Investment Account Transfer Fees: What to Check Before Moving
Ask the departing institution’s exit fees and check whether the receiving one reimburses them before moving an account.
In this article
Moving an investment account for better fees is often worthwhile, provided you know the cost of the transfer itself. The institution you leave charges transfer fees per account. The new one often reimburses them, but under conditions: a minimum amount and a written request. Get that commitment by email before starting anything. You then have to choose between an in-kind transfer, where positions travel as they are, and a cash transfer, where everything is sold and repurchased. The latter means days out of the market and, in the taxable account, realized gains. Some proprietary funds cannot be transferred and will have to be sold. Plan those sales with tax in mind rather than enduring them mid-process. This article lays out the complete checklist, the order of steps and the documents to keep until the statement that confirms the promised reimbursement.
Know the exit bill
Leaving an investment institution means transfer fees, billed per account. An RRSP, a TFSA and a non-registered account leaving together generate three bills, often around $150 each. These fees appear in the departing institution's fee schedule, a document to check before any move. They add to any closure charges. Include the complete exit bill in your calculation of whether the move pays off. On a small account, it can absorb a year of management-fee savings. On a large one, it becomes negligible, and reimbursable. Knowing the exact figure avoids surprises and helps you negotiate with the new institution, which knows these schedules very well.
Secure the reimbursement before leaving
Most receiving institutions reimburse transfer fees, but under conditions: a minimum transferred amount, often around $25,000, and an explicit request, since the reimbursement does not happen automatically. Get the commitment in writing before starting the transfer. An email specifying the accounts and amounts is enough. Keep it until the actual reimbursement, which generally appears on a statement one or two months after the funds arrive. Without a prior written commitment, an after-the-fact request is harder to negotiate. Transfer promotions sometimes sweeten the offer, with cash bonuses by amount. Compare them across receiving institutions, along with their retention conditions: the money often has to stay a year or two.
Choose between in kind and in cash
The transfer can happen two ways, with opposite consequences. In kind, the positions travel as they are: no sale, no time out of the market, no tax consequence. Ownership simply changes address. In cash, everything is sold at departure and repurchased on arrival. You spend days or weeks out of the market, missing any rise in the meantime. Above all, in the non-registered account, all accumulated gains are realized, which means an immediate tax bill that can exceed years of fee savings. The default rule: in kind wherever possible, especially for the taxable account. Reserve the cash transfer for cases that demand it, such as non-transferable positions or a complete portfolio overhaul already decided.
Spot the passengers that will not travel
Some positions cannot make the trip: the departing institution's proprietary funds, which are absent from the new one's shelves, and certain in-house products. The transfer blocks them or turns them into a forced sale. It is better to find out before launching the process. Submit your position list to the receiving institution, which will identify the ones that cannot be transferred. Plan their sale, in the taxable account with tax in mind, so you choose the timing rather than endure it. Then monitor the transfer calendar, a few weeks in normal times. Check the positions that arrive against the departure list and chase the ones that are late. Documented follow-up keeps the move from dragging into a dispute with the brokerage.
Quebec scenario
Drawn by lower fees, a financial controller in Saint-Georges wants to move his $240,000 investment account. Before signing, he reviews the hidden costs of the transfer. The departing institution charges $150 per account transferred, $450 total for his RRSP, TFSA and cash account. The new institution reimburses those fees, but only on written request and for transfers above $25,000. He gets that commitment by email before starting anything. Then comes the decisive choice: a transfer in kind, where his positions travel as they are, or in cash, where everything is sold and repurchased. He chooses in kind, to avoid spending weeks out of the market and, in the cash account, to avoid realizing taxable gains. Two proprietary funds from the old institution cannot be transferred, however. They will have to be sold, and he schedules those sales with the tax bill in mind. The transfer takes five weeks. The fee reimbursement lands on the second statement, as promised in the email he had archived.
Checklist
- Ask for the exit fees per account
- Get the reimbursement commitment by email
- Choose the in-kind transfer when possible
- Avoid the cash transfer's weeks out of market
- Protect the taxable account from needless sales
- Identify non-transferable positions in advance
- Plan their sales with tax in mind
- Track the transfer through the final statement
- Verify the promised fee reimbursement
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