Which HISA FI refunds RRSP transfer fees and how much? | General comparisons | Discussion forum

NCC1701Z said
Got a quote from CIBC IE for a 135 rebate, just wondering what the other HISA banks are offering for over 25k transfer fee refunds/rebates?  

I believe based on the size of the portfolio, they all do. $135-150 was the amount they will reimburse up to. If you are moving multiple accounts over, they will reimburse each and every one.

HISAhopper said
What transfer fee/rebate is this?
I am moving 90K rrsp to Tang and asked them to cover transfer-out fee of BMO, it was a NO.  

Try adding a zero to the amount you mentioned...

Its all about how much you are "worth" to them, as in how much they can make off you as a customer.

EQbank will not cover fees either. I transferred $50k RRSP to them earlier in the year and they would not cover the $50 fee I was charged by the FI I transferred from.

One would transfer 900K to rrsp to get transfer-out fee covered, but how one would not worry about it exceeding the insurance limit in this time of uncertainty

savemoresaveoften said

If ur RRSP is under a brokerage account, its covered to 1MM liability.  

The overall account is covered for $1M liability via CIPF from brokerage insolvency, malfeasance, etc. but none of the assets are covered against financial loss. GICs in brokerages are covered by the CDIC insurance of the issuer.

Brokerages cover off the transfer out fees from other brokerages which now average $135-150 per account to get the business IF there is enough business being transferred. Each receiving institution has to judge whether they will likely recover those costs from the new customer over some period of time.

There is generally less movement of accounts between brokerages because there is not much difference between them. In over 20 years, I have made only 2 moves of an investment account: a move to RBC Direct Investing over 10?15? years ago to capture a 'bribe' they were offering at the time, and then about 5 years ago, leaving RBC DI because of certain bureaucratic processes I could no longer accept.

Funnelling your GICs through an investment brokerage will not provide any more insurance. The only way to increase your insurance is to put it in a CU. In Ontario and MB, CU RSPs are 100% insured (unlimited) by the provincial authority. I don't know the rules in other provinces.

The brokerage insurance referred to above only covers what the brokerage does, not the GICs themselves. If you don't use a brokerage, you don't have that particular risk, so it's irrelevant.

AltaRed said

As Loonie has articulated, CIPF insurance and CDIC insurance are two very different things for different purposes. They bear no relation to one another. Go to the respective websites and read for yourself.

CDIC insurance basically says it will guarantee your capital, e.g. of a GIC, up to $100k if the GIC issuer, e.g. RBC, goes bankrupt.

CIPF insurance does not do that. If you hold that RBC GIC in a brokerage account and RBC goes bankrupt, it is still CDIC that covers your RBC holding up to $100k. CIPF has nothing to do with the value of your asset.

However, if brokerage A goes insolvent and that RBC GIC disappears from your brokerage account, it is likely because that holding was used in a nefarious way to settle brokerage debts or it was insider theft. CIPF will cover the loss of that holding (i.e. the total aggregate holdings in your brokerage account that are missing) up to $1M.  

Thank you for the explanation. You touched on the part that I find difficult to understand. I thought that once the RBC GIC was bought the brokerage A was no longer relevant, it might be the case of straight up cash GIC.
Is the RBC GIC example here mixed with stocks, mutual funds and the like?

Most investment brokerages don't place the GIC in the client's name. Instead, the GIC, like other investments, is placed in the brokerage's or a nominee's name, in trust for the client. So, the brokerage is still involved.

That's done so that payments, like interest and dividends, are sent to the brokerage instead of to the client. The brokerage then credits the client's account.

Yes, the legal registration of the GIC or investment matters. If the registered owner is the client, then CIPF coverage doesn't apply:

LOSSES OF ELIGIBLE CUSTOMERS NOT COVERED

The following customer losses are not eligible for payment by CIPF:

…

(iv) securities or segregated funds that are not held by a Member, or recorded in a customer's account as being held by a Member, such as a mutual fund that is registered directly in the name of the customer with the mutual fund company and is, therefore, not held by the Member for the customer in its records, unless such securities or funds are in the control of the Member.

Client doesn't need CIPF coverage in such cases. Client is the registered owner. Client can contact issuer and appoint another brokerage.

I think you misunderstand. CIPF is not guaranteeing the value of that GIC if the issuer of that GIC goes bankrupt. Securities of most (if not all) kinds (stocks, bonds, GICs) held in brokerage accounts are held in nominee form. I cannot speak to mutual funds.

See https://www.wealthadviser.ca/newsletters-8/227-what-is-the-difference-between-a-nominee-account-and-a-client-name-account.html

Even more info on nominee accounts, though US oriented, may apply fully to Canada. https://www.investopedia.com/terms/n/nominee.asp

Added later: The bottom of this link provides a descriptor of a nominee held GIC https://portfolioplus.com/client-name-vs-nominee-name-gic/