The Wealthy Boomer

Hi Bylo, yes I read it in January. Agree that all funlibers should read it. I borrowed my copy from our local branch library. Whenever someone posts the name of a book I check our library's website catalogue to see if they have it. I can reserve it online and they deliver it to the local branch who phone me when it arrives. If it's not in the catalogue they have "suggested library acquisitions" spot, so I suggest it and I'm placed first on the reserve list. They always seem to acquire the books I suggest - so I'm most happy to see my taxes being well spent.

The "Rule of 40" in the book's preface knocked me off my chair. I find it hard to believe that MERs are so devastating. Maybe gummy or some other math whiz could double check the rule? Thank heavens for index funds. I hope Active's suggestion re Vanguard to PH&N (another thread) is acted on. I think I'll give them a call tomorrow.

"Maybe gummy or some other math whiz could double check the rule?"

Bylo

I haven't been able to access your site this afternoon. Is the server down?

Lado

Hi compounder_

An easy, precise formula (which gummy has provided) is is follows:

(1-MER)ⁿ = Amount of accumulation you keep after n years.

So, with a 2.5% MER, after 25 years,

(1-.025)²⁵ = .531 or you keep 53.1% of principal plus growth --> the MER eats the rest.

Further clarification:

The "rule of 40" (and the formula) apply only to RRSPs and other tax-sheltered accounts. In taxable accounts you have to share even more of your portfolio with Revenue Canada whenever the fund makes distributions.

The last link I cited at Directions includes a calculator that lets you see the effects of factors like portfolio growth rate, inflation and taxes.

For those who have access to back issues of the FP, Chevreau published a column on 22Nov97 that shows just how isiduous these factors can be. The calculations were also based on work done by Malcolm Hamilton.

For example, in a taxable account at 50% marginal tax rate, assuming an average 7% real annual return and an MER of 2.1%, after 25 years you get to keep 38% of your money, the fund company 32% and the taxman 30%. Ouch!

Having paid for my copy of the Wealthy Boomer, I have no conflict of interest in agreeing with Bylo's review. :-) (I had to content myself with a free copy of Smart Funds, thanks to a tipster here at the Library.) Among the popularly available writers on personal finance these days, I'd say Chevreau is the foremost consumer advocate for ordinary mutual fund investors. I think in this book, much of which will be familiar territory for Library regulars, Chevreau measures up to that billing.

The weakness of Chevreau's book, I'd say, was in living up to its subtitle of "Life After Mutual Funds." I was hoping for a more nuts-and-bolts review of the costs and benefits of the various pooled funds, investment counsel, wrap accounts and so forth available to high-net-worth individuals. Instead, by my recall (and it's been a couple of months since I read the book), Chevreau doesn't get much beyond generalizations on this topic. I'm not convinced after reading the book that a well-constructed portfolio of tax-efficient, low-MER mutual funds (even without a major index fund component) can't be had by the average DIYer at comparable cost to the various high-net worth products. But I'd be interested in hearing other opinions from those in the know.

Good book - well put together, I was honored to be asked to do a "read-through review", so it has been 6 months or so since I read it, but as I recall, the content would be "spot on" for most DIY investors. Jon's stuff is pretty hard hitting on MERs, returns and the like .... much of this comes through in the book (oh, FWIW, I get no trailers, royalties, or free trips from the book sales).

Warren.

Warren:

...oh, FWIW, I get no trailers, royalties, or free trips from the book sales...

The benefit you receive from Jon Chevereau is certainly material, but maybe not measurable. Ask any FP how valuable it would be to be regularly featured/quoted in a popular national column on personal finance. You may have earned your spot there, you may just be friends with Jon, but no matter how you look at it, it is undeniably a very significant benefit. I know that you are quoted in other stories, but none more often than those written by JC (from what I read anyway).

