I’ve held all our investment accounts at TD Direct Investing (TDDI) for a number of years. When I moved to TDDI, they were one of the few ones around that offered wash trading in registered accounts, which helped save a pile on currency conversions when switching from foreign stocks to broad market ETFs. Since then, a few discount brokers — RBC Direct Investing and BMO InvestorLine prominent among them — have started offering US Dollar RRSPs. Clients in other brokers like Scotia iTrade and CIBC Investor’s Edge are now reporting that US dollar dividends in registered accounts are converted into Canadian dollars at favourable rates. TD Direct Investing, unfortunately, is not only dragging its feet on offering a US Dollar RRSP but also refusing to do anything about currency conversion charges in registered accounts. At the very least, to remain competitive, TD Direct Investing should convert US Dollar dividends in registered accounts at favorable rates but in recent communications, TDDI indicated the best they can do is wash US dividends into the TD US Dollar Money Market Fund but only for selected clients and only if the client calls before the dividends are due and requests a wash trade. To be fair, TDDI is reported to have stopped double dipping on US dollar dividend reinvestments as it did in the past but that is of little use to non-DRIPers.

After sitting down and calculating the fees incurred in keeping our registered accounts at TDDI, I started looking into other brokers. My requirements were:

  1. Must be a broker affiliated with a large financial institution.
  2. Must have easy transfer of funds between TD Canada Trust bank accounts and brokerage accounts.
  3. Must have segregation of US Dollar securities in registered accounts.
  4. Must have easy, automatic Norbert Gambitting across all accounts.
  5. Must refund transfer out fees that will be charged by TD Direct Investing.
  6. Nice to have HISAs to park cash.
  7. Nice to have DRIPs for REITs.

My choices narrowed down to RBC Direct Investing and BMO InvestorLine but I decided to go with the latter because, frankly speaking, they offered a bribe.

The BMO Bribe

Until March 10, 2014, BMO InvestorLine is offering clients who are funding their qualifying account (Cash, Margin, RSP, Spousal RSP or Corporate account) with at least $100,000 in net new assets and maintaining the account for a six-month period a cash back of $250 and 250 free trades for a 90-day period. Clients opening an additional qualifying account and funding it with at least $5,000 will receive an additional cash back of $50.

But wait, it gets better…

The cash back offer can be combined with BMO InvestorLine’s Refer a Friend program. If you have a friend with a BMO InvestorLine ask for a referral (if you don’t have a referral, contact me). If the new account is funded with $50,000 or more in assets, the new client will add a bonus of $50 ($100 for accounts opened with $250,000 in assets). The referring account also receives a bonus of $200 or $300.

Also, the BMO cash back offer is per client, so if your spouse opens an account and funds it with at least $100,000, he or she will also receive $250. Better yet, open your account first, then open your spouse’s account with your Refer a friend code (which is simply the e-mail id associated with your InvestorLine account) and together you can end up with a total of up to $1,000 in total cash back plus free trades. Now, BMO InvestorLine’s Cash Back offer is not nearly as attractive as the 1 percent of account value in cash that RBC Direct Investing offered a few years back, but it is a decent incentive for a couple of hours of paper work.

The Catch

As with any offer, you have to pay attention to the fine print. A client should maintain $100,000 in net new assets in the account for a six-month period to receive the cash back. For example, let’s say John opens an account and funds it with $150,000 in total value of stock and cash on the day of the transfer. The next month, John’s investments have grown and the account balance is $200,000. He withdraws $60,000 from the account. Since, the net new assets ($150,000 – $60,000) is below the $100,000 threshold, John will not be eligible to receive a cash back. Note that any dividends paid into the account do not count as new assets. Also, if the account value drops below the threshold after the account is funded due to market fluctuations, the cash reward(s) will still be paid out. These terms and conditions are consistent with other cash back offers I have participated in the past.

