Many of us have heard about the recent “discussions” that have been going on between CREA (Canadian Real Estate Association) and the Competition Bureau.  We are keeping a close eye on this as it does have the potential to drastically change the way the Canadian world of Real Estate is handled.  

Not only may discount brokerages be able to access the MLS system (a system that is owned by CREA), but the public may be able to pay to add their own home to it as well! I’ve heard many different arguments about this situation and I am still not exactly sure where I stand.  We all know that a house on the MLS system has a FAR greater chance of selling then one that is not (I’m sure many For Sale By Owners can agree with this).  But CREA owns it and its members pay HUGE amounts every year to maintain and access it.  Years ago the public had zero access to the MLS, there was no internet, there was no www.realtor.ca, and there was no easy way to find a home on your own.  That is not the case today – anyone can search for a home via this website.  It is by far one of the most viewed websites in Canada.  

What would happen if CREA decided instead of finding a common ground with the Competition Bureau…they shut off the public’s access?  CREA does own it and can change it so that it is once again for Realtor®s only.  This would solve the issue from the Realtor®s perspective.

And, if they do find a common ground that would allow discount brokerages and the public access to upload homes, what would that mean to the Real Estate world?  Would everyone start selling their own homes (I doubt it, who wants the hassle)?  Would commissions change? 

At this point we don’t know any of these answers…but over the coming weeks/months we will slowly find out how they are sorting through all of this – Realty Boost will be here, watching, listening and passing all the news on to you!

When trying to invest in stocks there are two primary ways; mutual funds and individual stocks.

Mutual funds are a way of investing in a set of stocks with a single purchase. Mutual funds have several advantages:

Simple diversification, get many different stocks with a single purchase. Purchase different types of funds to get coverage over different financial segments. Does not require you to research your own stocks. Get professional money management without the pricey broker fees.

Unfortunately not all about mutual funds is good. There are also several disadvantages:

Often mutual funds are not as diversified as one thinks. Most mutual funds only cover a very small financial segment. e.g. The S&P 500 is one of the most popular indexes tracked by mutual funds. It has 500 stocks, but it really only tracks a very small financial segment (very large US stocks). The vast majority of mutual funds underperform the index they track (~80%). This is because as with all things about half actually outperform and half underperform, but because you have to pay fees a larger percentage end up underperforming.

In my experience mutual funds are good for people who don’t have the time/desire to research their own stocks but still want to invest in stocks. And for the vast majority of those folks an index fund is the best way to go as it allows you to track the index while having the lowest possible fees.

But for those with the time and desire to try to beat the indexes’ returns they would be much better off researching and picking their own stocks. The advantage the individual investor has is they do not have to try and perform for their investors, which causes them to do things that may not actually be the best money making choice. i.e. They may need to sell certain stocks to lock in profits to show on their annual reports.

If you are interested in trying to invest in individual stocks your first step is to find a Discount Brokerage. As with mutual funds one important part to being successful is not getting drug down by fees. You will need to find a broker with a good price, but also with the kinds of features you’re interested in. Many brokers offer research and help finding stocks. Start by comparing different brokers and trying to find the one that best fits your needs.

Investing in stocks incurs more risk, you may lose money on your investment. Please contact your financial advisor before changing any of your current investment strategies.

Please visit us at site to know more about Discount Broker

Брокер работещ стриктно като агент по клиентски сделки, с по-ниска комисиона, но без да предоставя инвестиционни съвети.

I’m in the process of opening a new account at BUYandHOLD.com. I’ll be sure to share my (hopefully good) experiences with them initially and then later on as I become more familiar with their system. So far the fees seem reasonable for an investor with a long-term bent like me. BUYandHOLD also provides free dividend reinvestment (much like your friendly DRIP plan) that in some ways is even better than the actual DRIP plans they mimic. Time will tell…

It is in economic times like we are experiencing at present, where people become much more careful of their expenses. In good times where employment opportunities are plentiful and financial markets are progressing well, we intend to be more relaxed about our spending and we come a little complacent when it comes to our day to day costs.

As a financial planner, I have noticed that when markets are performing well and investments are increasing in value, most investors do not take a lot of notice of the fees that they are paying on those investments. There are fees attached to pretty much all investments, however, in this hub I am going to concentrate on fees attached to Managed Funds, Allocated Pensions, Account Based Pensions and Superannuation Funds. In other hubs, I will talk about other financial and personal insurance products.

I am also going to discuss the roll and the remuneration of the adviser.

There may be some terms in this hub with which you may not be familiar.

 I have a Frequenty Asked Questions page where you can view a detailed explanation as well.

Managed Funds, Super Funds, Allocated Pension and Account Based Pension, come to us in many different forms. They can be purchased as a standalone product or they may be marketed to you by way of a Portfolio Wrap Service or an Investment Platform.

