Understanding how much you are paying your wealth advisor doesn’t have to be confusing or lack transparency. And having a professionally managed portfolio doesn’t have to break the bank either. But we get it, sometimes it’s just not that easy to track down the facts.
When it comes to fees, we have you covered. Here are some of your top questions answered.
How do your fees work?
Like any professionally managed investment, you are charged an investment management fee. Our investment management fees are among the lowest in the country. Why? Because we don’t charge you a percentage of your account size. Instead, we charge you a monthly flat management fee that is capped at $80 a month, no matter how big your account grows. Here’s the breakdown of our low-capped fees.
Our Investment Management Fees
|Account Size||Monthly Management Fee|
|$75,000 to under $150,000||$40|
|$150,000 and Above||$80|
Is it free to open an account? I’m curious to see how this all works.
Yes! It’s entirely free for you to open an account. We don’t actually charge you any fees until you’ve funded your account and your money is invested. The first step to opening an account is letting us build your portfolio, which takes no effort on your end. Tell us about yourself, your investment goals and time horizon online and we’ll build a free portfolio for you in less than 2 minutes.
What about other charges, like trading fees?
Depending on your account, there are some other charges to be aware of like trading fees and other custodian fees. We choose to make all fees as transparent as possible so we break them out for you. We believe Canadians have already spent too much time and money on hidden fees when it comes to their wealth management.
What is a custodian and why am I paying them? A custodian is an institution that holds customer securities for safekeeping. We use our custodian to hold your portfolio assets and to make trades.
Our pricing model allows you to see exactly where your money is going and why. Firstly, we’ll cover up to $100 per year per account for trades.
And when we make trades to do things like allocate your asset mix or rebalance your portfolio, our custodian charges $9.99 per trade and that’s how we call it out in your dashboard; a $9.99 trading commission. This way, you know how much you’ve paid in fees and you know the reason behind why it was charged in the first place.
Can I open multiple accounts?
Yes, you can open as many accounts as you’d like! Nest Wealth’s monthly fee includes as many accounts as you’d like under the same owner. We also cover the custodian annual administration fee on your first account. Our custodian will charge you an annual custodian fee for any additional open accounts at the end of each quarter. These aren’t complicated either.
Custodian fees for new accounts are based on whether they are non-registered or registered accounts. If you are registered with Fidelity Clearing Canada (FCC), registered accounts are $36 annually and non-registered accounts are $25 annually. NBIN charges $100 annually for registered accounts and $75 for non-registered accounts.
Are there any fees to withdraw money from my account?
No. You can transfer money from your Nest Wealth account held at our custodian to your bank account at no charge. There are other types of transfers, such as a wire transfer, that our custodian will charge a small fee for.
What is an ETF?
An exchange-traded fund (ETF) is an investment fund that’s traded on a stock exchange, like a stock, but holds a basket of investments, like a mutual fund. Most ETFs track broad, well-established indices like the S&P 500 or TSX. They tend to have much lower fees than traditional mutual funds.
Why ETFs? Explore ETFs and learn how low-cost passive investing is more likely to be the better investing approach.
How do you choose ETFs?
We want your money to stay where it belongs, with you. That’s why we only use ETFs with low management expense ratios (MERs). MERs are charged by the ETF companies, and the average MER of the ETFs we use is 0.13% for a balanced portfolio.
What is an MER? The Management Expense Ratio (MER) represents the management fee, charged to a fund, including exchange-traded funds (ETFs). MER is expressed as a percentage of a fund’s average net assets for that year.
Our ETF selection is based on a number of variables. Our experienced portfolio management team compare the tracking error and cost to ensure the lowest opportunities wherever possible. We also look for highly liquid ETFs and providers with a strong reputation and a long market tenure to ensure you’re receiving the best-in-class investing experience. You can learn more about Nest Wealth’s ETF selection by visiting us here.
A Final Thought
Although percentage models may seem easier to understand, they also cost you a huge part of your wealth. If the market rises 5% and you’re paying 2% a year in fees, that’s 40% of your gains gone.
We don’t believe in hidden fees. It’s all about keeping things transparent. When you do the math, and you consider what the average Canadian saves over their life, it’s much more beneficial to invest using our pricing model over the long-term.
Here’s an example of a someone opening an RRSP account with $100,000 invested to give you a true sense of what we mean when we say our pricing model is more beneficial long-term.
Flat Fee Advice
|Total Savings On Fees|
|Cost to Open an Account||Free||Free||—|
|Management Fee||2.23% per year||$40 – $80 per month||—|
|Trading Fees||—||$100 per year||—|
|ETF Fees||—||0.13% per year||—|
|Total After 1 Year||$2,375||$718||$1,657|
|Total After 5 Years||$15,866||$4,811||$11,055|
|Total After 15 Years||$83,999||$19,884||$64,115|
We don’t do hidden fees.
Our pricing structure allows Canadian investors to see exactly where their money is going and why. Since our portfolios are managed uniquely for each client, we want our clients to understand what they’re being charged and why. It’s the simplest way for you to see the value of our digital advice.
So why continue to pay more in management fees? You owe it to yourself to get advice-based investing that’s transparent and lets you keep more of what ultimately belongs to you—your money.
Our pricing comparison calculations assume 6.5% rate of return with a monthly contribution of $1000. It is not intended to predict portfolio earnings or performance, nor is it a guarantee of future performance.
The MER impact is calculated by multiplying the MER times the AUM at the end of the year after contributions. MERs are not directly paid by investors as a fee but reduce the return an investor receives from investments.