How to choose a self-directed plan

Question:
I am currently looking into self-directed RRSPs for both my wife and myself. We have to convert to RRIFs within two years, so we will want a plan that can carry on into a self-directed RRIF as well. There is currently a little over $100,000 invested in each plan. Each plan is invested primarily in mutual funds split between two or three companies with mixed asset allocations and a bank term deposit. It is becoming increasingly difficult to balance my desired asset allocation and to maximize foreign content.

While I feel quite certain that self-directed plans are the way to go, I am having a little difficulty deciding which company would be the best for me. I am comparing several companies with respect to administration costs, costs to buy/sell securities, on-line research, and client assistance. Could you please give me some advice on selecting a firm and list some of the questions I should be asking of them. – I.G.

Answer:
You’re on the right track. Cost is a factor, of course, but it should not be the sole criterion in making this decision. Here are some of the questions I would pose:

1) What kind of advice n you expect? Will you have to make all the decisions yourself or can you count on help from a professional advisor? If the latter, who is the advisor, what are his/her qualifications, how long has the advisor been at this job and how well do you relate to the person. This is a critical issue because while the cost of an advisor-assisted plan may be a little more, the help you receive in making your decisions may be well worth it.

2) What restrictions are there on the plan? Every company has its own rules and some of them may cause problems. For example, some companies set an arbitrary foreign content limit on RRIFs that is lower than the maximum allowed by the government.

3) What do the statements look like? Some companies issue excellent portfolio statements that clearly show the assets, the original purchase price, the current market value, the foreign content position, the account activity in the past month and a lot more. Other companies are still in the Dark Ages in this regard.

4) Are there special charges that may affect you? For example, do you want to set up a systematic withdrawal plan? If so, is there a special fee attached and how much is it?

Combining these with the research you are already doing should help you select a company that will be right for the job. – G.P.