RDSP’s and Changing Financial Institutions – by Doug Carley.

Almost all Banks and Credit Unions that offer an RDSP have a menu of investment products that is restricted to their own brand of Mutual Funds. There are two financial institutions that have a “self directed” RDSP which  allow investing in any product available on the stock market. They are “TD  Direct Investing’s WebBroker” and “National Bank Direct Brokerage.

You decide what security to buy or sell, or you could employ an independent investment advisor. One of the major differences is the fees charged by the investments and over a long time frame this makes a significant difference.

For instance a mutual fund that invests in an “index” might have a “MER” (fee) of 2% while a ETF (Exchange Traded Fund) which invests in the same “index” might have a MER of 0.5%. 

I decided to change the RDSP to a self directed one. I chose TD Waterhouse. The process can be tedious and take several months but this is how I did it. 

In my case, I am the plan holder and my daughter is the beneficiary. I made an appointment with a Financial Advisor at a TD branch to open an account. They asked about my financial status and investment knowledge, my information (address, date of birth, social insurance number, spouse social insurance number), they want the beneficiary information (age, address, social insurance number), and a letter from a Physician stating that the beneficiary does not have the capacity to make financial  decisions. If you are applying for the grant and bond then the beneficiary also has to sign a form. I assume that you could use a “Representation  Agreement”. I had a copy of the present RDSP statement showing its  account number. 

To open a Trading Account they wanted a void cheque from my bank. I had to come up with a “username” and “password” for the Trading Account and my email address. These forms with all the information are then sent to Toronto. After 4-5  business days (in my case 11 business days) they emailed that the account is open. This is a trading account on ”webbroker.td.com”. 

Once the account is open I made another appointment, with the advisor I was dealing with, at the TD branch, to fill out the forms to transfer the plan. The information needed is all on the statement from your present RDSP plan. The plan can be transferred “in kind” so you don’t have to cash out  before transferring. This is then sent to Toronto.

It will take awhile to be transferred as the old financial institution has to sign off for the transfer. It took10 business days, the funds were transferred and it was done. 

In my case I sold the Bank Mutual Fund and bought a stock that ticked all the boxes for me, a balanced and diversified “All in One” balanced ETF (there are several Companies that offer them) with a MER of 0.02%. I asked that the Dividends be reinvested and now I just sit back and let it do it’s thing.