IGM Financial (Symbol-IGM)

[scomac]

OK, I just checked the list (I rarely bother). IGM is, in fact, on it, not "IMG".

I'm glad RBC finally got religion! It has been a very good day for me.

[deaddog]

OK, I just checked the list (I rarely bother). IGM is, in fact, on it, not "IMG".

Soory about that.I tend to be a little dyslexic.

I end up trading a lot of stocks that I don't mean to. One of the reasons I'm a technical trader. Buy a stock I didn't research and then make a decision whether to keep it or not.

[Shakespeare]

Investors Group to reduce management fees on majority of its mutual funds - Yahoo! Finance Canada

Investors Group said Friday it will reduce its management fees by up to 0.4 per cent per year — equivalent to about $4 per $1,000 of assets, although not all reductions will be that large.

Glad I took a hint from AGF's crashing price and sold IGM (at about $45).

[BRIAN5000]

Investors Group to reduce management fees on majority of its mutual funds - Yahoo! Finance Canada

Investors Group said Friday it will reduce its management fees by up to 0.4 per cent per year — equivalent to about $4 per $1,000 of assets, although not all reductions will be that large.

Glad I took a hint from AGF's crashing price and sold IGM (at about $45).

IMHO IGM is starting to look like a buy, broke its 52 week low today.

[DanH]

Investors Group to reduce management fees on majority of its mutual funds - Yahoo! Finance Canada

Investors Group said Friday it will reduce its management fees by up to 0.4 per cent per year — equivalent to about $4 per $1,000 of assets, although not all reductions will be that large.

Glad I took a hint from AGF's crashing price and sold IGM (at about $45).

I'm doing nothing but speculating with the following comments but IGM is worth watching - at least to see the precise prospectus changes. IG stated that it expects the financial hit from lower fees to be made up with higher sales. It also said that it's "changing" compensation of its "consultants" (i.e. salespeople). My guess - and it's just a guess - is that salespeople will effectively be paid more to sell its funds. (IG advisors already make a bit less than peers for the same sale. Paying them less still will just make their advisors flee to other firms, almost guaranteeing a sales decline. Hence, my guess that the compensation changes will effectively incent more sales.)

[Shakespeare]

"Where are the customer's yachts?"

[IdOp]

I'd like to know the $-weighted average MER reduction.

One thing this buys them is some press coverage.

[Shakespeare]

I'm not sure that high-fee stand-alone fundco management can withstand what may be a prolonged period of low returns.

[DanH]

I'm not sure that high-fee stand-alone fundco management can withstand what may be a prolonged period of low returns.

This is a key point - and one that I've touched on when speaking with the industry. High fees might serve shareholders well for a while or if returns are robust. But over time, we know that fees act as a headwind that is most obviously over longer periods of time. And when returns had been disappointing for investors - even before 2008 - and future returns may be more modest, having fees that are 'too high' doesn't seem like a smart long-term strategy for anybody involved. Disappointed clients will eventually leave. And setting yourself up to disappoint clients isn't a sustainable strategy.

Related: Investors Group to lower fees (G&M)

[Shakespeare]

Yes, but if memory serves me correctly, that amount of lowering will still leave them with high fees....

[BRIAN5000]

But over time, we know that fees act as a headwind that is most obviously over longer periods of time

It's a good thing that this is a little known fact among their clients ? Or do the clients actually know they are paying more and stay anyway?

Seems to me if I was to ask 10 random people (not in the industry) they wouldn't know what a Mer was or what difference it made to return.

[Shakespeare]

I don't think their clients know the MER but, over time, if their money doesn't go up, they will walk anyway.

[DanH]

Brian, that's a tough one to answer because - of course - ten people is meaningless if you really want to conduct an experiment. But I get your point and you're probably right that people aren't as aware as they should be. But that will change as regulators will eventually require personal performance reporting - a requirement that has been put off more than once in the past but is inevitable. Then there is the issue of non investment services. Many advisors - including some very bright IG advisors - provide good financial planning advice/services. That is worth something. So it becomes difficult to separate the investment advice (which generates all the fees) from other financial planning advice (which isn't charged for separately). I can't imagine that people don't know they pay fees. But many don't know how much they're paying and exactly what kind of performance they're getting. As those items become more transparent, the weaker advisors/firms will suffer.

Yes, but if memory serves me correctly, that amount of lowering will still leave them with high fees....

We don't know anything yet. All they've said is 5-40 basis points in reduced fees (+ HST) no indication of how much for each until July I suppose. But you're right that fees will be, at best, around average for load funds and - at worst - still on the high side. As one article said, they want to be closer to the middle and away from the (higher) edge. But at least if they can get close to their peers, they'll have erased one disadvantage vs. their peers.

Where you and I may differ is on where to insert the pin to define a "high" MER. Good advice is valuable and can pay for itself in multiples. The industry's overall challenge is the lack of consistently good advice - but not sure that's unique to any industry of this size. ETFs, lower returns, and greater regulation are putting pressure on fees. That will continue (though the ETF is resembling the broader fund industry more each year) and will squeeze all load fund co.s equally. But those with captive distribution like IGM will have an advantage because the assets are stickier and the sales force is dedicated.

IGM has high turnover of "consultants", consistently weak returns and the highest fees. And still their sales and asset retention stats are much better than you'd expect. But that's weakening so they have to do something. That Globe article I linked above basically confirms that IG advisors will be happy with the compensation tweaking, which will give them more incentive to sell. And while IG margins could be squeezed a bit I would bet that they will make that up in volume sales from this point. But can sales growth be sustained longer term if clients continue to be disappointed? My guess is 'no' but the long term is a long time away. In the interim, I suspect shareholders will get some better news in the next couple of years re: the impact of these changes. But take that with a grain of salt (or a salt mine ) because I don't follow the company and don't know their financial history intimately well.

[Bylo Selhi]

I don't think their clients know the MER but, over time, if their money doesn't go up, they will walk anyway.

OTOH if Iggy's competitors can only do 25-50bp better (on account of their lower MERs) then I doubt many people will switch on that count. So the same ignorance of the egregious effects of high MERs will work to their Iggy salesperson's advantage (again.)

[Shakespeare]

Down below $40 now............

[BRIAN5000]

Down below $40 now............

Seems to be stock specific and I would really like to see this Greece thing take another 10-15% before I buy. It's hard waiting.

[Shakespeare]

Fee cut will hurt IGM margins, say analysts - The Globe and Mail

“The performance of many [Investor Group] funds has struggled recently,” he wrote on Tuesday. “We believe this announcement could put additional pressure on industry participants to also reduce fees. We have updated our financial forecast to account for the lower expected management fee margin, a modest pickup in sales and also a modest reduction in consultant compensation.”

Downside: Mr. Boland, who maintains a “hold” rating, cut his one-year target by $2 a share to $43.50.

(Dollar target included FYI; analyst dollar targets and a toonie will get you a cup of coffee.)