RRSP Planning - The best advice you'll never get

[nolanrh]

I visited multiple financial advisers in banks and investment firms in starting to plan my RRSP for the first time and not one of them mentioned this option:

Self-directed RRSP accounts with investments in Index Funds.

TD has a line of efunds that can be purchased with 0 load and a MER of 0.3. The best MERs I was quoted from financial advisers ranged anywhere from 1.6->3%. Over 40 years of saving thats a difference of hundreds of thousands of dollars.

I thought I'd mention my discovery here as all the financial advisers I spoke to failed to mention it to me, I assume they'll fail to mention it to you too.

For more reading on the subject, here is an excellent article:
http://www.sanfranmag.com/story/best-investment-advice-youll-never-get

[AlanH]

I visited multiple financial advisers in banks and investment firms in starting to plan my RRSP for the first time and not one of them mentioned this option:

Self-directed RRSP accounts with investments in Index Funds.

TD has a line of efunds that can be purchased with 0 load and a MER of 0.3. The best MERs I was quoted from financial advisers ranged anywhere from 1.6->3%. Over 40 years of saving thats a difference of hundreds of thousands of dollars.

I thought I'd mention my discovery here as all the financial advisers I spoke to failed to mention it to me, I assume they'll fail to mention it to you too.

For more reading on the subject, here is an excellent article:
http://www.sanfranmag.com/story/best-investment-advice-youll-never-get

Just be cautious of administration fees, you can get hosed on what they call administration, when really all you do is donate to their pocket a fee for doing nothing. As long as you steer clear of that, you can then buy your own stocks in an RRSP account.

[onestop67]

Administration fees don't really come into play in this situation. If you have investments outside of an RRSP, mutuals or just investments in a specific companies stocks, you do have to watch out for those fees. That's how your broker can afford that Beemer!

If you go to your financial institution to buy RRSP's they don't often offer up much information of all the different options that are available to you. They want you to buy the everyday basic RRSP from them so they can make money by using your money while it is in their control.

[AlanH]

Administration fees don't really come into play in this situation. If you have investments outside of an RRSP, mutuals or just investments in a specific companies stocks, you do have to watch out for those fees. That's how your broker can afford that Beemer!

If you go to your financial institution to buy RRSP's they don't often offer up much information of all the different options that are available to you. They want you to buy the everyday basic RRSP from them so they can make money by using your money while it is in their control.

Uhhh, yes they do in some self directed RRSP's, and I say again, but will word it more clearly.
Just be cautious of administration fees, some plans charge them, and don't notify you of a yearly administration fee, unless you read the fine print. So steer clear of those ones, and get the ones that don't charge a yearly fee, or at the least charge a small one. Ensure you ask up front what fees are involved in administrating your self directed RRSP.

[onestop67]

Administration fees don't really come into play in this situation. If you have investments outside of an RRSP, mutuals or just investments in a specific companies stocks, you do have to watch out for those fees. That's how your broker can afford that Beemer!

If you go to your financial institution to buy RRSP's they don't often offer up much information of all the different options that are available to you. They want you to buy the everyday basic RRSP from them so they can make money by using your money while it is in their control.

Uhhh, yes they do in some self directed RRSP's, and I say again, but will word it more clearly.
Just be cautious of administration fees, some plans charge them, and don't notify you of a yearly administration fee, unless you read the fine print. So steer clear of those ones, and get the ones that don't charge a yearly fee, or at the least charge a small one. Ensure you ask up front what fees are involved in administrating your self directed RRSP.

I misunderstood your prior post. Yes, if you buy certain funds and put them into an RRSP, there can be fees from the fund.

Your basic RRSP that you purchase from your bank should not have yearly fees.

[AlanH]

Administration fees don't really come into play in this situation. If you have investments outside of an RRSP, mutuals or just investments in a specific companies stocks, you do have to watch out for those fees. That's how your broker can afford that Beemer!

If you go to your financial institution to buy RRSP's they don't often offer up much information of all the different options that are available to you. They want you to buy the everyday basic RRSP from them so they can make money by using your money while it is in their control.

Uhhh, yes they do in some self directed RRSP's, and I say again, but will word it more clearly.
Just be cautious of administration fees, some plans charge them, and don't notify you of a yearly administration fee, unless you read the fine print. So steer clear of those ones, and get the ones that don't charge a yearly fee, or at the least charge a small one. Ensure you ask up front what fees are involved in administrating your self directed RRSP.

I misunderstood your prior post. Yes, if you buy certain funds and put them into an RRSP, there can be fees from the fund.

Your basic RRSP that you purchase from your bank should not have yearly fees.

Yeah, sorry I wasn't clearer. Your regular RRSP's have the fees rolled into the fund, self directed RRSP's are a whole different animal, but with some care there are ones out there with very low maintenance costs.

[nolanrh]

TD waterhouse has one for $25/year

[AlanH]

TD waterhouse has one for $25/year

And a fee per transaction I believe. Although quite reasonable, especially as you can administer the trades at home, without a broker.

[nolanrh]

Ya, i use it to purchase TD mutual funds which can be purchased for free via the account.

[trapp]

REMINDER: Today is the last day to purchase your RRSP's for 2007 tax year.

[CEO2BE]

Yes there can be fee's just for having a self-directed account whether it's registered or not. MER's range largely and should be watched as they can erode away returns! This should also be your advisors responsibility to keep these under control.... but remember the more active a fund is managed such as Emerging market equity's your MER's is going to naturally be higher as there are more trades and active management within the fund then say a bond fund.

I am embarrassed to say that some companies or financial institutions have quota's and bonuses for selling certain investment vehicles or funds. Unfortunately that can cloud recommendations from advisors.

I am a firm believer in paying a reasonable price for professional services. If I have to pay MER's which I do on my investment portfolio I better see some justification for them. As a financial advisor and investment advisor I get paid from these. I feel my pay is justified if my clients are happy with there returns. If your advisor is not helping you with investment choices and bringing forward meaningful recommendations and building you an investment or retirement plan then these fee's may not be justified.

Just my opinion!

Regards,

Danny