If you do decide to take advantage of BMO’s Cash back offer, I would recommend setting up an appointment with an InvestorLine Representative at your nearest branch. Ask the Rep to confirm that all transfer out fees will be refunded by BMO InvestorLine. You will need your Driver’s License, Social Insurance Number card, a void cheque and your TD Direct Investing account statements and be prepared to spend at least a couple of hours in preparing the paperwork.

This article has 46 comments

  1. I’ve met with challenges helping family set up BMO InvestorLine accounts. I’ve always filled out all the paperwork online and then taken it to a branch for them to check IDs and forward it.

    I’ve learned that health cards are no good for ID in Ontario, and they really want postal codes on all the obscure address they ask for. I’ve also had trouble with one branch that would fax in the ID photocopies and then Investorline says they’re not clear enough.

    Once when sending in paperwork on two accounts, the ID photocopies got switched between the two accounts. That took a while to straighten out.

    Overall I’m happy with InvestorLine, but you have to be patient with account opening. It can easily take an extra week or two after you think you’re done. And you might have to explicitly ask for 5-star status on any account that you attach to your unbrella ID.

    • Canadian Capitalist

      Michael, thanks for your comments. The InvestorLine rep I worked did say that it is best to open the account at a local branch. The paperwork is mountainous and I spent about 1-1/2 hours opening my accounts and still found a couple of mistakes. And yes, you need postal codes for your current address, your old address (if you lived at the current address for less than 2 years), your work address, your spouse’s work address etc. But this is pretty much standard at other brokers as well, so I can’t complain.

      • It’s true that all brokers want postal codes. My complaint about InvestorLine is that their online form allowed me to leave out some postal codes and then they just waited for me to call them to find out why my account remained frozen.

      • Canadian Capitalist

        Yes, it would indeed by annoying to have new accounts frozen. It looks like the rep set mine up correctly but I will know for sure when the holdings get transferred over from TDDI and I actually make a trade.

  2. Oops, 2 typos. Should be “addresses” and “umbrella”.

  3. The BMO Bribe

    Until March 10, 2013, BMO InvestorLine is offering clients

    ….well thanks for the heads up…9 months late.

  4. Does this mean I will receive $250 and BMO will in addition cover my transfer out fees?

    • Canadian Capitalist

      @Michael: The transfer fee reimbursement is in addition to the cash back. According to BMO website, if you transfer $250K or more, transfer fees will be reimbursed up to $200 automatically. However, check with a BMO InvestorLine rep. In my past experience, I’ve always managed to get transfer fees reimbursed even if the transfer amounts were below the threshold. But, as always check first because you don’t want to be unpleasantly surprised.

  5. Scotia iTrade has US friendly RRSP but charges $30 per quarter for each account.

    • Canadian Capitalist

      @Phil: I did not even consider Scotia iTrade because for our two family accounts the US-friendly RRSP will cost us $240 per year. For a low activity investor like me, most years that kind of cash will pay for all the trades and have change left over for a couple of beers.

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  7. Another negative about TDDI is that the only way to open a new account, even when you already have another account there, is to go to a bank banch. I prefer and need to do stuff online; BMOIL can do that, at least for people like me who already have an existing account, so BMOIL has ended up with a new TFSA.

  8. Hello! Great article. I am seriously considering opening an account with BMO. So, if I do, I will contact you for the referral.
    My question is: How is the performance reporting feature with BMO? Do you like it??
    Also, has anyone done a Norbert’s Gambit with BMO?

  9. I have been with Investorline for a few years and while it is great that I have a significant amount of my RSP in US funds, there are some drawbacks with Investorline generally, particularly around the minimums.

    To use the HISA, you must park at least $5000 in it. Once $5000 is in the account subsequent purchases are min $500. For me this is not very useful and defeats the purpose of having access to a HISA since I rarely accumulate over 5k in cash. If I am going to have over 5k in cash (either as new funds or by selling an investment or having fixed income come due), I typically invest it pretty quickly rather than let it sit.

