Fixating on fees might just be your most rewarding investing move for 2016.
The turn of the year is a natural time to take stock of a portfolio and see what can be done to better position it for success. One option is to look at adjustments in your holdings, while another is to do an audit of the fees you pay to see if they're bringing you value.
After introducing our Globe and Mail fee disclosure tool last fall (tgam.ca/disclosure-tool), I've heard from quite a few investors asking if they're paying too much in fees.
I answer not by looking strictly at what they're paying, but by asking what package of advice they're receiving.
All of that said, my sense in trading e-mails with a limited number of people is that some are paying too much.
Surprisingly, this is most evident among high-net-worth investors.
A strong advice offering includes a financial planning process that assesses your current finances and your goals, then maps out an investing plan.
A baseline question for assessing the advice you're getting: Do I feel confident about my retirement?
For high-net-worth clients, tax and estate planning should be part of the conversation as well.
The investors I'm most concerned about, fee-wise, are the people paying well above 1 per cent in advice fees and getting only a modest level of investment management, not financial planning.
There are a few ways to go in addressing the issue of high fees:
1. Get more advice
Ask for financial planning in addition to investment management so that you get more value from the fees you pay; the idea here is that more advice will provide a better investing outcome.
2. Find an adviser with a more favourable pricing model
Perhaps an online adviser, also known as a robo-adviser (check out The Globe and Mail guide to online advisers at tgam.ca/roboguide).
3. Negotiate a fee reduction with your current adviser
If you're only getting investment management with little personal attention, ask for a stripped-down fee.
4. Become a DIY investor
It's a false economy if you save on the advice fee, but end up sitting in do-nothing cash.
With new disclosure rules coming into force this summer, the investing industry is getting ready to start providing the dollar amount of fees paid as well as percentages. Fees will be on the adviser-client agenda this year, and now's an ideal time to get the discussion going.
Rob Carrick