"For example, in a taxable account at 50% marginal tax rate, assuming an average 7% real annual return and an MER of 2.1%, after 25 years you get to keep 38% of your money, the fund company 32% and the taxman 30%. Ouch! "

Bylo this is really scary!!. You have been advising all of us to look into Index funds which has the lowest MER to avoid the funds company eat our investment.
Do you have any advise Re: how to decrease tax??. After RRSP, spousal RRSP is there any other tax advantaged vehicle?? What about offshore investment? Any advise on this?? Thanks ekwee

Jon's book may be a good read, but his investment advice on the CBC's National last night was just plain bad. Basically, he suggested investors currently avoid equity mutual funds and put money into Bond and money market funds because of world-wide deflation and the much ballyhooed Y2k problem. Furthermore he predicted that stock markets would not provide good returns in the short-term, and would be flat over the next 6-10 months, with the Dow vacillating between 9200 and 9600. Never a good idea Jon, to make stock market predictions, especially on national television. Abby Cohen you are not. No mention of the importance of a long-term investment horizon, portfolio construction, asset allocation or the futility of trying to time financial markets.

He also mentioned that typical investors were paying around a 2% MER for mutual funds,(I think this is a low estimate) but made no mention of the low-MER index products currently on the market. He suggested that investors with large portfolios should look into the advantages of pooled funds and Wrap accounts, with fees as low as 1%. What about the .5% MER offered by Royal and Altamira? No mention that almost all bank no-load index funds have management fees well under 1%, and improtantly, one doesn't need to have a large portfolio to buy them.

Keith1....of course I believe in the long run and stocks and equity mutual funds..but not at THESE prices.....don't forget the second part of Bylo's name: Sell High! If there was ever a heaven sent opportunity to sell high it's now at these ridiculous prices....and Y2K and the coming panicky sell-off will be a second heaven sent opportunity to buy low......; yes market timing is normally a mug's game but Y2K is a once in a lifetime event.....if i'm wrong I can live with the consequences: a mere 5% return...that's better than the 50% drop that many people think is in the cards....

and thanks, Bylo, for the review and the thread. As for my relationship with Warren, I "inherited" him as one of Bruce Cohen's select "4 star contacts." I didnt' even meet him the first year I quoted him. He lived up to it though we've met only twice since and have yet even to do "do lunch."

As for the Bludget. that's the other half of why we're all poorer than we can be...... both the MER kick and the Taxes oppression came out of a brilliant analysis Malcolm Hamilton did a year and a half ago at a pension conference..... and MERs are by far the more benign of the two

Jon, you may well be able to exploit an arbitrage opportunity caused by a Y2K inspired stock market sell-off, but if you did,it would be the result of blind luck, not superior information. There are potentially 6 billion other investors out there, many far smarter, more aggressive and armed with more relevant information than you.

From a probabilistic viewpoint, you are doomed to fail according to decades of exhaustive empirical research. Generally, the losses incurred by attempts at market-timing are dramatic. By the time you have bought back into the market, it will be too late-- the long term portfolio damage being significant.

Ever noticed how big stock market sell-offs in recent years, have lasted only minutes or hours, with gut-wrenching intra-day bottoms being made and dramatic recoveries taking place in the next instant. Good luck trying to exploit any anomalies in stock market prices in the electronic information age! I agree with Professor Fama, who asserts that most stock price anomalies are illusory. Today's financial markets are brutally efficient, thus making successful market-timing nearly impossible. Rare success is not sustainable, and the result of simple random chance, not superior skill or clairvoyance.

Wise investors are ALWAYS best advised to adhere to a disciplined, low-cost, passive asset-allocation strategy. Ignore all the hype flying around. ...And there is always going to be lots of hype, Y2K notwithstanding! In the long run, disciplined investors will be the winners, both in terms of prudent risk management, and attaining superior returns.

I'd have to agree with rayw's comments above in that the book is lacking in specific recommendations and detailed analysis in the "Eat Well and Sleep Well with Managed Money" section. This is the last and most important part of the book, and the part where I was hoping to get some solid advice and alternatives to mutual funds. I was disappointed.

