The article “What To Do When Banks Give Questionable Financial Advice To Seniors” was originally published on MoneySense on February 12, 2019.

Mel can’t get a straight answer from his bank about his investment fees and is looking for some input on investing late in retirement.

Q: Do you have any advice for an 80-year old? I have $180k invested in GIC and mutual funds. I am having problems with the bank to produce a financial statement of actual costs. They will give trailing fees but say actual MER costs are unavailable.

So, I am looking to change my investments.

At my age, probably too late, but would like to try something a little different.

Suggestions would be appreciated.

– Mel

A: I’m sorry to hear you’re getting the runaround, Mel. Canadians place a lot of trust in their financial advisors, and unfortunately in some cases those advisors give inaccurate advice. Furthermore, when you’re dealing with frontline employees at the bank, there can be outright knowledge deficiencies which may be unintentional but can also be frustrating.

I think investing should always start with your risk tolerance. Some 80-year old’s have a higher tolerance for risk than someone half their age, so age should not necessarily be the primary determinant of risk tolerance. It needs to be based on investing experience, comfort with volatility, time horizon, and so on.

As an 80-year old man, Mel, you have about a 50% chance of living to age 90. So, you may well have 10+ years as your life expectancy. That doesn’t necessarily mean that’s your time horizon. You may be living off your pension income and never touch that money, but even if you are not taking withdrawals from this nest egg currently, the future can be particularly uncertain late in retirement.

I can tell you from personal and professional experience that the cost of long-term care can be sudden and significant. If you live in a debt-free home, that could be a source of funds to pay for long-term care, but what if you want to stay in your home? Costs could range from hundreds of dollars for a little extra help to $10,000 or more per month for full-time in-home care. Nursing home costs range across the country from $1,000 to $3,000 per month but wait times can vary widely depending on your location and your condition.

I’m sorry to go off on a different tangent from your initial question, and for being so morbid, Mel, but these are the sorts of conversations a financial advisor should be bluntly having with you as you consider your investment options.

Regarding the fee concern you’ve raised, I think the bank’s answer – or lack thereof – is unacceptable. Current reporting regulations require the bank to disclose only the trailer fees on your statement, which are generally less than half the total fee for a mutual fund. The MER you reference – the management expense ratio – is a truer representation of your all-in mutual fund costs. It may not be on your investment statements, but they do need to disclose it to you.

When you invest in mutual funds, each fund has a “fund facts” document that summarizes important information, like the MER, in a standardized format. Your bank should be providing you with a copy upon request, and the advisor should be able to easily confirm your MERs with you.

You can also do some of your own sleuthing, Mel, by searching for the fund facts for the mutual fund online. The bank’s website should likely have a copy updated monthly, but there are other good resources like, for example, that are commonly used for mutual fund analysis.

I don’t know what kind of mutual funds you’re invested in, but one thing I can say worries me about older mutual fund investors is that low-risk mutual funds can be rather unappealing these days.

Canadian government bonds are yielding about 2.3% currently and Canadian corporate bonds about 3.2% (based on the FTSE TMX Canada All Government Bond and the All Corporate Bond indices). If you’re paying 1-2% in mutual funds MERs to earn 2-3% returns, well, there’s not much net return leftover after fees, is there? Granted, some conservative mutual funds invest in riskier bonds paying higher yields, more volatile preferred shares, or common shares that move up and down with the stock markets to try to increase returns.

If you’re a conservative investor, Mel, I don’t think GICs are a bad investment option at your age and stage. Bank GIC rates are paltry, so look beyond to credit unions, trust companies, and smaller issuers. Most are insured federally or provincially up to maximum deposit thresholds.

And if your risk tolerance and liquidity needs make stocks a viable option, if you can’t get a straight answer on the fees you’re paying, you need to speak to somebody different at the bank, or to a different company all together.

At $180,000 of investments, your best options if you want stock exposure may include a low-cost mutual fund company or a robo-advisor, because banks and portfolio managers may need a higher minimum investment to charge a reasonable fee, or to take you on as a client in the first place.

Inaccurate or inadequate financial advice is an unfortunate part of the Canadian financial industry, and it’s a big issue for seniors who may be less inclined to ask the right questions. On that basis, don’t be afraid to ask twice, or to ask around, to make sure you’re getting all the right answers, Mel.

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