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A Better Way to Target Your Priorities
With our Partnership Accounts, you can focus strictly on the strategic value of your investments without being distracted by commission costs.
Partnership Accounts allow you to replace commissions with an annual management fee. This option is of particular interest to clients who wish to have an actively managed, diversified portfolio and who prefer to pay a flat fee rather than a commission or profit margin on each transaction. The annual fee is based on the value of the portfolio, and varies in proportion to that value. Certain criteria apply.
Ordinarily, since a commission is charged for each transaction, investors may find their decisions unduly influenced by the costs associated with a sale or purchase. Partnership Accounts eliminate this effect by dissociating the fee from the transaction.
A Word about Fees
Like any financial institution, we charge for our services. Clients who do not choose a Partnership Account or discretionary management are invoiced as charges arise. While such charges are generally related to specific transactions, they nevertheless cover our business relationship as a whole – including the valuable counsel and service provided by your Investment Advisor. It’s worth repeating that when it comes to investing, advice is a valuable commodity that is ultimately far less costly than ignorance!
Our remuneration can be broken down into three broad categories:
- Profit Margin
At all financial institutions, a profit margin is taken on fixed-income investments. For example, banks pay out a certain rate of interest when you deposit money or purchase a GIC, then charge a higher rate when they lend that money back out in the form of a mortgage or other loan. The difference between these two rates is the bank’s profit margin. Investment dealers also build a profit margin into their fixed-income transaction rates by purchasing bonds, debentures or treasury bills directly from the issuers in multi-million-dollar quantities at a certain yield, and then reselling them back to individual investors in much smaller quantities at a slightly lower yield. The difference between these two rates is a profit margin that covers the cost of doing business and the financial risk of holding large quantities of securities in inventory. Note that this profit margin has already been taken into account when the interest rate is posted: the rate quoted to you by your Investment Advisor is exactly what you will get.
- Commission
Commissions are charged when you buy or sell stocks. These commissions are clearly detailed on the transaction confirmations you receive. Commissions also apply to most mutual fund transactions, except that the commission is charged either on the purchase or the redemption transaction, but generally not on both. Note, however, that while commissions are applied to specific transactions, they also cover all the counsel and information you receive from your Investment Advisor. This advice costs you nothing unless you actually make a transaction.
- Administration Fees
As in all financial institutions, fees are charged for specific services, such as the administration work involved in offering our self-directed Portfolio RSPs, ESPs or RIFs and Transition RSPs. Aside from these registered plans, administration fees are charged only in particular situations or for particular services, which are listed in a brochure available from your Investment Advisor.
Once again, remember that with our Partnership Accounts, as with our discretionary management services, most of the fees explained above are replaced by a fixed annual fee based on the value of your portfolio. To choose the option most suitable to your situation, please consult your National Bank Financial Investment Advisor.
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