Chances are however, no matter how it is presented, if you purchased the investment direct from the fund Manager, or through a Financial Planner, Investment Adviser or a Broker, you may have paid an entry fee in the first instance and more than likely there is a trail commission being paid from your investment. In some cases there may even an additional adviser fee being paid as well which is usually negotiated with the adviser for ongoing advice.

These Entry Fees,Trail Commissions and Additional Adviser fees are in addition to the fee which is paid to the Fund Manager who actually manages the fund. This fee is usually called the “Underlying Fund Manager Fee” and furthermore, if you happen to have a “Wrap Service” or “Investment Platform”, there is usually an administration fee attached to these as well.

Firstly I would like to say that SOME of these fees are justifiable, particularly the Wrap and Platform fees. These investment instruments are there to perform particular functions and in most instances, in particular where superannuation is concerned, they take much of the legal and compliance burden from the investor.

However, there are fees such as trail commissions and additional adviser fees, which in some cases, can be not so justifiable.

Trail commissions on investment were devised in the early nineties and were introduced to assist the adviser in the day to day running of his or her financial Planning practice. In the early days of Financial Planning, if indeed it could be called that back then, there were no trail commissions or ongoing adviser fees, which meant that an adviser was concentrating more on the next piece of business than the existing investor. I was around in those days and I can testify that it was not an environment which encouraged proper planning and review practices. In some ways, it is understandable why this was the case. Introductory commissions was all that the planner had to live on because there was no other way of earning a living.

Financial Planning has come a long way since then and this is predominately due to, amongst other things, a regular income being generated by trail commissions and ongoing adviser fees.

Over the past few years there has been many a campaigns waged by the industry funds and unions about trail commission suggesting that they are simply ripping of the consumer and lining the pockets of the financial planners. In some cases these comments may be at least partly justifiable, however, I can say with experience that obtaining proper, qualified advice and ongoing advice and reviews, can save you thousands of dollars in the long term and will assist you in obtaining all benefits that you are entitled too, be it taxation, Centrelink or from the investment houses themselves. Sometimes it is the things we don’t know and don’t do that cost us money and or get us into hot water. The savings and benefits of a properly constructed investment strategy can greatly benefit you and well and truly outweigh the costs.

On the other hand, there are cases where investors are paying relatively large amounts of fees on their investments, some of which are directly attributed to ongoing advice and service which is not forthcoming.

Unfortunately, the trail commission system has harvested complacency amongst some advisers because fees are charged to the investors funds normally on a monthly basis and are forwarded to the adviser. This means that the adviser is paid whether the client receives the ongoing service or not.

The problem which has arisen in the last decade is that a lot of investors are paying for the service and advice by way of trail commission but are simply not getting what they pay for. In some cases that I have come across, the investor hasn’t seen their adviser since they made their initial investment and in other cases the investor has never met their current adviser because the original adviser has gone and they have been passed to someone else.

The answer to all this is of course a pure Fee For Service arrangement. A fee for service simply means that, when you need qualified advice you ask for it and pay for it and when you don’t need it or don’t receive it you don’t pay for it.

The fee for service adviser would charge a flat hourly rate (or “a la carte” rate) for his or her services, instead of taking compensation from commissions on investment transactions which is usually based on a percentage

A fee for service model would mean that you initially obtain written advice from a Financial Planner and then you make the recommended investments without the entry fees, exit fees or trail commissions, much like an architect draws plans for your home. The plan would then be implemented by the investor by way of a Discount Broker Service or if needed, with the help of the planner, and if the investor needs ongoing advice and reviews then he or she pays as the advice is given. If you use a discount broker service, for a relatively small annual fee, you can access most funds without paying entry or exit fees, and the trail commissions are paid back to you in cash. You have full control of the investment.

The fee for service way of investing is a much fairer and transparent model and it would ensure that the consumer gets what he or she paid for. If you don’t get the service and the proper advice, then you don’t have to pay. This is the way that most services are delivered these days and I think it is time that this model is adopted in the investment arena. There will of course have to be some adjustments on behalf of both the planner and the investor but I think it would make for a better and fairer system all around.

The fee for service structure of compensation perhaps allows investment professionals to do well for themselves while taking their clients’ best interests to heart. These types of professionals allow investors to access professional expertise while gaining independence from compensation-based advice.

It should be noted that commissioned services may very well be the most suitable for some investors, particularly in the case of a smaller portfolio where less active management is required. Of course the adviser needs to keep in regular contact with these investors. For anybody who has a very large portfolio to manage, whose investment objectives necessitate frequent attention and active asset allocation, the fee for service model is a must have.

Below are some examples of the fees which can be levied against your fund.

