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These are your best avenues for lowering the investment fees you pay

If you want to pay lower investment advice fees, the beginning of a new year is an ideal time to make your case.

Many investment firms will be mailing clients an annual statement on returns and fees paid in dollar terms for investment advice and services. Advisers are expecting some clients to call to discuss the numbers. Here are some suggestions on how to explore the idea of lower fees with your adviser:

If your adviser is paid through commissions embedded in mutual fund fees

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You don't pay your adviser directly in this model . Instead, your fund companies take a portion of the fees they take off the top of fund returns (returns are reported on an after-fee basis) and route them to your adviser in the form of what's known as trailing commissions. Trailers are pretty much standard through the industry, but fund fees vary a lot. There may very well be cheaper funds available that will deliver similar compensation to your adviser. Why not ask if your adviser can find some?

The fund profiles on will show you the management expense ratio for your mutual fund – that's the standard way of measuring fees. Look up other funds in the same category to see how they compare.

If you have a fee-based account

In a fee-based account, you pay a set percentage of the value of your account for advice and additional fees associated with the products you own. There's a special F-class version of mutual funds designed for fee-based accounts – the trailing commission is removed so you don't end up paying twice for advice (this is called double-dipping).

F-class funds are much cheaper than regular mutual funds, but they're still pricey compared to exchange-traded funds. So why not ask your adviser if you could move into ETFs instead of F-class mutual funds? ETFs could also be a cheaper solution than pooled funds, wrap accounts and other products that investment firms offer clients.

If you're already an ETF investor, make sure your adviser is using the cheapest possible options. For reference, there are Canadian equity ETFs with MERs as low as 0.06 per cent and diversified bond ETFs as low as 0.12 per cent.

A final note on the advice fee. A column from last fall argues that households with investable assets of more than $1-million should be able to get comprehensive investment advice for 1 per cent annually. Smaller accounts may push closer to 1.5 per cent. Great service with full financial planning can justify fees on the higher side.

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