The institution that will receive your money sends the transfer forms to the institution that currently has your money. But the two don’t always speak the same language.
“Here I sit, the monkey in the middle,” said a retiree who left his financial adviser of 30 years to invest on his own with an online broker. “It has been seven months and very few investments have moved across the void.”
Multiple requests to move the assets were rejected on the grounds that the account numbers were wrong or the information was incomplete. He was finally told to take the forms to his current investment dealer to have them filled out properly.
“Is it normal for financial institutions to be so inept? I appreciate that there are many pieces of paper traveling between institutions, but surely they know how to get this process completed,” he said.
The most cumbersome switches involve a locked-in retirement account (LIRA), which is set up when you quit a job and take your money out of the company pension plan. There are more rules to follow there than with other switches.
A few years ago, I transferred my own LIRA from BMO Nesbitt Burns (a full-service broker) to BMO InvestorLine (a self-service broker). Even though I wasn’t leaving the financial institution, I couldn’t complete the transfer before sitting down at a BMO branch to have my signature witnessed.
RRSP switches take an average of 10 to 20 days, he said, as long as you don’t begin during the last-minute rush to meet the tax deadline.
Transferring a tax-free savings account (TFSA) is faster than a registered retirement savings plan. And transfers of non-registered accounts are the fastest of all — less than 10 days because there is less paperwork.
How many clients participated in the survey? Wealthsimple won’t give the number for competitive reasons. Its policy is to cover the transfer fees when clients move over — but only for those with accounts higher than $ 25,000.
I also spoke to WealthBar, a new investment firm that has a similar business model to Wealthsimple. Often called “robo advisers,” they sell diversified portfolios of low-cost exchange-traded funds to clients who want to manage their money online.
Most clients hold mutual funds with bank branches or fund dealers, said Chris Nicola, chief technology officer at WealthBar, based in Vancouver. Transfers can take up to two months, but most take about one month.
“Very few institutions in Canada have electronic account operating processes,” he told me. “This doesn’t make sense at a time when you can cash a cheque with your mobile phone. We think change is coming, but it’s very slow.”
My advice: Wait until the spring to initiate a switch. Set up an RRSP account with a company you want to patronize, write a cheque, do the paperwork and wait for the money to come over at a later date.