ENTRY FEE – This is a fee which is generally paid to the adviser or broker but can be retained by the Fund Manger if you invested directly with them. This fee is generally between 1% and 6%. On some Agricultural Products it can be as high as 10% however, this is normally paid to the adviser out of the fund manager’s coffers and is not attributed directly to your individual investment. It is important to note however that the money is coming from somewhere and at the end of the day it is your fund.

EXIT FEE – Exit fees come in several forms. The first is the Deferred Entry Fee. This is because the adviser/broker received an upfront commission when you initially invested and which was not taken out of you original capital. If you withdraw your investment before the fund manager was able to recover this commission(usually over five years) the fee will be levied. The second is simply a fee paid if you didn’t pay an entry fee on your initial investment and the adviser received an upfront commission. The latter is very rare these days.

MANAGER FEE or UNDERLYING FUND MANAGER FEE - This is a fee that you will never avoid.

The management fee is the cost of having your assets professionally managed. A charge levied by an investment manager for managing an investment fund. The fee pays other people to select which securities your money (along with that of the other investors in the fund) is invested into, to do all the paperwork needed and to provide information about the fund’s holdings and performance.0.5% of assets under management.

Management fee structures vary from fund to fund, but they are typically based on a percentage of assets under management. For example, a mutual fund’s management fee could be stated as

This fee can be between 0.1% to 1.8% depending on the structure of the fund. For example, a typical cash fund may charge 0.3%; An Australian Equity fund may charge between 0.5% to 1.2% and a more sophisticated fund or say a very active international fund may charge 1.85%

Underlying Management Fee

The underlying management fee is the same as above but it is usually expressed as the underlying management fee when it is in an Investment Platform or Wrap Service

TRAIL COMMISSION – Trail commissions on investment is a fee usually expressed as a percentage of the value of the investment and is paid to the adviser on a monthly bases. This fee is usually between 0% and 0.6% but can be higher.

ADITIONAL ADVISER FEE – This is a fee which is negotiated between you and your adviser and is for review and ongoing advice. This fee is on top of the trail commission and can be any amount but usually between 0.1% and 1.1% depending on the size and complexity of the portfolio. This fee can be a flat fee instead of being based on a percentage of the value of the fund.

SUMMARY

In all cases you will be paying the underlying fund manager fee. In most cases you will be paying the trail commission or some equivalent fee. In some cases you will be paying the additional adviser fee and again in some cases you would have paid the Entry Fee or the exit fee if you withdraw before the exit free period has elapsed.

If you would like to know more about investing without the high fees, visit my web site at http://financialplanningandinvestmentgroup.com.au

There you can invest your self without the fees.  You can even start saving on fees immediately on your existing investment by nominating Financial Planning & Investment Group as your broker with a simple form.  I will even help you fill in the form.

Good luck

Max Harrington

“Everyone Will Want to Buy This Product!”

All products and services have partial market penetration. For example, only so many people wish to use a discount broker, as evidenced by the very successful but only partial market penetration of Charles Schwab. Not everyone wishes to join a particular discount club, or buy gold, or drink filtered water, or wear a particular style of shoe, or use any product or service. No one in the real world of business would seriously consider the thin arguments of the MLMers when they flippantly mention the infinite market need for their product or services.

The nature of trading online has changed dramatically in the last 5 years. Before, you had to work in the industry to have access to the news, information and tools that moved markets. The internet has made getting information much easier for everyone and access to better tools means the online trader can have the same power that used to be reserved only for professional traders.

If you are starting to trade online, it is important that you are able to choose a trading platform that meets your needs and skill level. Make sure you have access to real-time quotes on your platform. With fast moving markets you do not want to be trading on information that is 15 to 20 minutes old.

Unless you plan to trade full time, make sure that you can enter orders with specific criteria of when to buy, or sell, at the start of the day. This way you won’t have to constantly check your orders throughout the day.

Technical analysis (the study of charts) has gained tremendous popularity recently. Working with a trading platform that has integrated charting functions can be very useful in helping you determine your strategy for a particular security.

Lastly, you should choose an online broker that has knowledgeable staff. Too many brokers employ call center staff that are more familiar with banking procedures than online trading. You want to be speaking with people that follow the markets just like you.

The ultimate fight that all Realtors fight is explaining the difference in a Full Service Realtor, such as myself, and a Discount Broker, such as Assist 2 Sell, Crossroads Realty…etc.  Columbia SC Real Estate is full of both types of brokers.

Ever heard the saying, “if it’s too good to be true, it probably is”? Well, that is the case here. First here, I’ll talk about what I do for clients.

ME:

Before the initial appointment to list a house, I do a careful analysis of the property in your area, what they are selling for, how long they take to sell, how much the average listing is having to decrease the price to sell. When I meet with a prospective client, this is data I share with them. I want to know what you feel your house is worth and why. I want to know where you want to be in the next month, 3 months, 6 months. This will all help me devise my marketing plan.

