Canadian mutual funds charge a yearly management expense ratio, or MER, that the Ontario Securities Commission says ranges from less than 1% to more than 3%. For funds sold through an advisor, part of that, typically 0.25% to 1.5% a year, is a trailer fee paid to the firm that sold you the fund. You never see either on a bill. On C$300,000, a 2% MER costs C$6,000 a year, whatever the fund returns.
That’s the main reason fee-only advice exists in Canada. A fee-only planner who publishes prices charges a median C$2,300 a year for ongoing planning or C$1,900 for a one-time plan, a dollar figure you can set against what your funds cost.
What’s inside an MER
The MER combines the fund’s management fee and its operating expenses, shown as a percentage of the fund’s value and taken out before returns are reported. For advisor-sold funds, the management fee usually includes the trailing commission. So part of what looks like an investment cost is really the cost of the advice that came with it.
The BC Securities Commission gives a simple example. Two similar funds each earn 5.5% before fees. One has an MER of 1.5% and the other 1.75%, so investors see 4% and 3.75%. On C$10,000 that’s a C$25 gap in one year, and it compounds.
Trading costs are reported separately, as the trading expense ratio, and they come on top.
Sales charges
| Option | What you pay | Status |
|---|---|---|
| Front-end load | Up to 5% of what you invest, when you buy | Allowed, and the BCSC says you can negotiate it |
| Deferred sales charge | A fee if you sold within five to seven years | New sales banned since June 1, 2022 |
| Low load | A shorter version of the DSC, usually about three years | Banned since June 1, 2022 |
| No load | Nothing to buy or sell | Allowed; the MER still applies |
Under the old DSC option, the fund company paid the selling firm a commission, usually about 5%, when you bought. The Ontario Securities Commission said those upfront commissions gave dealers “an incentive to sell mutual funds that impose redemption fees on investors.” Funds bought before the ban can still carry their redemption schedule, which the BCSC says can be as long as seven years. If you’re thinking of moving, check whether any of your funds are still on one.
Some funds and dealers also charge a switch fee to move between funds in the same family, and a short-term trading fee if you sell soon after buying, for example within 30 days.
Trailing commissions
The BCSC describes the trailer as paying “for services and the advice provided to you.” Whether you’re getting that is the real question.
Since June 1, 2022, fund companies can’t pay trailers to dealers that don’t make a suitability determination, such as discount brokerages. Fund companies were given time to offer a series of each fund without a trailer for those investors. Many funds are offered in several series, so the same fund can cost you different amounts depending on which series you hold and where you hold it.
A trailer is a commission, so an advisor paid that way isn’t fee-only, whatever their title. If you want to pay for advice directly, ask whether a no-trailer series of your fund is available.
What it costs in dollars
On C$300,000, here’s what a year costs at different MERs, against what a fee-only planner charges for the advice itself.
The gap between a 2% fund and a 0.20% ETF portfolio on a steady C$300,000 is C$5,400 a year, or C$54,000 over 10 years before any compounding. Paying a fee-only planner C$2,300 a year and holding low-cost funds would still leave you well ahead, at those numbers. Try your own figures in the OSC’s investment fee calculator.
A higher MER can be worth it if the advice behind it is good. It’s worth knowing what you’re paying, in dollars, before you decide.
Where to find your fees
- Fund Facts. Every mutual fund has one, and it must be given to you before or when you buy. It shows the MER, the trading expense ratio and any trailing commission. ETFs have an equivalent ETF Facts document.
- Your annual report on charges and other compensation. Your dealer sends it each year. It shows what you paid the dealer directly and the trailing commissions it received on your accounts, in dollars.
- The newer cost reporting. Amendments that took effect on January 1, 2026 require firms to also report the fees embedded in investment funds, so the fund costs you’ve been paying through the MER show up in your reporting too.
What the rules require of the person selling
Registered advisors have to follow the Client Focused Reforms, in force since 2021. Before recommending a fund, they must weigh its costs, including the MER, against your situation, based on the know-your-client information they hold, and put your interest first. Firms must also address conflicts of interest, such as compensation that pays more for some products, in your best interest.
The rules don’t say a fund must be cheap. They say the cost has to be part of the decision. If your advisor can’t explain why a 2% fund suits you better than a cheaper one, ask.
Questions to ask about your funds
- What’s the MER on each fund I hold, and what is that in dollars a year?
- How much of it is a trailing commission, and what do I get for it?
- Is there a cheaper series of the same fund I could hold?
- Are any of my funds still on a deferred sales charge schedule?
- What would it cost to move, including any switch or redemption fees?
If you want a second opinion
An advice-only planner can review your funds for a one-time fee, a median C$1,900 for a full plan or C$250 an hour (from 46 and 15 firms), and earns nothing from what you hold afterward. See what fee-only advisors charge in Canada and advice-only financial planning. If a robo-advisor would do the investing job for less, our guide to robo-advisors vs fee-only planners in Canada compares the costs.
Before you hire anyone, read how to check a financial advisor in Canada, then browse fee-only advisors in Ontario or by province, starting with British Columbia and Alberta.