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www.insideHALTON.com | OAKVILLE BEAVER | Thursday, March 24, 2016 | 28 C RBC change results in higher taxes for some investors Dollars & Sense With transparency and fairness, investors would have voted for something that would have been in their interest. To me, it seems the change (to one of the mutual funds) was in the best interest of RBC. Guest contributor anada's largest bank made a signi cant move that greatly affected thousands of investors. It is just another example of individual investors taking a backseat in the Canadian nancial services industry. The Royal Bank of Canada made a change to one of its mutual funds. No longer would the fund hold individual stocks and bonds, but invest in other RBC mutual funds. In order for this to happen, securities held would be sold and the proceeds would be used to purchase RBC mutual funds. Sounds pretty simple. Anytime there is a "material change" to a mutual fund all investors have to be informed of the proposed changes so they can vote to approve them. Information provided to investors by RBC encouraged them to grant their approval because it "believes that the proposed change is in the best interests of security holders." The communications to investors indicated all cost and expenses incurred would be paid by RBC. This sounds fair and I am sure it was interpreted as such by the investors who vot- Peter Watson Guest Contributor Peter Watson ed approval to make the change. This is where it gets ugly. When investments are sold within a mutual fund and there are capital gains, these gains are passed on to the investors. Now that we are at tax time, investors are receiving noti cation of capital gains. The backlash from some investors is they were not informed of any income tax considerations. Surprise, surprise. Now, investors are upset. To state the obvious, it appears RBC made a mistake. It should have advised investors of the full implications of them voting to approve changes to the fund. This affected many people because the total assets within the mutual fund were approximately $2 billion. With transparency and fairness, investors would have voted for something that would have been in their best interest. To me, it seems the change was in the best interest of RBC. Secondly, RBC appears to have communicated after-the-fact. The honourable route is to admit a mistake and apologize. Perhaps a concession, like waiving management fees for a period of time, in part, would appease investors upset by these taxes. A RBC spokesman said it had performed its own tax analysis, but because of normal market volatility, it could not predict an exact tax liability. That sounds lame. It could have acknowledged the tax risk and provided approximate gures. Regardless of RBC's position now, it clearly dropped the ball in communicating to their investors. After the fact, RBC acknowledged the tax liability and tried to take credit for spreading this liability over two years. Really? It still is an unnecessary tax liability and whether it is incurred in one or two years is of little consolation. For anybody who is keeping score, chalk this one up as another example of a wellrespected Canadian nancial rm acting in a manner that does not appear to be in the best interest of individual investors. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner Our Services We take care of your health! · Massage · Acupuncture · Reflexology · Chinese Massage · Fertility Acupuncture · Physiotherapy · · · · Follow Oakville Beaver staff on Twitter: @OakvilleBeaver, @NewsHooked, @DavidLea6, @JuliaLeReporter, @HerbGarbutt, @PostBeaverSport and @Halton_Photog 1395 Abbeywood Drive, Unit 14, Oakville Open 7 days a week maJor Leaky Basement? Call Us! · Crack ack Injection Injec Repair Specialist · Wise Dry Interior Drain Systems · Lifetime Fully Transferrable Warranty · Sump Pump Renewal Installations eSPORTS the amily one! F tournaments "Filledwithkid-friendly iendly gamingfun! lx egZ In partnership with · MinecraftBuild-a-thon · BeybladeTournaments · NERFGunBattles" Call Us... 905-510-9739 Canada's LAR ARGEST Professional, Cost Effective VideoGame EXPO! wayne@wisecracks.com w w w. H a l t o n Wi s e C ra c k s. co m Solutions for Wet Basements For tickets and show schedule visit eglx.ca