutual funds, or you might have a contractual agreement that they get paid a certain percentage of your portfolio value every year. But in the end what matters to you is how much are you paying in total fees. How expensive is that relationship with your investments?

Now those fees should be a relationship killer.

Fees are more than important when it comes to investment returns. Here’s a wonderful pun that was offered in a Tangerine billboard. 

Money Does Not Grow on Fees!

So why is that Canadians find it so hard to say goodbye to their high fees? Why is breaking up so hard to do? First off, I’d offer up that ‘Being Canadian’ is at the top of the list. We all hear that we Canadians are simply too nice. And it’s true, they don’t want to hurt anyone’s feelings. As an advisor I heard that one over and over and over again.

I also heard “Hey he’s gotta eat too eh. I get some, he gets some, everyone’s happy.”

Also, Canadians are so nice that they won’t break up with their advisor because their advisor is so nice. There’s just too much niceness going around here. That gem was shared with me by Ed Rempel who is a fee for service advisor.

Many Canadians won’t break up with their advisor because the advisor is family or a friend of the family. Well as they say you can choose your friends but you can’t choose your family. Tough one there. But you might do the math on what your family ties are costing you.

Here are some other barriers or reasons (excuses?) we often hear as to why Canadians don’t want to reduce their investment fees by 50-95%.

  • They don’t want to do the complicated paperwork
  • They don’t want to spend the time
  • Life is busy, they don’t have the time

Now on that front, I would suggest that it might be the ‘most money you make’ in your lifetime at an hourly rate. In simple situations where you only have an account or two, the paperwork required to move your monies to a lower fee environment might consume less than an hour. Here’s an example. If you cut your investment fees by a very doable $4800 per year on a $400,000 portfolio, well that’s obviously $4800 per hour. If you earned that on a regular basis that would be $177,000 per week. Wow, the irony, now you’re working at the hourly rate of a big bank CEO.

Of course it’s time well spent. If you took the time to move into a high fee situation you should consider taking the time to move into a low fee situation.

Another break up roadblock is that many Canadians simply do not have the confidence to take control of their own investments. Now that is certainly the route to the cheapest investment portfolio. One would learn enough to be able to self direct their portfolio and create their own ETF or Exchange Traded Fund Portfolio. In that scenario you might cut your investment fees below .20%. You might be saving 90% or more on annual investment fees.

But that’s not your only option. You can find many simple and wonderful Managed Portfolio Solutions. In that scenario your portfolio is managed for you and you might cut your fees by 50% or more. In that area you’ll find the Canadian Robo Advisors.

There’s also the option of that fee for service advisor. You would gain access to professional advice and you would pay a one-time fee for the meeting(s) and the advisor will then (usually but not exclusively) set you up in a low fee ETF portfolio. You might check in with that advisor once a year – not for that expensive dinner, but for a pay for service check up on the personal financial situation and portfolio.

I can tell you from experience that we can rewrite that melody to the sweet sound of …

I know that breaking up is not hard to do
Now I know

I know that it’s true
Please know that this is truly the end 
I’m afraid I won’t ever be paying you those high fees again

Music to my ears. And here’s a little break up starter kit from Dan Bortolotti and moneysense. Here’s The Best Way to Dump an Advisor and Mutual Funds.

Enjoy your financial freedom.


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