When setting up an investment account, your Caldwell advisor will provide an explanation of how fees are applied.

There are two categories of fees common to all mutual fund and segregated fund accounts:

1. Getting Started

In most cases, several hours of preparation go into setting up an investment portfolio. Activities include identifying your investment objectives, preparing and reviewing with you a portfolio suited to those goals, completing regulatory and account-opening paperwork, communicating with other financial institutions when an account transfer is involved… all the requirements related to setting up your investment account. Your investment may be structured in such a way as to cover the early costs borne by both the advisory firm and Investment Dealer during this set-up period:

1. Front-end Load – FEL (Bundled): Some investment funds apply a fee of up to 5% of the amount you invest. The fee is paid to the Investment Dealer that offers the fund – in our case, Quadrus Investment Services. This is a bundled fee that most advisors can arrange to have reduced on your behalf.

2. Low-Load – LSC (Bundled): Low-load funds charge a lower sales charge of approximately 3% of your invested amount, and a redemption fee of up to 3% on amounts withdrawn within the first 3 years.

3. No-Load – NL (Unbundled): Availability of No-Load funds is typically limited to accounts exceeding $250,000. Effectively, NL funds unbundle the Advisory fee from the Management Expense fee; while the Management Expense fee is pre-determined, the Advisory fee is reported separately and can be negotiated with your advisor based on the advisory services required.

4. Back-end Load or Deferred Sales Charge – DSC (Bundled): Funds may charge a fee of up to 6%, but only on money that you withdraw from the investment within 6 years. As funds stay invested within that early time-frame, the withdrawal fee reduces until it reaches 0% at the end of year 6.

Each calendar year, fund companies allow investors to make a fee-free withdrawal of up to 10% of the account balance that would otherwise be subject to DSC fees each year.

The Investment Dealer typically receives 5% from the fund company when you purchase a fund under this structure, and any deferred sales charge for an early withdrawal goes to the fund company.

2. Ongoing Investment Management & Advisory Services

Management and administration expenses are incurred by fund companies as they invest your money. These expenses are paid by the fund and are in turn recouped directly from investors’ accounts as the Investment Management Fee (IMF).

Management costs relate to:

  • Actively overseeing the fund
  • Trading costs
  • Compensating portfolio managers for investment selection
  • Paying other companies hired to assist in the administration of the fund

Operating expenses include:

  • Bookkeeping and administrative fees
  • Marketing costs
  • Filings with provincial securities commissions
  • Legal, audit and custodial fees

In addition, Advisory Fees are paid to the Investment Dealer, a portion of which gets passed on to your advisor.  This fee is intended to cover administration and management costs borne by the Dealer, in addition to the advisory services provided directly by your advisor.

Advisory Fees include costs and services related to:

  • Dealer administration
  • Compliance & oversight
  • Financial planning services
  • Annual reviews
  • Local administrative staff
  • Office overhead
  • Licensing & compliance
  • Continuing education

Depending on available options, the IMF and Advisory Fee may be either reported separately or bundled into the overall cost of your investment.

  • When bundled, the two fees combine to make up the Management Expense Ratio (MER) which is determined as a percentage of the overall fund value and withdrawn prior to the reporting of the investment performance; and
  • when unbundled, the IMF is deducted prior to the reporting of the fund’s performance, and the advisory fee is reported quarterly as a deduction against each investor’s account.  For non-registered (or Open) accounts, the advisory fee may be tax deductible as an investment expense.
How Caldwell Wealth & Estate Advisory Ltd. is compensated

When clients invest, the Investment Dealer (Quadrus Investment Services or insurance company in the case of segregated funds) is compensated by receiving either a portion of the MER or the Advisory Fee. In turn, Caldwell Advisory receives a portion of the Dealer compensation in two forms:

Up-front compensation when circumstances call for a Deferred Sales Charge (DSC) or Low-load Sales Charge (LSC) fee structure; and

Trailer commissions paid each year based on the cumulative total of all client investment accounts under our stewardship.  Under Front-end or No-load fee structures, CWEA receives only trailer compensation.

Compensation received by CWEA covers our advisory and operating expenses, including:

• Administrative staff salaries
• Advisory & planning services, including advisor compensation
• Lease and office overhead
• Regulatory compliance costs
• Staff & advisor training costs
• Marketing, sponsorships & donations