    While my RSP is entirely in ETFs, my wife’s is in indexed mutual funds (as are my kids’ RESP). There is a $5000 min per fund and each additional purchase needs to be at least $500. This is very restrictive for those starting with a smallish portfolio.

    Other than special promotions liek the one you mention (there was one in place when I joined a few years ago), there are no “free” trades for ETFs. I would have thought that they would have at least made purchasing BMO ETFs commission free.

    When I need to call, the hold times are longer than they should be. Transferring US funds from my BMO USD account to my Investorline RSP can’t be done online and must be by phone.

  10. CC, I did the exact same thing as you…got the idea off CMF site. Transferred RSP, TFSA, cash acount from TDDI to BMO, for the same reasons as you. All accounts finally showed up on BMO site yesterday (after 8 days). Transfer paperwork at branch no big deal, 45 min., I had to call and send copy of license on follow up as accounts suspended due to non-clarity of license photocopy taken by rep at branch.

    BMO told me that they will pay all transfer fees and I will get $300 into cash account in 6 months. I noticed yesterday that TDDI dinged ALL THREE accounts over $150 in transfer fees – BMO rep on phone said they will reimburse all.

    This seems pretty low – $152 transfer for each account! Is that your experience also?

    • Canadian Capitalist

      Yes, the transfer out fees are pretty standard across brokers. Around $150 per account. But, as long as you negotiate with the receiving broker before you open an account and do the transfer, my experience is transfer fees are almost always refunded. TDDI, for instance, was willing to refund the transfer fee, when we moved TFSA accounts from Ally, when we had only a couple of years’ contribution in it — around $10K or so.

    • I mean “low” in a bad way, as in “low down dirty rotten.” But I guess that’s the game.

  11. Canadian Capitalist

    @CanadianInvestor: Good to know. When I opened a TFSA account, I don’t remember the process I went through at TDDI. I must have done it at the branch. We have a branch a few blocks down the street, so it was not a problem. For clients, who have to do it by mail, it would be a problem.

    @Helen: I looked up performance reporting in BMOIL after seeing your comment. They report an account’s annual, quarterly and comparison with a benchmark. It’s slick but I’m not sure how useful this will be (unless one’s entire portfolio is in one account) because all one care’s about is the entire portfolio’s return, the components of which will be spread across different accounts. I still think, I’ll stick to my Google spreadsheets for tracking returns but especially rebalancing and ACB.

    I’ll dig up references but gambitting is super simple at both BMOIL and RBCDI (among big bank brokers). Buy TD on TSX, sell TD on NYSE and when the trades settle, you’ll have converted CAD into USD.

    @Greg: Thanks for your input into the niggles you face at BMOIL. You are correct that TDDI is better for parking cash and index mutual funds. TDDI has three HISAs all with $100 minimum. Also, their e-Series funds are legendarily cheap for investors.

    For me, I did not worry about parking cash because in registered accounts, my cash balances tend to be low because all dividend payments come in around the same time at the end of the quarter. Also, my kids’ RESP accounts are in index funds and they are staying with TD Mutual Funds. If I had different requirements, BMOIL would not have worked out.

  12. I’m curious about your first requirement, “Must be a broker affiliated with a large financial institution.”

    I’m personally a fan of Questrade. I’ve searched your site and it seem’s you’ve had not so great experience in the past. I’ve only used them for the last year or so, so I think there has been some improvement. Although their journalling process for norbert’s gambit is a little tedious — requiring a phonecall or a live-chat request.

    In anycase is there something the large financial institutions have that a discount broker such as questrade doesn’t, or is it just the ease of brining all your banking/investing under one bank that made you specify that initial requirement?

    Thanks,
    SK

    • Canadian Capitalist

      @SK: Technically, brokerages are required to keep fully paid-up securities in cash and margin accounts segregated. i.e. they may not be used for the firm’s business. As we learnt in the bankruptcy of MF Global, more than $1 billion worth of clients assets were illegally accessed and it is only now — more than 2 years later — that customers will be fully paid back.

