Any time now, you’ll be receiving the most important document of the year from your investment firm. It has a boring title, and the format won’t entice you to read it, but it’s a must read. I’m talking about a report with a name like Annual Report of Investment Returns and Fees (the words “compensation” and “charges” may also be in there).
The report is as close as the investment industry gets to being transparent. It contains an accounting of the fees you’ve paid your dealer (although not all your fees, more on that later) and shows your returns stretching back at least five years.
Some Canadian investors already get this information in their monthly or quarterly statements, but a vast majority only see these figures in this report.
How have you done?
The good news is, with each additional year, the returns in the Annual Report become more meaningful. Firms must show returns going back to Jan. 1, 2016, which means you’ll see a 5-year number for the first time (some firms go back further, but most do the minimum in this regard). One five-year period is still not long-term, but it’s getting there.
The number you see will be after fees and is a money-weighted rate of return, which means it’s impacted by two things: how your holdings did in the period and the timing of your contributions, withdrawals, and asset mix shifts. This can be confusing, but ultimately is a very good measure of your actual performance. It’s your advisor’s job to help you understand it.
Exciting but less important
As I wrote in my last column, the one-year return will be interesting given how wild the markets were in 2020, but your focus should be on the longest period. The last five years were characterized mostly by good markets, with two big, brief interruptions — the fourth quarter of 2018 and last year’s March meltdown.
For comparison purposes, the bond market averaged four per cent over the last five years, the Canadian stock market came in at nine per cent (including dividends), and the World Index led the way at 10 per cent. A typical balanced portfolio (60 per cent stocks; 40 per cent fixed income) was in the range of five to seven per cent per year.
Lost return
Years ago, Vanguard began referring to investment fees as “lost return” to reinforce their importance. It’s an area where the investment industry gets away with murder. Until laws were enacted to require it, most Canadian investment firms didn’t show their clients what they were paying, or at least made it exceedingly hard to find.
Unfortunately, the fees shown in your annual report are still incomplete. You’ll learn what you paid your investment dealer for administration, transactions and advice, but you won’t see the fees that are embedded in the ETFs, mutual funds and other managed products you hold. These can be significant but are not shown in the Annual Report.
I hear it often — “My guy charges me one per cent.” Or 1.25 per cent. This statement is technically correct. The guy’s firm is charging you one per cent annually, but your total cost could be as much as double that if you’re invested in products that charge an additional one per cent or more.
I also hear it said that fees don’t matter, it’s returns that count. Certainly, the latter is true, but fees have a significant impact on returns. If you’re paying more, make sure of two things. First, that you’re getting additional service and expertise. And second, that it’s actually leading to higher returns over time.
Questions to ask
If you have an advisor, let him know that you’re bringing your Annual Report to the next meeting. You want him to walk you through it and explain the numbers, as well as provide an accounting of the other fees and charges not listed in the report. If he tells you the Annual Report isn’t important, then redouble your efforts.
I say that because you need to be your own advocate in the areas of returns and fees. The wealth management industry is pathetic when it comes to transparency. Any client-friendly initiatives in the last few decades have been driven by securities regulators, not firms’ desire to improve client service.
The Annual Report is a good place to start your advocacy work. Ask lots of questions. Don’t be bashful. Remember, your advisor or portfolio manager reports to you. You’re the CEO of your portfolio.
Tom Bradley is chair and chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at [email protected]
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
