Are You Paying Too Much to Invest? | Ep. 53

Paying more for investing does not automatically mean you are getting better advice, better products, or better returns. In this episode, Tre breaks down what Canadians should understand about investment fees, advice fees, product costs, commissions, and the difference between active and passive investing. He explains why new fee disclosures matter, how fees can quietly drag down returns, and why investors need to know exactly what they are paying for. This episode is especially useful for professionals, business owners, and DIY investors who want to make informed decisions instead of assuming higher cost means higher quality. The goal is simple: know your fees, understand the value, and stop overpaying for complexity that may not help you. 

You’ll learn:

•  Why higher investment fees do not always mean better performance 
•  How active and passive investing costs compare 
•  What management expense ratios mean in plain English 
•  Why commission-based products can create conflicts 
•  How advice fees, product fees, and robo-advisor fees differ 
•  Why good financial planning should be clear about cost and value 

Follow, review, and share the Plain English Finance Podcast with someone who needs to check what they are really paying for financial advice.

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Transcript

Tre 0:00

Have you ever wondered how much you should be paying to invest, how much you should be paying for advice? Let's talk about it. How does that sound for an intro?

Sierra 0:08

Good.

Tre 0:09

Good.

Sierra 0:10

I'm like, I don't know. I thought you were looking at me how much? I'm like, I don't know.

Tre 0:13

Well, how much did you pay if somebody said that? That's the thing, right? So to, to get into why, um, why I'm thinking about this now is there is, which I'm really happy about, but there is a new disclosure coming towards the end of the year. Mm-hmm. So I've been, I am extremely fee sensitive. I will go over actually what my, what my fees are so people can compare and stuff, but. Fees are a really important part of investing. Mm-hmm. Um, fees aren't the whole story. You need to be getting the value for it. Right. So people often say like, you, you get what you pay for. But there is a line, and in my industry that is very often not true.

Sierra 0:54

Okay. You get what you pay for.

Tre 0:56

Yeah.

Sierra 0:56

Not true. Yeah.

Tre 0:57

Yeah. You get what you pay for is not true.

Sierra 0:58

Yeah.

Tre 0:59

Because just because something is more expensive. Absolutely. Especially on the, if what they do is manage money. Like that's, I say that like very, so there's two parts of what I would do for clients. There's a financial planning piece, and then there's the, the money management piece. Mm-hmm. And then depending on. Lots of things. I might even be hiring a money manager to pick the individual stocks and stuff like that that goes into a portfolio. So depending on what you're paying for, there's value assigned to parts of that chain.

Sierra 1:30

Mm-hmm.

Tre 1:31

And overpaying for parts of that chain just cost more sometimes.

Sierra 1:35

Mm-hmm.

Tre 1:35

So, we'll, we'll kind of go, go through that, but. Um, part of the reason, uh, is because this is gonna be the first year's, the end of 2026, that they will disclose on the statements, not only the advice fee that you're paying, but the management expense included in that.

Sierra 1:59

So they're gonna break down what you're actually paying for

Tre 2:02

the total amount. So before this point, I would, you would only see the, like the, the dealer fee almost. So what you are, what they're paying me and TCU and the Aviso, all of that bundled in, right?

Sierra 2:18

Mm-hmm.

Tre 2:18

You wouldn't see what you're paying for certain.

Sierra 2:21

Oh. So

Tre 2:22

they wouldn't see other part of the. Does that make sense?

Sierra 2:25

Oh, I was gonna say, does that mean they would see, this is what Tre gets, this is what TCU gets, this is what

Tre 2:32

No, they don't see that. They just see, they don't see that this is what Aviso takes.

Sierra 2:35

Okay.

Tre 2:36

And that money that Aviso takes pays Aviso, TCU. Yeah,

Sierra 2:41

but you're saying they're gonna disclose the other,

Tre 2:45

the other side. So there's two parts of,

Sierra 2:48

okay.

Tre 2:48

The, the fee there is that side.

Sierra 2:51

Yep.

Tre 2:51

And then, which is like the, the servicing side, the client servicing side. Mm-hmm. Um, and then there's the, the fee of whatever product we are using. Okay. Okay. And this is something that while I, I am very like, again, very fee sensitive. I, it's a big part of it is part of the reason I make certain product decisions and things like that is to do with cost. I am a rarity. Most, most, I'd say the majority probably aren't as. Open and pushy about fees, whether they, whether because they don't understand the impact on it or, or whatever it is, it's just not as, as talked about, um, out

Sierra 3:35

So you're saying in comparison to other advisors or planners, they don't care. Maybe that's the wrong thing to say, but they care less or like,

Tre 3:45

I don't care. I think half of them just don't understand the impact.

Sierra 3:48

Okay. So they're like, oh, it is what it is. Yeah. You paying three and a half percent for, I don't know if that's a normal number, but

Tre 3:55

Right. And that's, that's part of the issue is that you don't know what to benchmark it against. So that's why I am gonna do this episode so that people have something maybe to benchmark it against. Right.

Sierra 4:05

Yeah.

Tre 4:06

Um, but you're Absolutely, yeah. Does that make sense?

Sierra 4:11

Yeah, I think so.

Tre 4:12

Okay, good. Yeah, so we will get into the two parts. So we'll, we'll talk about the, what you should or can be expected to pay on the product side. And then we'll talk about. The advice side, right.

Sierra 4:26

Okay.

Tre 4:26

The end part. Yeah. So for the product side, there is, it's not really a debate, but there is, there are two main routes that you can go when it comes to investing. Do you know what those two routes are? We've spoken about it in previous episodes.

Sierra 4:41

We Passive or active?

Tre 4:42

Yeah, you go look, you go four

Sierra 4:45

claps. Now we can time.

Tre 4:49

So, um, yes. So what do you, which one do you think would be more expensive?

Sierra 4:54

Active.

Tre 4:55

Why?

Sierra 4:56

Because you're paying somebody to work specifically for you kind of thing, like on your portfolio and like watch and stock picking and stuff. Is that what acting

Tre 5:05

is? Kind of, yeah. So you're paying for somebody to go and analyze each individual security you're paying for a team of analysts, pay like. It's going to be some of the brightest minds go into that type of field. Right? Like trying to

Sierra 5:17

Yeah.

Tre 5:18

For various reasons, but some of them, it often it's to try to beat the market.

Sierra 5:22

Mm-hmm.

Tre 5:23

Okay.

Sierra 5:23

Yeah.

Tre 5:24

Um, which, which means there's cost involved in doing so. Yeah. So I brought up a bunch of, a bunch of, uh, balanced funds.

Sierra 5:33

Okay.

Tre 5:34

So a balanced fund is basically like 60% stocks, 40% fixed income. So it's like the, the default option. Yeah, it's the,

Sierra 5:45

that's the pension fund option.

Tre 5:47

Yeah. T typically Right. Um, like especially the old school pension funds where that is, that was. It's a, so in my industry we measure risk in volatility. So how much volatility, something experiences. Yeah. And there was a, sharp bridge how to describe this. There was a formula that was created to determine how much return per unit of volatility that you would get.

Sierra 6:21

Okay. So how, okay. I think that makes

Tre 6:23

sense. Yeah. To, to try to find the most efficient way to invest. But my issue and that, that has been the way to do it. It's the balance fund for long, long periods of time. Yeah. My issue is that volatility doesn't, results isn't the only risk. Well it's just not the only risk that you have.

Sierra 6:42

Yeah.

Tre 6:42

And if you are optimizing a portfolio based on volatility. Is that Ariyah?

Sierra 6:52

That is uncanny. She makes up this. That's probably a bad dream. Do you wanna do it or do you I can. Yeah. She usually wants you. If it's a bad one,

Tre 7:02

you can finish this conversation. Right, exactly.

