Personal Finance

Industrial Alliance RESP

  • Last Updated:
  • Mar 13th, 2020 12:09 am
Tags:
None
[OP]
Newbie
Oct 13, 2012
97 posts
29 upvotes
Mississauga

Industrial Alliance RESP

Hi!
Does anyone has any experience with the Diploma RESP offered by Industrial Alliance? A broker presented us the product, but I'm not yet convinced. I listed below some of the details I found so far.
One of the selling feature seems to be the 15% bonus you will receive after contributing for 16-17 years, but it's not clear if this is the only bonus or you are getting also year by year returns.
You receive an education bonus of up to 15% of your total contributions once your commitment has been fulfilled.
Also, it looks like the 15% is a one time bonus, at the end of the contract. I'm not too familiar with the financial world, but comparing this with the rather high MER (3.53%), it might not be too much of a bonus...

Any help will be greatly appreciated.

Official site: http://ia.ca/resp-diploma-my-education
Performance Data for Diploma Elementary: http://files.ia.ca/-/media/files/ia/pla ... -fu844.pdf
Performance Data for Diploma Secondary: http://files.ia.ca/-/media/files/ia/pla ... -fu845.pdf
27 replies
Newbie
Jun 22, 2015
1 posts
Saint-Romuald, QC
Hi,

Please see our answers in green.

Hi!
Does anyone has any experience with the Diploma RESP offered by Industrial Alliance? A broker presented us the product, but I'm not yet convinced. I listed below some of the details I found so far.
One of the selling feature seems to be the 15% bonus you will receive after contributing for 16-17 years (there is a 15 % bonus if there has been a monthly payment of at least 25$, for a beneficiary aged 0-4. The bonus is paid at the end of the year where the beneficiary attains 17), but it's not clear if this is the only bonus or you are getting also year by year returns (this 15% bonus is added to investment return you get on the Diploma funds).
You receive an education bonus of up to 15% of your total contributions once your commitment has been fulfilled.
Also, it looks like the 15% is a one time bonus, at the end of the contract (payable at the end of the year when the beneficiary turns 17). I'm not too familiar with the financial world, but comparing this with the rather high MER (3.53%), it might not be too much of a bonus...
The 15% bonus is calculated as the product of 15% and the sums of monthly payment made. This is added to net investment return which is not guaranteed.
Deal Expert
Aug 22, 2011
32027 posts
17915 upvotes
Ottawa
Group RESP...stay far away.
Too many fine prints and if you ever decide to leave before the full commitment term;be prepared to fork over thousands of dollars.
Deal Addict
User avatar
Jan 2, 2012
3644 posts
1512 upvotes
Toronto
catalinb wrote: Also, it looks like the 15% is a one time bonus, at the end of the contract. I'm not too familiar with the financial world, but comparing this with the rather high MER (3.53%), it might not be too much of a bonus...]
3.53% is ridiculous for an account mainly invested in bond or index funds.
If you put in the maximum $2500+$500 CESG = $3000 each year for 15 years, based on a reasonable return in the 3-4% range you are looking at over $20,000 in lost potential earnings by paying the ridiculous MER and not re-investing that money instead yearly. Their 15% "bonus" wouldn't come close to overcoming the MER hit.

Plus with these scholarship companies you need to pay close attention to penalties if you want to change, put a hold or cancel your monthly contributions, not to mention the penalties if your child ends up not going to a qualifying school.

In short, most of these types of plans are pretty bad. You're better off going through your bank and putting the RESP in some of their funds or a few simple ETFs. No commitments, hidden fees or penalties to worry about.
Newbie
Jun 22, 2015
96 posts
26 upvotes
Calgary, AB
To add to the above, our company has RRSP with them. Their fees are very high even for index products, and as said above, there is a lot of fine print. I can't even transfer the money my employer put in after many years. These types of companies make their money by catching customers through brokers and company plans and try to keep them locked in using fine prints etc.

As soon as I reach a certain limit, I will pull my money out of there through a discount brokerage. I would stay away from industrial alliance if I were you.
Sr. Member
Feb 5, 2013
592 posts
109 upvotes
catalinb wrote: A broker presented us the product
It is probably a 'sure thing' for him, then. Long term commitment with high commissions. For you? No idea.
Newbie
May 26, 2015
26 posts
4 upvotes
Toronto
Don't do it! When I worked as a Financial Advisor I saw so many unhappy families that were emotionally caught by group RESPs. As others mentioned, they have extensive product conditions and high MERs. Plus, it's typically extremely difficult to get out of the investment plan.

If you're unfamiliar with investments, go into your bank and see what they can offer you. The MERs are a little high, but if you take an index product you should be fine (don't get caught with their high service MERs Mutual Funds). These accounts are very flexible, the mutual funds don't have load fees and it can be easily linked to your existing accounts. You can also sign-up for a self-directed RESP and choose investments with lower MERs (but with commissions).

Also, here's a link to all the government grants/benefits available to your child

Hope that this helps,

The Friendly Financial Coach
Deal Addict
User avatar
Feb 16, 2004
1519 posts
52 upvotes
York Region
to bump an old thread - im glad i googled it first before investing! RFD has everything! love it!
Banned
Aug 19, 2016
1903 posts
756 upvotes
edkate wrote: to bump an old thread - im glad i googled it first before investing! RFD has everything! love it!
Lucky you. A lot of my friends are at the age for kids and a lot of them felt into these traps.
They have sales people waiting for you outside the clinic.
Deal Fanatic
Jul 1, 2007
8341 posts
1341 upvotes
Ask the "broker" how much commission they make up front for putting you into this RESP product. Oh yeah, insurance salespeople in Canada don't have to disclose commissions.

Just stay away. If the person purportedly offering you an investment isn't registered here: https://www.securities-administrators.c ... px?id=1128 then they're not real advisors, they're insurance salespeople. You can buy term insurance from them, as needed, but don't let them sell you anything else.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Deal Addict
User avatar
Jan 8, 2007
3790 posts
766 upvotes
Kingston, Ontario
This is not group resp plan this is an individual plan. You guys have your info mixed up
Deal Fanatic
User avatar
Apr 29, 2008
6461 posts
2404 upvotes
Montreal
Slawek wrote: This is not group resp plan this is an individual plan. You guys have your info mixed up
Still a bad offer considering high fees
Deal Fanatic
Jul 1, 2007
8341 posts
1341 upvotes
Slawek wrote: This is not group resp plan this is an individual plan. You guys have your info mixed up
I think people are likening it to a group RESP/scholarship trust, even though it's not exactly.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Deal Addict
User avatar
Jan 8, 2007
3790 posts
766 upvotes
Kingston, Ontario
I am actually just about to sign up my son for an resp and I was weighing heavily on this Industrial Alliance plan. However, we have pretty much made up our mind to go with RBC directly from the bank

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)