How to move your investments
Changing brokerages should be a very simple process.
Sometimes financial journalists fail to impart basic information that readers need. The result is like buying a car without being told how to turn it on. Now, if I were an automotive journalist I’d assume you were interested in my review of the vehicle and not how to fire it up.
However, in the world of money the lack of such details is often what keeps consumers from being able to evaluate or act on advice. Because financial matters seem simple to us, we personal finance writers forget to deal with them.
Happily, readers keep me on my toes. Roger Jensen wrote, “You have written about advisors and financial planners but my soon-to-be ex-advisor won’t tell me if I can move my account let alone how to do it.”
Investment accounts can seem like a bit of a mystery but they’re not much different than a bank account when it comes to opening, closing or moving them. They come with many different names: Registered Retirement Savings Account (RRSP), Registered Retirement Income Fund (RRIF), Tax Free Savings Account (TFSA), Registered Educational Savings Plan (RESP), Registered Disability Savings Plan (RDSP) and non-registered investment account.
Regardless of moniker they are all simply boxes that reside with an advisor or investment advisory firm, a full service brokerage or at a discount brokerage like QTrade Investor or one of those owned by the major banks.
Opening an investment account involves filling in and faxing or mailing downloadable forms or doing it in person. RDSPs are the exception because they require proof that the account holder has a Disability Tax Credit Certificate and they are only available at the branch level of the major banks or through some full-service brokerages.
Once your investment box has been around awhile and is full of products like mutual funds, it becomes a weighty object. Many tend to think it takes a great effort to move it to a different location. I’ve encountered numerous individuals with multiple RRSP accounts because they didn’t know how to transfer an existing one.
Fortunately, moving an investment account is a straightforward process similar to switching a bank account to a different institution. The new investment firm or advisor opens an account for you and takes care of the details of transferring the holdings from the previous location.
When you are at this point you might want to add power of attorney to the account and/or someone with trading authority. I handle the family investment accounts so I have both power of attorney (POA) and trading authority for my husband’s RRSP. I am the subscriber for my daughter’s RESP but my husband is included as POA. Both the POA and trading authority can be rescinded at any time.
I always recommend contacting your original brokerage to inform them you will be moving your account and asking if there are any forms required on their end. You may pay some transfer fees but it shouldn’t be much. If you’ve been working with a specific advisor take the high road and let that person know you are moving your account and why. However, if you’ve had a bad experience, which is often the catalyst for wanting to change, you can always do it by email if you’d rather not speak to the person directly.
And here’s another important point. Make sure you have a copy of the most recent statement. When the transfer is made check that every investment, be it cash, bonds, mutual funds or stocks, has made it to the new destination. Years ago my husband and I moved our accounts from a full service brokerage to a bank discount brokerage and $10,000 disappeared along the way. We got it back but not without some time-wasting wrangling.
In most cases, everything can be transferred to the new account. Stocks or other investments listed on foreign exchanges may take additional time.
Many people wonder if they should sell their investments first then transfer cash. In most cases I’m against it. Switching brokerages or advisors is sometimes an emotional experience. It’s never a good idea to make investment decisions in that frame of mind.
In some cases, holdings such as Investors Group mutual funds may not be transferable and you will have to sell them. However, by far the majority of investments can be moved. Check with your new advisor or brokerage first.
Next week I’ll explore how to clean out your investment account after transferring it.
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