      IMO, it is better to keep your assets with a broker affiliated with a bank or another well capitalized company. No guarantees still but at least you have some additional protection offered by the bank’s shareholder equity.

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  14. What rate does the BMO HISA pay?

    I’m getting 1.25% at TDDI with TDB8150 & TDB8155.

  15. You indicated that one of your requirements in selecting a discount broker was that it would have to provide for easy movement of funds between your TD Trust accounts and your discount brokerage accounts – how does BMO Investorline accomplish this ? – and does it allow for funds to be moved in both directions ?
    You also indicated that Norbert’s Gambit was easy to do at BMO Investorline – is it really as slick as buying TD on the Toronto Exchange and immediately selling TD on the New York Exchange ? – does one have to pre-arrange it or notify BMO Investorline beforehand what you’re up to – or is it OK to just go ahead and do it ?
    Thanks for the great info

    • Canadian Capitalist

      @Warren B: When you open an InvestorLine account, you get a bank account to go with it. The bank account allows 2 free withdrawals per month and unlimited deposits at a branch or ABM network. Deposits can also be made online by setting up BMO InvestorLine as a Payee in your chequing account.

      I haven’t done a Gambit at BMO just yet but my understanding is that at both BMO and RY it is as simple as buying on the TSX and selling on the NYSE (for converting CAD to USD).

      Hope this helps.

  16. “I’ll stick to my Google spreadsheets for tracking returns but especially rebalancing and ACB.”

    Would you kindly share a sample of your spreadsheets with us? I never heard of Google spreadsheets before.

    Thank you.

  17. “Must have segregation of US Dollar securities in registered accounts.”

    I suppose this means TFSA as well, doesn’t it, and BMO offers it?

    I cannot believe TD is behind. It’s not that they are lacking money to modify the system. And they are segregating US Dollar securities in non-registered accounts, so they must have the “know-how”.

    I have been waiting and waiting and finally I think I will make the switch.

    “Must be a broker affiliated with a large financial institution.”

    Very good point, Questrade offers free commission purchase of ETFs but why take any chances, even if the risk is very small.

    • Canadian Capitalist

      @skeptical investor: I think BMO offers USD TFSA. Not sure though. It wasn’t important for me because our TFSAs hold CDN securities.

  18. @CC
    In the switch from TDDI, did you have leftover dividends at TDDI and did you have to call them to get them back? Also, did you have to bug BMO to get your transfer fees reimbursed? I am faced with both of these situations.
    One complaint about BMO IL. Threre doesn’t seem to be the “Activiy” page like TD has, which lists recent transactions and conversion rates, in a one page format. I found it very convenient at TD.

    • Canadian Capitalist

      @madMike: For me, there are no dividends due until the first week of Feb and the transfers should hopefully be done by then. Dividends paid into the TDDI account after the transfer, will be sent over the BMOIL account. It’s part of the transfer process.

      My transfers are in process but I’m not expecting any problems in getting them refunded. Did you talk to anyone prior to transferring about refunds?

  19. Yes I talked to a rep before transferring, I made sure that the fees were covered. I’m told I have to show them my new statements with the fees deducted, so now I guess I have to wait until early next month for the first statements.
    A bit of a pain but should work out in the long run.

    • Canadian Capitalist

      @madMike: When transferring accounts in the past, I had to show that transfer out fees were paid by attaching statements as well. It seems standard, so no worries there.

  20. The BMO IL rep on phone told me about the fine print on the transfer – have you read it? You must open one account with at least $100,00, to qualify for the $250 bribe, then add another $5000 to another account to get the extra $50 “Promotion”.
    This contradicts what I was told in person at branch, that I qualified with $100,000 total assets.

