About 7 years ago I was on top of the world. I was doing well in my career, and I had recently gotten engaged to my girlfriend. Paying for the wedding wasn’t a huge concern since I had been saving for a long time, plus I had been making steady RRSP contributions so I figured I was doing just fine.
I suppose you could say I became serious about money a few years earlier since I knew the engagement would come eventually. I wasn’t very happy with the services that my bank was providing at the time so it didn’t take much convincing to move my money to an investment firm when a former co-worker of mine became a financial advisor.
My advisor had slick presentations, was always in communication and he made me feel rich. He seemed like a completely normal person. He outlined a plan for me and invested my money in a few mutual funds, best of all the fees were minimal. I had complete faith in him, but fortunately for me, a random encounter saved me from a lifetime of fees.
Thanks to a stranger
For a little while, I was obsessed with the site Redflagdeals.com and would frequent the message board on a regular basis. One of the forums covered personal finance and in there was a thread where a member was asking about the services of the investment firm where my advisor worked. I wrote about how thrilled I was with the service and that I wasn’t really being charged much so it was worth switching.
A few other members started to give their input and started to talk about the high management expense ratios (MER), but I was adamant that I wasn’t paying that much because that’s what my advisor told me. I took him at face value, this was supposed to be a friend after all right?
A random stranger privately messaged me and explained to me what MERs were and how I was definitely paying them. He took the time to explain how MERs worked and how they would affect my returns in the long run. Deferred sales charge (DSC) was also a new term that he introduced to me; if I wanted to pull my funds out I would lose some of my money. Of course, he encouraged that I check on my own and to call the firm’s customer service line to find out what my fees were.
Getting serious about money
I called my investment firm and inquired about the fees, they confirmed that the funds I was invested in had an MER and DSC. After the initial shock, I realized it was time to get serious about money. My advisor didn’t technically lie to me, he did get paid a tiny commission, which was part of the bigger MER. He also never mentioned what a DSC was since I never asked, to be fair, I should have done my due diligence.
I decided to ask my advisor about the fees and lack of transparency and he responded with he could switch my portfolio to more aggressive funds if I wasn’t happy with the performance. That was totally irrelevant to my questions so I took it to a level above him and provided evidence that my advisor had deceived me. There was a quick internal audit, and I had my deferred sales charges waived with the condition I do not further seek compensation, nor do I speak about the firm or advisor involved in public. This is why I’ll never publicly disclose which firm I was with or who my advisor was.
It was pretty clear to me at that point that the only person that would care the most about my money was me. I took the time to educate myself and put myself on the path to where I am now. That being said, I now recognize that it’s just fine to get a little help if you’re uncomfortable becoming a do-it-yourself investor. You could also work with a fee-only financial planner which is totally worth your money. Just know that everyone needs to get serious about money one day.