Author Topic: Canadians - How to go back to basics and leave your financial advisor?  (Read 1075 times)

Edge of Reason

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Background...we moved a big part of our investments up floors (and through investors) at TD over the last 2 decades. We went from the regular bank & doing it ourselves to an advisor (TD Wealth?) about 10 years ago when they said they could give us more options (they couldn't) and then to TD Private Investment Advice (with tax deductible fees) because someone "upstairs" got around to really reviewing our portfolio and realizing that we'd been eligible for their advisor tax deduction for a number years but hadn't gotten it (another of many red flags).

All the moves were highly encouraged by TD with lots of carrots (promises) that never really happened. Life was busy with kids over those years so we didn't take much notice but now that we've had so many red flags we are kicking ourselves for "upgrading" like we did. We make very few changes in our holdings and what changes we do make are always our ideas (so they are basically making all their money on our money or free or VERY little effort). The straw that broke the camel's back with this advisor is how they deal with us. Sloppy responses based on sloppy meeting notes and not a very professional attitude. Not giving us the level of comfort we should have with them managing 6 figures...We'd like to go back to where we started and do it alone like we should have in the first place.

I see lots of posts on leaving an advisor but how do you do this? Are we thinking this is a lot more complicated than it really is?

A big part of our portfolio is tied into RRSPs so we can't "cash them out" (tax hit). Do we need to stay at TD or can we go this elsewhere (transfers in kind)?

Thanks for your insight.


erp

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #1 on: October 23, 2018, 08:48:14 AM »
I have a similar story (well, CIBC rather than TD, but otherwise pretty similar). The first thing I did was open an account at Questrade - this took a week or two and I started adding my monthly contribution there instead of with the bank. They have nearly free ETF buys, so as long as you're indexing you should have quite low transaction fees ($0.10 on $1000 or so). I buy mostly VGRO, because I'm lazy and it's probably good enough, but you could easily choose to follow something like the couch potato method with very little increase in complexity.
Once you've been doing your questrade contributions for a few months or a year, and you're comfortable with the process, you can do a transfer from RRSP to RRSP. It's a pretty simple form authorizing the transfer. I'd check pretty carefully that this isn't a taxable move, but I'm virtually certain it is not.
Bear in mind that in Canada it's harder to get the ultra-low MER they have in the states, but it's pretty simple to get 0.25% or so. Good luck!

Cookie78

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #2 on: October 23, 2018, 08:58:10 AM »
You can absolutely transfer an RRSP in kind to questrade without any tax consequences.

powersuitrecall

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #3 on: October 23, 2018, 10:54:59 AM »
We did this about 5 years ago.  It's really quite simple, but can take some time.  You don't even have to leave the TD ecosystem if you like convenience.  All that's needed is:
- open up TD Direct Investing (or any other discount brokerage) accounts (RRSP / TFSA / RESP / Cash)
- move assets 'in kind' from your current accounts into the new accounts (nothing gets sold, no tax consequences)
- sell/buy what you like, when you like, and never pay fees again


Kashmani

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #4 on: October 23, 2018, 11:03:51 AM »
We did this about 5 years ago.  It's really quite simple, but can take some time.  You don't even have to leave the TD ecosystem if you like convenience.  All that's needed is:
- open up TD Direct Investing (or any other discount brokerage) accounts (RRSP / TFSA / RESP / Cash)
- move assets 'in kind' from your current accounts into the new accounts (nothing gets sold, no tax consequences)
- sell/buy what you like, when you like, and never pay fees again

+1

I have been with TD for over 10 years. For mutual funds, they have low-MER funds called "e-series" that can be bought fractionally. Otherwise, in a direct trading account, they charge $9.99 per trade.  You could transfer everything into a direct trading account and then, in due course, buy low-cost index funds. Vanguard VBAL has an MER of 0.22% and self-rebalances. This is as hands-off as it gets and will most definitely be cheaper than an advisor.

TD doesn't hassle me or try to upsell me. In exchange, I have been loyal and not switched to Questrade even though it would have been cheaper. I don't begrudge TD the fees they do earn on me.

Just tell TD what it is you are trying to do. They might make a pitch for you to keep the advisor, but you are the customer. You decide.

Edge of Reason

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #5 on: October 24, 2018, 06:43:32 AM »
Glad to learn it's not as difficult as we had initially thought. Also glad to know that we are not the only ones that started down this path and want to go back to basics.


We did this about 5 years ago.  It's really quite simple, but can take some time.  You don't even have to leave the TD ecosystem if you like convenience.  All that's needed is:
- open up TD Direct Investing (or any other discount brokerage) accounts (RRSP / TFSA / RESP / Cash)
- move assets 'in kind' from your current accounts into the new accounts (nothing gets sold, no tax consequences)
- sell/buy what you like, when you like, and never pay fees again

+1

I have been with TD for over 10 years. For mutual funds, they have low-MER funds called "e-series" that can be bought fractionally. Otherwise, in a direct trading account, they charge $9.99 per trade.  You could transfer everything into a direct trading account and then, in due course, buy low-cost index funds. Vanguard VBAL has an MER of 0.22% and self-rebalances. This is as hands-off as it gets and will most definitely be cheaper than an advisor.

