Some advice on choosing the right online broker for your registered and non-registered accounts: Don't blow it.
Pick the wrong broker and it could cost as much as $150 to move your account to another firm. This applies not only to registered retirement savings plans, but also to registered retirement income funds, tax-free savings accounts and cash accounts.
Even brokers with a reputation for low fees may ding you on account transfers. Virtual Brokers has no annual admin fees for RRSPs and TFSAs, but it has a $150 charge for transferring both types accounts to other firms. Questrade, another firm that charges no TFSA or RRSP admin fees, charges $125 for a transfer out of both of these accounts.
Among the other online brokerage firms, transfer-out fees are typically in the $125 to $135 range. With TFSAs, these fees generally apply when you move your money to another firm. If you withdraw the full amount in the account in cash but keep the account open, then you typically pay nothing.
Partial lump-sum cash withdrawals from an RRSP cost $25 to $50 apiece (expect a withholding tax to also apply). Some firms apply these charges to withdrawals made through the federal Home Buyers' Plan and Lifelong Learning Plan, while others charge a lesser fee or waive the charge entirely. Most firms have no fee for taking some cash out of a TFSA; an exception is Virtual Brokers, which charges $25.
Brokers typically deduct transfer-out fees from cash in the departing client's account. Here's how to get that money back: Before initiating the transfer, ask your new firm (online or full service brokerage) to cover the fee for you. Save your final statement from your old firm – you'll need to submit it to your new firm to document the amount of the transfer-out fee. The larger your account, the more likely it is you'll have the transfer fee paid for by your new firm.
Online brokers are a bit like cars – a test drive is mandatory before making a commitment. Some firms now offer practice accounts that even non-clients can try, while others may offer videos and screen captures on their public websites that offer a flavour of what's available to clients. Some firms may also give you access to a dummy account to check out.
If you're looking to make the switch, take a look at my latest annual ranking of online brokers.
Rob Carrick