Benefits of moving many funds under a web direct brokerage service?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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Saintor
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Benefits of moving many funds under a web direct brokerage service?

Post by Saintor »

I am in mutual funds. I already have my two main accounts on web, not touching them.

I also have a few other 'minor' funds at 3 banks. BMO, RBC and TD. I just opened a Questrade account. Is it a good idea moving/centralizing them to Questrade "as is"? I would appreciate the commodity of easier reporting and contributions as I never opened web accesses with them. I just get bunches of paper every quarter.
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Peculiar_Investor
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Re: Benefits of moving many funds under a web direct brokerage service?

Post by Peculiar_Investor »

Welcome to FWF.

A couple of quick thoughts. From the point of keeping things simple, I would agree that moving/centralizing your holdings "as is" to a single financial institution makes sense. One caveat, double-check with the receiving institution to make sure that all of your existing holdings can be transferred in-kind before starting to move things.

The second, most important thought, have you done the math on the management expense ratio (MERs), i.e. ongoing costs, associated with your mutual fund holdings? Canadian mutual funds have some of the highest MERs. There are much lower cost alternatives available, you might want to read our wiki article, Low cost investing - finiki, the Canadian financial wiki for some ideas. Again a caveat with mutual funds, make sure you are aware of any deferred sales charges (DSC) if you become convinced it is time to leave that high cost world.
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Re: Benefits of moving many funds under a web direct brokerage service?

Post by pmj »

The OP may already be aware of this - Questrade refunds a good chunk of the fees it receives from the MF Cos via its "Mutual Fund Maximizer" program. It's an effective method of mitigating the MERs on funds that are "stuck" in back-end fee agreements.

And, notwithstanding that most MFs do charge high MERs, it's not a given that their performance is worse than similar indexes or ETFs. I've been pleasantly surprised by a few funds that I hold - and as a result, I'm happy to use certain funds to mop-up stray dividends.
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