TD doesn't hassle me or try to upsell me. In exchange, I have been loyal and not switched to Questrade even though it would have been cheaper. I don't begrudge TD the fees they do earn on me.

Just tell TD what it is you are trying to do. They might make a pitch for you to keep the advisor, but you are the customer. You decide.

Our advisor encouraged us to switch a lot of funds into their managed equivalent when we moved upstairs. A tactic, I assume, that they do to make it a lot more complicated to move back to direct investing.

We took a look at the direct investing TD funds and are wondering what you did for your non RRSP funds that you couldn't find a direct investing equivalent (E or D series?) in their offerings. Does this mean there isn't a Transfer in Kind option? Will we have to sell their fund when we move them down into TD Direct Investing (claim the capital gains on taxes) and then buy something else? Not too pleased with what they did if that is the case...didn't want to have to sell/claim anything until we FIRE (and have a lower income).


Lews Therin

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #6 on: October 24, 2018, 06:56:29 AM »
Move over to Questrade, and follow the Couch Potato Portfolio. You don't need to remain with TD.

E-series is still you doing everything yourself, but paying the premium for not switching from TD (Very little effort required, and a one-time action, then done forever)

For non-reg, sadly yes. You might have to take a tax hit if you want to get it out.

For RRSP and TFSAs, you can sell out of their funds, but as long as the money remains in RRSPs and TFSAs there is no tax implication.
« Last Edit: October 24, 2018, 06:58:09 AM by Lews Therin »

powersuitrecall

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #7 on: October 24, 2018, 07:06:59 AM »
We took a look at the direct investing TD funds and are wondering what you did for your non RRSP funds that you couldn't find a direct investing equivalent (E or D series?) in their offerings. Does this mean there isn't a Transfer in Kind option? Will we have to sell their fund when we move them down into TD Direct Investing (claim the capital gains on taxes) and then buy something else? Not too pleased with what they did if that is the case...didn't want to have to sell/claim anything until we FIRE (and have a lower income).

In our scenario, we were with a different bank (Scotia).  We had multiple registered accounts with them including RESP, RRSP & TFSA.  Our investments in each of these accounts were a broad range of mutual funds, individual stocks and GICs.  We had, what you could call, the 'financial adviser's 15 pack'.  Every single one of them transferred to TD Direct Investing without issue.  I don't believe you will have an issue transferring your products over.  You don't even need to tell your current advisor you are doing it, as everything can be done at by your target account at TD Direct Investing (or Questrade, or wherever).  It's simply a form that you fill out.  It might be worthwhile to give them a call and they will walk you through the process.

K-ice

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #8 on: October 24, 2018, 02:06:20 PM »
All good advice here.  I will just echo some of the things mentioned.

It doesn't really matter what "direct investing" bank you go with. I am with RBC and happy. 
Questrade seams a bit better, but for the few transactions I do a year it doesn't really matter.
Whoever you pick will help move it all over.

The key thing is transfer "in-kind" then there should be no tax issues.  You may want to sell some expensive mutual funds and but keep the cash under your RRSP (etc.) umbrella and then reinvest in Vangauard or a Couch Potato recommended portfolio. 

I just helped my SO move a bunch from CIBC to RBC. The RBC lady was great and even though she is a financial advisor who normally makes a commission she could tell we were knowledgeable self investors and moved it all over to RBC DI for us.  Oh RBC even offered to cover the $100 closing fee at CIBC.

 

GreatLaker

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #9 on: October 24, 2018, 06:59:55 PM »
Up to about 8 years ago I had most of my investments in managed accounts with CIBC, that sound similar to what you are doing with TD. The service was awful and the fees were high. Up to a point I was successful negotiating lower fees with CIBC, but eventually they would not get down to a fee level I could accept. I also had funds with a mutual fund dealer called Fundex, and a small amount in Tangerine index mutual funds. Total was a few hundred $k including RRSP, LIRA, TFSA and non-registered.

The thing to remember with banks and brokers is they are not in business to make money for their clients; they are in business to make money from their clients. Going to a big bank or broker expecting low costs and DIY support is like going to a Rolls Royce dealer and asking for a good price on an economy car. It's just not in their business model.

The first thing I did was read a lot about how to DIY invest, and create a plan for myself. Then I pulled together $50k and opened a non-registered account with TD Direct. I had other banking with TD, so TDDI was a natural fit, and not being an active trader, the trade costs was not a significant factor for me. At that time $50k was the minimum to get $10 trades, otherwise trades cost $30. That was typical of the trading commissions back then. I built a couch potato style portfolio based on the recommendations of Canadian Couch Potato. It dropped about 15% the first year, and took more than a year to get back to my original investment.

