Paid commission to buy no-load funds

Q – I have opened a self directed RRSP at TD Waterhouse and used it to purchase several different mutual funds. I did all the transactions through their WebBroker service. I was charged 0.75% commission on the PH&N funds. I understand that this goes to TD Waterhouse, not PH&N because all their funds are no load and they don’t pay any trailer fees or commissions to brokers. Because I did not talk to a broker directly, I was not able to negotiate the fee, which I now understand was possible to do. In your experience, is this type of commission reasonable, considering I did all the work myself? With the size of my investment, these commissions totaled over $1,000. Should I try to renegotiate after the fact, or just chalk this up to experience? (By the way, the funds have made enough in the week to more than cover the commissions!) – J.H.

A – Most on-line brokers offer some funds that are normally no-load through their system, but you can’t expect to get them without any cost to you if you buy them that way. After all, the brokerage firm has go through the process of, first, listing the funds in their system and, second, executing the trade. Why wouldnyone expect them to do this for free?

You say your commission came to more than $1,000. That means you invested something like $135,000 in the PH&N funds. For an order that size, I don’t understand why you would not have gone directly to the company itself. You would have acquired the funds without any commission and, if needed, you could have sought their guidance on portfolio balance.

The obvious message is that anyone making a substantial investment in no-load funds should consider dealing with the fund company itself rather than going through a discount or an on-line broker. You will almost always pay some kind of fee if you buy through a broker (even if it is only an exit fee). There’s no harm in going back and asking them to renegotiate the commission. All they can say is no. But I suspect you’ll just have to live with the cost and take a different course next time. – G.P.