Service Fees

We know most things in life aren’t free and that, of course, extends to financial advice and service. Advisors receive commissions from the financial products they sell to you, such as investment funds issued by Canadian life insurance companies. The vast majority of Advisors in Canada are paid this way. How it works depends on the product. It’s important to learn the different styles of compensation, so you can make an informed decision about which type you prefer. Segregated funds can have different types of initial commissions; each determining how you will pay for the financial service and advice that you receive.

No Load (NL)

We like to choose funds that have the lowest fees and give you the opportunity to deposit money into your account and withdraw money from your account at any given times without deposit or redemption charges. Funds designed to do this are called No Load or NL.

Management Expense Ratio (MER)

Separate and apart from initial sales charges of DSC, LSC and NL; investment funds charge an annual fee referred to as a Management Expense Ratio (MER) consisting of three components – administration, distribution and insurance costs. Your advisor will be paid an ongoing fee out of the distribution cost to support their commitment to you and compensate the time and effort they put into managing your portfolio. The MER charged for each fund can be found in the Information Folder and Fund Facts given to you by your advisor when you purchase the fund.

Deferred Sales Charge (DSC) Commissions

At CorrWealth, we do not believe in using DSC funds! We know that sometimes life happens and clients need their money which is why we do not believe in choosing funds that lock them in. DSC funds lock in the client’s money for a period of time. Should the client run into an emergency and require their funds, a redemption fee is charged based on the time the withdrawal is made.

These funds are paid by the insurance or investment company so you do not see a fee deducted from your initial investment amount. For example; if you buy $1000 of investment funds using the DSC method, the total initial commission will be 5% or $50, but the entire $1000 will be deposited to your fund account. However if you withdraw money from the fund within an initial set period of time, you will pay a redemption fee.

For estate purposes, the DSC redemption schedule is eliminated in the event of the plan holder’s death.

Below is an example of a typical “DSC declining redemption charge schedule”.

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Low Sales Charge (LSC) Commissions

We do not use LSC funds at CorrWealth! These funds are sometimes referred to as Low Load (LL) and work similar to the DSC option but pay a smaller total initial commission (typically up to 3%) and have smaller declining redemption charges, typically starting at 3%, and shorter redemption schedules, typically lasting 3 years.

Even though this option might be better than DSC, these types of funds lock in a client’s money and does not provide them with as much flexibility should they run into an emergency. It’s important that your money is there for you when you need it the most.

For estate purposes, the LSC redemption schedule is eliminated in the event of the plan holder’s death.

Below is an example of a typical “LSC declining redemption charge schedule”

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