As regular readers know, we have our brokerage accounts with TD Waterhouse. I transferred our accounts over from RBC Direct Investing to take advantage of TD Waterhouse’s wash trade capability in adopting a passive investing strategy. Now, RBC is making a tempting offer: earn 1% cash back when you transfer $25,000 or more from a competing broker into a new or existing RBC Direct account. In addition, RBC is refunding the transfer fees (upto $125) paid for transferring accounts that hold more than $15,000. The only catch: the accounts should be held with RBC Direct until May 29, 2009 and the bonus will be paid on June 22, 2009.
I don’t see any downsides to the offer — RBC Direct now has the same $9.99 commissions as TD Waterhouse — and since wash trading isn’t very important for me any more, I am seriously considering going back to RBC Direct. The way I see it, it is a risk-free way to earn an extra 1% within the next year for an hour’s effort.
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24 responses so far ↓
1 Canadian Capitalist // Sep 4, 2008 at 11:12 am
Lots of discussion on this on the Financial Webring Forum:
http://www.financialwebring.org/forum/viewtopic.php?t=108269&postdays=0&postorder=asc&start=0
2 Million Dollar Journey // Sep 4, 2008 at 11:55 am
Oops, posted my question in the wrong thread.
Would the 1% benefit be considered taxable income?
3 guinness416 // Sep 4, 2008 at 12:14 pm
That’s a really good question, FT.
I’m extremely happy with TDW generally, I think it would take a lot more than 1% for me to move. But if RBC is a known quantity to you I can see it would make sense.
4 Canadian Capitalist // Sep 4, 2008 at 12:23 pm
FT: The FWF guys mentioned that tax slips weren’t issued the last time RBC made the offer. Not really sure the tax status of the bonus in a taxable account. At least in RRSPs, the worse that can happen is to treat the bonus as a RRSP contribution.
guinness: The biggest attraction with TDW for me was the wash trade capability. Now that I’ve taken advantage of it, it’s fallen off my list of requirements. Apart from that I’d say TDW and RBCDI are equivalent. A risk-free 1% is simply too irresistible to give up.
5 Four Pillars // Sep 4, 2008 at 1:01 pm
1%! Hmmm…I’m going to have think about this one. I love Questrade’s $5 trades but I’d need to become a pretty active trader to make up for the 1% bonus…
6 MoneyGrubbingLawyer // Sep 4, 2008 at 2:48 pm
Wow, that’s an attractive offer. Does anyone have any experience with RBC Direct? I’ve never strayed from TD, but this is tempting.
FT, I’ve looked into that issue before in a very similar situation and the 1% cash back generally won’t be considered taxable income.
7 Four Pillars // Sep 4, 2008 at 4:27 pm
I’ve finished thinking about it - I’m gonna do it! What a phenomenal deal.
I called RBC - the rep confirmed that the $100,000 threshold for eligibility for $10 trades is by household - not by individual as CC states in the original RBC review. So assuming my guy was correct, they must have revised this policy at some point.
8 Rick // Sep 4, 2008 at 5:22 pm
Curious why wash trades are no longer important to you?
9 Canadian Capitalist // Sep 4, 2008 at 5:31 pm
MGL: I’ve been with RBC Direct and they have two drawbacks compared to TD Waterhouse: (1) No wash trades and (2) No TD eFunds. I can live with not having those options at this time.
Mike: I think this is an awesome deal as well and I’ve already printed out the forms
Thanks for clarifying that $100K threshold is per household. They must have changed the policy since I wrote that post.
Rick: I moved to TDW to take advantage of wash trades to sell every US stock we held in our portfolios and move the proceeds to ETFs such as VTI, VEA and VWO. That process is complete for a while now and I won’t need the feature anymore. I rebalance when adding new funds and don’t plan to sell existing holdings for a long time.
10 Jay // Sep 4, 2008 at 5:50 pm
It’s a very attractive offer. One thing I am not sure is how to transfer the stocks in US currency. I wonder whether they do the in-kind transfer or liquidate the original account first in Canadian dollar?
11 Canadian Capitalist // Sep 4, 2008 at 7:27 pm
Jay: When you select in-kind transfer, everything is transferred as is. They don’t sell the US stocks and buy again.