Sierra 7:04

Okay, so basically volatility. There's some secret hidden messages in there for

Tre 7:29

Oh no, I'm, I'm not gonna, I'm not gonna cut anything out. I'm back.

Sierra 7:35

I Never left. Have to cut that out. Just FYI have

Tre 7:39

YI. Oh wow. Hello, this is editing Tre here. If you want to hear my wife's ramblings. Uh, I put it at the end of the episode. Okay. Um, should went down pretty quick. That's awesome. What was I saying?

Sierra 7:58

Volatility risk is not the only in, in is not the only, is

Tre 8:02

not the only risk.

Sierra 8:02

Is not the only risk in your industry.

Tre 8:05

Yes. Um, but it is the one that they u they were using to come up with this anyway, balance fund was the answer to that. Um,

Sierra 8:13

right.

Tre 8:13

So what I have on my screen is just comparing a bunch of, a bunch of balance funds. Um, so as we spoke about some typical discussion about when it comes to types of management is passive versus active and as I've touched on before, there's some kind of that fit in the middle of that. Mm-hmm. Various ranges. Anyway, so I have three, 4, 4 active, strategies here all at very different price points. And I wanna be very clear picking any of these. Is fine. Like as in, I wouldn't say it's fine from a, like do I think it's a good idea to pick any of them? No, but I'm saying that somebody, it's

Sierra 9:00

better than doing nothing kind of thing.

Tre 9:01

Yeah. But no, I'm not. That is, is true. But no, I'm saying that there isn't a person out there that can truly tell you whether, which one of these managers is going to outperform. They're all very large funds, very high quality managers.

Sierra 9:21

Oh, et cetera.

Tre 9:22

I see what

Sierra 9:22

you're saying. Yeah.

Tre 9:23

Um, would I say that some of them are better teams than others, et cetera, yet by a small amount, but does that then translate to better performance? No. No. And you're gonna see that, right? But there, these are. Different ones. So this one is charges 1.1%. That's the, um, that's the management expense ratio. So what it costs. Mm-hmm. So 1.1%. So this makes up, this is what goes, this is like the taxes, but it's also. Part of this is compensation to the, the management team.

Sierra 9:58

Mm-hmm.

Tre 9:59

Okay. So that's 1.1%. This would be expensive, right? So remember this is not the all in cost, this is just for the product itself. Okay.

Sierra 10:09

So it's like you're paying for the product, then you're paying for like the other part of the fee, which is like you

Tre 10:17

Yeah. How you get the product. However you access the product, To have to still pay for that part.

Sierra 10:22

Okay. So what about, sorry, I'm probably jumping around like I always do.

Tre 10:26

Mm-hmm.

Sierra 10:26

Um, what about people who just go to like wealth simple or something?

Tre 10:30

So it depends. So wealth simple have two sides of it, right? Same for um, same for Visa. There's, there's two sides. There is the brokerage like Qtr. Yeah. Which is you go and buy it yourself.

Sierra 10:41

Yeah.

Tre 10:42

And then there is the RoboAdvisor. So there a robot puts together the portfolio. Yeah. So again, this would be, let's say, uh, you're using a RoboAdvisor 'cause that was what was putting together the portfolio. And they were using these products. You'd be paying, you'd pay for the RoboAdvisor fee.

Sierra 10:59

Yeah.

Tre 10:59

That's how you're accessing it. And you would pay for the, the product fee.

Sierra 11:03

Yeah.

Tre 11:03

Same for if you went through, uh, an advisor, you would be paying the advisor fee and then you'd also be paying the product fee.

Sierra 11:11

But what about, sorry, but what about if it's they do it themselves,

Tre 11:15

so self-directed, then you'd just be paying the product fee and then whatever the fee was to buy or to use the platform.

Sierra 11:23

Okay. Yeah.

Tre 11:24

Right. Yeah. So you wouldn't have to be paying the,

Sierra 11:27

like, even though some of those places are like, it's free. It's probably not. Is it free?

Tre 11:32

It depends. Depends.

Sierra 11:33

Okay.

Tre 11:33

It really depends. That's a huge discussion that we're not gonna get into it. Sorry.

Sierra 11:38

I'm like Uh.

Tre 11:39

cause some of them will, will, I

Sierra 11:40

just know

Tre 11:40

people sell money flows and stuff, but it, it doesn't matter. It's, um, for the, for the sake of this, just think of it as two, two separate fees. So this is just the product fee that we're comparing. Okay. Okay. Um, so this, this fund is 1.1%. That would be, I would consider that expensive.

Sierra 12:00

Okay.

Tre 12:00

Okay. This, uh, this one is RBCs version. This is 0.94%.

Sierra 12:07

Mm-hmm.

Tre 12:08

And you're now getting into the typical range. Okay. Okay. So

Sierra 12:14

average.

Tre 12:15

Average, right. This is another fund. This one is 1%. Right? This is a fund that I sometimes use.

Sierra 12:22

Mm. Yeah.

Tre 12:22

And this is 0.5%. Okay. All four of these are active management. Okay.

Sierra 12:28

Oh, okay.

Tre 12:29

So they're all actively managed, but can you see there's a quite a range. I know we're talking about like 1% seems so small, but keep in mind into that. So this one, um, the one that I sometimes use is 0.5.

Sierra 12:41

It's half price.

Tre 12:42

It's half the price of this fund.

Sierra 12:45

Yeah.

Tre 12:45

Okay. Now here's the interesting part. Now let's go look at the returns.

Sierra 12:51

Okay.

Tre 12:51

Let's say they all started at the same time, so that would be 2018. So since 2018, what would the performance have been? Okay, so

Sierra 12:58

yeah,

Tre 12:58

for this one here, that is 1.1%, the performance is 6.24%.

Sierra 13:03

Is that what people average?

Tre 13:05

That's what if you would've put it in on at the, be like in 20 18, 20 18, that's what you would've, an investor would've gotten back.

Sierra 13:14

Okay.

Tre 13:14

Over that time period. Okay.

Sierra 13:15

In total,

Tre 13:16

yeah, like average each year.

Sierra 13:19

Oh, average each

Tre 13:19

year. So average of 6.24%. Yeah.

Sierra 13:21

Okay,

Tre 13:22

so they put your money in.

Sierra 13:23

Yeah.

Tre 13:23

That money has grown. 6.24%. Annually until now.

Sierra 13:29

I feel like the annually thing is like throwing me off a little bit. Yeah. But yeah. Okay, good.

Tre 13:32

Does that make sense?

Sierra 13:33

I think so, yeah.

Tre 13:34

Okay. So then we compare that to a cheaper product. So let's look at this McKenzie one. This is 1% as opposed to 1.1%. Yep. This product is average 6.92%. So slightly higher, right?

Sierra 13:50

Yeah. What was it, six point, you just

Tre 13:53

point it 6.9 versus six. So seven 0.7% higher on average per

Sierra 14:00

For a cheaper product.

Tre 14:01

For a cheaper product. Okay.

Sierra 14:03

Okay.

Tre 14:03

Then let's compare it to the RBC one. So the RBC one was 0.94%. That's now returned to 7.9%. So in almost 1% more. And it's so far the cheapest of these three products that you're talking about?

Sierra 14:17

Yeah.

Tre 14:17

Okay.

Sierra 14:18

I'm gonna jump the gun again here. Do they include the fee in

Tre 14:24

their Yes. This is after the fee and everything.

Sierra 14:25

Okay.

Tre 14:26

Yeah.

Sierra 14:26

So it's like the fee is, this

Tre 14:28

is what the client got.

Sierra 14:30

Yeah. So maybe that's impacting it as well.

Tre 14:33

Yeah, very much so. And then we look at the Vanguard Fund. Um. Which is the cheapest one out of the active managers at 0.54% and their common history return is 8.99%. Right. Crazy. So by far, uh, the best, but it is the cheapest. So it's the best, but it's also the cheapest.

