Almost 9 in 10 Canadians don’t understand potential impact of fees on investments
TORONTO, Feb. 24, 2020 (GLOBE NEWSWIRE) — 87 per cent of Canadians don’t know or underestimate the impact a 2 per cent versus a 1 per cent fee would have on the value of their portfolio in the long run.
A recent study conducted by Leger (www.leger360.com) on behalf of Questrade (www.questrade.com) today unveiled strong misconceptions that could be impacting Canadians’ retirement savings in the long term. The survey found that 41 per cent of Canadians think reducing fees from 2 per cent to 1 per cent would only add 20 per cent or less to the value of their portfolio over 30 years. In fact, if one were to take two equivalent portfolios, a 1 per cent decrease in fees over 30 years could result in upwards of 30 per cent (assuming both portfolios have an initial investment anywhere between $1,000 and $100,000; and a 6 per cent return in a tax-sheltered account, compounded annually).Given that the lower-cost, diversified Questwealth Portfolios’ highest fee for a core portfolio maxes out at 0.48 per cent* (including both MER and management fees) which is well below the 1 per cent in the survey, the potential positive percentage impact can be even greater. Visit questrade.com/calculator for more information.According to the research, almost half of the respondents who invest in mutual funds also indicated that they didn’t know what fees they’re paying today, which further illustrates how important it is for Canadians to look closely at their fees before making this year’s RRSP and TFSA contributions and investments.“Canadians are worried about not having enough for their retirement, and one way to secure their financial future is to examine the fees they’re paying for their investments and reduce them,” said Edward Kholodenko, president and CEO, Questrade. “There is no better time to take action to maximize one’s retirement savings than today.”The survey also found the following:One-third stated they “don’t know” if a 2 per cent fee for a mutual fund is high76 per cent of those who didn’t know what fees they’re paying agreed that Canadian mutual funds are a good way to invest for retirementWhether or not investing in mutual funds:More than half of those polled (56 per cent) agree that a 2 per cent fee is too high52 per cent think the fees for mutual funds (in general) are too high
Of those invested in mutual funds:59 per cent are worried that the high fees they pay are cutting into their retirement savings69 per cent believe a 2 per cent fee is high59 per cent are “worried about their retirement,” but still plan to contribute to their retirement “…in the same way they did last year”
Among those planning on contributing to their retirement the same way they did last year, these were the reasons behind this continued behavior:25 per cent do what their bank or advisor tells them to do21 per cent get overwhelmed when they start thinking about it16 per cent are not aware of alternatives15 per cent don’t have time to research alternativesResearch Methodology
An online survey of 1508 Canadian residents was completed between December 20-23, 2019, using Leger’s online panel. The margin of error for this study was +/-2.5 per cent, 19 times out of 20. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. Stringent quality assurance measures allow Leger to achieve high quality standards set by the company. As a result, its methods of data collection and storage outperform the norms set by WAPOR (The World Association for Public Opinion Research). These measures are applied at every stage of the project; from data collection to processing, through to analysis.Questrade, Inc. is a registered investment dealer, a member of the Investment Industry Regulatory Organization of Canada (IIROC) and a member of the Canadian Investor Protection Fund (CIPF).About Questrade Wealth Management, Inc.
Questrade Wealth Management Inc. (“QWM”) provides professional investment management services through Questwealth Portfolios (www.questrade.com/questwealth-portfolios). QWM is an Exempt Market Dealer, Investment Fund Manager and Portfolio Manager. QWM is a wholly owned subsidiary of Questrade Financial Group Inc.For more information, research statistics, visuals, or to arrange an interview with Questrade president and CEO, Edward Kholodenko, please contact Susan Willemsen or Ruth Colapinto at The Siren Group Inc. Tel: 416-461-5270. Email: [email protected] or [email protected]. Visit www.thesirengroup.com and on Facebook, Twitter and Instagram @thesirengroup.