BCSC Study Confirms Investors Need to Learn More About Fees

Just in time for RRSP season, many investors will receive new information about the fees they pay for investment products and advice, and the BC Securities Commission (BCSC) wants to help investors get ready to “Take a Look” at that information.

The BCSC launched its Take a Look campaign in October 2016 to encourage investors to pay attention to the fees they pay for investment products and advice. And according to a recent study conducted by the BCSC, investors in the province still have some significant gaps in fee knowledge.

Of the investors surveyed, 28 per cent do not know how their advisor is paid and 36 per cent are not familiar with the types of fees they pay for the investment products they own. Only 44 per cent of investors agree that paying one per cent more or less in fees will make a difference to their returns.

While 83 per cent of investors said they know whether the value of their portfolio went up or down over the last year, only half (51 per cent) know the total amount of direct fees they paid in the past 12 months. And only a small group of investors, 34 per cent, know how much their advisor received in indirect fees from third parties based on the products they own.

Here is an illustration of the results of the BCSC study:

Beginning in January and February, investors will start receiving charges and compensation reports from their investment advisors as part of securities regulations called the Client Relationship Model, Phase 2 (CRM2). The BCSC is conducting a three-part longitudinal study to measure how well BC investors understand the fees they pay and how the new charges and compensation reports will affect investor knowledge and behaviour.

The BCSC released new tools as part of the Take a Look campaign, including an Investment Fee Quiz, Fee Guide, and Investment Fee Calculator. Available on the BCSC’s investor education website InvestRight.org, the calculator allows users to directly compare different fees and see their impact on investment returns.

The BCSC’s Investor Readiness for Better Investing study was conducted by Innovative Research Group Inc. in November and December 2016. For more information on the research findings, view the survey report.

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at inquiries@bcsc.bc.ca. You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website.