After this basic info the true work starts. I sell homes for a living. I handle the largest investment that most people make in their lifetime, I remember this. This is your investment, where you raised your kids, where you have lived for years.

Keeping this in mind, I want you to be comfortable during the selling process…but it is not a dream world. I break the hard news and help you realize why we have to move around your favorite couch, paint your walls, remove that wall paper you adore. This is all for your benefit.

After this, we list the property. This involves paper work, the MLS, and several other things.

I put your house under warranty. A warranty insures your house to buyers. I have your house pre-inspected by my termite inspector so we have the peace of mind that there will be no problems when the new buyers have theirs go through.

I photograph your property. Inside and out, people will know how beautiful your home is.

The internet is the most important tool to sell houses. Your house will appear on over 55 websites! Trulia, Zillow, my personal website, my blog, homes.com, etc etc. The list continues.

In addition, different books such as TREB, Homes and Land. Every real estate agent licensed in the Columbia Area will receive a flyer in their email, fax, and postal mail. Your neighbors receive a “Just Listed” post card. I invite them to pick their own neighbors if they have friends looking to move into the area.

Virtual tours are made, websites are added, phone calls are made. The top Mortgage Brokers in Columbia that your house is for sale…by me! They know their buyers that have called to be qualified, and they let them know about my homes.

Agents are walked through your house. Not just agents, but agents that sell houses! A sign is erected, a call capture system is put into place.

I service your home. I make sure that your home is safe. This is very important for homes that are vacant as they are often targets for thieves who may strip the copper from the HVAC, case your home, or even steal the flag out front. Also, this makes sure there have been no pipes which have burst, fires, etc.

Most importantly, YOUR HOUSE SELLS.

Discount Brokers:

They List your house for 4%. I am not going to target any specific company.

As it states on 1 popular discount broker’s website: “We list your house for 4%” That is all they do. I don’t see anywhere where it says, “We sell your house for 4%”. I can list any house, but will it sell?

Here is how the commission breaks down for a discount broker:

$100,000 House ‘listed’ at 4%

$4,000 total commission

$3,000 goes to the buyers agent.

$1,000 goes to the listing agent.

50% goes to their broker, so the agent is down to $500.

Half goes to Uncle Sam, so the agent is down to $250.

Where is the money to market your property? To eat? To gas their car? For their childcare?

Which one will they choose? Market your property or eat?

I have a ’step-down’ commission schedule. I invite you to look at My Listing Package. I can both save you money, and sell your house!

My Listing Package

Many people think about selling their home on their own in an effort to keep more of their money in their pocket. The question that comes up by doing so is, “What are the legal requirements I have to comply with” when selling a home? 

The answer is, “It depends”. Some states require different forms and disclosures to be used and you have to find and correctly fill out those forms.While each state is going to have different requirements, there is no law that I know of that requires you to utilize a real estate agent to sell your own property.  However, it has been my experience that most homesellers don’t have a good working knowledge of the requirements involved in selling a home, let alone correctly pricing or marketing a home.

The issue in using an agent is really one of cost vs. benefit. Is the fee that you pay an agent worth it, if it limits the problems that you may encounter?

I think that this question is best answered by asking another question. “If you had direct access to your most valuable asset, would you handle its sale all on your own, or would you want some professional guidance?”

The answer to this question is going to be different for every individual. Some people are very adept at handling large amounts of money and could easily navigate the stormy seas of real estate quite easily. However, those people are in the minority. The vast majority of people will not have an asset more valuable than their home. And, most people are fairly risk-intolerant and would benefit from getting some professional advice.

 The problem with the “traditional” real estate company is that they only offer one service package for that advice. They charge anywhere from 5-7% of home’s sales price for that service package regardless of the amount of services the client may actually need.

Here’s what I predict will happen (and it is currently available ):

• Consumers will visit with a brokerage which will analyze the services that the client actually needs.
• The brokerage will then charge a fee based on the services to be provided to the client.
• The fee can be paid in a number of ways, but a percentage of the home will not be the only option
• Some clients will need only help with paperwork, while others will want a completely “hands-off” experience in which the brokerage does everything and the client merely shows up at the closing of the transaction.

This is exactly how my brokerage operates now. We offer customized service plans for each client ranging from managing paperwork to full blown marketing campaigns. Clients call pay us a percentage of the home OR they can pay us an hourly rate OR they can pay us a fixed fee for the services we provide them.

We find that we are able to provide a higher quality of service for a more appropriate fee to our clients, and they love it!

 If you would like more information or have any questions, feel free to contact us!

Rob Green
Principal Broker for Smart Choice Realty, LLC
(801) 377-SMART