Calculating fees

The Substitute Decision Act sets out what you can charge an incapable person to manage their assets:

3% on capital and revenue received
3% on capital and revenue disbursed
3/5 of 1% care and management fee (annual value of assets)

Before even being appointed BMO writes Section 3 saying

We will require the investment statements including Nesbitt Burns as soon as they are available to you.  This tells us what is transferrable, cashable etc.

My mother had $700,000 at Nesbitt Burns. Transfers result in immediate fees for BMO – even if the transfer is not necessary.

About October 30, 2015 Section 3 transferred $300,000 to BMO just days ahead of a hearing where their appointment would be challenged. About Feb 17, 2016 Section 3, cost docket suggests another transfer of the remaining $400,000 could have occurred.

The Act allows more to be charged but requires both the Public Guardian and the Persons guardian of care to approve. That didn’t happen as my mothers court appointed Section 3 counsel “negotiated” BMO fees to include

Investment Advisory Services – current prevailing rate
First $ 500,000 – 1.60%
Next $1,500,000 – 1.10%

And what is the proposed “Investment Advice”- to place the money in a money market fund.  Something you and I can do that for free and certainly not worth $15,000/year.

This advice also put my mother’s assets at greater risk, and would result in a net loss of income.

People who are past 75 should be very conservative in their investment. My mother was using insured GIC’s for the bulk of her holdings. Money market funds can lose money. GIC’s cannot. The income from GIC’s and Money market funds are similar so the fee for investment advice come should be subtracted from the income achieved. I could not find a scenario where my mother would not be poorer simply due to the fees.

If the bank does real property management it would charge 3% of the houses value up front, plus 0.6% annually as a management fee. They wouldn’t do the actual property management but would hire and pay another firm to do that. They are already charging 0.6% for management so can they also charge 3% on the payments to a property management firm. They wouldn’t answer.

And because they are not supplying quarterly reports no one knows.

This concerned me so I wrote the banks Ombudsman. They too did not answer the question saying  “While you indicate that your additional questions refer to general policy only, we are of the view that they relate directly to your concerns regarding BMO Trust’s conduct as court-appointed guardian of Mrs. Childs’ property”. The policy questions asked were:

* Is it bank policy to charge incapable persons for your costs to secure their business? (affidavits and management plans)?
* Is it bank policy to let people who are not bank employees and not financial professionals write financial management plans for the bank?
* Can the bank produce cash flow plans? and if so why, after 250 days, can it still not provide one?


Make you wonder.

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