fund investing questions for your advisor

What is the fund's management expense ratio and how does it compare with the average for its category.

Canadians should be more concerned that they seem to be about the annual fees they pay fund managers for looking after their money.
In some cases, those fees are excessive.
Often, a large percentage of the fee goes back to your broker for on-going advice.

Make sure you are getting your money's worth.

What types of units does this fund offer. Fund investors are faced with an ever-expanding array of choices when it comes to which type of units to buy.

Unfortunately, there is no consistency in the way these units are labelled and each company offers its own selections. Some types of units are much less expensive than others. For example, if you can acquire "F" units, they are usually the best value.

Some funds now also have "D" units which are also worth investigating.

Ask for a complete explanation of all the choices available.

What compensation will you receive if I invest in this fund.
You have every right to know this since ultimately it is your money that will be used to pay the advisor. So don't be shy about it.

Also, ask how the compensation will change depending on the type of units you buy. Of course, it will take some time to go through all these questions with an advisor. But every one of them is important and you have the right to some clear answers.

If the advisor seems impatient or fudges, it's time to look elsewhere for help.

This article originally appeared in Mutual Funds Update Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters. © June 2004 Gordon Pape Enterprises