How Banks are Fleecing You with a Smile

Just a couple of days ago I visited my “Personal Banquier” to discuss some investment options. Remember back in May I fired my financial planner for lack of professionalism and got him replaced by this new lady who carries a weird title. All I asked from her was to get back to me when I contact her and to execute my instructions related to my account, nothing more and nothing less.

Since I had contribution room in my RRSP and have some profits to declare for my DIY accounts, I thought I would neutralize the tax by contributing an equivalent amount to a registered retirement savings account. The only RRSP account I have is with my employer, so I thought why not open an account with my bank since it might come in handy again in the future.

In our discussion I asked her which product she would recommend based on my criteria. I am a very boring guy when it comes to RRSP investments, just an index hugger with a balanced profile. This might surprise you since you got used to the fast paced action of my DIY portfolio in the energy sector. But with retirement funds, I just want to set it and forget it, I check my RRSP only when I need the numbers for my monthly net worth calculations.

Try to find the error in the suggestion she came back with, I’ll circle it for you in red:

Yes, it’s the MER not the management fee that counts. I did not ask her about the difference but I did ask which one applied. Now tell me why would I go with my bank’s product if I can buy 3 ETFs and get my wish for much less?

We parted with my advisor smiling and “looking forward to opening my RRSP account”. On my way back to work, I felt sorry for all the hard working men and women out there who are paying those fees because they failed to spot the “error”.