Sierra 14:55

Yeah.

Tre 14:56

What you'll notice if you lined up, if I lined up hundreds of these, you'll see a pattern that the cheaper the funds, the better the performance. Because, and I can't stress this enough, people are playing in the same sandbox.

Sierra 15:14

Yeah.

Tre 15:14

Nobody has this secret, magic

Sierra 15:18

sandbox.

Tre 15:20

Yeah. Basically, nobody has this secret. And even people talk about the, the investing greats. You go back to Warren Buffet and you're like, incredible investor, right. When you look at his returns post. The. On the name of it, but post when public markets pub, like the information that was, that was shared for public companies, it, it

Sierra 15:46

went live kind of thing.

Tre 15:47

Yeah. Like it increased in quality, like the, the standard increased of how much public companies have to share with the investors when that changed, so that was in the nineties ish, Warren Buffett's returns compared to the market dropped off a cliff. Hmm. Because information wasn't information leveled the playing field.

Sierra 16:08

Yeah.

Tre 16:09

And you see that consistently that Yes. A, an active manager in private markets where the information isn't as readily available, having a team of analysts and all that fun stuff and is, is an, is an advantage. But when you get into public markets, that advantage significantly drops.

Sierra 16:30

Yeah.

Tre 16:30

So while you do have the outliers that happen to outperform the market significantly, that's why I say. Why for most people the choice, it isn't a good choice to, to pay more for active management when the likelihood is that they're going to underperform.

Sierra 16:50

Mm-hmm.

Tre 16:50

Okay.

Sierra 16:51

Yeah.

Tre 16:51

So that was the, roughly the cost. So basically on the high end, if you're paying any more than 1% for a product that's actually managed, you are significantly overpaying,

Sierra 17:02

you're paying overpaying, and you're probably not, well, you're not performing as well

Tre 17:06

in these examples. Find if somebody's willing to find me one that, that has, let me see it. Uh, 'cause it's very rare, right? You might, you might get the odd one, but the fact is you have to better pick these, these different management teams or whatever before the outperformance happens.

Sierra 17:22

Yep.

Tre 17:24

If you find a way to do it successfully, Let me know. We can make a lot of money. They're

Sierra 17:31

like, I don't wanna let you know.

Tre 17:32

CPP So CPP just released their numbers and they underperformed the, the, their benchmarks again for the millionth time in a row. Um, just proving it is very different, very difficult to do. Most people would be much, much better off just not bothering. Hmm. Okay. And then so that's what you should be thinking about for in that range. So anything I would, I would say anything above 1% way too expensive, you should be trying to aim for, if you're wanting to go the active manager route, you can get options as cheap as half a percent.

Sierra 18:07

Yeah.

Tre 18:07

So you should be probably realistically looking in that,

Sierra 18:12

I wanna say like 0.7 is like

Tre 18:14

a good Yeah. Point seven, 0.8 range is likely what you'd be paying for.

Sierra 18:19

Yeah.

Tre 18:20

For an active manager. Okay. Now, let's compare that to. A, like a passive strategy. Right. Okay. So I have two here. I have, again, dimensional, I, I use them a lot and then just iShares. So it's kind of like a, they just use basic indexes to put their, put their product together. So again, these are both balance funds.

Sierra 18:43

Mm-hmm.

Tre 18:43

Now what are the price of these ones?

Sierra 18:45

Sorry, can you angle a bit? It's just the glare is so bad for me. Uh, 0.2% for iShares 0.28% for

Tre 18:55

dimensional

Sierra 18:55

damage.

Tre 18:56

So significantly cheaper. So compared to the the, the NBC, the National Bank one, which is 1.1%

Sierra 19:05

crazy. Point two,

Tre 19:07

0.2, it's nothing. So five times cheaper. Yeah. Okay. What do you suspect we are gonna see from performance?

Sierra 19:14

Great performance. Because the V cheap

Tre 19:17

in comparison.

Sierra 19:18

I think it's gonna be awesome.

Tre 19:20

Yeah.

Sierra 19:20

Awesome.

Tre 19:21

So you look at the, so we, so then. Meritage one did 6.24%.

Sierra 19:26

Yeah.

Tre 19:27

The global, the passive one, purely passive one did 8.4%. Right. So, yes, it, the vanguard one, the cheap, cheap one happened to outperform in this timeframe, but you can't expect that forever.

Sierra 19:42

Yeah. The

Tre 19:43

performance did 8.5%. right. Over the, over the same timeframe.

Sierra 19:48

Yeah.

Tre 19:49

So, and that's the, uh, that is the, the cheapest one.

Sierra 19:52

Yeah.

Tre 19:52

So. Tell me again why, why, but like when I said at the beginning that sometimes you don't get what you pay for.

Sierra 20:01

Yeah. You know what's funny? This is like, this is like a marketing trick as well. It's making me think of, uh, a part of a book I read again, do I remember the name of the book? No, sorry, everyone. Um, but it was talking about, there was an example that talked about, um, of a woman who owned a jewelry store in Arizona. So they were selling turquoise, if you know anything about the states. Mm-hmm. Um, like some of the indigenous tribes that were there. Turquoise is a big thing anyways. So some of the handmade hat, some of the handmade jewelry that was there, um, she was trying to push it out of the store, so she marked it down half price.

Tre 20:43

Mm-hmm.

Sierra 20:44

Uh, nothing happened. Um, so then she wrote a sticky note to her employee saying. Can you mark this down to like 75% off? 'cause they want to get it out and he misread the note. Um, I don't exactly remember what it, like the exact numbers of how he got it messed up, but he made it a lot more expensive, basically. Like upped it by $70 or something like that, whatever. So anyways, it was a lot more expensive than it had originally been. And then even more so than when they marked it down and they sold it out. Immediately. Mm-hmm. Like within a week it was all gone and she was just mind blown. Like, the, how did this happen? You know, like how, how did I make more money on these things that, um, I was trying to get rid of for so long? Trying to mark it down didn't entice people, but making it more expensive, enticed people. Mm-hmm. And I think it is, it's a mentality thing. That was what the book was partly about, was basically we have these almost like automatic tapes that play in our head that just tell us, it's, again, we've talked about this, having the easy answer so your brain doesn't have to actually think

Tre 21:54

mm-hmm.

Sierra 21:54

Oh, more money. I spend more, it means better

Tre 21:56

quality,

Sierra 21:57

more money equals better quality, better value. So I don't wanna think about it. You know what I mean? Mm-hmm. So people look at the jewelry store and they're like, wow, these pieces are so much more expensive than the rest of them. They're gonna be really good. Which isn't true. Mm-hmm. But it is the story that we tell ourselves or whatever. But that's what it makes me think of and why people probably still pick. Those because they think they're doing something. You know, it's like probably just a mind game thing.

Tre 22:24

Yeah. I think there's a few reasons that people pick them. Yeah. One of them is ignorance.

Sierra 22:30

Yeah,

Tre 22:30

for sure. But if that's a major problem in, but

Sierra 22:32

that's kind of similar, right? Like if you knew, if you walk into a jewelry store and don't know anything about it, it's ignorance. Right? Like

Tre 22:39

Absolutely. You dunno what you're comparing it to, which hopefully this episode will help, uh, that you have an idea what you should be comparing what you'd expect to be paying. Yeah. Um. Yeah. I also think that, well, I know that the wealthier you are, the more that you think there's something special out there for you.

Sierra 22:59

Mm-hmm.

Tre 23:00

That happens very often. That you know, I, I have $5 million, I should be getting more than the average person, and they do things to try to get more than the average person.

Sierra 23:11

Is that like an ego thing, do you think? Because you just said like,

Tre 23:13

yeah,

Sierra 23:14

it's like I have this much money. I should,

Tre 23:16

yeah. I think

Sierra 23:17

be above.

