Investing

Thinking of switching RDSP from TDDI to National Bank Direct Brokerage. Any things we should know? What are downsides?

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[OP]
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Dec 26, 2019
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Thinking of switching RDSP from TDDI to National Bank Direct Brokerage. Any things we should know? What are downsides?

Hello there. Less than a year ago, we became eligible for the DTC and so opened up an RDSP account with TD Direct Investing. At that time, the only two options for self-directed investing in an RDSP account were TDDI and National Bank Direct Brokerage. I don't recall why we decided on TDDI over NBDB.

Were NBDB's fees in 2020 lower than TDDI's? https://www.theglobeandmail.com/investi ... o-putting/, which says that National used to charge $7, whereas TDDI in 2020 (and even now) charges $10. So I guess lower fees wasn't why we chose TDDI.

Was it because we could open an account with TDDI much sooner than NBDB? Memory's hazy on this one.

Anyway, now that National got rid of their trading fees, it seems like a no-brainer to switch from TD to National.

Just a little bit about our RDSP account activity. We have just bought ETFs in bulk and plan to hold the position until beneficiary needs the funds. That's decades away.
We are not investing experts (in other words, we don't know much about options trading or stuff like that, but are willing to learn if it will help with returns)

What should we be aware of in making this switch?
TDDI charges $150 for the transfer out, and National Bank is willing to pay up to $135 of the transfer fee. So we customers will have to cough up $15 bucks. That's not bad -- two free trades with National, and you already recoup the cost!

But what are the downsides to switching to NBDB?
10 replies
Sr. Member
May 2, 2019
723 posts
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Vancouver
pleasantpeasant wrote: the only two options for self-directed investing in an RDSP account were TDDI and National Bank Direct Brokerage. I don't recall why we decided on TDDI over NBDB.
Why the downvotes? People must be confused. It's a valid thread as RDSP is a very special case and deserves a separate discussion.

Anyway, good question. I didn't even know there was RDSP at NBDB. It seems one downside is the administration fee of $100/year, unless you have $20K at the brokerage - I suppose many RDSP accounts start smaller. There are other ways to avoid the fee, such as 5 commission-generating trades / year (how do you do that if trades are free?) or being younger than 30 (not clear if it helps a young RDSP beneficiary if the account is in their parent's name).
Sr. Member
Feb 13, 2008
815 posts
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Edmonton, AB
yvrbanker wrote: Why the downvotes? People must be confused. It's a valid thread as RDSP is a very special case and deserves a separate discussion.

Anyway, good question. I didn't even know there was RDSP at NBDB. It seems one downside is the administration fee of $100/year, unless you have $20K at the brokerage - I suppose many RDSP accounts start smaller. There are other ways to avoid the fee, such as 5 commission-generating trades / year (how do you do that if trades are free?) or being younger than 30 (not clear if it helps a young RDSP beneficiary if the account is in their parent's name).
Me too.

If I were you I would stay with TD for now because they have those low fee index e funds.
[OP]
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Dec 26, 2019
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yvrbanker wrote:
Anyway, good question. I didn't even know there was RDSP at NBDB. It seems one downside is the administration fee of $100/year, unless you have $20K at the brokerage - I suppose many RDSP accounts start smaller. There are other ways to avoid the fee, such as 5 commission-generating trades / year (how do you do that if trades are free?) or being younger than 30 (not clear if it helps a young RDSP beneficiary if the account is in their parent's name).
Fortunately, in our case, the RDSP account has enough in it to waive the $100 annual fee.
Jr. Member
Sep 12, 2008
188 posts
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Canada
If I remember right, only TD allowed you to invest in a wide range of investments.
Sure, I understand if you're not experienced, you're not likely to do option trading.

But I believe it's a good idea to have more than just a few choices, and IIRC, NB
only offered very few. Maybe check which investment choices they allow before
you take the plunge.
[OP]
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Dec 26, 2019
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shplad wrote: If I remember right, only TD allowed you to invest in a wide range of investments.
What investments does TD have that NB doesn't?
shplad wrote: Sure, I understand if you're not experienced, you're not likely to do option trading.
We plan to study option trading. NB as well as TD offers that.
shplad wrote: But I believe it's a good idea to have more than just a few choices, and IIRC, NB
only offered very few.
What choices does TD have that NB doesn't?
Sr. Member
Dec 13, 2010
839 posts
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Vancouver
If you're primarily buying ETFs inside the RDSP, then moving to NBDB could make sense. Both NBDB and TDDI are self-directed brokerages, so you can buy the same ETFs and stocks - but as you know, TDDI has a $10/trade fee, and NBDB is now $0. The interface is slightly different on the two platforms, but not in a significant way and probably won't make a difference to you.

If you were using the TD eSeries mutual funds for the RDSP, it would make sense to stay with TDDI - as they allow you to buy/sell the eSeries funds for free.

Are you mostly making about 1 trade per month, buying ETFs? If so, moving to NBDB will save you $120/year. This may or may not be worth the hassle of moving your account
Jr. Member
Sep 12, 2008
188 posts
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Canada
Well, I'd like to be able to tell you an answer, but after I tried
typing RDSP into the National Bank website, I got almost nothing
of any use.

That right there tells me something. You may feel differently.
[OP]
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Dec 26, 2019
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mastaj wrote: Are you mostly making about 1 trade per month, buying ETFs? If so, moving to NBDB will save you $120/year. This may or may not be worth the hassle of moving your account
Do you have an RDSP yourself?
Sr. Member
Dec 13, 2010
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pleasantpeasant wrote: Do you have an RDSP yourself?
No, not currently. We had one previously setup with TD, but it turns out the family member does not actually qualify for the RDSP. So the account was closed, but we had done a fair bit of background work to familiarize ourselves with it.

There's a thread here on RFD that has a lot good info :
registered-disability-savings-plan-rdsp ... d-2442095/
Member
Feb 27, 2011
221 posts
219 upvotes
I currently manage three RDSPs for family members, all with TDDI. I've been broadly satisfied, although all three account have passive investing strategies (rebalancing once a year), so the trading fees with TDDI are not a big concern. We've had a few hiccups with TDDI over the years, as front line staff aren't terribly knowledgeable about the ins/outs of RDSPs, but the "head office" staff in TO have been pretty good. I have no experience (good or bad) with NBDB, so can't really compare the two. So, if the account is your RDSP, and you wish to pursue an active trading approach within the account, then you probably could save some money by switching over to NBDB.

That said, if the beneficiary is someone else (even a child or a spouse), then I would offer some general caution against exploring alternative, active investment strategies (options trading, etc.) as that will add an unnecessary layer of risk and volatility to the portfolio. Given you are already earning a healthy return with the government grant (and/or bond), I would argue that a more conservative investment approach is most appropriate within an RDSP. Doesn't mean you have to keep everything in GICs or bonds, but just keep in mind that if you are managing an RDSP for someone else, your own risk tolerance is irrelevant. Think of yourself as managing someone's pension fund, and an appropriate strategy will emerge.

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