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Do-it-yourself investors fight against trailer fares



A Toronto man says his "head exploded" when he learned he had lost more than $ 60,000 from his retirement nest by paying taxes for financial advice he never received and that his broker is not authorized by law to provide.

"Investors are fucking themselves," said Steve Pozgaj.

Pozgaj, 65, is one of a growing number of Canadians who are do-it-yourself investors, who use online brokerage services to buy mutual funds and other investments, rather than through a financial advisor.

Last year, he and his wife were sold for $ 5,000 in trailer commissions – also known as final commissions – which are embedded commissions paid by mutual fund companies to compensate for consultants and companies that sell their funds , for the services and advice they provide to customers.

Pozgaj estimates that it has indirectly paid these commissions to its brokerage of discounts, TD Direct Investing, for over a decade, which means it has also lost the effect of compound interest.

In the case of do-it-yourself investment sites, such as those used by Pozgaj, securities regulators strictly prohibit online brokers from providing advice.

"Why should I pay for advice when I am not legally able to give it?" called Pozgaj.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Nell & # 39; darkness"data-reactid =" 19 ">Nell & # 39; darkness

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Pozgaj said he had no idea to pay for the alleged tips & nbsp; until a few months ago, when he carefully examined his investment statements, after the industry was forced to be more transparent about the fees charged to investors. "data-reactid =" 20 "> Pozgaj said he had no idea to pay the supposed advice until a few months ago, when he carefully examined his investment declarations, after the industry was forced to be more transparent regarding fees charged to investors.

"I have no problem paying someone to manage my mutual funds, it's what they do to make money, and I'm generally happy with TD," said Pozgaj. "But for advice I'm not receiving? Crazy."

In an e-mail to his discount agent at TD Direct Investing last April, Pozgaj asked for trailer fees. His broker replied: "Everything is as it should be".

We are talking about the tens of millions of dollars that have been paid for advice that has never been delivered. – Attorney Michael Robb

Pozgaj considers itself an expert investor; in the 1990s he was Chief Information Officer at Mackenzie Financial, a large investment management company.

Yet he had never heard of a type of mutual fund that he could buy, called "Serie D" funds. They are designed specifically for do-it-yourself investors, with lower commissions and no final commission.

"I'm not Einstein," said Pozgaj. "But if I did not know them, with my level of sophistication, I would bet dollars in donuts that not everyone knows at all."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Classified actions"data-reactid =" 28 ">Classified actions

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Five months ago, Siskinds & nbsp; LLP, a law company based in London, Ontario, & nbsp; archived a class action proposal & nbsp; lawsuit& nbsp; against the investment management company of TD Bank, TD Asset Management, claiming that there were "breaches of trust" when TD charged final fees for advice that was not provided by a discount broker. "data-reactid =" 29 "> Five months ago, Siskinds LLP, a law firm based in London, Ont., filed a legal action proposal against TD Bank, an investment management company, TD Asset Management, claiming that there were "breaches of trust" when TD charged final commissions for advice that was not provided by a discount brokerage.

"Because discount agents do not provide and can not provide advice to investors, the payment of final commissions is improper, unreasonable and unjustified," wrote Siskinds in his statement.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Siskinds also presented a similar proposal for collective action& nbsp; in June against Scotiabank's investment management divisions relating to final commissions paid to discount brokers. "data-reactid =" 31 "> Siskinds also presented a similar class action proposed in June against Scotiabank's investment management divisions on final commissions paid to discount brokers.

"Investors now see the dollars and cents they are paying by way of management fees, which include final commissions on these [DIY] mutual funds – and I think people find it worrying, "said Siskinds attorney, Michael Robb.

He admits he once had do-it-yourself investments and paid trailer fees.

"I'm sure there are thousands of people, if not more, who are affected," said Robb. "We're talking well about the tens of millions of dollars that Canadians have paid for a council that has never been delivered."