While the book is a good, casual read, I think those who have followed this discussion forum for any length of time need not buy it. Much of what the author talks about (MERs, index funds, wrap accounts, etc.) has been intelligently discussed in these threads ad nauseum.

OFA, see Jon's comments on our "relationship" - I would add to this that I was a "freelance" writer (on FP issues) back in the early '80s with the FP even before Bruce Cohen joined them - from that "relationship" with the paper, I got to deal with Bruce and as Jon has said, with him on an inherited basis.

Jon, this is a good reminder on that "lunch". Thanks.

Warren.

Warren:

I understand that you are in the media, not because you push JC's books, but because you were there before. Maybe I'm splitting hairs here, but you still receive a benefit by being featured in Jon's articles. So you don't get direct payment from anybody, but my only point is that the fact that Jon uses you as a financial planning reference is beneficial to your practice, to some degree. That's it - nothing sinister.

I lost my last message to the "Megatron".

The main thrust was that Jon should continue his role as "consumer advocate", and drop the "market prognasticator" role. His position of influence, particularly amongst new DIY investors, should not be used to excercise his personal market timing views. The DIY crowd that follows Jon the closest are the ones who need support and discipline, not a waffled explanations and predictions on a month to month basis. The statements of the last several months have shown serious lack of judgement for a person in his position who claims authority in the financial arena.

The "Mutual Fund Review", had a quote from the FP, Oct.8/98 that I chuckled at when reading Jon's inane Y2K prediction.(see above)

"One of the greatest bull markets of the century (1982-1998) appears to have ended. Therefore, one of the greatest bears may have begun." -Jon's comment in The Financial Post the day the market started its 17% ascent within 2 months.

Comments like these are dangerous, and misleading. Too many people will follow this ludicrous advice and "buy high, sell low". It is ironic that Jon mentioned the "buyhisellow" above as well. His comments carry less and less weight to me every day.

Jon Chevreau, you are no Bruce Cohen!

keith

Good post, your view follows some of the sentiments I put forth earlier- that were lost in the "Megatron". I suppose hype sells, and that is why Jon changes his views with the seasons.

I have read the Wealthy Boomer, actually not once, but twice. Enjoyed it and learned from it both times.

I thought he made a reasonable case for index funds while pointing out some of their peculiar risks. The book makes a strong case against high MERs and righly points out the importance of cost in investing. As usual I appreciate his discussion of the Rip Van Winkle theory of investing and am in fact quite convinced of its merits. I also think he makes some good arguments in favour of laddered stripped/bonds which I am surprised were not used in Bylo's thread on bonds vs bond funds.

All in all, I think this book belongs in the library of any Canadian investor who wishes to be well informed.

BTW I'm not so sure that keith-1 is right in dismissing jon's p.o.v. re investing conservatively this year.

If he is right in predicting as many do predict that this present market cycle is about ready to come crashing down either by its own excesses or in combination with Y2K anxiety, real or not what would be wrong with taking a defensive position for this year? If he and others are proven right you will be in a much better financial position a year or two from now than you would be if you bravely go down for the big count. If OTH he and others are proven wrong all that really has happened is that for a year or two you might have invested a bit more conservatively than necessary. Remember, one can alway DCA back into the market when the storm clouds of this year pass.

I don't know if I am going to follow this line of reasoning myself but I am convinced that it has merit and certainly will, at least, reflect on it while busily rejigging my portfolio.

Another example of Rip Van Winkle waking up in the middle of his supposed long term sleep to sell his stocks and bonds to sit on the sidelines!

Another waffle...

OFA - well said, my response was based on my interpretation of your post that you seemed to intimate that the articles and quotes are a "quid pro quo" for "help" on the book - not so! I was asked to do the read through simply because I had had a number of comments that had appeared in articles on which the book is based.

Content and value to journalists is the reason I am contacted so much - no question there are others who do the same, no big deal, and yes the exposure does have a nice "ring to it" with clients. With all that, I still like to "keep my hand in" with various journalists since I enjoy dealing with professionals like Jon (amongst others).