    I guess I’ll have to wait the 6 months to see if my move was worthwhile, or if I got “taken” by the big banks again.
    I had to add my TFSA together with RSP to hit the $100,000 magic threshold. Seems pretty sneaky.
    Did you have this issue?
    Also, I was told by IL rep that the federal govt. regs prevent DRIPS of $US securities.
    I’m anxious to see my first

  21. Anxious to see first statement to see if DRIPPED $US goes staright into $US side or gets “converted”, thought I was assured they would not.

    • @madMike: I was aware that a second “qualified” account should be opened for the extra $50 bribe. The rep at the branch also said the same thing. Note that TFSA is not a qualifying account. Shame that you were told otherwise at the branch. I don’t know of any regulations that prevent USD DRiPs. TDDI, for example, offers USD DRiPs on many securities.

    • I have some stocks in the USD side of my RRSP at InvestorLine. The dividends are paid and stay in the USD side.

      I don’t DRIP.

  22. I just signed up for an InvestorLine account. I saw one of your criteria was that you should have easy transfer of funds between your TD bank account and the brokerage account. It looks like a drawback of InvestorLine is that it’s easy to do a bill payment to get funds in, but seems like the best way to get funds back is to write a cheque to yourself. Have you found anything better? Coming from Questrade I miss the EFT.

  23. There is one major problem with BMO IL statements. They do not publish the BOOK VALUE of your investments.
    This information is essential at tax time when you are figuring out what capital gains or losses to report. One just goes back to the statements and NO BOOK VALUE FIELD
    Book Values keep changing if you are enrolled in DRIPs
    When I asked about this the rep told me they are displayed on the website.
    However the website displays the average cost per share only for that day. If you wanted that information for 31st December on 28 March when you are doing your taxes good Luck – you wont find it.
    TDW statements clearly show book values on the website and on the printed statements making tax time that much easier
    Major reason why I left BMO IL

  24. rajeev with all due respect i strongly believe each individual investor has to learn to keep meticulous constantly-updated ACB records for himself.

    the reason is that brokers make far too many mistakes. They are not paid for this ACB service in cash or margin accounts, it is being offered purely as a courtesy.

    my principal broker – who shall be nameless – makes horrendous, eye-blinding, ghastly mistakes. Apparently representatives can phone the back office to get ACBs adjusted. Apparently it’s not uncommon that either rep or back office clerk or both get the ACB number wrong.

    this is what happened to my BMO stock. It has a cost base in the high $60s. All of a sudden the broker dropped the ACB to less than $10 per share.

    the reason? a licensed rep had phoned in with another clients’ data.

    of course i have my own records so what the broker thinks about ACB in non-registered accounts at the end of the day is not worth a bunch of parsley.

    still, an investor should not develop a dependence on unstable data.

  25. td waterhouse client

    http://www.tdwaterhouse.ca did not fill my 94.64 limit sell order which was .02 lower than the high.
    Google Finance showed MPC as having hit 94.66 on March 18th (Tuesday).
    TDwaterhouse.ca explanation is that 94.66 was a fill from the ARCAEX and the NYSE, where TD put limit orders, did not have any fills in the 94.60’s.
    TD claims market order fills on the ARCAEX got priority, were filled “quicker” on the ARCAEX instead of mine .02 cents lower on the NYSE.
    Are prices from Google Finance from the NYSE or do they include the ARCAEX as well?
    Is this BS or does this explanation hold water?
    I’m thinking of sell out and moving to BMO with the free trades offer.

  26. I have been with BMO InvestorLine for almost 10 years and I am ready to bail. The list of problems encountered is way too long, but they have recurring intermittent problems when it comes to prices, streaming, volume and functionality of the website. If you want to go to them, just because of their “bribe”, you may want to think again, especially if you plan to be active.

    To TD Waterhouse Client, all brokerages are on a “best efforts” basis when it comes to filling your order. So if TDW routed your order to one exchange and another exchange had a trade going 0.02 higher, it is possible that your order was not filled.

  27. Think again.

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