Tre 23:17

Yeah. I think people, people expect to. The more you have to just have more access. And you do get more access, right? Like you do. Yeah. You have access to different types of investments and your an accredited investors. So kind of you can invest in whenever you like.

Sierra 23:33

Yeah.

Tre 23:34

Doesn't mean that you should, and for most people, the vast, vast majority of people, and you hear stories about it all the time, but still people don't just do the, do what they hear to be true. But you hear stories of we

Sierra 23:47

want them it to be complicated.

Tre 23:48

Yeah. But you hear stories where the, where these big investment companies will go and like invest all this money and buy companies and they make another company ends up being really big or whatever. And then you look at the return and you're just like, if they to just put. The original payout into the markets and just left it for 20 years, they'd be ahead. Right. Donald Trump's a, a big, uh, a big example of that where it's like, if you'd just taken the money his dad gave him and put it into the markets, he'd be richer than he is today. Just bought Index fund. But,

Sierra 24:21

but again, people like that, that's another. Like a whole nother topic, but I find people like that it's too boring.

Tre 24:29

Yeah, absolutely.

Sierra 24:30

Like they need that like chase the risk though. Like they want, they're, they wanna work. I always say that about you. You're like, oh, when I retire I'm like, you're, when are you retired? It's just never gonna happen. This you love's

Tre 24:44

not a thi not, there's a difference between having to work for money and doing things 'cause you enjoy it and you're interested in a project and you Yeah.

Sierra 24:53

But I think that's what people do. It's like, at some point, how much money do you really need? It's like you're, if you're, you do cool things. Yeah. You like look at Musk.

Tre 25:02

Yeah. Pretty

Sierra 25:02

much. He's bored. He wants to

Tre 25:04

go to Mars instead.

Sierra 25:05

He's not bored anymore. Look at what he's doing.

Tre 25:08

Yeah. Yeah. Absolutely. But yeah, so as I said, so what you are, what you are, what you're looking for is. So that there, what's the best way to say this? Um,

Sierra 25:19

passive. Is this like the recap?

Tre 25:20

Yeah. Okay. So passive investments or things like that are gonna be significantly cheaper?

Sierra 25:25

Yeah. Because you don't have a team of analysts like looking at everything all

Tre 25:29

time. No, in the same way. Yeah, exactly. Like dimensional is like factor investing, right? So it's a little bit different. But when you look at, like, when you like comparing like the 10 year return on it, it's, you know, the iShares is at 7.95 and DFA is at 7.97. Mm-hmm. Right? Like there, it's gonna be very similar, but what you would expect to see is that over, over like an entire market cycle, long time you would expect to see certain factors outperform the, the basic index. But it doesn't mean you'll see it every single year or anything like that. Mm-hmm. And you, you're talking about a very, a sustained long-term investment. Timeframe and then you would expect to see the outperformance again, all things being equal, the more expensive something is likely, the less return that you would, you would get.

Sierra 26:20

Yeah.

Tre 26:20

Right.

Sierra 26:21

Especially, and it's like, what are you paying for at that point? That's the real

Tre 26:23

question. And that's the thing that's really the question is when it comes to these types of investments, what are you paying for?

Sierra 26:30

Yeah.

Tre 26:31

And once you determine that, you can determine whether the risk is worth it, because if you are paying for outperformance

Sierra 26:38

mm-hmm.

Tre 26:39

You are unlikely to get it right.

Sierra 26:41

Yeah.

Tre 26:42

Um, and even companies that have outperformed doesn't mean it's gonna continue to happen.

Sierra 26:48

Mm-hmm.

Tre 26:49

Right. You just never, you never know. It's, there's been plenty of fund companies out there that have performed exceptionally well over short periods of time. Everybody piles on and dumps a much of money in there, and then they go to underperform. For the next 10 years, lots of them out there. Right. Win win fund awards, be the best fund in Canada, and then suddenly, you know, nothing

Sierra 27:12

falls off the deep end.

Tre 27:13

Right. Happens all the time. So, yeah. Um, okay. So that's on the, that's on the product side of things.

Sierra 27:22

Yep.

Tre 27:22

Okay. Now on the adv, on the advice side of things, so first off, there are three, I would say, but two main types of business models in my industry, but there's three really.

Sierra 27:36

Mm-hmm.

Tre 27:36

So I

Sierra 27:36

know kind of what you're going for. Okay. What I wanna say, like a client, I don't know exactly they the right words probably, but a client that you get paid by. The markets basically like they're your client, they go through you, you get paid by how well the markets are doing because you're investing for them. Is that right?

Tre 28:00

K? Kind of

Main audio 28:00

guess.

Sierra 28:00

Maybe I shouldn't be saying this. I guess this full, I gonna have to cut this out. Maybe I shouldn't answer. I was just thinking, you're probably talking about the hourly rate as well as like a poss possibility, right?

Tre 28:12

Yes. So you can do, yeah, so you can do, there's like hourly or project based, you can work with planners.

Sierra 28:18

Yeah. So it's like, Hey, I. Just my great aunt from PEI died and I got a huge inheritance and I dunno what to do with it. Like that would be a project based maybe if someone was like, it could be depend.

Tre 28:33

Yeah, yeah, depending, depending on, yeah. Depends on lots of things. But yeah, absolutely. That could any, anything that is planning orientated. It could be a planning hourly case, depending on, depending on lots of different things. Yeah. But there's the hourly planning, there is a percentage of assets. Mm-hmm. So we call that like assets under management. So you charge a percentage of the money that you manage.

Sierra 28:58

Mm-hmm.

Tre 28:59

And then there is commission.

Sierra 29:01

Okay. The assets under management was what I was thinking. Could you tell? Yeah,

Tre 29:05

kind of.

Sierra 29:06

I like how many times have you said those words to me? And like I, yeah, just mind went blank. But

Tre 29:12

yeah. So with, what do you think commission is?

Sierra 29:15

Oh, I know what this is. I think. No, I

Tre 29:20

let us know.

Sierra 29:22

I'm not going to 'cause I need to be careful.

Tre 29:24

Why? Why? No, it's fine.

Sierra 29:26

You might have to cut it out or something. Whatever, possibly. Okay. Um, so when you work at a, like let's say you work at a bank, you don't, you like, how do I explain this diplomatically? I'm like,

Tre 29:40

no, it's fine. Just go for it.

Sierra 29:42

Okay. So there's your dealer.

Tre 29:44

Yeah.

Sierra 29:45

There's the company you work for and then there's you.

Tre 29:48

Yeah.

Sierra 29:48

So there's three parties involved in this particular relationship? I guess so. Um. And then there's like the products, right? So sometimes the product people have a deal with the bank or the dealer, and they want you to sell that product because they make more. Off of it if you sell it, I think. Is that right?

Tre 30:16

That happens, but that's not what commission is.

Sierra 30:18

Okay.

Tre 30:18

So a commission is where the,

Sierra 30:21

I was thinking you would make more if that product gets sold. No.

Tre 30:24

Yeah, that, that, So that it's a commission? Yeah. That, that's not necessarily a commission thing.

Sierra 30:27

Oh, okay.

Tre 30:27

So a commission is where the, the compensation for, for whatever it is, is derived by the product itself. So for example, we looked at, uh, funds without any commission attached to it. Okay. But they are the same funds that you could buy? That's 'cause I have the RBC one up right in front of me. I'm going to use that one. So the same, the same fund, but with a, with a commission attached to it. In my industry it's called A Series. This one, the cost for this one is 1.94.

Sierra 31:05

We,

Tre 31:06

because, so before it was at 0.9 ish.

Sierra 31:09

Mm-hmm.

Tre 31:10

Now it's 1.9.

Sierra 31:12

Why?

Tre 31:12

Because that 1% is the commission.

Sierra 31:15

Commission To who?

