The British Columbia Securities Commission (BCSC) says a study of consumers has found that many B.C. investors lack knowledge when it comes to understanding the fees they pay on their investments.
The study’s findings, released this week, found that 28 per cent of B.C. investors don’t know how advisors are paid and that 36 per cent are unaware of the various types of fees they pay on products. Less than half (44 per cent) realize that a difference of one per cent in fees will have an impact on their returns.
The study also found that 83 per cent of investors said they are aware if their portfolio increased or decreased in value over the last year, but only 51 per cent know the total amount they pay in direct fees on their investments. Meanwhile, just 34 per cent of investors understand the impact of indirect fees on their investments.
BCSC is concerned
Pamela McDonald, Director, Communications and Education, BCSC, said "Some of the study results concern us. New securities regulations will be putting more information in the hands of investors to help them clearly see the fees they paid in the last year. We're conducting this research to show us how ready investors are to use this information and what else they still need to understand."
BCSC will be starting a three-part longitudinal study to better understand what investors know and don’t know about the fees they pay, and how this knowledge affects their investment behaviour.
Fees impact returns
"Fees impact your returns over time. Fees are a fact of investing and we want to empower investors to discuss them with their advisors. This is why we created a number of new online tools like our fee calculator, to help make this important information more accessible,” McDonald said.
The study, called Investor Readiness for Better Investing study was conducted in November and December 2016 by Innovative Research Group Inc.