In addition, while I have worked hard in this field for almost 2 decades, and I have volunteered for the Directorship at CAFP for 6 years, I find the work with journalists as a way to help demonstrate to the public who read the papers or magazines that there is value in getting solid answers to their FP questions.

Warren.

After reading Jonathan Chevreau's section "How to fix the flawed portfolio," I called the fund companies where I (really my wife and I) hold DSC funds to find out how many units we could sell with no redemption charge. I was surprised to discover that in some cases, for a reason(s) unknown to me, more than 10% qualified as "free units" (do free units accumulate from previous years?). I sold what I could for free and also instructed E*Trade to arrange to receive distributions in cash rather than have them reinvested in a DSC, high MER environment. My thanks to Jon for spurring me on to make these moves.

We still have a lot of Templeton Growth and Templeton International DSC hanging over our heads, and I'm torn. Do I sit tight and wait for these bottom up, value funds to finally rise and shine or do I sell them in favour of low MER international index funds? Another option would be to drop my current DIY approach and have all of our investments managed through pooled funds from an investment manager.

In "The Wealthy Boomer", Jonathan mentions Scepter Investment Counsel and TAL Private Management regarding the setting up pooled funds specifically for individual clients. A TAL representative supplied the following performance figures for their pooled funds (annualized percent returns to December 31, 1998 for one year, three years, five years): Balanced Fund (Taxable) 16.3%, 16.3%, 13.0%; Balanced Fund (RRSP/RRIF) 10.4%, 13.6% and 11.7%; Short Term Bond Fund 6.6%. 6.9%, 7.0%; Fixed Income Fund 9.2%, 10.3%, 9.0%; Dividend Income Fund 5.3%, 13.0%, 10.5%; Foreign Currency Bond Fund 23.4%, 11.7%, 9.7%; Canadian Equity Fund -3.6%, 11.3%, 10.3%; US Equity Fund 43.6%, 30.9%, 25.4%.

TAL Private Management performance numbers are reported gross of fees. Their annual, management fee is 1.00% for the first $2,000,000. The minimum fee is $10,000. Fees are billed on a quarterly basis and the non-registered account fees are tax deductible. There is an annual surcharge fee for international management which is 0.15% for money invested in the Foreign Currency Bond and 0.35% for money invested in the International Equity Pooled Fund.

So, considering TAL's performance figures and fees, what would knowledgeable, experience investors say? Is the TAL, or similar approach really worth it or would a great DIY portfolio made up of, for example, Bissett Canadian, Bissett Small Cap, PH&N Bond, PH&N Dividend Income, TIPs, SPDRs and low MER international index funds have a reasonable chance to outperform the likes of TAL?

If I continue with my DIY approach, how should I handle our 5 figure DSC load? Should I: 1) Bite the bullet and pay to sell all of our Templeton Growth, Templeton International, AIC Value, AIC Advantage II, AIC Diversified Canada holdings? 2) Gradually sell our annual 10% free units and hope for index matching performances from the DSC funds? 3) Sit tight with AIC and Templeton and pray for index beating performances to justify the high MERs ?

One last nagging concern. What are the "buyer beware" implications inherent in purchasing pooled funds sold by offering memorandum rather than by a prospectus?

I don't want to prematurely abandon hopes for a successful DIY approach, however, it may be clear to others that pooled fund management is exactly what we should seriously consider. I would greatly appreciate any comments.

Bill

I read the Wealthy Barber and, despite a few shortcomings, thoroughly enjoyed it. Like Bill and many others in this forum I am inclined to view active management and "advisors" with measured scepticism. My quest has recently led me to finish American Larry Swedroe's book, The Only Guide To An Investment Strategy You'll Ever Need (1998). I most highly recommend this book, which, as the subtitle suggests, (Index Funds and Beyond), goes beyond promoting index funds to a well thought out plan for Modern Portfolio Management Theory and Assett Allocation. I found these thoughts very clearly developed and quite fascinating. My problem, like Bill and others, I am considering rolling out of active management but where are the various Canadian index funds that Swedroe would have us use for assett allocation?? (i.e.Can and U.S. small cap value indexes. small cap growth indexes, large cap growth indexes. larg cap value indexes). Must we Canadians settle for managed funds beyond the few Int'l index funds CIBC,Canada Trust etc), TIPS, SPYDERS, DIAMONDS etc (inclduing the new NASDAQ). Does anyone out there have any suggestions as to particular funds? Please send me an email or respond here if you do. Thanks, and happy investing, david

