Being Promised Better Returns? Don’t Forget About Those Hidden Management Fees!

June 14, 2021

Have you ever been offered a “great deal” for a flight or hotel, only to be frustrated after about additional fees or surcharges?  Hotels don’t advertise their additional “resort” fees, and some airlines charge more for your baggage (and more) than they do for your ticket.  Sometimes reality just doesn’t match the advertised price.

The same is true for many traditional investments.  Investments sold by financial advisors have yearly management fees as well as additional fees such as trading fees, brokerage fees, early termination fees, etcetera.  What used to be hidden, now must be disclosed, but often consumers are still unaware of what they are really paying for – and often without any guarantees of good performance.

Like the travel industry, the financial industry advertises investment returns before taking fees into account.  If an investment shows a 5% return before fees and taxes, even if that return is achieved (and remember, the fees you pay are guaranteed, but the return advertised is not), you will not receive 5%.

- First, your fees will be deducted (2.01% on average). 

- Then, you must pay tax on the amount earned after fees.

- And, this new income that increases your tax bill might also result in a claw-back or loss of any income-tested benefits you were entitled to before, and have come to rely on, such as the Canada Child Benefit, a Guaranteed Income Supplement, an HST rebate, and many more.

All that risk to earn those returns, only to find that you’re no further ahead because you’ve lost financial support from other areas.

For example, take an investment of $500,000.00 over 20 years that charges 2% annually.  Assuming the capital amount remains the same, the total of the fees paid by you to your financial advisor over 20 years is $200,000.00.  You will have spent 40% of your original capital investment on fees.

What if instead, the total cost of that investment was presented up front?  Would you make the same decision if the investment proposal showed you the true cost?

Structured settlements have no taxes, no fees, and the broker receives a one-time commission, paid by the life insurer that promises you the highest payment.  This commission is already calculated in the structure return and not an additional fee to be paid by you.  With a structure, the return you see is exactly what goes into your pocket - guaranteed.  And none of your other income sources get reduced.

This makes structured settlement returns far, far better than what others might be telling you.



Nathan is an Associate at McKellar Structured Settlements.  Nathan’s big picture thinking and mathematical proficiency play an important role in his daily tasks that ultimately help to further McKellar’s reputation for being the best in the business.  To learn more about Nathan, check out his bio here , or contact him directly here.