Canadian investors need to stop being so Canadian.

Canadians are known for being very nice, and very polite. “Sorry” might be our favourite word. If two Canadians arrive a door from the opposite direction, you’ll hear a string of “sorry’s” followed by “after you”. If they then both attempt to then go through the door at the same time – more “sorry’s”. Then some “excuse me’s” and perhaps a “pardon me” or two.

This Maclean’s article touches on the roots of our niceness and whether it’s even true or not. From that article, even our first Prime Minister Sir John A. Macdonald suggested that we are a subordinate people.

John A. Macdonald called Canadians a subordinate people,” he says. “That’s in part because we’ve had a strong tradition of centralized regimes, with the French, and then as a British nation.” Further, Wiseman notes that “fragment theory” may be a factor in Canadians’ niceness. The theory suggests that colonial nations are made up “fragments” of the societies that colonized them. In Canada, the characteristics and values of early European settlers infiltrated the culture and persisted, particularly those of the conservative British Tories. “Although Canada is no longer a British nation,” says Wiseman, “these tendencies replicate and perpetuate themselves like a gene.

And of course many will debate whether or not Canadians are really as nice as the world perceives us to be. We have a great international brand in that regard. And studies will show that Canadians believe it and perhaps we try to let live up to that promise.

I know Canadian investors are too nice.

Canadian investors pay the highest mutual fund fees in the developed world. And yet, over the decades they continue to kindly hand over half of their investment wealth to their banks and mutual fund advisors.

This is not the case south of the border where Americans are not so generous with their hard-earned wealth. Americans have been embracing lower fee investment options for quite some time, and in fact they lead the world in that regard. So selfish eh? Keeping their own monies in their own pockets.

Here’s the recent US fund flows.

Fund Flows US

Even though US mutual fund fees are less than half of that of Canadian funds, US investors still stampede out of their mutual funds and seek the lowest fee options – those Exchange Traded Funds.

Canadians need to be more American.

OK, there, I said it. Certainly as much as we love our neighbours to the south, and we love to travel to the US, we Canadians embrace our unique identity and that certainly includes more ‘sharing and caring’. But in the land of investing we do need to be more American. We need to take charge.

When I was an advisor with Tangerine Investments I would come across so many clients who had terrible short and long-term portfolio returns to go along with a poor experience with their bank or mutual fund sales person. It was easy to clearly demonstrate the additional thousands to tens of thousands to hundreds of thousands of dollars that they would have in their pocket had they embraced lower fee investments. Many would offer that they knew they would be better off leaving their bank or advisor but that they did not want to hurt anyone’s feelings. They were nervous about initiating the process and ‘confronting’ the other advisors. Clients often showed compassion for the advisors that were taking a significant amount of their net worth over time. They worried about the advisor’s livelihood. I even heard …

Hey Dale, Jerry’s gotta eat too eh. Maybe I get 4 or 5 percent, he gets 2% or more. Everybody’s happy right?

That sentiment came in many shapes and forms. I heard that often, too often.

The thing is, the banks and advisors might even take up to half of your investment wealth over the decades. Please have a read of my review of Larry Bates’ Beat The Bank that details why Canadians stay with their high fee funds and it describes the sales tactics of the mutual fund industry. Here’s Don’t Give Away Half Of Your Investment Wealth – Beat The Bank.

Investors might take the point of view of the investors in the Questrade commercials. I love the spot with the Mom and her baby. Mom looks to her child and then to the advisor and offers “I just can’t afford to support both of you”.

Watch the baby’s expressions and look away. The lucky timing is incredible, or we’re looking at the next Meryl Streep. If that’s a boy let’s go with Robert Downey, Jr. By the way, Ms. Streep announced at the Oscars that all the nice people come from Canada.

We have to stop being so nice, sorry Meryl.

Of course at Questrade you might consider the Questwealth Portfolios.

It’s your money. It belongs in your pocket. And the transfer process to lower fee options is easy as was demonstrated in the book and my review of The Value of Simple. In fact you complete the paperwork (or online) with the receiving institution. You don’t have to talk to the bank or your advisor or mutual fund sales office. Nice.

Once again, you can self direct your own ETF Portfolio, go with a Canadian Robo Advisor or one of the lower fee mutual fund companies such as Mawer or Steadyhand. They also offer lower fee funds and more robust advice that might add considerable value. You may consult a fee-for-service advisor that can set you on the right path.

I am happy to help you find the low fee option that is right for you. I do this for Karma – how Canadian is that?

Thanks for reading. Help spread the word, kindly hit those share buttons for Twitter, Facebook and LinkedIn. You can Follow Cut The Crap Investing at the very bottom of this page. To join in on the fun on Twitter, I’m at 67_Dodge.

Contact me, Dale @ or better yet, leave a message.

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