AVOID "Knowledge First Financial (KFF)" for RESP - A legal SCAM | Page 2 | General financial discussion | Discussion forum

I like Doug's thought process here on fiduciary standards plus an exempt category. Bravo!

I agree that a fiduciary standard would be ideal, but of course it would have to be enforced, and that does involve regulation; otherwise, I can't see tht it would matter. I considered it earlier but didn't think it would get support here because it involves a much higher level than I had imagined would be acceptable. Perhaps acceptance depends on who proposes it.

But if this means they must pass the CFA, then there is not a snowball's chance in Hades of it becoming a reality. Those folks really have to work hard for their designation and only work with high net worth individuals (if they work with individuals at all).

At the moment we can't even count on bank employees to exercise fiduciary responsibility as they put pressure on their employees to sell.

It would be great if we could count on some kind of natural attrition due to stricter standards. But let's remember that the reason standards and regulations exist at all is because customers were mistreated.
For more information on this, OP might want to look at The professional financial advisor: putting transparency and integrity first by De Goey, John J. DeGoey has been very involved in advocating for increased fiduciary responsibility on the part of financial industry and is very informative.. Look for the most recent edition.

The transfer fee is not that unusual, unfortunately.

Scotia iTRADE, for example, now charges $150 for a registered account transfer out, full or partial. If one just wants to close and de-register the registered account to a cash account, it would be $125.

I suspect "retained" amounts would include interest earned. Group RESP's tend to retain any investment earnings and allocate them to the remaining participants when a participant leaves "early".

The risk in those kind of RESP's was actually not the government bonds the money was invested in. It was what happens should the parents be unable to keep up the monthly purchases, the parents decide to leave early, or the child wasn't going eligible post secondary training.

I agree transfer out fees are common. Every brokerage account from every provider I know of charges upwards of $150 plus tax for transfer outs. The RESP I have at BMO Investorline would have that charge, but in most cases, the receiving institution will pick that up for getting the business.

Unfortunately, I signed up with KFF years ago and tied into regular contributions. I see now that I would do better running it myself.

I am not entirely sure of the math behind why they are a legal scam, aside from the general concept that they charge high fees and their return is not much better than standard GIC rates. I believe I initially signed with them because I didn't trust myself to not lose principal in my own investing.

What would I need to do to transfer out? Sign up with RESPs somewhere else and let the new firm handle all the transfer paperwork? Where would I transfer to that is low fee and can do automated contributions?

Thank you everybody!

Save2Retire@55 said
Hello All,

Many years ago I was fool enough to be scammed by KFF agents who came with their beautiful smiles to my home. As a new parent they knew how to target people. Also they were referred by a friend which created a trust.

What they do is to make you sign papers to keep paying monthly or yearly for your child(ren) in return of buying Units. These units are like shares of any Mutual Fund, ETF, or Stocks. The difference? They deduct a hefty $100 per unit. Example I paid $5000 in 2014 and got about 9 units. They took more than $900 right away.

Gladly I didn't sign for any yearly thing and instead opted in for just the one payment 6 years ago.

For my other child, I paid only $1000 as they were selling to me the price of each unit will go higher and it is always best to buy as soon as the child is born, etc. So I got 2.27 units which they deducted more than $220 for it.
As you see the deduction counts for 22% of the investment. This is a HUGE loss.

They were also advertising "Attrition Value" and "Supplement Amount" which are basically the distribution of the units' from those who cancelled their plans. This was one of their main selling point telling me that I will get a huge lump sum at the end as many people cancel early yearly. This is another HUGE LIE and SCAM. The whole thing was about $9 per unit extra so I'd have received an extra $100 or so for my $6000 investments after 18 years!

IMPORTANT: They cancelled this so called supplement value so no extra money.

Their return has been averaging close to 3% a year. I could have bought a 5 years GIC with Meridian for %3.75 or even do better buying ETFs on my own or use Robo advisors and keep investing paying 0.25% management fee rather than losing 22% (Yes that's about 100 times more). Plus you get monthly or quarterly dividends payout when purchasing ETFs which is NOT the case with KFF.

Advantage: NONE
Disadvantage: Lose 22% of your investment up front. Low yearly return. No dividends or lump sum payments.

Bottom Line: I regret this $1200 loss as a principle and if I could I would be an advocate to educate new parents avoiding this place or any other similar money management companies. It took 5 years of income to recover the unit fees they deducted.  

Thats like 20% fee upfront and yet people agreed ?!?!
The best hedge fund manager in the world charges 2% fee on asset and only 20% IF they make a profit for you. And thats 20% of the profit NOT the principal !!