# How would you pull your money out of a high MER mutual fund?



## PrairieGal (Apr 2, 2011)

Hello, everyone, I have lurked on this forum for quite a while, but haven't posted much. I have about $18,000 in Investor's Fund (in an RRSP account) at about 2.66% MER. My agent is an acquaintance/friend and I have had the money in there for years. I quit contributing to the fund about a year ago, but I don't know how to go about transferring the money out of Investor's and into something lower cost. I also don't know what to say to the agent, but I guess I will have to figure that out. Any suggestions?


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## MoneyGal (Apr 24, 2009)

HIGH-LEVEL EXPLANATION: 

Open the new account, and put in the paperwork to transfer the account. 

Your advisor will find out when the fund transfer paperwork hits his/her desk. 

This happens ALL THE TIME and is a normal part of the business. An advisor who isn't used to that / gets bent out of shape about it will have a bad time in the business generally. 

There are a couple of detailed things you need to be aware of but I need to come back to this later.


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## MoneyGal (Apr 24, 2009)

IMPORTANT DETAILS:

If your funds are Investors Group funds, you cannot hold those funds in any other kind of account - hence you will need to sell them in order to move the money (from the sale) over to a new account (like with TDW or wherever you open the new account). 

EXTREMELY IMPORTANT: find out what the deferred sales charges, if any, are on the funds before you sell them. You can phone IG (or whoever your fund company is, if not IG - but 2.66% sounds like IG) to get the DSC schedule. They are obliged to provide that info to you. I don't mean phone your advisor; phone the fund company itself. If you confirm the fund company I will tell you how to find this number. 

If there are DSC charges (and there will be if you contributed fewer than 7 years ago), you may want to keep those UNITS of the funds intact until the DSC charges are diminished and the break-even point between keeping the units intact (at 2.66% MER) and paying the DSC is reached. 

Even if the funds are not with IG, they are more than likely subject to DSC charges and you should investigate the amounts you'd owe. If the funds are not IG, you may move them intact to a new account (i.e., TDW) and then sell them according to a schedule you work out. 

Do you have a new investing plan for when you move the funds over? Do you know where you'd open an account and how you want to invest - and where you will go to get your questions answered?


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## Cal (Jun 17, 2009)

I would tell the aquaintance/friend the truth. 2.66% is a completely unacceptable MER to be paying.

Not usre if you are going to go with etf's or what your plan is....but I would stick with the truth.


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## AltaRed (Jun 8, 2009)

Cal said:


> I would tell the aquaintance/friend the truth. 2.66% is a completely unacceptable MER to be paying.


But only if asked. As has already been said by MoneyGal, there is no need to talk to the agent/friend as part of this transfer. Mutual fund sales people already know most actively managed funds, especially those from the big houses, including Investor's Group, have high MERs, and people transferring out to discount brokerages are doing so to cut their MER costs.


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## PrairieGal (Apr 2, 2011)

MoneyGal said:


> IMPORTANT DETAILS:
> 
> If your funds are Investors Group funds, you cannot hold those funds in any other kind of account - hence *you will need to sell them in order to move the money (from the sale) over to a new account (like with TDW or wherever you open the new account). *
> 
> ...


Thanks for your help, MoneyGal. Yes, they are Investor's Group funds. But, since they are in my RRSP I can't cash them in or I will lose the room, and pay withholding tax, won't I? Sounds like I might be doomed to leaving the money in Investor's. It's not a huge amount, but my portfolio is small, and I want to grow it the best I can.


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## MoneyGal (Apr 24, 2009)

OK, forget for a moment these are IG funds. 

What I meant was sell them in the current IG RRSP fund, and then move the PROCEEDS OF SALE (the "cash") over to a new RRSP account at a different institution. This is not the same as "cashing out" or withdrawing the funds. NO tax implications!

Because these are IG funds, here is the strategy:

1. Stop contributing - I know you did this already. Confirm that there are NO ongoing transactions in this account (like automatic reinvestment of dividends). 

