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.

This article has 31 comments

  1. Canadian Capitalist
  2. Oops, posted my question in the wrong thread.

    Would the 1% benefit be considered taxable income?

  3. 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

    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. 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. 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. 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. Curious why wash trades are no longer important to you?

  9. Canadian Capitalist

    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. 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

    Jay: When you select in-kind transfer, everything is transferred as is. They don’t sell the US stocks and buy again.

  12. 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. 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

    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. 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.


  16. 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. 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

    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!

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  20. I am going to transfer from etrade to RBC…looking forward to 1% back.

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  22. 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. 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. 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!

  25. I have looked at these 6 banks.

    Scotia Bank, HSBC, TD Waterhouse, CIBC Investors Edge, RBC Direct Investing, and BMO Investor Line.

    Not sure of what Scotia Bank and HSBC offer.

    – TD Waterhouse offers $100,000 investment and $9.99
    trades and 3 months free commission up to $1500 value=
    150 free trades. Account must have $100,000 on the 4th
    business day of each month to avoid fees.

    – RBC Direct Investing offers $100,000 investment and
    $9.99 trades. Account must have $100,000 at the end of
    each month to avoid fees. Until Friday Nov 28th RBC Direct Investing is offering 1% back= $250.00 paid after 6 months on a $25,000 switch and will cover your transfer fee as well.

    – BMO Investor Line offers $100,000 investment and $9.99
    trades and $300 credit in cash into your account after 6
    months. Account must have $100,000 to avoid fees.

    – CIBC Investors Edge on $10,000 investment offers a
    package that contains 50 trades that cost $395 during the
    calendar year which is $7.90 per trade and after 50 trades
    $6.90 per trade. Account must have $10,000 value during
    August and September to avoid annual fees. Rest of year you
    can zero in the account.

    Based on these comparisons I feel that CIBC Investors Edge offers me the best deal and the least hassle.

    What do you all think? Please give me your input. I want your opinion and feedback. If you know of better deals or if I have made any errors please let me know.

    Thank you

  26. Be careful with their commissions like gene said above and read a fine print.
    They have got my over $100k on 1 OCT and I was still charged $150!!! for a trade made on 20 Nov. This is almost two months that they keep my money and they fine print technically confirms that I do not qualify.
    They got me there but I will get them on 22 June 2009 by collecting my 1% and closing account.

  27. AM PM,

    I would definitely talk to them about getting that rate reduced to $9.99. They will likely reduce it just to keep the customer satisfied. I was surprised that you didn’t qualify for the $9.99 rate by that time. Seems you had terrible luck on your timing! You needed to either have your $100k assets there one day earlier, or initiate your trade two days later.

    I would recommend writing a letter or fax, explaining your issue, and request a refund. I usually end a letter like that saying how much I like their brokerage, but that this issue is likely to drive me away if it isn’t remedied. I don’t usually like doing this over the phone, since there is huge variability in the competence of customer service reps (generally speaking, not specifically at RBC).

    Just for the others following this thread, RBC rules are that you have to have $100k in assets by the end of a month to qualify for $9.99 trades by the 22nd of the next month. Very strange rules, so the fine print is necessary. There are three weeks in between qualifying and being awarded the lower commissions.

  28. I will let you know how they eventually treated me. My case will be more complicated for them though because I have had more trades over the course of last two months that I was not paying attention to commission fine print.

    One more think that I did not see mentioned here is that you will get 0% interest for cash in your account. Yes that is ZERO. Pretty bold statement in today’s financial times !

    You can hear that so far I am not impressed and not putting much hope for the future relationship with RBC. Do they actually read others offers like Etrade 100 free first trades and Cash Maximizer? (deliberately chosen example to contrast my points 🙂 )

  29. Yes, the lack of interest on balances bugs me too. I’ll be doing some swaps or RSP withdrawals to keep the cash down in my RSP. No sense leaving any significant amount of cash in the account.

    I’ve met their minimum requirements for Royal Circle status, so I get 3 free withdrawals per year and free swaps. I’m interested in seeing how versatile the swaps are. I’m impressed with these two free services given to Royal Circle members, so overall, I’m optimistic about RBC Direct Investing.

  30. So, AM PM, how did RBC treat you about the trading fees? I’m in a similar situation so any hint as to how to go about would be appreciated.

  31. I transferred our accounts from ScotiaMcleod and TD for this 1% deal. I’ve been quite happy with RBC thus far. The customer service folks here in Calgary are unbelievably helpful and friendly. I hang up wondering if I really just dealt with a bank. They have straightened out all my issues with in hours in most cases which is remarkable. All I have to do is keep our balances with RBC until May and we get a nice $15,000 for our troubles. These days…that’s a great return!