12 MillionDollarJourney // Sep 4, 2008 at 9:56 pm
I think FP answered this, but just to confirm, if I were to transfer a $50k non-reg account and $50k registered account, I would get $9.99 trades for both accounts?
13 Rusty // Sep 4, 2008 at 10:02 pm
I see the footnote says “assets (cash and/or securities).” I have mutual funds with ING Direct, are they considered securities? Thanks. Rusty.
14 Canadian Capitalist // Sep 5, 2008 at 9:35 am
FT: Yes, that’s my understanding. You would have to call RBC and let them know that both accounts are from the same household. I called them yesterday and that’s what they told me.
Rusty: Yes, mutual funds are securities as well. But I’m not sure if you’ll be able to transfer ING Direct funds. For instance, I don’t think TD e-Series funds can be transferred over.
15 Four Pillars // Sep 5, 2008 at 10:47 am
FT - one thing that the rep mentioned is that if you don’t have $100k in the account(s) to start then call to get them to switch on the “$9.99″ option so you can start trading.
The reality is that if you are transferring in from different institutions then the monies are not all going to arrive all in the same day so you might be temporarily under $100k - if you don’t call then they will charge the regular $30 or whatever per trade.
Another issue I saw someone comment on one time (not sure if it’s true or not) is that they (meaning any of the brokerages) look at the lowest balance for the month when determining your trade costs so if that is true they can charge the regular trade rate for your initial trades if they are done in the same month as the transfer-in. I’m not sure about this one and obviously a phone call will take care of it anyways.
Mike
16 Bob Ross // Sep 8, 2008 at 6:17 pm
Apart from 20 years of banking with TD, this offer may be too hard to pass up. Money talks. Getting $4500 for about an hours work and minor inconvenience is likely worth it. I can always switch back if I don’t like it. Of course I would have to see the money in my account first!
TD is going to get a lot of calls on this. RBC is going to get even more.
17 gene // Sep 8, 2008 at 9:12 pm
CC: Thanks for bringing this offer to my attention. I’ll gladly take advantage of it for my non-registered account. I have ongoing US$ trading in my RSP, so I’ll leave that with E*Trade Canada. What’s your finder’s fee for this offer: 10%?
FP: The fine print on RBC’s asset threshold states that you need to have had $100k in the account(s) on the previous month’s closing balance, ie December’s commissions are based on November 30th’s balances.
18 Canadian Capitalist // Sep 8, 2008 at 10:36 pm
Bob Ross: I like TD Waterhouse much better than RBC (I was with RBC for 7 years before moving to TDW). Still, a 1% risk-free bonus is too tempting to pass up, especially, since I don’t have to do wash trading anymore.
gene: You’re welcome. Unfortunately, we are doing free marketing for RBC, so there is no finder’s fee!
19 Thursday Linkstuff // Sep 11, 2008 at 4:57 am
[...] Capitalist wrote about RBC Direct’s new offer - a bonus of 1% of your assets if you transfer from another brokerage. Like Kenny said - [...]
20 Larry // Sep 12, 2008 at 6:18 pm
I am going to transfer from etrade to RBC…looking forward to 1% back.
21 Switching to RBC Direct Discount Brokerage // Sep 17, 2008 at 4:59 am
[...] some of you have already heard, Canadian Capitalist broke the news last week that RBC Direct discount brokerage (read a review of RBC Direct) is offering a 1% [...]
22 John // Oct 12, 2008 at 8:02 pm
How long is this offer good for? I ask because from many indicators if you move money this week you are a fool. It sure looks to me like the market will move up 5% while your money is in transit to make 1%.
23 The Immortal // Oct 23, 2008 at 1:00 am
What about the lack of the TD e-series funds? Anyone know if RBC has something equivalent?
Do you think we would be rejected if we wanted to come crawling back on our hands and knees to TD after receiving the bonus?
24 Bob // Oct 29, 2008 at 7:06 pm
Hi there!
I am about to open an DI account in RBC and found this offer. I currently have no investment account in any financial institution.
Is there any way to open a new account in other institution and than transfer it to RBC in order to get the promotional 1% ?
How long can it take and which investment company would you suggest?
Thanks a lot!
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