Final conclusion not reached on new fee model

The model came out of a cross-
Canada consulting tour with
prospective MFDA members and has
caused a great deal of
consternation in the dealer
community. It proposes a
dealer-paid fee based on assets
under administration.

Many in the industry are upset
about basing fees on assets under
administration. The bigger
dealers don’t like having to pay
the same rate as smaller
dealers. The smaller dealers are
upset because this model makes
it very hard for them to flow the
fee through to its reps. They say
they can’t bear the fees based on
low-margin business.

An alternative proposal has
come from the industry itself.
A proposal from Mackenzie
Financial Corp. chief
executive, Jim Hunter, has been
made for funding the MFDA, and
supporting a national contingency
fund for fund managers and
dealers, from trailer fees.

Regardless of that proposal, the
MFDA is operating on the assumption
that it will have to institute
its own fee model. It will have
to have a decision at the next
board meeting if it hopes to
stick to its schedule of applying
for self-regulatory status at the
end of November. It will also
need a codification of its
proposed rules by then too, so
provincial regulators can consider
its rules and operating model.

Waite says that whatever
direction the MFDA takes, any fee
model would be operative for a
few years, but subject to change.
He adds that the MFDA would likely
review the model on an annual
basis to ensure that it is fair
and functional.

For more on this controversy
see the front page story in this
month’s Investment
Executive. You can read it
here, online, by clicking on
“Latest Issue of IE.”

IE Staff