blog03feb2008

Hot Off the Web
In WSJ’s “Questions for parents” Shelly Banjo discusses how adult children can approach a discussion of the adequacy of their parent’s retirement plans with them. I recommend to you Huntington Bancshares’ Checklist for Life  as a great starting point for you to document what and where are your key financial assets and information.
Ken Kivenko of CanadianFundWatch.com http://www.canadianfundwatch.com refers to a recent article on T Class funds by Dan Hallett and asks “are T class funds Ponzi schemes?” Hallett discusses T class funds and explains that the claimed tax advantages are illusory since they come from return of investor’s own capital. The return of the investor’s capital will correspond to a reduction of the fund’s unit value. Hallett also indicates that he has never recommended T class funds to a client! Not surprising, since why would you pay somebody an ongoing fee to hold your money and then periodically send it back to you?
Camilla Cornell in Financial Post’s “Test driving the advisors”  makes the rounds to a bank advisor, online brokerage, full service broker and fee only planner. Unfortunately, while Camilla recognized the value of a comprehensive financial plan and the ongoing advice that she could get from the selected fee-only financial planner, this came at a steep price of $4,000 for the financial plan plus 1.85% management fee per year for portfolios in excess of $250,000. Also, from her description it wasn’t clear whether the portfolio was going to be constructed from mutual funds, ETFs or stocks/bonds which, depending on the choice, could attract additional hefty management or transaction fees.
Jonathan Chevreau in “New breed of advisors shun mutual funds”  describes a “new” approach that some fee-only advisors are taking building a portfolio on a passive approach using low cost ETFs and charging “only” 1% for managing the portfolio. This is certainly an improvement over 1.85% mentioned in the previous article, though not clear if you get the same service level.
Chevreau also discuses “The mutual fund they don’t want you to know about” . He is referring to ING Direct’s Streetwise Funds which charge “only” 1% management fee (great progress in Canadian terms), which comes in basic, aggressive and conservative versions with stock/bond mixes of 60/40, 75/25 and 70/30 respectively. Chevreau suggests that this may not be a bad approach (you could do worse) though he suspects that both advisors and clients may prefer more customization (see previously discussed article)
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