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Weekend Reading: Investor Buyer Beware Edition

Online brokerages are strictly prohibited from providing advice, yet many still offer mutual funds that come with trailer fees – which are in place to charge for ongoing advice. See the dilemma? DIY clients who purchase these mutual funds are being charged for advice they cannot and will not receive.

Recently, a proposed class action was filed against TD Asset Management Inc. regarding trailing commissions paid to discount brokers on TD mutual funds. The action claims damages of $200 million and other relief on behalf of all investors that have ever purchased a TD mutual fund through a discount broker.

Rob Carrick took some flack from investor advocates for claiming buyer beware, saying, “if you can’t research a simple mutual fund, you’re not cut out to be a do-it-yourself investor.

The way I see it, this could be solved by either removing these funds from the menu of investing options available to online brokerage investors (only 7 percent of online brokerage holdings are in mutual funds), or with a pop-up warning that clearly states, “the fund you are about to purchase comes with a trailer fee designed to pay for advice you will not receive as an online brokerage client.”

This Week’s Recap:

On Monday I wrote about investing in retirement and shared my view on how much money you should keep in stocks.

On Wednesday Marie looked at building flexibility into your retirement plan.

And on Friday Marie shared some crucial information for last minute tax filers.

Weekend Reading:

Is it too dangerous to retire in Mexico? Here’s why some expats are discouraging new retirees from joining them in Mexico’s Lake Chapala.

Jonathan Chevreau reviews The Four Phases of Retirement, a new book written by retirement expert Riley Moynes.

A report quietly released by the Financial Consumer Agency of Canada warns mortgage specialists are incentivized to sell mortgages that yield higher commissions, with insufficient oversight.

In the meantime, March home sales fell 22.7%, with the national average price sliding 10.4% to $491,000.

Ben Felix explains how renters can meet or exceed the wealth of a homeowner:

Robo-advisor Justwealth examines the true cost of tax inefficiency when investing in a non-registered account.

If you don’t report the sale of a principal residence on your income tax return, you could be subject to a fine of as much as $8,000.

Tim Cestnick reveals the top 10 things the taxman may review on your tax return.

Bank of America tracked the downfall of the biggest asset-price bubbles in history less than one year out from its record and determined that Bitcoin is the greatest bubble in history, bigger than tulips, the South Sea Company and gold.

A great read from Michael Lewis, who says the idea that bitcoin will replace currency is ‘insane’.

Can you frugal your way to wealth? Or does it help to start from a privileged position? Here’s how the Frugalwoods made a name for themselves teaching millennials how to save money. Trouble is, you have to start with a lot of it.

Chris Taylor explains how game theory can have some real applications in your everyday life; from buying a car or a home, to negotiating a salary.

Will Disney destroy the movie theatre? An interesting read on how Disney is set to revamp its business model with a new streaming Netflix-style service.

Brian Banks rolled up the rim and won a Honda Civic. In this Maclean’s piece he shares the unexpected anguish of winning the prize every Canadian wants.

Michael James shares an entertaining tale of the couple who made millions beating lotteries in Michigan and Massachusetts.

Finally, not all side-hustles are created equal and this author explains why she became a Barre instructor – and why she quit.

Have a great weekend, everyone!

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3 Comments

  1. RUSS on April 15, 2018 at 11:07 am

    I wonder about the lawsuit being aimed at TD Asset Management. It seems to me that the suit should be filed against the discount brokerages that provide for the purchase of mutual funds with advice trailers. I believe the trailing commission is retained by the brokerage, so is it not the discount brokerage that could be charged with “unjust enrichment”? Even so, not all mutual funds have a D-series version. If an investor wants that non-D-series mutual fund and after having done the necessary due diligence, decides to buy it fully aware of the relatively higher MER, is it not right that the fund be made available for purchase?

  2. The Curious Frugal on April 16, 2018 at 6:06 am

    ‘The true cost of tax inefficiency’ was a good quick read. It highlights something I need to take action on but I’m not really sure what I’m going to do yet. When I started investing in equities (mainly dividend stocks) many years ago, I opened a non-registered TD self-directed account. I only just recently opened direct investing TFSA and RRSP accounts too. I probably need to do something with the money in the non-registered account, but right now it’s hard for me to pull the trigger and sell some (and then transfer and buy in the registered accounts). Anyways, the article got me thinking that I need to look into this more.

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