Dan Primeau is adamant about taking a hands-on approach to the investment portfolio in his registered retirement savings plan. He is just as adamant that a self-directed RRSP is the ideal structure for him, giving him maximum opportunities to pursue the investment choices he wants to make.

“I get the satisfaction of seeing first-hand the performance of what is basically the fruits of my own labour,” says the 47-year old Calgary resident, a former sales representative for a pharmaceutical company who now manages his investments on a full-time basis.

“I put quite a lot of time into it and enjoy it immensely.”

Mr. Primeau has accumulated a lot of investment experience and skills, especially because he has been doing it full time for the past seven years, but that isn’t a prerequisite for everyone considering a self-directed RRSP. In fact, investors don’t necessarily need a high level of expertise to realize that a self-directed RRSP is right for them, say financial professionals.

Nor do you need to do everything yourself. As long as you are willing to commit the time needed to keep on top of developments, and to learn about investment opportunities from various sources, including some online, experts say that a professional investment adviser can also play a major role in structuring and maintaining a self-directed RRSP.

“It doesn’t have to be either/or,” says Ms. Lovett-Reid, who stresses that you can still be a self-directed investor with the help of a financial planner.

One major advantage of having a self-directed RRSP is the potential for taking control of a vastly expanded array of investment opportunities — mutual funds, publicly traded stocks, bonds, guaranteed investment certificates, and strip coupons, among others.

A wider choice of opportunities, particularly the ability to invest in equities, could translate into greater potential return, says Cheryl Mont, a Toronto-based certified general accountant.

Mr. Primeau prefers to invest in individual stocks rather than mutual funds, in large part because he believes he can do a better job of managing stocks himself, and getting a healthier return, rather than investing in a basket of equities managed by someone else. He is “quite happy” with the results achieved in his RRSP since he took over its complete management. “From 1999 to 2006, I almost quadrupled the money in my stock portfolio,” he says.

With a self-directed RRSP, you also have a wider range of investments you can place in your plan, says Ms.

Lovett-Reid. This includes cash, GICs, publicly traded shares or bonds of corporations listed on Canadian or foreign stock exchanges, domestic or international mutual and segregated funds, Canadian and certain foreign government bonds, government-insured mortgages, certain private small business shares — even certain gold and silver bars. Guidelines as to what is allowable are outlined in the Income Tax Act, as well as in bulletins issued by the Canada Revenue Agency.

With a self-directed RRSP you need to be aware that putting equities, or stocks, into your plan could have important tax implications, Ms. Lovett-Reid adds. There would be a deemed disposition of that stock by the CRA, and any increase over its original purchase price would be seen as a capital gain — although only 50 per cent of the gain would be subject to taxation. A capital loss, however, which could normally be applied to offset capital gains elsewhere, cannot be taken when equities are in an RRSP.

Moreover, any gains or losses from that stock when it is inside the RRSP will be treated as regular income and lose any preferential tax treatment, she says.

If you have investments scattered in multiple retirement savings plans, a self-directed RRSP gives you the opportunity to consolidate them in one place, letting you better track their performance and adjust your portfolio as needed through constant monitoring.

Having one organized plan also pays off when you start tapping into the RRSP funds. “I would not, as a retiree, want to have little bits of money coming from a different bunch of investment vehicles. I want it to come from one source,” says Ron Harvey, senior financial adviser for the Independent Planning Group in Ottawa, which provides independent financial planning services.

If you do select an adviser to help you handle your self-directed RRSP, the annual fees often tend to be higher than for a non-self-directed plan because the supporting services, including accounting and custodial costs, are more complex. But financial institutions are often flexible with their rates and terms. At TD Waterhouse, for example, the annual self-directed RRSP fee is $106 (including GST), but the fee is waived for customers whose plan has a market value of more than $25,000 at year’s end.

BMO InvestorLineÖ, a wholly owned subsidiary of Bank of Montreal, also levies an annual charge of $106, but fees are waived for clients who have a minimum of $15,000 in their RRSP, says Connie Stefankiewicz, president and chief executive officer of BMO InvestorLine.

She added that it is usually better for a self-directed client to have a minimum of $20,000 in his or her RRSP because that provides a financial base strong enough to build a diversified portfolio with several asset classes. And, as she notes, well-researched asset selection is “one of the keys to investment success.”

Special to The Globe and Mail