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cash and kerry

Confused man.

The best way to lose friends is to help them with their finances.

The defriending process often begins when I agree to review a friend's finances. By drafting a balanced financial plan that cuts spending, boosts debt repayment, and automates saving, I can turn a friend into a foe in minutes. Maybe a month.

In the off-chance that the friendship persists, I agree to the ultimate relationship killer: I look at their investments and end up explaining how much they are paying in mutual fund fees.

"I don't pay any fees," is often the declaration to our pre-friendship separation.

"Yes, you do!" I chime back while performing a complicated manoeuvre I call WTF-C or What The Fund Costs.

By reading a fund's lengthy prospectus and entering the documented, yet buried, sales fees (load), management fees (MER), and other fees (such as account set-up and redemption fees) into a Mutual Fund Fee Calculator, I can not-so-easily show my friends how simple it is to get confused by how much they're paying to invest in mutual funds.

In the case of one gal pal, she was set to pay around $8,900 in assorted fees to invest $30,000 over 10 years in a Canadian Balanced mutual fund boasting a 2.50 per cent MER. A comparable mutual fund with a 1.14 per cent MER would cost around $5,600 with no load – a savings of $3,300 over ten years.

"But I've never written a cheque to my financial adviser," she told me.

At this point I have to explain that the fees come out of her investments, whether her portfolio goes up or down. It's enough to make a friend feel really down.

The Canadian Securities Administrators (CSA) must have known I'm short on friends and tired of performing stealth calculations, because by July 2016 all investment dealers must fully disclose every dollar a client is charged in fees and commissions, while providing a performance report that details investment returns.

This investor-friendly change is the second phase of the client relationship model (CRM2) and it might just give me a shot at reaching over 500 friends on Facebook, or maybe even three friends in real life.

But before throwing myself a social party, I asked Sandi Martin, a fee-only and advice-only financial planner at Spring Personal Finance, if the CRM2 changes would help Canadians make friends with their mutual fund investments.

"With CRM2 the amount investors pay in fees will be shown in dollars, not a per cent. A price helps consumers understand what they are paying and what service they should expect," says Ms. Martin, who is based in Gravenhurst, Ont. "You don't go to a grocery store and pay 1.5 per cent of your paycheque for chicken."

One issue with the new rules is the services an investor should expect are not defined or regulated. So while one adviser might spend hours setting up a retirement plan, another might only send an annual email reminding you to contribute to your registered retirement savings plan.

"The reality is many people are paying an adviser money to pick a fund," says Ms. Martin. "If your adviser doesn't look at your goals they are just a product-pushing machine, a piss-poor adviser."

So how can Canadians separate the "piss poor" advisers pushing mutual funds that pay large commissions from the ones who are actually invested in your financial success? Is CRM2 the fiduciary friend they're looking for?

I asked Neil Gross, executive director of the Canadian Foundation for Advancement of Investor Rights (FAIR), if fiduciary responsibility is on the radar.

"Very much so. Canadian regulators realize that most investors assume investment advisers are supposed to act in their clients' best interests," says Mr. Gross. "The investment industry encourages this assumption by portraying advisers as professionals."

"There is no doubt a best interests duty would force some profound changes to be made to the industry's business models, especially in the way that mutual funds are sold," he says.

For now I'm happy to keep my friendships intact by letting the new regulations do the fee disclosure dirty work for me. Until everyone close to me is out of debt, I'll have to depend on the humble household budget to piss off friends and influence financial success.

Guess I'll never have 500 friends on Facebook. And I'm OK with that.

Kerry K. Taylor is a personal finance and consumer expert, the author of 397 Ways To Save Money and the lone blogger at You can follow her on twitter at @squawkfox.

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