Self-directed, managed and group funds can ALL be effective ways of accessing the RESP and grant program; it comes down to different consumer-based needs.The fact is, most people wander down to their local bank, are asked what level of risk they are comfortable with and are put in a mutual fund they have little or no knowledge about. Banks are hardly transparent about fees, and often do not educate people very well about the investments. Canada also has THE highest investment banking fees in the world.

Regardless of what kind of fund you are looking into, always compare products, ask about fees in real dollar costs over the term of the investment, and make sure that due diligence is accomplished. From what I have read from the many posts on this thread, there is inaccurate information on both sides of the discussion. I’ll leave you with a recent CBC segment on excessive banking fees, high investment management costs, and deceptive practices.. http://www.cbc.ca/marketplace/episodes/2013/01/busting-the-banks.html.

Kindest Regards,

Bill Harvey

In terms of RESPs, I’ll just say that I spent many, many hours (over 2 weeks) reading and rereading the prospectus before being able to understand it. I can’t imagine how to meaningfully present all of the various alternate combinations and permutations in a fairly short sales call. Many of the alternatives are rather unpleasant for the investor and if answered directly would be huge warning flags for many people. This combined with the constant (and vocal) complaints and confusion from many people over many years has led me to my belief.

You can fill out an application, submit your grant request, deposit your money and invest in any number of well known “qualified investments” (e.g. money, ETFs, mutual funds, bonds, GICs, stocks, bullion, etc.) that most investors are quite familiar with as well as some more complicated investments (e.g. royalty units) if you wish.

Or you can invest in a much more complicated (IMO) investment which is very different than any other investment you will probably make in your life and involves many different potential outcomes to be weighed and considered (some of which are not beneficial to the purchaser).

In the end, the (hopefully well informed) individual can make a choice that is in their best interests.

@ Tuzo – Slightly off topic, you don’t say it but you imply that being “sold” is a bad thing. As an ethical professional salesperson for 10 years (years ago, and real world items made of lumber) I can honestly say that being sold, and being a salesperson, is a noble profession and the bedrock of capitalism. Ideally to be sold is to be convinced, through honesty and logic, that the product your buying is the best choice for you. A good salesperson will listen to a customers wants/needs, give an honest opinion (which includes the option that the product selection may not be a good fit for them), and guides the customer to the best choice for them – which may or may not be the item they came in. Unfortunately ‘sales’ as a profession is denigrated and cheapened by unscrupulous, ignorant salespeople who live up to the caricature of misleading conmen.

@MacKenzie: Do you know that this article was initiated by the banks? Am I biased against Group RESPs? You bet. That doesn’t make me a cheerleader for the banks. We’ve always recommended low cost products that we believe is in the best interests of investors, not banks. And we are pretty sure that we are aware of all the fees involved in a self-directed RESP. Often, it’s just the mutual fund MER and that’s it. There is no laundry list of fees as with Group RESPs.

It also seems to me that the industry has people posting here posing as customers with great success stories. This along with all of “rebuttals” by obvious employees of these companies (usually with incorrect facts or half truths) has an atmosphere of “methinks they protest too much”.

For people who are interested it is probably worth reading the government Review of Registered Education Savings Plan Industry Practices ( http://www.hrsdc.gc.ca/eng/publications_resources/evaluation/2008/industry_practices/page00.shtml ) from 2008. In particular, the section on How the group scholarship plans work ( http://www.hrsdc.gc.ca/eng/publications_resources/evaluation/2008/industry_practices/page10.shtml ) is quite informative.

The truth is that the investments are fixed-income and excess returns are generated by taking money generated (or forfeited) by the “have-nots” and distributing it to the “haves”. It seems more akin to gambling on your future circumstances than investing.