2. Find out the DSC schedule for all units by phoning IG corporate (I can't get this number for you right now - perhaps later)

3. Once you have the DSC schedule, find out how many units you can sell with NO penalty. Sell those in the account, with no buys. Just have the trade settle as cash in your account. CASH. NOT an IG money market fund. CASH. 

4. Open RRSP at your new institution of choice. Transfer the cash over. Use the cash to buy whatever you want in your new account. 

5. Repeat this process over time, moving more and more of your IG funds over to your new account as the DSC charges get less and less.


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## Eclectic12 (Oct 20, 2010)

PrairieGal said:


> Thanks for your help, MoneyGal.
> 
> Yes, they are Investor's Group funds. But, since they are in my RRSP I can't cash them in or I will lose the room, and pay withholding tax, won't I? ...


If you were to sell the IG funds in the RRSP *and withdraw* the cash ... then yes. 

I don't believe this is what MG is suggesting as ...



MoneyGal said:


> OK, forget for a moment these are IG funds.
> 
> What I meant was sell them in the current IG RRSP fund, and then move the PROCEEDS OF SALE (the "cash") over to a new RRSP account at a different institution. This is not the same as "cashing out" or withdrawing the funds. NO tax implications! ...


+1 ... I haven't needed to sell MFs as the RRSP at the receiving financial institution accepted the few MFs I was transferring but I have done transfers. 

Here are more details about RRSP transfers.
http://www.moneysmartsblog.com/t203...-account-at-different-financial-institutions/

Note that the link talks about "in-kind" transfers, which is what I did (i.e. MF units were transferred one RRSP account to another without a sale, as-is). Likely the sell for cash, then transfer the cash is your only option (called "in cash" or "cash') as I don't know of any financial institutions except IG that allow IG funds to be held. [Not that I've done an exhaustive survey!]


Cheers


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## kcowan (Jul 1, 2010)

Also when you have the DSC schedule, note whether it is sliding scale (reduces each year) and sell any that are approaching 2.66% remaining or less. 

The RRSP can trade so you will not lose room by trading within or transferring the funds to another RRSP.


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## lonewolf (Jun 12, 2012)

3. Once you have the DSC schedule, find out how many units you can sell with NO penalty. Sell those in the account, with no buys. Just have the trade settle as cash in your account. CASH. NOT an IG money market fund. CASH. 

4. Open RRSP at your new institution of choice. Transfer the cash over. Use the cash to buy whatever you want in your new account. 

5. Repeat this process over time, moving more and more of your IG funds over to your new account as the DSC charges get less and less.[/QUOTE]

Hi, PrairieGal

Moneygal did a good job in explaining, here is a little added infoe

Check to see if there is a transfer fee, This fee can sometimes be negotiated lower ( I have nogotiated lower with a bank, should have been using a credit union) The instutution you are transfering money into ask if they will pay the transfer cost or part of it. Last year the transfer costs @ banks were $100 dollars I nogotiated the bank that was charging me $100 dollars down to $50 the same as the going rate that credit unions would charge to transfer money out of. My mom had the credit union pay the transfer fee she transfered money into.
It might not be practical to transfer small amounts but wait for larger amounts to mature before transfering.

Make certain that both instutions understand that money is to be kept in RRSP account. Dont be surprised if investors edge drags thier feet a little in the speed the money gets transfered. Might have to baby sit them for quicker transfer.


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## Eclectic12 (Oct 20, 2010)

^^^^

Good point about the 2.66% threshold ... no point in keeping the fund an extra year or so to "save" 2.5% while at the same time spending 2.66% on the MER.


It's probably a good time to point out that whatever RRSP account that is setup at the receiving end is going to determine several things including what investments can be purchased, switched to or traded and what the costs will be.

As an example of the range of choices, some MF fund RRSPs opened through the bank have no annual fee, easy options to contribute and the costs are the MER plus a short 30 or 90 holding period to waive the early redemption fee. At the other end of the scale, there's a brokerage RRSP which can buy/sell MFs, ETFs, stocks, bonds, split shares, which can have an annual fee until there are enough assets to waive it plus there are commissions charged for each buy/sell.



