The article “How to figure out your investment fees” was originally published in MoneySense on September 28, 2021. Photo by Andrea Piacquadio from Pexels.

John is unclear about what he’s paying his advisor, and cannot seem to get a straight answer.

Q. I was wondering why there is no accounting in my statements for the money taken out for my financial advisor or any expenses. I asked my advisor about this two years ago and she just stonewalled me. Is there no legal requirement to report this information to the client in Ontario?

A. Client Relationship Model 2 (CRM2) came into effect in 2017, with the goal of increasing fee disclosure and transparency for Canadian investors. Unfortunately, John, there are a lot of people who, like you, are still unclear on their fees. Even worse, I’ve seen that some advisors are vague on fees paid by investors, even when they are asked directly.

Currently, most investment dealers and advisors are required by regulators to disclose, at least once a year, the annual dollar amount of fees paid for services and advice. Typically, this disclosure is part of either a year-end statement or a separate Report on Charges and Compensation, a Fee Report, or some similar document. Disclosures may be provided by mail or online, depending on your investment firm’s statement delivery method.

Fees that are disclosed include trailing commissions paid from mutual fund companies to advisors and firms, as well as transaction fees for buying and selling securities like mutual funds, stocks, bonds or exchange traded funds.

Some firms charge a management fee, either in addition to or in lieu of trailing commissions or transaction fees.

There may also be operating costs like annual administration fees, common for registered accounts like RRSPs.

One of the problems with CRM2 is that the fees disclosed may tell only part of the story. Mutual fundsexchange traded funds (ETFs) and some other products have fees that do not require disclosure to investors.

Mutual funds have a management fee that is withdrawn from the funds each year. Most mutual funds used by investment advisors have two layers of fees, though, and this is a huge failure of the financial industry to only tell consumers half the story. The trailing commissions that require annual disclosure to investors typically range from 0.5% to 1%. However, the all-in fees that investors should actually care about average around 2%, but typically range from 1% to 3%.

As another example, if you invest with a robo-advisor, there are management fees of about 0.5%. The underlying ETFs have their own fees as well, which may add another 0.25%.

If you ask your advisor and they hesitate to disclose your fees, this is a red flag, John; you need to be able to trust them. The fact the disclosures issued by their firm may not give you your answer either is disappointing, as well. You can ask for a copy of your annual fee disclosure, and at the very least and review it.

If you own mutual funds or ETFs, you may be able to do a bit of your own due diligence by googling the full name of the fund or by using a site like to look it up.

One day, I hope, the regulators and the industry will put investors’ best interests first. In the meantime, if you are not clear on the investment fees you are paying, it is kind of like buying a house without knowing the interest rate for your mortgage. You would want to know your rate and you should know the fees you are paying for your investments as well.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.