David_Kuracina@ocdsb.edu.on.ca

Correction Wealthy Boomer, oh for an Unsend. My apologies to Jon Chevreau. david

Bill99,

I can't help you out with your decision but I wanted to touch on part of your post if I may.

Using the figures you supplied from TAL a 500k portfolio invested 60% Cdn. Equity, 20% Cdn. Fixed Income, and 20% US Equity, would cost $ 10,350 per year in Mgmt fees. ( plus custody charges perhaps ) That works out to an MER of 2.07%. This is the bargain that Jon enjoys making repeated references to? Frankly I have always found these blanket statements about the low cost of Investment Counselors to be somewhat misleading. The TAL figures underscore my feelings.

ExBT - there are usually economies of scale provided by dealing with any IC - clearly using the minimum IC fee applied to an inordiantely low amount of protfolio $$$ will twist the MER dramatically - however, as Bill says, the MER (@ TAL) on $2m is 1% with a minimum of $10,000 (perhaps with some custody on top of this .... say 25 bps) - gee, isn't is obvious that one would not go there except with $$$ that exceed $1m?

Overgeneralizations can be made in many directions, eh?

Warren.

Bill 99, I can't help you with the Investment Counsel question, except to suggest you keep shopping. Too bad Chevreau's book didn't have more hard facts on what's available. (By the way, check out what Bissett might have to offer for large accounts. I think they have some information on what they have available at their site, but, as I recall, not much on fees.) If you're convinced of the index route, at least for a substantial part of your portfolio, I don't think you'll find that Investment Counsel are competitive.

If it were my account, I would not be prepared to eat the DSC fees on the Templeton and AIC funds. Why not consider moving your DSC funds to Schwab to take advantage of their 25 bps trailer rebate while you let the schedules run out? Are there any tax considerations here?

If you check the prospectuses you'll probably be able to explain the amounts you redeemed free from these funds. For example, at Templeton, which I'm more familiar with, "reinvestment shares" can come into play.

Am I mistaken, or did we not have a discussion on your portfolio here a while back?

"Must we Canadians settle for managed funds beyond the few Int'l index funds..."

ExBT,

TAL does not charge custody fees. Our portfolio would be approximately 1.1 million so my guess would be a MER of perhaps 1.2% when the "international management" surcharges are factored in. TAL is slated to inform me of the percent of their balanced funds that draws the international management surcharges. I am also waiting to hear if TAL will hold Templeton, AIC and Ontario Hydro strips as part of their $1million requirement. TAL would be awfully expensive if I had to pay DSC the first year.

Bill

Warren,

"Over generalizations can be made in many directions, eh?"

You've certainly made more than your share of those in this forum.

Warren,

From Jon's book Page 236,

"During the 1980's, many investment counselling firms began making their pooled funds available to individual clients, as long as they could meet the high minimum investment requirements. Some investment counselling firms, notably Sceptre Investment Counsel and TAL Private Management, set up pooled funds specifically for wealthy clients. These funds were designed for investors with significant assets outside their RRSPs who wanted professional, cost effective investment mgmt. and wanted to receive service directly from the investment firm ratehr than from a distributor. These pooled funds took advantage of the investment and administration efficiencies available to the managers from the pooled structure. At the same time they avoided the high cost of paying trailer fees, since the funds were available only to clients of the counseling firm.

Many firms offer more than one pooled fund so it is relatively easy for clients with $500,000 to obtain discretionary management of a portfolio of pooled funds. Clients are able to have professional management of both the asset mix and the security selection of their funds.