Tre 31:16

The, the dealer. So if it was me buying this fund, it would be 1% is sent to Aviso and Aviso takes their cut, they then give it to TCU. TCU then takes their cut. Then I'm, it's

Sierra 31:31

really complicated.

Tre 31:32

That's a commission. So it's embedded inside of the product itself. And until like three or four years ago, this was never, it was talked about like you would, you had to talk about it with the person, but it was never disclosed on any

Sierra 31:49

documents or

Tre 31:49

anything. Documents or anything like that. Like officially, like you didn't get a statement at the end of the year that showed you in dollars and cents is actually what was

Sierra 31:56

in a big red like bubble being like, here's how much you paid.

Tre 32:00

Yeah, you don't, you didn't get that. But now you do. Now you do get, they see the commission side of it.

Sierra 32:05

Okay.

Tre 32:05

But they don't see the product side of it. And that's what's changing at the end of this year.

Sierra 32:11

Who's they? Sorry? The The client.

Tre 32:13

The client? Yeah.

Sierra 32:13

Okay.

Tre 32:15

Does that make sense?

Sierra 32:17

I feel like I'm struggling on this one.

Tre 32:18

Okay. Why are you struggling?

Sierra 32:21

I dunno. You could be a multitude of reasons, like exhaustion. Um, but I, okay, so who is paying the commission? I'm a client.

Tre 32:32

You're a client?

Sierra 32:33

Yeah.

Tre 32:33

You are paying it because it's embedded into the price of the product,

Sierra 32:37

but you are technically paying it at some point somewhere else. No.

Tre 32:43

What do you mean?

Sierra 32:44

So if I like, why would I not just pick the other product if it's cheaper? Why would I pick a commission?

Tre 32:51

Because that's what you get offered.

Sierra 32:54

But isn't the other one the same?

Tre 32:56

Yeah.

Sierra 32:59

So Slow mic. I don't

Tre 33:04

get it, but, okay. Well, the, the, they might not offer you these because Okay. Maybe if I finish up my three different ways, this will make more sense.

Sierra 33:13

I feel like, you know, you're holding out something on me. Do you know you're holding something out on me?

Tre 33:18

No, but I think maybe the, the last one will help. So this is the way that I typically work.

Sierra 33:23

Okay.

Tre 33:23

Which is we charge a percentage of the assets that we manage.

Sierra 33:26

Mm-hmm.

Tre 33:27

And then it's irrelevant what products you use. You're paying specifically for the advice. So think of it as a, with a commission, you are being, it's not the client paying you, it's the fund company paying you.

Sierra 33:40

Mm-hmm.

Tre 33:41

Okay. With a, when you're using a like a AUM fee, it's the client directly paying for paying you.

Sierra 33:48

I see. So that entices you to be more fee sensitive as well. Correct. Because if you are being paid by the dealer. It's going through that route. So that would be

Tre 34:00

if you're being paid by the fund company. So let's say I buy the RBC product.

Sierra 34:08

Which one?

Tre 34:09

This, this, this one with a,

Sierra 34:12

the commission one.

Tre 34:12

With a commission in it.

Sierra 34:13

Okay.

Tre 34:14

So there's this one without the commission and then this one with the commission.

Sierra 34:18

Wow. They look so obviously different.

Tre 34:21

It's just a number.

Sierra 34:22

You just flip through the same page twice.

Tre 34:24

It's just the number. The only thing different that you'll see about these two is the number.

Sierra 34:29

Okay.

Tre 34:29

Basically this is exactly the same fund.

Sierra 34:32

Okay.

Tre 34:32

So this one costs 0.94. This one with a commission costs 1.94.

Sierra 34:36

Yeah.

Tre 34:37

cause that 1% is the commission. Okay. Okay. That's why their prices is more,

Sierra 34:42

yeah.

Tre 34:42

Okay. So if you, if you're using a commissioned product, then it means that the client pays RBC this amount and that 1% is sent from RBC to the advisors, advisors dealer.

Sierra 35:00

Okay. So that 1%. So the client is paying for the fund. That 0.94 goes to the fund place

Tre 35:08

that 1.94.

Sierra 35:10

No. 'cause you said the 1% goes

Tre 35:13

No, but it goes to the fund manager first.

Sierra 35:14

Okay. And then the fund manager gives, pays you the 1% to the bank. Like let's say

Tre 35:19

the dealer. Yeah.

Sierra 35:21

You said the banker.

Tre 35:21

Don't

Sierra 35:22

use,

Tre 35:22

no, don't use the bank because you are thinking of RBC. So use Aviso. Pretend I'm, I'm buying this.

Sierra 35:30

Where does TCU fit in then?

Tre 35:32

Yeah. Cool. Keep going down the line.

Sierra 35:34

So I thought it was client.

Tre 35:36

Yeah.

Sierra 35:37

Pays RBC. Fund fact.

Tre 35:40

Yeah.

Sierra 35:41

Uh. RBC Fund. Fact. TCU.

Tre 35:47

No.

Sierra 35:47

Aviso. Okay. Aviso and then Aviso. TCU.

Tre 35:50

Yeah.

Sierra 35:51

And then TCU Tre.

Tre 35:52

Yeah.

Sierra 35:54

So if client buys 0.94 fund. Client to RBC. Fun fact.

Tre 36:05

Yeah.

Sierra 36:07

RBC Fund. Fact to Aviso?

Tre 36:08

No, there's no rbc. There's no RBC to aviso.

Sierra 36:13

Okay?

Tre 36:14

There's, so you're only paying for the product,

Sierra 36:17

but then how do you get paid?

Tre 36:18

So that's where the fee-based account comes in, where it's completely separate from the product. It doesn't matter. You're not paid through the product. It doesn't matter what product you use that's not, there is no part of it. It's completely irrelevant to what the client is paying for. So, for example, let's say I was still charging 1%, right?

Sierra 36:36

Mm-hmm.

Tre 36:37

Then in that case, 0.94% would go to RBC.

Sierra 36:42

Mm-hmm.

Tre 36:42

1% would then go to Aviso. Aviso then takes their cut. To TCU. TCU takes their cut. Then I get,

Sierra 36:49

so it would be the same if you, but you say how much?

Tre 36:53

Yes. So it doesn't have to be 1%. Right? So no matter how much I put into this fund, it's 1%. Okay?

Sierra 37:02

Mm-hmm.

Tre 37:03

But let's say. So maybe we'll get into like what I actually charge. So for example, I charge on the first $500,000, I charge 1.5%.

Sierra 37:12

Mm-hmm.

Tre 37:13

So if you are, if you're a corporation owner, right? Okay. So this is like, if your stuff is more complicated, I charge 1.2. If you're not, so, if you're, if you have $300,000, I am more expensive. You pay more than if you was to use the commissioned,

Sierra 37:28

because it would be almost like you, like you're doing a lot of work.

Tre 37:32

That's why I charge more.

Sierra 37:33

Yeah.

Tre 37:34

Yeah. I see. I charge what I believe is fair for the amount of work that I would be doing. Mm-hmm. It doesn't matter. I don't care what it would be if it was elsewhere. That's not what you're paying for. If you want somebody to take the commission, go walk into the RBCs branch and see what type of advice you get there.

Sierra 37:52

Yikes.

Tre 37:53

It's ouch. And, and, and this is very specifically for corporation owners, right? Like that's why I charge even more on the first $500,000 for corporation owners. 'cause it takes me longer. It's more work. It's more complicated. More more specialized skillset. It's harder. Yeah. So I charge more for it. Yeah. But what happens after that? Right? Like it isn't, let's say I had $10 million. And I walked into RBCs branch and I bought this RBC balanced portfolio for 1.94.

Sierra 38:24

Mm-hmm.

Tre 38:24

You would be charged 1.94 on that full $10 million. Let's type in $10 million into my fee schedule. Mm-hmm.

Sierra 38:32

Mm-hmm

Tre 38:34

And on $10 million.

