Escape Plan: Read in case of irreconcilable differences with your investment adviser. Do not attempt unless you're ready to manage your own investments.
Step 1(a): Find an online broker and open an account.
We'll leave the question of which firm is best for the 2009 edition of the annual Globe and Mail ranking of online brokers, coming up next month in this space. If you want to keep things simple, go to your bank or credit union branch and ask to open an account with the in-house online broker.
Or, go to the website of the broker you've chosen and look for the “Open an account” link. No matter which broker you choose, there are still a couple details to take care of so let's let John See, president of the online brokerage firm TD Waterhouse, take it from here.
“The client can fill out an account application online, click it through to us and have the account opened almost immediately,” he said. “We then require a physical signature within 30 days of account opening. You can operate the account in the near term.”
An easy way to get your signature to your broker is to print off the account application form, sign it and then mail it to the indicated address along with photocopies of one or two pieces of ID such as a driver's licence or passport. You can also drop the form off at a bank branch.
Want to put some money in your new account so you can start investing? Just attach a cheque to the signed application form you're mailing in. Bear in mind that some brokers have a minimum account size.
Step 1(b): Obtain an account transfer form.
Here's where you authorize the transfer of an account from your adviser to your new online broker, and where you provide instructions on how to arrange the move (more on this in a moment). You do not have to talk to your adviser about moving your account. The form does the talking for you.
Online brokers typically have a downloadable archive of forms on their website, including those for account transfers. You can print the appropriate transfer form and, once you've filled it out, mail or fax it in.
Step 2: Find the most recent statement for your existing account.
How quickly and smoothly your account is transferred depends a lot on what investment products you own. Mr. See explains that transfers of stocks, bonds, money market instruments and cash are carried out using the Automated Transfer Online Notification System, or ATON.
“It's a process that we can initiate as the receiving institution so that the securities or cash can be transferred in essentially seven to 10 days.”
Mutual funds and guaranteed investment certificates may take four to six weeks or longer because transfers are handled manually. If you have a large account, it's conceivable that your transfer will be delayed so that an attempt can be made to entice you into staying with your adviser.
Another reason why transfers get delayed is that people make mistakes filling out the transfer forms, Mr. See said. Pay close attention to getting the account numbers right for the account you're transferring from and ensure that the names on the transfer form and on the account match precisely.
Online broker checklist
- Account Minimums: Some brokers require a minimum of $1,000 to $5,000 to open an account.
- Account Fees: Brokers may charge for accounts of less than $5,000; annual RRSP admin fees may apply for smaller accounts.
- Stock-Trading Commissions: They vary according to your account and how often you trade.
- Mutual Funds: Ensure a broker offers the particular funds you’re looking at, and see if fees or commissions apply.
- Tools and Research: See what equity and fund research a broker offers, as well as tools to build a balanced portfolio.
- Convenience: Transferring money to and from your account is easiest if the firm’s related to your bank or credit union; otherwise, you should still be able to move funds electronically.
