New investment industry changes to create savvier Canadian investors

Reports out this year will show Canadian investors the fees they pay to invest

TORONTO, Jan. 11, 2017 /CNW/ - New industry regulations take affect this month and for the first time, Canadian investors will receive reports detailing service and administration fees and investment performance. According to a recent poll by Tangerine Investments*, the majority of Canadian investors surveyed (83 per cent) were not aware that this information would be included in their reports; however, once they became aware, nearly half (46 per cent) said it would make them a more knowledgeable and empowered investor.

The reports stem from new rules, called CRM2 (Client Relationship Model 2), which are the result of reforms phased in over the past three years that are designed to bring more transparency and disclosure to the investment industry. According to the Tangerine Investments' survey, the changes are much-needed, as nearly half of Canadian investors surveyed stated they don't pay investment fees, or are unsure if they do.

Of those who were aware that they pay fees to invest, nearly half (48 per cent) did not know what they pay in dollar amounts. Moreover, when asked if the level of information provided about the fees they pay is presented in a clear and transparent way, 44 per cent of all investors either disagreed or were unsure, suggesting a lack of clarity around the way fees are presented.

"With actively managed funds charging an average of 2.13 per cent in fees, this new information will likely encourage Canadians to consider alternative ways to invest their hard-earned money," said David McGann, Director of Tangerine Investments. "At Tangerine, we strive to make investing easy through our suite of award-winning, low-cost investment funds that are designed to track the market.  Since our funds have fees that are about half the industry average, this can translate into having tens-of-thousands of dollars more in your portfolio over the long-term.**"

The survey from Tangerine Investments also found that Canadians are growing comfortable with online investing options and are exploring alternatives to the traditional investment advisor model. When asked if they currently have a financial advisor to help choose their investments, 33 per cent of Canadian investors said they do not. 

So what are the top alternative methods they are choosing to invest their money? The chart below breaks down the responses (respondents could select more than one):

I'm a self-taught investor that uses an online account to trade a variety of investments to suit my needs

30%

I use an indexing strategy, investing in ETFs or mutual funds that track the market so I can sit back and relax

9%

I have a pension plan or stock options at work, and don't invest outside of that

10%

I'm a combination of the above

28%

None of the above

23%

Learn more about CRM2 at tangerine.ca/forwardthinking/investing

*Survey Methodology
From June 29 to July 4, 2016 an online survey was conducted among 1,003 randomly selected Canadian adults who are Angus Reid Forum panelists and who meet the following criteria: primary/shared decision maker for household finances and currently have investment accounts/mutual funds/bonds/stocks. The margin of error—which measures sampling variability – is +/- 3.1%, 19 times out of 20. The results have been statistically weighted on age, gender and region to the profile of Canadian adults who have investment accounts. Discrepancies in or between totals are due to rounding.

**Source: Investor Economics (2016). Investor Economics Insight 2016 Annual Review. Fees saved calculations are based on the Management Expense Ratio ("MER") charged to unitholders of Tangerine Investment Funds compared with the asset weighted MER for long-term mutual funds for the period of January 1, 2008 to September 30, 2016.

The difference between a total of $50,000 invested over a period of 20 years at 7% gross annual returns with fees applied of 2.13% vs. 1.07% is $31,055. This hypothetical example is for illustrative purposes only and is not intended to reflect future values or future returns. 

About Tangerine Investment Funds
Tangerine Investment Funds are managed by Tangerine Investment Management Inc. (formerly known as ING DIRECT Asset Management Limited) and are available only by opening an Investment Fund Account with Tangerine Investment Funds Limited (formerly known as ING DIRECT Funds Limited). Both firms are wholly-owned subsidiaries of Tangerine Bank. With more than $2 billion assets under management, Tangerine Investment Funds Limited is the principal distributor of the Tangerine Investment Funds.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. All securities, including mutual funds present a risk of loss of capital. To understand risk better, you may also want to look at the specific risks for mutual funds and how they could affect their value. The principal risk factors for the Tangerine Investment Funds include Index Risk, Equity Risk, Foreign Investment Risk, Foreign Currency Risk and Fixed Income Investment Risk. For a full list of the Funds' risk factors and details about them, see the What Are the Risks of Investing in a Mutual Fund Generally section of the Funds' simplified prospectus.

About Tangerine
Tangerine is a direct bank that delivers simplified everyday banking to Canadians. With over 2 million Clients and close to $38 billion in total assets, we are Canada's leading direct bank. Tangerine offers banking that is flexible and accessible, products and services that are innovative, fair fees, and award-winning Client service. From no-fee daily chequing and high-interest savings accounts, Credit Card, GICs, RSPs, TFSAs, mortgages and mutual funds through its subsidiary, Tangerine Investment Funds Ltd., Tangerine has the everyday banking products Canadians need. With over 1,000 employees in Canada, our presence extends beyond our website and Mobile Banking app to our Café locations, Pop-Up locations, Kiosks and 24/7 Contact Centres. Tangerine was launched as ING DIRECT Canada in 1997. In 2012 it was acquired by Scotiabank, and operates independently as a wholly-owned subsidiary.

For more information, visit tangerine.ca

SOURCE Tangerine

For further information: Derek Kirk, dkirk@tangerine.ca, 416 316 0149

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