Sierra 38:35

Did you build this calculator?

Tre 38:36

Yeah, of

Sierra 38:37

course you did. I'm like,

Tre 38:40

I consistency, I Where did, where did

Sierra 38:42

you get this?

Tre 38:42

I did the, I did the research on what I wanted to charge, and I figured out what I felt was fair and then this is, this is my fee schedule.

Sierra 38:49

Yeah.

Tre 38:50

And then so, but for $10 million, I would be charging 0.4%.

Sierra 38:55

Wow.

Tre 38:56

Right. So that's a big

Sierra 38:57

difference.

Tre 38:58

a big difference. It's

Sierra 38:59

a big

Tre 38:59

difference. So

Sierra 38:59

people should work with you.

Tre 39:03

So on this, let's say I was still in the same product, right? Still the same everything, same product. The difference would be that if they $10 million, they would be paying 1.3% versus,

Sierra 39:18

yeah.

Tre 39:19

And, and I, I do, I would say a small factor that a lot of these fund companies will reduce their fee.

Sierra 39:27

Mm-hmm.

Tre 39:27

Right? So instead of it being one point or nine, 0.94%, it would be, it'd be slightly less, like it goes down a little bit. Mm-hmm. Um, but let's say it was 0.8, but it would be point A on the product side and the. Commission side. Yeah. So they're both, so I kind of ignore that for now. But yeah, so it makes a big difference. Cost makes a, makes a, makes a big difference. But that is why I do not like commission products. Yeah. I don't like it from a, from a principal point of view, because if you are being paid by somebody else, who do you work for?

Sierra 40:03

Yeah.

Tre 40:03

You're paid by the person that pays you Well, there's only one person that, like a financial planner should be working for the client and that should be the client. Yeah. So the client should be the one that pays. Yeah. Not a fund company. Not an investment firm. Especially because they would, they would do things like, um, which has being gotten rid of now, but they would do things like if you locked the client in for three years, you get 3% of what they're investing upfront, or you have 7% of what they're investing upfront. Or some places will pay like a 1.2% commission. Like all of this stuff. Hate it. Get rid of it all. You shouldn't be,

Sierra 40:43

because then it's like, again, it's that. It's like you're the middleman for the fund company to get

Tre 40:49

Yeah.

Sierra 40:49

More money for them.

Tre 40:50

Basically, you're working for them. Yeah. Right. That's not, there should be zero incentive between you picking one thing over the other. Mm-hmm. It should not impact your compensation. What you should be charging your client at all. Mm-hmm. Is my opinion. Right. So that's why I always separate it out. So I, the only two ways that I really like to work is either a percentage of assets or like a project based hourly, pre predetermined amount for the, for the work that I'm doing.

Sierra 41:17

Yeah.

Tre 41:17

Okay.

Sierra 41:18

Yeah.

Tre 41:18

So, so I'll go through my fees so you can kind of get an idea of what is, is what you could expect to pay. Um, I'll give you an idea of whether it's expensive or not.

Sierra 41:29

I just wanna say really quick, I can completely understand if someone, wow. Like, I hate this. I'm sorry. I'm like, how much do I have to pay it? It's like, oh, let me just tell you 5,000 things about how you're paying it. Ugh. Well

Tre 41:46

that's why

Sierra 41:46

I don't wanna like, I don't wanna do all that.

Tre 41:48

That's why people

Sierra 41:49

get lazy

Tre 41:49

and For sure. But you know what the crazy thing is? The amount of people that I've met with, that they'll be interviewing advisors, right? And they will interview me eventually and. They'll ask. 'cause there, there's a list, like if you Google what questions you should ask a, a financial planner or whatever before you consider hiring them, it'd be very similar. You could ask about the experience, but fees are gonna be a major one. And the amount of advisors out there that can't answer that question,

Sierra 42:17

like their fees.

Tre 42:18

Yeah. So they'll say like, what, how much are you gonna charge me on? Like uh, 2 million, 2 million bucks?

Sierra 42:24

And they're like, Hmm.

Tre 42:25

And they'll say, oh, well it would be like, it would be like competitive. Like for, you know, it's like, well, can't you just gimme a number? Like, oh, oh talk about that later. Yeah. It's insane.

Sierra 42:35

We'll talk about that later.

Tre 42:35

Like, like later on in the process of like onboarding or whatever. And that is right. And it's just like, I hate that. That's because they're picking their fee based on what they think they can get from you.

Sierra 42:44

That's

Tre 42:44

insane. Nasty, insane. Somebody walks into my office and says, I have $2 million. What are you gonna charge me? I'm gonna say you incorporated in any way. And they're gonna say. Yep. And I say, Kate, I'm ticking this box. Your fee is 0.91%. That's what, that's what I'm gonna charge on $2 million.

Sierra 43:02

That is

Tre 43:02

next question. Right. And the amount of people that don't, because it is just, I dunno, I don't, I don't,

Sierra 43:08

but nobody makes a calculator. See you. Well, they should. Nobody's quite like Tre. How many of you guys are making calculators all by yourself? This This was a, this was probably a Saturday night project for each tray.

Tre 43:22

I wanted it to be consistent, right? Like, I don't know.

Sierra 43:24

Oh, for sure. This is, this should be

Tre 43:27

standard.

Sierra 43:27

Standard. Why did, I'm not even, maybe I shouldn't even go down there. Like, why did you have to build this

Tre 43:32

though? I don't. Anyway, move on. So, um, yeah. So, okay, so what I charge, so on under $500,000, if you're a corporation owner, it's 1.5%.

Sierra 43:43

Yeah.

Tre 43:43

If you're not a corporation owner, it's 1.2%.

Sierra 43:46

Yep.

Tre 43:47

That is. It's expensive. That is on the expensive side. Here's the truth, is that

Sierra 43:56

I'm waiting,

Tre 43:57

this is where, this is the part, this is the, the, the segment of the population that there, you either need somebody like me or you don't. If you don't, don't pay for it. It is simple as that. Like I, my, my skillset is very specific. If, if your, if your life is very simple and you can afford to do it yourself and you can like do it yourself, right? Like it's a case of, I think most people should learn how to invest money on their own and literally go in, buy index funds and they'll be great. What I focus on is all the other aspects. Yeah. So honestly, if people were trying to do it as efficiently as possible, you would want to come to somebody like me for two, three years, learn as much as you can and then go do it yourself, right? Mm-hmm. As, and then hire somebody hourly or something like that. Every,

Sierra 44:52

well, that's what I was gonna say. Maybe even just hire like someone. Hourly to get them to look it over and stuff to make sure like, okay, you're kind of on the right track if you were learning yourself. Yeah. At least you have an expert opinion, because I think that's what would scare someone like me. It's like, oh, go learn by yourself

Tre 45:10

and you don't know what you're missing, and things like that. Yeah, I would say that does come to a point where if you aren't willing to dive into it properly. The cost is worth it.

Sierra 45:20

Mm-hmm.

Tre 45:21

Even if you're low complexity.

Sierra 45:22

Mm-hmm.

Tre 45:23

Right? Because the, the fact is, is you, you going in picking 80% equity versus 70% equity, well, if you working with an advisor can get you to 80%, you've made the fee multiple times over that. It wouldn't be

Sierra 45:42

Yeah. Like,

Tre 45:42

just in that small allocation change. Right. So if you need the help, it's, it's like, but it's like with anything in life.

Sierra 45:49

Well, yeah, I was just thinking about like taxes you, so

Tre 45:52

yeah. If you can do your own taxes, do your own taxes, if you can fix your own car, fix your own car. If you can take your, if you can represent yourself in court, guess what, it's a lot cheaper to, if you can represent yourself buying a home, that definitely a lot cheaper than you using in a realtor. Right. So just like anything you. If you can do it yourself to a high quality. To a high level, do it yourself. Well that's the

Sierra 46:11

questionable part again, for those things. 'cause I was thinking about, I remember like working in retail first job, like I'm talking like teenager and people were going to h and r block to get their taxes done. I'm sure they were just raking in money because they're like, that's the easiest taxes ever. It's like these teenagers who have like their one slip

Tre 46:31

and they charge 'em 150 bucks or 200 bucks.