What some have done (this was not an option when I started out :rolleyes2: ) is to find a range of MFs with low MERs and setup the MF only RRSP for no annual fee and contribute to that. While the asset total is building up so that the annual fee for a brokerage RRSP is waived - there is time to learn investing for all the other investment types. When the assets are large enough, it's setup the brokerage RRSP and transfer.


Cheers


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## Ponderling (Mar 1, 2013)

Read the simplified proscpectus. I know, not usually exciting. 
Uusally there is a clause about allowing you to sell something like 10% annually, but this amount does not accrue. 
You must sell 10% every year, usually penalty free. 
This strategy can accelerate the migration out of a high MER DSC fund by advancing the break even point, if the residue can be invested/parked in a low MER vehicle.


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## fraser (May 15, 2010)

Look on the positive side. You learned very early on about the challenges and costs of investing through Investors.


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## james4beach (Nov 15, 2012)

Congrats on getting the wheels in motion to escape from Investors Group. Even if there is a penalty (as a %) weigh it against the high MER, it may still make sense to eat the penalty.

By the way, institutions will stall and delay you... they don't like losing RRSP accounts. Don't be surprised if it takes months just to do the simple cash transfer.

Investors Group also had some weird stall tactics when I tried to withdraw all my money. They said this didn't jive with the Know Your Client profile, and they wanted me to write a letter explaining why I wanted my own money back. The nerve of these people. So I will never do business with IG (or IGM) again, and have recommended to all friends & family that they also move funds elsewhere to lower MER accounts.

There's your "letter", IG.


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## fraser (May 15, 2010)

A few years ago Royal Bank Direct had an offer that included a rebate of up to $200. per account to cover admin fees when accounts were transferred into RBD. We took advantage of this on four accounts.

Not sure if they still have something like this. IF they do, you can perhaps use it as a lever to get a competitive offer from another institution.


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## AltaRed (Jun 8, 2009)

Almost, if not all, major discount brokerages will offer some 'refund' of transfer out fees if one asks for it. The amount depends on the institution and how much money is being moved (what it is worth to the new brokerage). The key is to ask for compensation of transfer out fees. I think the typical range is $125-150 per account, perhaps a bit more.


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## PrairieGal (Apr 2, 2011)

MoneyGal said:


> IMPORTANT DETAILS:
> 
> If your funds are Investors Group funds, you cannot hold those funds in any other kind of account - hence you will need to sell them in order to move the money (from the sale) over to a new account (like with TDW or wherever you open the new account).
> HIGH-LEVEL EXPLANATION:
> ...


It has been a year since I started this thread, and I am finally ready to do this. My Investors Group advisor was a friend of my late husband's (and a very nice guy), and up until now I did not feel I had the emotional strength to deal with him, but I do now. So, if I understand correctly, this is what I need to do:

- Open an RRSP account with Questrade.
- Call the Investor's Group Corporate Office and get the DSC schedule.
- Decide if it is worth taking the hit on the DSC. (Unless it is some ridiculous amount, I am just going to move it all and be done with it.)
- Call Questrade and get them to initiate the transfer "in cash", rather than "in kind" as the money is in Investor's Group funds, and Questrade doesn't sell those.
- Once the cash is in my Questrade RRSP cash account, buy ETF's, using a Couch Potato type approach.

Does that sound right?


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## cannew (Jun 19, 2011)

You must be desperate for posts? Based on your previous posts you seem quite bright and normally would be answering the question rather than asking it.

Anyway, get out of funds as fast as you can, just complete a registered transfer form after you've opened up a discount broker account, and have the money transferred in cash. Bite the bullet on the fees they'll charge you and move on.

Reasons not to buy funds, from The Connolly Report:
http://www.dividendgrowth.ca/dividendgrowth/mutual_funds


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## RBull (Jan 20, 2013)

Sounds right to me PrairieGal. 

