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RRSP Transfer Fees
February 26, 2018
8:44 pm
GR
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Which financial institutions, if any, reimburse transfer out fees charged to clients by the institution from which RRSP funds are transferred out AND also do not charge their own transfer out fees? The intent is to transfer out RRSP funds from an institution charging transfer out fees and moving those funds to a receiving institution that will reimburse the fees and not charge their own transfer out fees later.

February 27, 2018
1:18 am
Loonie
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Honestly, I don't think there are any.

February 27, 2018
2:28 am
Shawguy
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Wealthsimple will.

February 27, 2018
7:48 am
AltaRed
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GR said
The intent is to transfer out RRSP funds from an institution charging transfer out fees and moving those funds to a receiving institution that will reimburse the fees and not charge their own transfer out fees later.  

Why does it matter as long as a receiving institution covers the cost? Why is there any appeal to move/transfer an account in the first place...other than perhaps a considerable bribe to switch?

February 27, 2018
11:52 am
Loonie
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Even if the desired FIs do exist, there is nothing to prevent them instituting a transfer fee later, so that, by the time you want to transfer the money out, you will be paying a fee. I couldn't recommend choosing a FI on this basis unless it had other significant advantages.

When I first started putting money in RSPs, back in the '70s, transfer-out fees, where they existed, were $25. They can raise them or bring them in while your GICs are in progress, and there's nothing you can do about it because the regulations only require a short notice. It's a major weakness of the regulatory system. In addition, there are no limits to the fees they could decide to start charging while you are waiting for your GIC to mature. This is why I believe it's important for consumers to object to transfer fees at every turn. Let them know you're watching, you care, you're not happy, and that Hubert doens't charge transfer fees.

Transfer free, not transfer fee!

February 27, 2018
12:00 pm
JenE
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Love your last paragraph, Loonie!

February 27, 2018
1:27 pm
Loonie
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AltaRed said
Why does it matter as long as a receiving institution covers the cost? Why is there any appeal to move/transfer an account in the first place...other than perhaps a considerable bribe to switch?  

It matters if you want to get out of being part of the food chain.
Being offered a better rate elsewhere is a very legitimate reason to move one's money. It's called "competition", something I would have thought you'd be in favour of as it's fundamental to the capitalist system.

February 27, 2018
3:52 pm
AltaRed
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Loonie said

It matters if you want to get out of being part of the food chain.
Being offered a better rate elsewhere is a very legitimate reason to move one's money. It's called "competition", something I would have thought you'd be in favour of as it's fundamental to the capitalist system.  

I understand that is the case for a lot of investors, but I've never managed my RRSP or TFSA that way. It is always at one brokerage and I only move to another brokerage if there is merit. I've moved my RRSP only 3 times that I can remember in 20? years. And have never moved my TFSA. There is enough 'capitalist' competition within the brokerage from various providers for it to work for me.

February 27, 2018
4:14 pm
Loonie
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Like the ads on TV say, what may seem like a small percentage really adds up over time.

You're welcome to do things your way and take the lower return, but don't tell other people who make decisions with better returns that they are being "bribed".

February 27, 2018
4:22 pm
AltaRed
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Transfer out fees are thus justifiable. A shareholder should demand that their management charge for the privilege of rate hopping. I am not trying to be difficult or argumentative, and we've had this argument before, but the game does cut both ways.

P.S. As an aside, I do better with a 5-6 year ladder of corp bonds, debentures and GICs in my brokerage RRSP than I would strictly with HISAs and GICs anyway in almost any online FI. Yes, I have to accept BBB or BBB+ credit quality on some bonds and debentures but that is not much risk for short term maturities. It is just different strokes for different folks. Nothing more, nothing less.

February 27, 2018
5:46 pm
Loonie
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Well, no, they're not justifiable. The client makes a deal with the FI for an RSP or whatever for a specified term. The FI has already figured in its margin, profit, costs, and pretty well always has more sophisticated expertise in so doing than the client. But even that is sometimes not enough for them as they unilaterally increase the fees during the course of the GIC. When the deal comes to an end, the client picks up his bag and leaves. There was never any commitment to a lifetime of GICs, which your theory assumes. And it's not a "privilege" to have control of your own money. It costs a whole lot more to acquire a new customer than the $50 or $100 they're going to collect in fees. If I were a shareholder, I might be more concerned about them losing customers than about insisting on more unpopular fees.
I get that they don't like it if I move my money, but the best response, if you are losing customers, is not to punish them but to make them an offer.
There is really no end to the potential willingness of shareholders to expect and demand even greater profits and consequent fees, so it's difficult to find a rational argument there. Do you consider ever-increasing dividends also to be a "bribe"? just wondered.
Unfortunately, this habit is not restricted to banks. Most of the credit unions are just as bad.
Kudos sto Hubert.

February 27, 2018
7:31 pm
AltaRed
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Indeed...ever increasing dividends can be a bribe to juice attractiveness and push up stock price. Don't think corporations are simply being generous with money that could instead be re-invested as retained earnings. Actually, I am more interested in Total Return on a stock than dividend yield but that is different subject.

I do agree with you that changing fees during the course of a GIC term is poor behaviour and at least some people have successfully fought that (bro did to some degree with ING turned Tangerine a few years back).

Edited to remove extraneous comments

February 28, 2018
10:45 am
Bill
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Transfer fees ARE justifiable (not that a business even has to justify its prices - no-one is forced to patronize any business, we are free to take our business where we like).

And when you buy your GIC you know that an fi may increase or bring in new fees in the interim. If you're concerned, ask for a fee-free transfer guarantee before you buy your GIC and if you don't get one you can take your business elsewhere.

"The FI has already figured in its margin, profit, costs,". Loonie, I don't know how you'd know that re account transfer/closing costs, no evidence is provided.

As well, there is no mention made of the extra costs attached to complying with CRA reporting requirements for registered accounts or any accounts that have been opened and then transferred/closed again within a short time-frame. Why should someone who keeps their account with a bank for decades share in the costs incurred for those who buy a GIC for a year and then transfer their account to another place that pays another quarter per cent next year? Transfer fees are completely justifiable, they are borne by those who cause the extra cost.

About losing customers, anyone who's been in business knows that some customers aren't worth the bother, you're fine if they leave, even if they themselves think they're vital to your operations. So in fact it's not at all true that it's always best to make people an offer to retain their business. In fact it can free up resources that can chase more lucrative business. And, like CDIC coverage limits, I don't know that I've ever heard anyone in my circle complain about account transfer fees, so I'm pretty sure the fi's are not too worried about any related publicity about these fees.

"There is really no end to the potential willingness of shareholders to expect and demand even greater profits and consequent fees, so it's difficult to find a rational argument there." Again, Loonie, though stated as fact it's just your opinion, no evidence to support the notion that shareholders' rapacity is endless, or even is greater than those who constantly move their money around looking for an extra quarter percent or so on their GICs or HISAs.

Sayin' it don't make it so.

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