Sierra 46:33

Like it's not like, it's not super expensive. But it's also like, again, the low complexity of it is not really, it's you, you could and should learn to do it yourself probably.

Tre 46:44

But they mo the more important thing is that you do it right. Yeah. So if I had to choose between somebody, even like these, I'm talking about like these high cost funds and stuff like that. Even if the choices between you doing that or doing nothing, you do that.

Sierra 46:58

Yeah.

Tre 46:58

Right. Like I, there are levels to optimization. If if you're, yeah, if the choice between doing nothing and doing something, then you start somewhere. Start somewhere, right? Yeah, but I, I, yeah, basically, but I'm not the right, I'm not the right person for like, I can do it and I can do it very well and that, that's the hard thing where. Once you get to a certain level and a certain point, I can do the simple stuff really, really well. Much better than I could when I first started. Right?

Sierra 47:30

Yeah, of course.

Tre 47:31

So I was like, yeah, I'm gonna be better than that, but you don't really need somebody like me.

Sierra 47:35

Yeah. Oh, this is, again, very

Tre 47:37

simple. Right. You

Sierra 47:38

know, I'm always like connecting things. It reminds me of like my neurologist, I always wanna go through him for stuff. 'cause I'm like, I just know you're really smart and you know stuff and you'll just get stuff done. But they're always like, this is not related to your, like you gotta go through the gp. I'm like, oh please. It's like, you don't pay me enough. You don't pay me

Tre 47:58

at all. That's not, that's not his area of speciality. Right. He could do it.

Sierra 48:01

Oh yeah. I'm

Tre 48:01

sure he could do it, but it's not his area. Special specialty. Right? Yeah. So it's like, what? Yeah. Anyway. Totally. So that's why I charge on the first 500,000 and then I charge 0.95 on the next 500,000.

Sierra 48:13

Okay.

Tre 48:14

Right. And then 0.6 on the next million dollars. So this is now somebody with $2 million every penny. After that, you're paying 0.6 and the next $3 million, 0.33. So you'll notice it drops off very quickly.

Sierra 48:27

Yeah.

Tre 48:27

And then next five 0.26. And then anything over $10 million, 0.35. So actually jumps up because that then covers the the cost of running the portfolio.

Sierra 48:40

Because there's probably a lot more, maybe.

Tre 48:42

No, but the, the 0.35 is the, is my baseline for just managing money.

Sierra 48:48

Okay.

Tre 48:49

Basically. So the reason it's lower on the next five is to make up for the, um, the higher amount.

Sierra 48:56

oh earlier

Tre 48:57

Oh, earlier times the beginning. Yeah. Right.

Sierra 49:00

Man, you're kind of smart.

Tre 49:02

Smart. A lot.

Sierra 49:03

I

Tre 49:04

put a lot of thought into this, a lot of thought into exactly what I thought was there. This

Sierra 49:07

is kind interesting

Tre 49:07

the way, the way that I, the way that I do it. Um,

Sierra 49:10

but I feel like, again, as a client, like if I were a client just seeing this, like it's super simple. I'm like, okay. Yep. Makes sense. I understand like.

Tre 49:20

It gets, it gets cheaper as the amount goes up. I do not believe, nobody can tell me, look me in the straight in the face and say that managing $500,000 is easier or harder than managing a million dollars. It's simply not. It's about the complexity of the individual. You can have somebody worth negative a million dollars and it'd be a very time intensive to to, to manage their, their financial affairs. Right. So

Sierra 49:47

yeah,

Tre 49:48

that's why, and that's why it's so much higher on the first, on the first part of the money. 'cause I need to cover the basic time it takes me to.

Sierra 49:55

And like you said, it's almost like a coaching thing too. Like where are they kind of starting? You might have, you might need to put a lot of time into their knowledge or something. Yeah,

Tre 50:05

yeah. Anyway, that's, but that, I would say that is, um. Again, on the first part of the, of the, of the assets, I, I would consider myself expensive. If you walk into just a basic, like something like. If you walk into a branch or something like that, uh, you should be able to get around paying 1%, if not less. Like you might be able to find, like if you have like two or $300,000, you might be able to get like somebody at RBC or something like that, like the big banks to give you like 0.8 or something like that. They might be able to, like with manager approval or something like that.

Sierra 50:47

Mm-hmm.

Tre 50:47

Is probably the lowest that you're gonna get if you're working with, so that's if you're working with a person. Okay. There's the other side of it that now you're just using, so you're not getting the planning piece, you're just wanting

Sierra 51:00

investments.

Tre 51:01

Strict investment management, like manage my portfolio, nothing else. Then you're looking at Roboadvisors. Okay. Roboadvisors, the, the fees will range, but you're looking at Between about. Between 0.2% to to 0.5% 0.6%. Right. So then the all in cost is, 'cause most of the roboadvisors use passive strategies. So the all in cost, you're sitting at like under 1%.

Sierra 51:28

Mm-hmm.

Tre 51:29

Which is, if you're willing to do the administration of running your finances and stuff yourself, then that's a really, really good way to

Sierra 51:38

do it.

Tre 51:38

Good way to do it. Good way to go. But basically in the current environment, you're paying for planning. Yeah, because you're paying for the planning. You're paying for the coaching. You are, you're not, it doesn't make sense with the information that we have for you to pay somebody significantly more to attempt to beat the market. It's not your, you're paying for somebody if you are paying for a person, you're paying for them to help you navigate the markets mm-hmm. For them to pick the appropriate investment allocation, things like that. Which is why I think it is really important that advisors coach your clients to where they should be objectively versus just making them comfortable and let them sit in what they want. Yeah. Because part of your value is, and we have the data, so you can't tell me that we don't have the data and every client is, um, like every client is different to a degree, but not different enough for you to be able to look and not push back. When clients want to do one thing, but you know, the evidence points at something else. So if a client comes in and says, Hey, I'm 30 years old, I just got a million dollars from my grandparents' estate and I don't need any of the money at all. I dunno what to do with it.

Sierra 52:56

Let's put it in a term.

Tre 52:58

There are things that you shouldn't be doing with that money. Right? Like, like there there is, there is a right and wrong answer to these, some of these questions.

Sierra 53:06

Yeah.

Tre 53:06

Uh, that coaching, coaching them is, is really, is really that ma massive, massive part of it anyway. Does that make sense? I felt like I covered the items there you that people wanted. Oh, uh, something else to be said. There are, there were tiers I would say of. of. Like money management in the industry. So you have like the branch level, which you're talking like the introductory investors group stuff, the like branches, like RBC,

Sierra 53:39

like

Tre 53:39

are you talking about

Sierra 53:40

like

Tre 53:41

if you walk into somewhere and

Sierra 53:43

like I want to, can I just say like FA threes, like

Tre 53:45

Yeah,

Sierra 53:46

basically, but not like their wealth side.

Tre 53:49

Yeah, but you have to explain what that means. Now if you,

Sierra 53:51

sorry, I don't know how to,

Tre 53:53

like, the person that will probably, they'll probably do a mortgage for you at the same time as investing your TFSA. Basically,

Sierra 54:00

like I, I would say if you have a financial advisor at a bank right now that does your day-to-day financial stuff.

Tre 54:09

Yeah.

Sierra 54:09

And then. And they haven't referred you elsewhere for this stuff then that's like the branch level.

Tre 54:16

Yeah, but I would actually say, I'm gonna add a level. I'm gonna say that would be level two,

Sierra 54:22

oh.

