In the investment world, full fee disclosure tends to be a confusing subject to navigate.

Naturally, with that confusion comes a slew of questions, most commonly:

• What exactly am I paying for?

• Are there any hidden fees?

• How many layers of fees are there?

At Open Access, we believe in complete transparency when it comes to fees, and that’s been our top priority since our inception. Unfortunately, until quite recently, full fee disclosure was not a mandatory practice within the industry, but with the recent implementation of CRM2 (an initiative by the Canadian Securities Administrators for greater disclosure and transparency for advisors and dealers) the landscape is changing.

It’s an issue that’s gaining more attention as explicit fee information is not generally included in member account statements. In fact, there are several layers of fees, most of which are not fully disclosed.

In order to make it easier to understand the world of investment management fees, we’ve broken the topic down to a few common fee categories.

Investment Management Fee (IMF): This is a fee paid by the mutual fund investor to the mutual fund. The fee is broken down for each fund you are invested in on your Open Access statement. If you were to purchase a mutual fund outside of an Open Access group plan, you would likely end up paying a higher fee due to a lack of economies of scale. Each of the mutual funds that our clients are invested in is a fund where the fees are negotiated directly and are a function of the total amounts invested by all the Open Access clients. By consolidating all of our clients’ money, we are able to generate beneficial economies of scale and pricing that is lower than the retail mutual fund fees that are normally changed.

Trailer Fees: These fees are an ongoing commission paid to the advisor out of the investment management fee you pay, depending on how the funds were acquired. In some cases, an advisor does not charge a client commission directly, but rather, receives a trailer fee from the fund company because of the manner in which the mutual fund was purchased. It is important to know whether your mutual fund salesperson is receiving a trailer fee because it may influence which funds they recommend to you. This puts the salesperson in a conflict of interest and often results in the client paying higher investment management fees.

Deferred Sales Changes (DSC): This is a fee that mutual fund investors pay when selling fund shares within a specified number of years relative to the date on which they were originally purchased. It is a charge designed to discourage the early redemption or sale of your investment. DSC funds evolved as an alternative to selling funds with a “front load”, the industry term for an upfront sales commission. In offering the DSC option, an advisor could outright tell their client that they would be able to put all of their money to work – with no commissions to pay. However, the investment management fees on most funds that are sold with a deferred sales charge are higher than the comparable fund that is sold without a deferred sales charge.

At Open Access, we do not charge any trailer fees, and if you already have DSC assets, we assist you in holding and administering locked-in DSC assets as we transition them into a more effective cost structure over time. Also, we do not require our clients to maintain a minimum account balance in order to benefit from the institutional pricing we procure. It’s part of our philosophy to always be completely transparent and fully disclosed.


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