Today I went down to the bank to change Elli's RESP investment to something sensible. The bank has it invested in their 2025 fund, which is ostensibly designed to maximize your return by the year 2025 and to invest less aggressively as that date approaches. In reality of course it is designed to charge a truckload of fees so that the bank gets a tremendous share of the final sum. I told the 'investment expert' that I wanted to transfer my money to the Canadian Index Fund which charges .7% per year instead of 1.9% per year. First he tried to deny that there were any charges at all but eventually relented and confessed that the funds themselves charge but the bank doesn't!
The bank, by the way, is the one who manages and designs these funds. ARGH.
Finally he went on a long campaign to convince me that the Canadian Index Fund was too risky and wasn't a good idea. He pointed to the 2008 drop of 33% in the stock market and told me to expect my investment to drop 33% if I changed over to the new fund. Notably he didn't point to the precipitous drop in the 2025 fund in 2008, but I wasn't there to pick a fight. Finally after I made it clear I was simply not going to relent he filled out the forms to allow me to retain 1.2% more of my money every year and shooed me out of the place. There are times when I am much more willing to defend bankers than most people but today sure isn't one of those times. Investment advisors dress much better than pool hall sharks but they sure don't deserve any more respect.
In an interesting math note someone I know worked out what happens if you invest in a normal 2.5% fee mutual fund at the bank starting at age 25 and going until age 65. If you assume the bank keeps the fees and invests them at the same returns as the client gets the bank ends up with 50% of the money at the end. Yup, half the money for the bank, half the money for the investor. Who needs to break the law when you can do that?
When Obi-Wan said "You will never find a more wretched hive of scum and villainy." he must not have seen the local RBC. Of course, nobody is likely to try to *shoot* me in there...