G/L


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## humble_pie (Jun 7, 2009)

prairieGal i would change the order of these steps, possibly also the receiving broker ID.

the first priority is to determine the deferred service charges from the existing financial house.

then analyze what is to be cashed in. It may turn out that some funds will have longer to run, ie their deferred charges will be higher. Those you might choose to continue to hold. Then you would have only partial redemptions & a partial transfer of cash.

lastly, questrade. If i recall correctly, you may be the poster who occasionally wheels in here with truly colossal amounts of stock holdings along with awesome profits. Perhaps i'm wrong about this, but if you are indeed the lady who has done so well with the big energy holdings, i find myself wondering why you would go to a small, privately-owned broker such as questrade.

i've just posted in another thread about the remote risk of a global financial meltdown. In such a scenario - to which we came perilously close in 2008/09 - there will not be enough funds in the CIPF to cover all the brokers who will go under.

in the case of the small privately-owned brokerages, we know nothing about their capitalization. Nothing about their debt positions, nothing about their banking relationships. All we know is that they meet the minimum capitalization requirements imposed by the different exchanges.

the feeling i have is that questrade may not be the best choice for a spectacularly successful investor with substantial assets to protect. A worrisome aspect that has surfaced here in cmf forum is that all non-registered questrade accounts are margin only (i assume & sincerely hope that their registered accounts are fully registered in outright ownership.)

the margin nature of non-registered accounts means that questrade can borrow those shares at any time. To repeat: we really do not know what kind of wholesale financial business questrade is supporting on the backside of those retail margin accounts.

to be fair to questrade, i've often thought that the founder himself should offer perhaps 10% of his shares in an IPO. This would require him to disclose several years' worth of books to the securities authorities in a prospectus. This, in turn, would fill us in on the overall nature of the business. Possibly additional large clients for questrade might surface if they felt more reassured about the capitalization, the earnings & the balance sheet.

to summarize - & i certainly could be wrong - i tend to believe that a broker subsidiary of a primary canadian chartered bank might be a tad safer in a global meltdown scenario. In the meantime, do ETF freebies & $4.95 trades for fewer than 1000 shares really mean that much to a wealthy investor?


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## uptoolate (Oct 9, 2011)

A bit off topic but would it be safe to say that there is no situation where paying a DSC is really justified given the number of products currently available that have no such charge. Same for front load, if these funds even exist anymore.


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## PrairieGal (Apr 2, 2011)

cannew said:


> You must be desperate for posts? Based on your previous posts you seem quite bright and normally would be answering the question rather than asking it.
> 
> Anyway, get out of funds as fast as you can, just complete a registered transfer form after you've opened up a discount broker account, and have the money transferred in cash. Bite the bullet on the fees they'll charge you and move on.
> 
> ...


That was rude and uncalled for. I am definitely not desperate for posts, I couldn't care less about post count. I am smart, but some things escape me, and this is one of them. I have no experience with brokerage accounts. The small amount of money that I have is with Investor's group, some GIC's and Tangerine Streetwise funds. I am trying to learn how to get my money out of IG and into ETF's at a brokerage account. What may seem obvious to you is not necessarily obvious to everyone. Not sure why you had to be so rude. As the saying goes. "If you can't say anything nice ..."


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## humble_pie (Jun 7, 2009)

prairieGal it's possible the poster had confused you with another member from more or less the same geographical region of canada, with a similar name. This member has substantial individual stock holdings in the energy sector & seems to trade these frequently. I'm sure no rudeness was intended.

there are so many Gals on this forum, this is the confusing aspect!

turning now to your contemplated move from IG to an ETF portfolio held at a discount broker - & understanding your situation better - i believe my concern with questrade still has merit. It's nice to be able to save a few commission $$ but surely sleeping easy at night would be a paramount concern as well?


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## gardner (Feb 13, 2014)

humble_pie said:


> i believe my concern with questrade still has merit.


Keep in mind that getting out of Questrade into TDDI -- or whatever -- somewhere down the road would be a breezy cakewalk, compared to getting out of IG.