Typical management fees for pooled funds begin at 1% of assets. Even with custodial and brokerage costs added, the total fee is typically 1.25% to 1.35%, a big difference from the 2% plus costs charged to mutual funds. As chapter 3 makes clear, reducing your annual costs of obtaining investment management is the surest, lowest risk way to enhance wealth building in the long term.

Because they pay no commissions or trailer fees, pooled funds have been the best kept secret of investing for clients with assets up to $1 million......"

Now that sounds to me like Jon is saying our 500k investor can get his money managed for 1.35% or less. And in fact he references TAL. We know from Bill99 that TAL would charge our 500k investor an effective MER of 2%. The same rip-off that Jon suggests is being levied against the 500k plain old mutual fund investor who surely must have his head stuck up his butt.

Now what was that you were saying about generalizations ?

Warren and ExBT,

Just a point of clarification regarding TAL's current size of portfolio requirements.

Quoting from TAL's literature: "...T.A.L. Private Management Ltd. is a leading provider of investment management services for discretionary portfolios in excess of $1 million."

Bylo,

Thank you once again.

Regarding a Vanguard funds through Waterhouse: I know you have information concerning US tax matters for Canadians at your site so I'll go checking.

Bill

A "Rip Van Winkle Portfolio" of 80% PH&N Balanced and 20% Templeton Growth has a blended MER of 1.12%. Spice that to taste with some PH&N Bond and some index product, and the MER can be blended to below 1 percent rather easily. I'm not suggesting that's the route to go, but it does provide a benchmark.

Bissett posts the management expense on their pooled funds at .75%. But I see nothing on their website on the minimum entrance requirements (or any other fees). Sceptre's pooled fund management fees are posted at their site. Does anyone have information on what PH&N provides the HNW crowd?

Thanks Bill99,

But clearly TAL accepts smaller accounts than 1m.,otherwise there would be no need for them to declare a minimum fee of 10k. The 1% would take care of that.

Rayw,

You are quite right. And you don't have to be a high net worth type either.

rayw,PHN has two offerings for HNW investors:

1)Portfolio of Funds-minimum account size $500,000

2)Segregated Portfolios-min. acc't size $2,000,000

P of F acc'ts "are composed of PH&N mutual funds,with the asset mix and fund selection custom designed for each client.A portfolio manager is responsible for each acc't ,and completes a comprehensive Investment Policy Statement in consultation with the client.Asset mix and transactions are at the discretion of the PM,within guidelines agreed to in the IPS.Reporting is comprehensive and customized.Regular communication is initiated by the PM."The fees are the same as for mutual fund acc'ts;there are no add'l charges.

SP's are "a portfolio of individual securities,often combined with PH&N mutual funds for asset classes such as U.S. and international stocks.Purchases and sales of stocks and bonds are at the PM's discretion,again within pre-agreed guidelines set by the IPS."The fees "are on a sliding scale beginning at 1.0% on the first $2.0 million.Custodial fees are not included,and are generally in the range of 0.25% per annum."

rayw,

Call PH&N and tell them you're considering their IC services. I had a friendly, no-obligation chat with them a couple of years ago when they opened an office in Toronto. I don't recall their fee structure but the account minimum was $500K. For me the biggest stumbling block was how to convert from regular mutual funds (both their's and others), etc. without triggering the Mother of All Capital Gains.

That's a topic that TWBoomer and the various purveyors of HNW management don't seem to tackle. Now if I ever win a lottery (slim chance since I don't buy the tickets) or receive a $1M inheritance from a long-lost aunt or uncle...

Thanks Benkel & Bylo for your simultaneous response to my PH&N question. My interest here is pretty much academic, however. Were some long-lost rich uncle to drop 500K in my lap, I'm doubtful I'd be willing to hand it over to a single management firm at any rate.

