Composite Finance Inc.
GIC's and Financial Planning in Nanaimo & Victoria - Graham Cook CFP, FMA, CIM
Lack of transparency makes it difficult for clients to determine what [if any] value they get from fund managers and their own advisor. Regardless of the level of service received or performance fees are automatically deducted from your account before you get your statement. The result is a fundamental disconnect in the normal process of comparing the cost of a service to the value received.
Be assured ... there is no "free lunch", especially in the financial industry. Everyone should make sure they know precisely how much they are paying and the method so that they can determine what if any added-value their advisor is providing.
The other popular billing format (with advisors) is called the Assets Under Management Fee. It is our view that being billed a perpetual annual fee, calculated on a percentage of assets, is also a poor choice from the client’s perspective. It's great for the advisor, all they need to do is gather assets under management. Most established advisors have several hundred or more clients and the top earners often have double that number.
What does this mean to the client? Well, let's do some easy math using the lower figure: 300 clients means 300 annual reviews and 900 quarterly reviews. Only 220 working days per year divided by 1200 reviews means almost 6 per day. As you can see it doesn't add up, there are simply not enough days in the year to provide even a superficial level of service to this many people. Why is it done this way, because the compensation method is driving the business. Even if you are in the top 10% of the advisors' "book" you will likely only get an hour or two of their time all year. The assistant to the advisor will become the relationship contact while the advisor spends his time on gathering clients and assets.
When the industry declares they've had a stellar year they are not talking about the great returns in the portfolios of their clients. A stellar year to the industry means they have gathered more new client assets than usual.
Insurance Services
It should be plainly noted that completed insurance transactions will trigger a commission payment from the insurer to the advisor. Consumers of insurance products should also be aware that companies still offer travel incentives to financial advisors in the insurance industry.
To avoid any actual or perceived conflict of interest, we declare from the outset that we do not accept travel or other indirect payments when we arrange insurance coverage for our clients. Our disclosure policy requires that we produce all of the quotes including the data on commissions for the clients inspection.
2 nd Floor, 20 Townsite Road, Nanaimo, B.C., Canada, V9S 5T7
Call: 1 250 716-5750
Toll Free Fax: 1 866 598-7496
101 - 3960 Quadra Street, Victoria, B.C., Canada, V8X 4A3
Toll Free Phone: 1 888 361-8631
Email: CompositeFinance@telus.net
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