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## humble_pie (Jun 7, 2009)

gardner said:


> Keep in mind that getting out of Questrade into TDDI -- or whatever -- somewhere down the road would be a breezy cakewalk, compared to getting out of IG.




but if that's likely to be the plan, why not go to a big bank brokerage in the first place?

if i were prairieGal, who mentions she has "no experience with brokerage accounts," i'd take the time to visit several discounters.

of course, they don't generally send out individual staff for immediate interviews, but there are ways to get a peek.

- some big discount brokers offer excellent & regular educational seminars & workshops in most big cities across canada. One could attend, observe, ask questions.

- some discount brokers offer online trial accounts. Questrade & i believe royal bank do this, possibly others i'm overlooking. One could sign up, observe, ask questions.

- some discount brokers send marketing reps to nearly all the various bank branches in rotation. These reps meet with potential new clients. BMO does this, possibly other bank brokers do. I'm assuming these reps are able to offer live connects & live demonstrations to new clients at the branch.

- some bank discount brokers maintain storefront marketing operations. TD does this, other banks will tend to have such broker storefronts only in major cities. But certainly, at the storefronts, the brokers should be able to offer detailed live presentations of their wares.


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## AltaRed (Jun 8, 2009)

It is difficult to 'visit' several discount brokers. Taking a look at Rob Carrick's summary is a good way to isolate the probables down to a few. 

I have never felt comfortable with the brokerages on the fringes....like Questrade for which we know little about, and especially perhaps for investors new to DIY investing. The free commissions on ETFs at Questrade are not really worth much unless one is a frequent trader. I have accounts with RBC Direct Investing, BMO Investorline and Scotia iTrade and I might spend $100 a year total in commissions in all 3 accounts combined. That is essentially noise on anything beyond a high 5 digit account. Each of them have their specific strengths and weaknesses with RBC DI and BMO IL likely the preferred choices of the 3 (things like GIC puchases online, USD RSP accounts, etc.). 

The easiest is probably dealing with the discount broker with which one has a banking relationship because:
1) one can easily move money to/from bank account and broker online - all accounts can be seen online
2) it is easier to deal with discount brokerage paperwork signing and deliveries by being able to take it to the local bank branch for courier to the discount broker

Unless one has a bank account with RBC, it is impossible to move money out of RBC Direct Investing to other bank accounts (they don't have a EFT option). At least with BMO IL, they will create a Link chequing account that allows one to use Bill Pay to move money out of BMO IL. Scotia iTrade allows one to set up ETF processes to send money out of iTrade to a bank account of choice.

Moving money to a discount broker is easy since all major bank accounts allow the use of Bill Pay to send money to discount brokerage accounts.


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## MrMatt (Dec 21, 2011)

I've consolidated Retirement plans (pension, lira, rrsp, whatever) and TFSA a few times.

I've never really gotten foot dragging or refusals.
I did receive a call to confirm that I really did want them to transfer out, I simply told them I was consolidating and was done.
I was also "advised" to transfer in cash, and they'd hold the transfer until I updated it. That caused a delay of just a few days.

Don't let details paralyse you, develop a plan then try to do it


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## humble_pie (Jun 7, 2009)

AltaRed said:


> It is difficult to 'visit' several discount brokers. Taking a look at Rob Carrick's summary is a good way to isolate the probables down to a few



except the rob carrick ratings in the globe have always been a tad peculiar.

last one i looked at, he'd rated Virtual Brokers at the top of the heap. Seems this from-nowhere online broker got huge extra weighting in the carrick ratings because of its ultra-low promotion commish at the time, which was something like $1/trade (it was a loss leader.)

with respect to bank-owned brokers, the BMO transfer-cash-via-Bill-Payment is a great feature. Add that to fast 'n easy CAD/USD currency gambits trades in both rrsp & non-registered accounts & the picture looks good (one cannot gambit like this chez questrade, btw.)

re visiting the brokers, meeting their marketing reps in the storefronts or at the bank branches or wherever ... imho this is a gender-based kind of thing to do, altaRed you might have to smile tolerantly while the gals try to sniff the culture.

it's like Plugging says, gotta get to know management a bit before you invest.

it's well-known that charts & graphs don't cut the entire business biscuit for women ...


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