The Trouble with Investing Fees — Are Commission- or Fee-Based Accounts Better?

If you have a full-service investment account at a Canadian brokerage, your advisor has probably approached you in recent months to discuss the option of signing up for what is called a “fee-based account.”

This means that you would be charged an annual fee of somewhere betinvestment feesween 1-1.5% of the assets under advisement (AUA) at the brokerage, rather than paying commissions on individual buy and sell transactions.

I am often asked which type of account — fee-based vs. commission-based — is better from the investor’s point of view. The answer, as with most good questions, is that it depends.  Read More…

This article has 6 Comments

  1. Nicholas Mancourt

    Ahh yes, the big debate on which is best. They both have their advantages and personally i carry multiple brokerage accounts and make use of both fee styles and both work well for me.

    It all depends on your situtation.

  2. Cristian

    My entire portfolio is diversified mutual funds and i am happy with the annual fees i pay considering for the past 10 years ive had 30% returns each year (except 1).

  3. Kevin

    Maybe i am just new to investing but why don't these guys just make a flat rate like say Questrade and be done with it. Why complicate the water by having annual fees and stuff? Would make more sense to get new people to start investing.

  4. Chadwick Zimmerman

    Everyone wants their cut and calling it a different name by way of loads or MER or whatever wont make a difference…it's just a cash grab.

  5. Shelton H

    The real scurge to investors is trailer fees. Eliminate this from the Canadian lexigon would be a dawn in trading.

  6. Eric Roll

    If you're a buy and hold type who doesn't do much activity then it makes more sense to go comm. based. I think this is where most people fall under.

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