Why Aren’t More Canadians Switching to Index Funds?

First, the good news: At the end of 2016, 11.3% of Canadians’ investment fund assets were held in index funds and similar passively managed products. That’s a start. But compared to our U.S. neighbors at 34% of the same, we’re slow on moving away from over-priced, underperforming actively managed funds and into index funds.

Why are we lagging behind? In large part, I believe it’s because your banker or commission-based advisor is often failing to recommend the solutions that are in your best interests. Their complex compensation models aren’t encouraging them to sit on the same side of the table as you. And regulators aren’t sufficiently requiring them to do so.

 For indexing to become the same movement here that it’s become in the U.S., we’ve got to talk about simple fees versus complex commissions. We need to differentiate fiduciary from merely suitable advice. We need to continue promoting clear versus confusing cost disclosures. 

Most of all, we need people like you and me to recognize there’s a better way, and insist that we get it. Common sense? You bet. To join our movement, check out today’s video, subscribe to Common Sense Investing, and send me your own questions to address.

Original post at pwlcapital.com