Last week a friend asked about @blossom app I had referenced. BIG MISTAKE PARTNER !🤠 That inevitably led to a conversation about investing. I was genuinely impressed and proud to learn he’d built a portfolio worth over $400,000 across his TFSA, RRSP, and non-registered account. (he’s an entrepreneur in the trades and built a company five years ago, so having that much capital surprised me) Then he told me something that caught my attention. “I don’t pay any fees. It’s a family friend who manages everything.” 🚩 I asked if he had the fund documents. Sure enough, after a quick gmail search he pulls up the fund prospectus. on page two: 🚩Total expense ratio: 2.23% I discussed briefly Trading expenses, management expenses, etc. Then we did the math together. His Portfolio: $408,000 💸 The MER: 2.23% 💀 Annual cost last 12months : $9,098😵 avg Monthly cost: $758😵 He was shocked. He told me I was wrong: he showed me the email where the broker reiterated that the handling fees were waived.. I told him that paying an expense of any kind was the same as a fee, so technically that was bullshit but perhaps legally true- Also, I told him that paying for a product isn’t horrible, and told him I would gladly pay a high MER for spectacular returns. So I asked to see his account performance. 😵YTD: +6% 😵1 Year (TTM): +9% He was paying about $9,100 per year while trailing broad-market index ETFs like $XEQTover the same period. In fact, he had not seen double digit returns apart from the first COVID bubble. WTF This talk wasn’t about convincing him to switch to index investing, or become a stock picker. It was about making sure he understood THAT& WHAT he was paying, because his “family friend” certainly didn’t appear to be within industry’s expected ethics on fee transparency though @smallbird.financial or others can perhaps speak to openness requirements for financial folks more than I. In this scenario, the advisor might genuinely mean, “I don’t bill you separately.” But many clients hear, “This costs me nothing.” Those are very different messages, so I’m not blaming the advisor completely… YET. This is now the fourth person I’ve spoken to who genuinely believed they paid no fees, almost always thru “a friend of a friend/ family). This false belief is shattered when they discover they were paying a substantial MER (all have been in mutual, via investment agencies with the big banks) after we looked at the product. One stayed with the mutual due to switching and admin (time) costs, two left, and this friend is in the works of figuring out how he wants to play it. the issue here isn’t necessarily high fees. It’s that many investors don’t even realize they’re paying them, and that is a failure of the advisor and the client, though only one of those is bound by regulatory standards…. Curious to hear your thoughts, and shout out to @25andinvested for reminding me of this convo via his post ( https://link.blossomsocial.com/7uYa/08pokpui) this AM. I’ve added screenshots of the prospectus from a Fund in the same series as his- might be slightly different series but nearly identical.
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48 Comments
Michael Conroy@conroy119 · 26d
Doesn't sounds like they are a family friend at all. More like a family leech.
Jay @motivated_jay · 26d
Stop letting a family friend quietly drain money from your wealth. Paying a 2.23% hidden fee ($9,098/year) for weak investment performance is a financial disaster. Ditch the expensive mutual funds, open a self-directed account, and switch to a low-cost index ETF. It will instantly save you over $8,200 a year in fees while securing significantly better market returns.
Twenty-five And Invested@25andinvested · 26d
I think i will make a post about this 😆 🤣 great conversation with your friend. And super well handled, it is very hard to bring information without placing a personal bias on that.
Levi Ewald@smallbird.financial · 26d
I would definitely agree that this is outside of what is ethical. His family friend was almost certainly receiving a commission for putting him in this particular fund. Unfortunately, legally speaking, the cost was disclosed somewhere, he just never understood he was paying it. That is the real problem here. The MER shows up in the Fund Facts and the prospectus, and the advisor has to hand those over, but the annual statement he actually reads has only ever had to show what the dealer got paid, mostly the trailing commission, in dollars. It has never had to show the fund's full MER in dollars. So people read their own statement, see a small trailer line or nothing at all, and honestly believe they pay nothing. The "handling fees were waived" email is probably true and beside the point. A separate account fee can be waived while the 2.23% is still baked into the fund and coming out every year. He won't get a statement this year that spells it out either. Total Cost Reporting took effect January 1, 2026, but the first report that shows fund expenses in actual dollars covers the 2026 year and doesn't land until early 2027. Until then the ~$9,000 stays invisible unless someone does what you did and digs up the prospectus. This is the whole reason I got into this. It pisses me off that a hard-working guy who built a company from nothing is handing over $9,000 a year for a product trailing a plain index fund. Nine grand per year is a stupid amount of money for the quality of advice and planning that you get at a bank or a regular brokerage.
Vlastimil Cerny@vlastik · 26d
I heard that story before…wait that was me before I took control of my investments 2 and a half years ago 😝
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