Tre 54:22

I'd say level one is like the part-time insurance license to people that, I'm not gonna get into that in this episode, but like

Sierra 54:30

episode

Tre 54:31

four where they have no real business in my opinion, giving investment advice. 'cause they, they do the be minimum amount of schooling and then just try to sling commission based. Just like insurance products and stuff like that. It's a really big issue. I take a big issue to it because a lot of the people that are victims of that are people with low financial literacy. But I would say that's level, that's level one that's like had it my way and nobody ever deal with their, the type of people again. Then you have level two, which is the the bank stuff, and as you go up these levels, you should really expect to pay more if you are a smaller investor. Right. So then you have level two advisors, which would be like branches and things like that, where they likely have a lot more, significantly more experience than the first tier. Probably most would be trying, I do like to give 'em benefit of doubt. Most would try to be doing the right thing, but they often don't have the experience to know whether they're doing the right thing or not. But you probably, you could be okay. Right. That's, that would be my starting point. If I had no idea where to turn.

Sierra 55:36

Mm-hmm.

Tre 55:36

And just wanted to get invested, then you'd have like level three, which would be like where I sit, where you're likely gonna be referred by the branches to the wealth management side where. That's where you have the planners and the, the lawyers and like all that type of stuff on staff, where you'll be building proper plans. That's where most people would sit. And then you would get to like level four, which would be like the highest level, which you're talking about family offices, where this, this individual, you'll have, this individual has $50 million and they pretty much hire their own staff, or they work with a firm that manages five households. Yeah. And they have a full suite of staff. They have the lawyer, the account, all of them on staff and, you know, manage five households. And that's kind of that level that's like the highest level.

Sierra 56:29

Yeah.

Tre 56:30

Right. It's kind of the, the stages that you really have, but

Sierra 56:35

Yep.

Tre 56:35

Expect to pay appropriately for, for these levels. And I would say you'd probably wanna work up. Up them pretty quick as far

Sierra 56:43

from the, from the bottom

Tre 56:45

one. Yeah. Absolutely. Yeah. At least

Sierra 56:46

get to level three.

Tre 56:47

Yeah.

Sierra 56:47

Maybe not Everyone's getting to level four.

Tre 56:49

No. And I, I would say similar thing is I, I would do, if I had $50 million, I would do that for sure. But it would, it wouldn't be, I wouldn't be changing my investment philosophy because of I had $50 million. It'd be more a case of I would want a dedicated, like a dedicated lawyer that has five clients. You know, you're gonna get a lot of personalized attention at that level. You probably have a a huge amount of complexity in business assets and all that stuff. And they know, and

Sierra 57:19

they know you super well.

Tre 57:21

Yeah. I'd want that dedicated, you know, you're working with just on my stuff for three months outta the year. Okay. That's, yeah. Yeah. I would, I'd pay for that as opposed to, um. You know, somebody, even, even like at my level where you may have a hundred households, right?

Sierra 57:38

Yeah.

Tre 57:38

Something like that. So, yeah. Anyway, um, that's it. That's all. We're, that's all we're gonna to cover, I think, for that one.

Sierra 57:45

Perfect.

Tre 57:46

Anything you wanted to add?

Sierra 57:49

No. And that makes more sense now than it ever did before. So that's good.

Tre 57:53

Good. There you go. There you go. So to summarize, just because you're paying more doesn't mean that it's worth it.

Sierra 57:59

Yep. Go check

Tre 58:00

what your

Sierra 58:00

fees are.

Tre 58:01

Go check what your fees are. You, if you have friends and stuff and they are invested at X, Y, z, place, go check. Mm-hmm. Go, go. Make sure. And there's a difference between what you're paying and and value, right? So if it is something valuable to you, for example, we have a fund company called NEI. Which is like ethical investments. They're very, very good at what they do. They're expensive. But some people, it's really, really important to them that they don't invest in anything that contributes to fossil fuel stuff. Right. So if that is something that's really, really important to you, you have to understand you're gonna pay for that. Yep. Which higher fees mean you should expect lower. Lower returns. Right. And that's a trade off that you have to, as long as you make that, knowing that you're making that trade off. Mm-hmm.

Sierra 58:44

Yeah.

Tre 58:45

That's all I want. Right, for sure. What I want for everyone is that you, you make an informed decision. You understand that you're having that trade off and you're okay with it.

Sierra 58:52

Sometimes I feel like people think, oh, I'm gonna be judged for this decision. It's like, no, just, well, maybe, I don't know. I can't speak for anybody else, but I think for the most part. People don't necessarily care as long as you know exactly what you are paying for and like what, what you're doing. So,

Tre 59:12

exactly. That's all. That's all I want for people.

Sierra 59:14

As long as you can argue why you, you're doing, yeah, maybe not. Okay. Just ignore me. It's really warm in this room. I'm dying.

Tre 59:22

It is. Okay, perfect. We'll see you guys in the next one.

Sierra 59:24

Bye.

Tre 59:25

Bye.

Speaker 59:25

Thanks for listening to this episode of the Plain English Finance Podcast. Tre Bynoe certified Financial Planner. Chartered Investment Manager is a financial planner with TCU Wealth Management and Aviso wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell at any securities. The views expressed are those of the individual and are not necessarily those of Aviso Financial Inc. Mutual funds and other securities offered through Aviso wealth, a division of Aviso Financial, Inc.

Sierra 59:56

I'm like, I just. Back to my channel, everyone I know you've been dying to hear for me, obviously, in the next episode of Ceases Podcast about personality types and cognitive function preferences. So mom, you wanna know more about your cognitive preferences, huh? Do you ever remember what your preferences were? I don't think so. I bet you couldn't even tell me one, after so many times I've told you about your preferences. ESFP, extroverted sensing, introverted feeling, extroverted thinking, introverted intuition. That's your stack from top to bottom. Driver copilot, 10-year-old passenger, 3-year-old passenger. So basically your 10-year-old is when you're like, oh, I wanna be efficient, I wanna be effective. And you're doing things that don't actually make sense because it's a 10 year old's way of doing things effectively. That's something you like about yourself. You are like, I'm so good at knowing the root to something. You know how you guys always make fun of me for being bad at directions? It's because I feel like extroverted thinking is really good at that. But you guys do things that don't make sense sometimes. Like not use Google Maps out of stubbornness just 'cause you think somehow you know best, and that's just not true. And then we have introverted intuition, which is your three-year-old function, and that is where you love to catastrophize. Like when Aria is walking on the rug and you say, aria should be wearing pants that cover her knees, because if she trips and falls on the rug, she's gonna get rug burn so bad on her knees that they're gonna bleed so badly that they're gonna get infected. And if they don't get infected, she's gonna bleed so much. So she's gonna bleed out and die. Unreal. Un unreal. That's your introverted intuition running simulations in your head. But yours is a 3-year-old and mine is my driver. It's an adult, so I'm gonna take it from here on those. Thank you. This is a long pause. Tree's putting her eye to sleep right now. Hopefully she's okay. I just put her down so it's really bizarre that she's awake right now. It hasn't happened in a long time. Fully. She's okay. okay. I just know if mom watches all this stir, she's gonna be like, Sierra is hilarious. Sierra is so hilarious. And then my ego's gonna inflate again. 'cause I know I'm the funniest person. I know it's because mom always told me how funny I was, so I just believed it. And then Trey tells me, you're not funny. And I'm like, well, that's just simply not true. It's obvious. I'm funny. And I just know mom's gonna be sitting there on her laptop, dying laughing, watching this. She's probably gonna like the little boots and cats. Beatbox I did at the beginning. She's gonna love the, the reiteration of aria tripping and falling. She's probably gonna laugh really hard at that. Unless Tre gets to this first and he's probably be like, delete. He probably won't even watch this. Maybe no one will see this. Maybe this will never make it to the light of day.