Let’s face it: nobody likes paying fees. Yet all investments come with fees, and if you’re an investor, you are paying them. So, let’s spend a few minutes talking about what those fees are, what you’re getting in return and how CST RESP fees are different from the rest.
Fixed Fees
Just like the name says, these fees are a fixed dollar amount. You’ll know in advance how much you’re paying and your payment schedule. No surprises with these fees!
Variable Fees
As the name suggests, these fees are based on the amount invested and the return you earn. You may have heard them referred to as MERs –Management Expense Ratios – these fees are calculated as a percentage of your investment.
Here’s a simple example using an investment of $2,500. Let’s say that over one year, the mutual fund value grows by 6%, earning approximately $150. With an MER calculated at 2% applied to the whole balance, there would be roughly $50 of the income earned deducted from the overall value of your account. After the MER is deducted, the net return is about $100 or 4% (6%-2%) on the $2,500 initial investment — leaving you with less savings as a result.
At CST we try to keep things simple and easy. We break our fees into three parts. Here’s what they are and how they’re calculated:
Sales Charge:
At CST we have what is known as a “front-end” sales charge. That means you pay it at the beginning (or front end) of your investment. It’s a one-time fixed fee of $200 per unit purchased in the CSTTM Advantage Plan. A unit is a portion or share of the total investments in the CST Plan.
CST RESPs are customized for each child, but a CST Plan for 10 units would result in a fixed sales charge of $2,000. However, and here’s what makes us different, when your child attends post-secondary school, half of this fee is returned to you! (see details below).
Account Maintenance Fee:
CST also charges a fixed account maintenance fee that ranges from $3 to $10 per year (plus sales tax). The fee is different depending on the Plan and the frequency of contributions. It’s paid at the end of the year out of your Plan contributions.
Management Fee:
The only variable fee CST charges is an all-inclusive annual management fee that’s calculated on the average balance of Plan assets. It’s variable so it may change each year and as of October 31, 2021 it was 0.6% of assets plus applicable taxes. This fee isn’t paid by our customers directly; it's paid monthly from the income earned in the Plan.
When you buy a CST Advantage Plan, you know what the Sales Charge is and agree to pay it through your contributions. At the start, all and then some of your contributions will go towards the sales charge until the total is paid. These payments follow a schedule that is shared with you in advance.
Once the sales charge is paid in full, all your contributions going forward are then added to your principal to build your investment in your child’s education.
When you make all your contributions and stay invested to maturity in the CST Advantage Plan, we will return HALF of the sales charges you have paid, as your child qualifies and receives all four education assistance payments (EAPs). Think of this as more money that can go towards your child’s education, or for other school-related expenses!
When we created our Plan, we structured our fees so that customers would have the maximum benefit. Here’s an example: over the life of their CST RESP, the fees paid by a CST customer amounts to less than what they would have paid in an investment charging a 1% management expense ratio (MER). This fee structure is very favorable, especially for a product that invests for principal protection and a competitive rate of return!
We get it. This stuff can be complicated. That’s why we describe our fees clearly in our Prospectus and on our website. Our customers will see a summary of the sales charges they’ve paid and account maintenance fees deducted from their principal on their annual statement(s). If you still have questions, feel free to call your CST Sales Representative or a member of our Customer Experience Department at 1-877-333-7377. We’re happy to help! Interested in finding out more about CST RESPs? You can reach out to one of our friendly representatives here.
*Fee calculation assumes investor receives a refund of 50% of all sales charges paid in four installments, one-quarter with each education assistance payment as detailed in the CST Plan Prospectus.