The proposed class action suits have yet to be certified and no response has been submitted by either bank.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "When contacted by Go Public, both TD and Scotiabank & nbsp , said they are unable to comment on proposed class actions as the issue is "currently before the courts". he added that his commissions on mutual funds they are all known on his website. "data-reactid =" 60 "> When contacted by Go Public, both TD and Scotiabank said they were unable to comment on proposed class actions as the issue is" currently before the courts. "TD added that his commissions on mutual funds are all disclosed on his website.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Problem "at the sector level""data-reactid =" 61 ">Problem "at the sector level"

Although the proposed class action lawsuits are addressed to two investment fund management companies, Siskinds is currently evaluating shares classified against other mutual fund management companies, Robb said, because charging DIY investors with advice they do not get is a "sector-wide" issue.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A 2017 relationship from the Canadian Securities Administrators (CSA), & nbsp; an umbrella group for all provincial securities commissions, estimates that between the end of 2015 and the end of 2015 there were more than $ 25 billion in mutual fund products that paid commissions on trailers. data-reactid = "63"> A 2017 report by the Canadian Securities Administrators (CSA), an umbrella group for all provincial securities commissions, estimates that there are more than $ 25 billion of mutual fund products that pay commissions on discount brokerage trailer, starting from the end of 2015.

"It's a big deal and it costs a lot of money a lot of normal people," said Robb. "Every year money is taken from their accounts and accumulates."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Prohibition proposed"data-reactid =" 65 ">Prohibition proposed

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Last Thursday, the CSA published his proposal to ban & nbsp; towing costs paid for discount brokers. He is giving the industry three months to comment on the proposed change. "Data-reactid =" 66 "> Last Thursday, the CSA published its proposal to prohibit roaming charges paid to discount intermediaries on the proposed change.

The move comes years after the CSA launched in 2012 a review of commissions on mutual funds, which are the most commonly held investment products in the country.

The delay is disappointing for some investment experts, including Larry Bates.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" It went on for years "& nbsp; bbs; Bates, a former investment banker who became an independent investor, attorney and author of a book for Canadian investors & nbsp; title & nbsp; Beat the bank. "data-reactid =" 89 ">" It has been going on for years, "said Bates, a former investment banker who became an independent attorney for investors and author of a how-to book for Canadian investors entitled Beat the bank.

"I would like to see the regulators act more decisively and faster on this problem."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""The biggest secret of Bay Street""data-reactid =" 91 ">"The biggest secret of Bay Street"

While Bates said he believes paying trailer fees to discount brokers is "ridiculous," he said these products are actually just a small segment of the total mutual fund market, which amounts to $ 1.49 trillion, according to the Investment Funds Institute of Canada.

"The impact of mutual fund commissions on pension accounts over time is Bay Street's biggest secret," said Bates. "Investors are not aware and the industry wants to keep it that way."

The total commissions of a typical mutual fund range from 1.5 to 2.5% the year, Bates said.

"These taxes are deducted from pension accounts," he said. "But the industry never presents an account: the investors have never shown the amount of commissions that pay and do not see the impact of these taxes over time".

Over a period of 25 years, Bates said that a two percent commission will eliminate about 50 percent of an investor's total returns. "It's absolutely wrong and really exploits investors".

Investors would be well served by learning some basic notions about investments, Bates said. Taxes are not just a problem for people, he claims, but also "a social issue".

"Who will pay the retirement of our generation and the next generation? The business model we have in the investment sector that is dependent on these high-cost products will serve Canadian investors extremely badly," he said.

"It's not good for Canadians, it's that simple."

As for Pozgaj, he says he has waited to see how TD will address its concerns about the trailer fees it is paying indirectly and is considering a legal action.

"I can not see the injustice being done and doing nothing about it," he said. "This just seems wrong, it's morally incorrect, what they're doing."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "With Enza file & nbsp; Uda"data-reactid =" 102 ">With Enza Uda file

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