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I am a firm believer that clients have a right to know how much they are paying for service.  As such, this is a guide as to how fees are charged.

If the fees you are paying aren't being disclosed to you, then it is your right as to seek service elsewhere. 

Compensation Disclosure

A comprehensive financial plan is essential to achieving your personal and financial goals.  Financial planning is an on-going process.  My initial focus is on modular planning where the focus is on specific aspects of clients’ lives  -  retirement planning, investment management, tax planning, education planning, estate planning and so on.  Modular planning is the basis of a comprehensive financial plan.  The financial planning process starts from day one of our relationship.  There is no direct cost to my clients for the preparation of a financial plan or its various modules. 

Sterling Mutuals Inc. is an industry leader in the provision of Fee For Service accounts.  This type of plan is available to clients with a minimum account size of $50,000.  This is available for most registered and non-registered plans.  Under this arrangement, the fees paid to Sterling and its advisors is separated from the fees paid to the mutual fund company or other supplier (i.e. MER as discussed further below).  The Sterling fee is made transparent to clients and has the potential for tax deductibility for certain types of non-registered accounts.  The fee charged is a negotiated fee between the client and advisor between 0.25% and 1.25% of the market value of the account computed on a monthly basis.  Alternatively, a flat yearly dollar fee may be negotiated.  Fee based plans often lead to lower total costs for clients compared to the traditional plans used.  Hence, these are my recommended plan type to most clients who meet the account minimum.

Under traditional plans, mutual fund companies charge a Management fee to clients for management and administration of their products.  This is often reported as the Management Expense Ratio (MER) and is typically 2 to 3 % annually.  Part of the MER fees are paid to dealers such as Sterling Mutuals as compensation for distributing the mutual fund company’s products.  The fees paid to the dealers are typically 1% to 2% annually.  The dealers, in turn, pay advisors or financial planners a portion as compensation for ongoing service to clients.  The fees eventually paid to me are generally 0.25% to 1% annually based upon the book value of the amount the client invests in the fund.  My primary role is to provide ongoing service to my clients.  Thus, I rely on these service fees for compensation.  

My goal is to build and manage portfolios for the long-term .  I recommend funds that I believe a client should hold for at least 5 years.  There are generally three sales charge methods.  Under the deferred service charge (DSC) method, clients pay no sales charge for purchasing funds, but are charged a redemption rate if the funds are sold within the first few years (usually 7) after purchase.   This method pays advisors most of their compensation up front with lower ongoing service fees.  With the front end load (FEL) option, the advisor has the option of charging a client for purchasing funds, but the client pays no redemption fees when selling their funds.  Under, the no load (NL) option there are no purchase or redemption charges, but the advisor may charge a percentage fee for assets under administration.  Both the FEL and NL options pay the advisor larger ongoing service fees than the DSC method.  In recent years, a hybrid sales charge method called Low Load (LL) has come onto the scene.  Under this method, there is no charge for purchasing funds.  However, there is a redemption charge schedule that is much shorter than the DSC method.  At the same time, advisors get paid less upfront than with the DSC method, but move over to larger ongoing service fees faster than with the DSC method.  My personal preference is to avoid DSC fees if possible though I may use any of the sales charge methods depending on the circumstances.  However, this does not impact the total costs that a client pays.

A referral arrangement between Sterling Mutuals Inc. and national brokerage firm gives my clients access to a  full service securities brokerage.  The brokerage firm compensates me with part of the fees charged for their service.  This is typically 20 to 40% of the commission or fees charged by the brokerage firm.  I  do not charge clients directly for this service.

Insurance policies have a built in sales commission that compensate agents.  Typically, they are part of the premium on the policy and is usually paid to the agent for a specified period of time (for example, 1 to 5 years).  In addition, Sterling Insurance Agency, as a member of the Bridgeforce Financial Group MGA network, also pays a fee from their revenue for initiating my life insurance business through them.  Thus, my compensation for insurance products comes from the companies directly.  There are no direct charges to the client.

The fees for preparation of tax returns start at $75 for individuals and $150 for business owners.  The exact fee is dependent on the complexity and estimated time to complete.  Sterling Mutuals Inc. does not provide tax preparation service to clients.  This is an exclusive offer of Zaid B. Mohammed.

A referral arrangement between Sterling Mutuals Inc. and a national mortgage broker gives my clients access to a full service mortgage consultant.  The lenders pay a commission to the mortgage broker for sourcing the mortgage business.  The mortgage broker compensates me with part of the gross commissions earned for their service.  This is typically 20% of the commission earned.  There are no direct cost to the client.

The fees mentioned apply to most but not all of the products provided.  Fees for other products are communicated to the client prior to purchase.  

Note that all fees mentioned may be subject to government taxes such as GST and PST.  In addition, there may be additional fees for ancillary services that are charged by mutual fund or insurance companies pertaining to your products.  As a whole, these should be minimal.

Sterling Mutuals Inc. has yearly standard administration and trustee fees for Self-directed plans.  The most current listng of fees is available at the Sterling Mutuals website (www.sterlingmutuals.com) or you may contact me for the most recently updated schedule.

Finally, all fees and commissions may be subject to change.