My next step was to move all my non-registered and TFSA from CIBC to TD Direct. Then another year later I moved my RRSP and LIRA from CIBC to TD. TD covered the registered transfer costs from CIBC, and threw in a bunch of free trades (most of which I never used).

As others have mentioned you can move investments in cash or in kind (i.e. move the existing holdings) from one broker or bank to another. Although if any of your investments are proprietary to one bank or dealer you may not be able to move them in kind. Examples would be funds from companies like Tangerine or Investors Group. You don't even need to tell the advisor at TD you are moving... the new broker can initiate the transfer from their end.

I suggest you start by really learning investing, and creating a plan for what you want to do. Otherwise you risk getting paralyzed by analysis or making mistakes when the market gets turbulent (like now). Here are some resources I like:

If You Can: How Millennials Can Get Rich Slowly by William Bernstein is a free eBook. The author says more in 16 pages than many say in hundreds. It is US based, but the same principles apply in Canada if you substitute Canadian ETFs for the ones he lists.
https://www.etf.com/docs/IfYouCan.pdf

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam is an inspirational story of frugal living and low-cost investing. The author is a Canadian with a global perspective. I borrowed it from the library.
https://www.amazon.ca/Millionaire-Teacher-Wealth-Should-Learned/dp/1119356296

Finiki, the Canadian Financial Wiki is a great online resource for Canadian investing and personal finance:
https://www.finiki.org/wiki/Getting_started
https://www.finiki.org/wiki/Portfolio_design_and_construction
https://www.finiki.org/wiki/Simple_index_portfolios

The Finiki forum also has a thread where you can ask for portfolio advice. It's Canadian and has some very experienced posters if you are having a hard time building a plan or strategy.
https://www.financialwisdomforum.org/forum/viewtopic.php?f=29&t=116284

Good luck.


damyst

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #10 on: October 24, 2018, 10:18:22 PM »
We went from a TD advisor to a low-cost DIY broker, and never looked back.
If your situation happens to be similar, most/all of the fees you're paying are in the form of MER attached to the funds you hold. This means that whether or not you can transfer them in-kind, you probably still want to sell them as soon as possible, and buy something cheaper.

You should sit down and calculate the actual cost of the two alternatives, if you haven't already.
* How much would you pay in extra cap gains taxes if you sold your non-registered holdings now?
* How much extra are you currently paying in fees vs. a low-cost solution?
In our case, the answer surprised us, and drove us to exit from TD and stop the bleeding as soon as we could.

GreatLaker

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #11 on: October 25, 2018, 08:25:05 AM »
Our advisor encouraged us to switch a lot of funds into their managed equivalent when we moved upstairs. A tactic, I assume, that they do to make it a lot more complicated to move back to direct investing.

Depends on exactly what you have. Some managed investment programs will buy individual stocks that you can move in kind, if you want to keep them.

Quote
We took a look at the direct investing TD funds and are wondering what you did for your non RRSP funds that you couldn't find a direct investing equivalent (E or D series?) in their offerings. Does this mean there isn't a Transfer in Kind option? Will we have to sell their fund when we move them down into TD Direct Investing (claim the capital gains on taxes) and then buy something else? Not too pleased with what they did if that is the case...didn't want to have to sell/claim anything until we FIRE (and have a lower income).

I did not have a lot of non-registered at the time, and I had some capital losses that I could carry forward, so I just bit the bullet and sold the non-reg holdings.

If you have standard A-series mutual funds you can transfer them in kind, but may not want to continue holding them as they probably have high MERs. One option if you have large non-registered capital gains is to transfer in-kind then sell over a couple of years to minimize the tax hit in any one year, and especially avoid pushing yourself into a higher marginal tax bracket.

Some detail on your actual holdings may help give you better suggestions. Your statements or transaction confirmations should have fund names and codes. Also whichever new broker you choose should be able to confirm what you can or cannot transfer in-kind.

NVDee

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #12 on: October 26, 2018, 12:49:38 AM »
Look out also for DSC deferred service charge fees on your funds if you plan to sell them. 

Moving but not selling doesn't necessarily save you anything depending on what you own though and how your service fees are set up today. 

Kaspian

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Re: Canadians - How to go back to basics and leave your financial advisor?
« Reply #13 on: October 29, 2018, 07:07:14 PM »
Very simple!  I booted my TD advisor by completing and sending in the following form.  It converts your account to a TD e-Series account and the advisors can't touch it.  All funds made into index funds.  Perfect--I manage it myself.  They do make me complete the "tolerance questionnaire" thing every few years, but I do it over the phone.  Otherwise they mostly leave me the hell alone now.  :)

https://www.tdcanadatrust.com/document/PDF/mutualfunds/tdeseriesfunds/tdct-mutualfunds-tdeseriesfunds-convertaccount.pdf