Feeonly.ca wrote:Actually we are discussing advisor risk and MR-0048.
I know. That document comes out of the Portus experience and is aimed at that type of product. You cherry picked a number of items from the regulation and applied them in a way that they were not intended to be applied.
Does that mean they might possibly take a run at him when performance [which I assume is the rational for using 3%+ MER funds] eventually succumbs under the weight of the enormous friction.
This makes no sense. Is the cutoff 3%? What about all those funds with a MER of 2.99% because there will be tons at that level and none at +3%?
I’m not saying that this “must” happen, just that eventually there is a high probability that it will happen.
I disagree. As the industry moves to letters of engagement that include IPSs for all advisors, then there will a clearly defined and agreed upon advisor/client relationship. Once that exists, the regulator has no business asking questions about the performance/MER relationship.
If performance wasn’t the reason for using the 3%+ funds in the first place then what is the reason?
You new to the business?? As long as there's a letter of engagement/IPS in place with regular reviews, I see nothing wrong with the MER being whatever level it is. I see no conflict of interest problem either.
How would an advisor defend themselves in light of MR-0048 where the regulator specifically requires you to document your rational for fund selection with respect to fees, commissions and the availability of cheaper alternatives choices?
MR-0048 won't be used that way without a lot of shit hitting the fan because its purpose is being distorted.