Bill99,

I would suggest that you scout out additional IC purveyors. Order the Investment Counselling Central and Atlantic Canada booklet from:

Rodgers Investment Consulting
Phone (416) 967-4816
Fax (416) 967-5875
Email: RodgersInv@aol.com

The booklet has briefs on the firm profile, investment philosophy and process, assets under management, key personnel, account size, fee schedules and contacts for 26 IC firms.

For the $1M+ investor, Jarislowsky quotes a 50 basis point MER. RT Investment (a sub of Royal Bank) quotes 100 basis points for a $400K investor. It is likely that custodial charges are additional.

ExBT, thanks for your comments, but as mikale has pointed out, there are a number of ICs that will offer pools for $400k to $500k and up (along with appropriate asset-size-related MER costs). In rereading the post you kindly reproduced from Jon's book, I think he may mention TAL but then is making the general comment about ICs after that.

When we deal with consellors that utilize minimum or even staged fees, we endeavor wherever possible to avoid paying the minimum on a disproportionately small amount of capital and, conversely, we try to achieve an "economy of scale" where the counsellor's fee declines for certain levels of assets (IOW, assets up to $1m might be at 1% but assets over $1m might be priced at 0.75% - setting up a portfolio to pick up any fee economies like this is important).

Warren.

Warren,

Well I appreciate your appreciating my post because it took me forever and I even added HTML stuff without destroying the thread.

I don't actually care about all this stuff. I just think journalists get way too much credit.

Regards

rayw,

Reading from Bissett's site - Pooled Trust Profiles: "The Bissett Pooled Trusts were designed to meet the needs of group RRSPs and Defined Contribution pension plans." and, "Individuals can invest in two or more funds to build a customized, balanced portfolio..." Confusing!

I think that what is being said is that individuals have access to Bissett pooled funds only through group RRSP plans and Defined Contribution plans. Bissett has a program called "Personal Asset Management". Literature available from Bissett reads: "Bissett & Associates' Personal Asset Management Program is designed to provide discretionary investment management for clients with between $500,000 and $2 million of investments. A professional manager invests your portfolio to ensure that the Bissett Mutual Funds held are appropriate for your current objectives given your investment constraints." The client works with a portfolio manager to develop objectives, constraints, etc. and the portfolio is monitored by Bissett. There is no charge for the Personal Asset Management program. The only fees are the fund management fees.

Perhaps portfolios beyond $2 million qualify individuals (who are not part of group RRSPs) for their .75% MER pooled funds?

Bill

Had a conversation with a TAL representative. I was told that the benefits of TAL management are not index beating performances (doesn't happen very often). The benefit is TAL's ability to add value through tactical adjustments of their balanced funds' asset class mix (% Cash; CDN and Fgn. Currency Bonds; CDN, US and International Equities).

The actual value of this added value was not clear. There were no figures for the performance of their "Long Term Policy Benchmark" asset class mix, which is static, that would allow a comparison with the performance of their balanced funds that undergo "dynamic" adjustments of the asset mix, within their "Tactical Policy Range". The TAL representative intends to supply me with their benchmark performance so I can make comparisons.

Yes, they can at least temporally accommodate (won't charge full TAL fee for the time being) our mutual funds with DSC, strip bonds and limited partnerships, but the goal is to be 100% in TAL's pooled funds, rather sooner than later.

Bill

compounder_:
Sorry for the delay 'bout the Rule of 40 ... wuz sunning meself on the beaches of Cancun (eat your heart out) and returned to find... SURPRISE!... a copy of the Wealthy Boomer in my mail (then quickly read enough to find that Rule).

After N years, your portfolio is reduced by a factor (1-MER)^N

If the MER consumes 1/3, you're left with 2/3, so

(1-MER)^N = 2/3
Take (natural) logs of each side:
N log(1 - MER) = log(2/3) = -.4 from a table of logs

It is intuitively obvious (haven't had a chance to say that in six years!)
that log(1 - MER) = - MER approximately ... from the Maclaurin series expansion

That gives N (MER) = .4, or, if MER is expressed as a percentage,
N (MER) = 40 so N = 40/MER.