I’ve held all our investment accounts at TD Direct Investing (TDDI) for a number of years. When I moved to TDDI, they were one of the few ones around that offered wash trading in registered accounts, which helped save a pile on currency conversions when switching from foreign stocks to broad market ETFs. Since then, a few discount brokers — RBC Direct Investing and BMO InvestorLine prominent among them — have started offering US Dollar RRSPs. Clients in other brokers like Scotia iTrade and CIBC Investor’s Edge are now reporting that US dollar dividends in registered accounts are converted into Canadian dollars at favourable rates. TD Direct Investing, unfortunately, is not only dragging its feet on offering a US Dollar RRSP but also refusing to do anything about currency conversion charges in registered accounts. At the very least, to remain competitive, TD Direct Investing should convert US Dollar dividends in registered accounts at favorable rates but in recent communications, TDDI indicated the best they can do is wash US dividends into the TD US Dollar Money Market Fund but only for selected clients and only if the client calls before the dividends are due and requests a wash trade. To be fair, TDDI is reported to have stopped double dipping on US dollar dividend reinvestments as it did in the past but that is of little use to non-DRIPers.
After sitting down and calculating the fees incurred in keeping our registered accounts at TDDI, I started looking into other brokers. My requirements were:
- Must be a broker affiliated with a large financial institution.
- Must have easy transfer of funds between TD Canada Trust bank accounts and brokerage accounts.
- Must have segregation of US Dollar securities in registered accounts.
- Must have easy, automatic Norbert Gambitting across all accounts.
- Must refund transfer out fees that will be charged by TD Direct Investing.
- Nice to have HISAs to park cash.
- Nice to have DRIPs for REITs.
My choices narrowed down to RBC Direct Investing and BMO InvestorLine but I decided to go with the latter because, frankly speaking, they offered a bribe.
The BMO Bribe
Until March 10, 2014, BMO InvestorLine is offering clients who are funding their qualifying account (Cash, Margin, RSP, Spousal RSP or Corporate account) with at least $100,000 in net new assets and maintaining the account for a six-month period a cash back of $250 and 250 free trades for a 90-day period. Clients opening an additional qualifying account and funding it with at least $5,000 will receive an additional cash back of $50.
But wait, it gets better…
The cash back offer can be combined with BMO InvestorLine’s Refer a Friend program. If you have a friend with a BMO InvestorLine ask for a referral (if you don’t have a referral, contact me). If the new account is funded with $50,000 or more in assets, the new client will add a bonus of $50 ($100 for accounts opened with $250,000 in assets). The referring account also receives a bonus of $200 or $300.
Also, the BMO cash back offer is per client, so if your spouse opens an account and funds it with at least $100,000, he or she will also receive $250. Better yet, open your account first, then open your spouse’s account with your Refer a friend code (which is simply the e-mail id associated with your InvestorLine account) and together you can end up with a total of up to $1,000 in total cash back plus free trades. Now, BMO InvestorLine’s Cash Back offer is not nearly as attractive as the 1 percent of account value in cash that RBC Direct Investing offered a few years back, but it is a decent incentive for a couple of hours of paper work.
The Catch
As with any offer, you have to pay attention to the fine print. A client should maintain $100,000 in net new assets in the account for a six-month period to receive the cash back. For example, let’s say John opens an account and funds it with $150,000 in total value of stock and cash on the day of the transfer. The next month, John’s investments have grown and the account balance is $200,000. He withdraws $60,000 from the account. Since, the net new assets ($150,000 – $60,000) is below the $100,000 threshold, John will not be eligible to receive a cash back. Note that any dividends paid into the account do not count as new assets. Also, if the account value drops below the threshold after the account is funded due to market fluctuations, the cash reward(s) will still be paid out. These terms and conditions are consistent with other cash back offers I have participated in the past.
If you do decide to take advantage of BMO’s Cash back offer, I would recommend setting up an appointment with an InvestorLine Representative at your nearest branch. Ask the Rep to confirm that all transfer out fees will be refunded by BMO InvestorLine. You will need your Driver’s License, Social Insurance Number card, a void cheque and your TD Direct Investing account statements and be prepared to spend at least a couple of hours in preparing the paperwork.
