How to Consolidate Scattered RRSPs in Canada

As Canada’s financial services landscape grows to include online banks, credit unions, robo-advisors, online brokerages and other providers, it’s increasingly common to end up with registered retirement savings plans spread across multiple institutions. You might have an employer-sponsored RRSP at work, opened a guaranteed investment certificate (GIC) to meet a contribution deadline, and also hold another RRSP managed by a financial advisor.

While having more retirement savings is a good thing, leaving those accounts fragmented can be counterproductive. “Diversification should focus on asset classes, not on scattering accounts across institutions,” says Morgan Ulmer, a financial planner with the fee-for-service firm Caring for Clients in Calgary. Spreading your RRSPs out can create unnecessary costs and complexity.

Cost is one obvious downside. Many RRSP accounts charge annual administration fees that range from about $25 to $200. If you hold several accounts you may be paying that fee multiple times. In addition, some providers offer lower fees or better pricing tiers once your assets reach a certain size—savings you could lose by splitting funds across different institutions.

Beyond fees, managing your asset allocation becomes more cumbersome when accounts are scattered. “It gets unwieldy,” says David Trahair, CPA, CA, and author of several books on personal finance. If you can’t easily see the total amount in equities versus fixed income across all accounts, keeping a consistent target allocation is harder. Consolidating makes it simpler to monitor portfolio balance and rebalance when needed.

There’s also a practical, everyday benefit: fewer accounts mean less administration, fewer statements, and a smaller mental load. “If you can reduce complexity without sacrificing benefits, that’s a win,” Ulmer says.

That said, there are valid reasons to keep some RRSPs separate:

• If you hold large GIC positions. GICs from banks, credit unions and other institutions are covered by the Canada Deposit Insurance Corporation (CDIC) up to $100,000 per member institution. If your RRSP GIC holdings exceed that threshold, it may make sense to spread them across institutions for full coverage.
• For specialized or restricted investments. Some advisors and platforms don’t offer every type of investment. If you want a specific security that your primary advisor can’t hold, keeping a separate account with a broker that can is reasonable.
• To try a new provider. If you’re considering a robo-advisor or a low-cost discount brokerage, it’s wise to test them with a small account before transferring your entire portfolio. “A bit of experimentation can be useful, especially for younger investors,” Trahair notes.

If you decide consolidating is right for you, follow these steps to move your RRSPs without unnecessary cost or disruption.

Take stock of your RRSPs

Gather the most recent statements for every RRSP you hold. Statements must disclose fees and your personal weighted rate of return for one, three, and five years, and since account opening. Compare fees, returns and the quality of service. If one account clearly offers better net returns and lower fees, that’s often the best place to consolidate. If none of the options meet your expectations, seek referrals and interview multiple advisors to find the right fit.

Contact the provider you want to transfer to — not the one you’re leaving

You don’t need to notify your current provider first. Instead, contact the institution you want to receive your RRSPs and ask them to initiate the transfer. They’ll provide and submit the necessary paperwork (CRA T2033, Transfer Authorization for Registered Investments) on your behalf once you supply details such as the names of the current institutions and account numbers. Many providers now offer online transfer tools to streamline the process. “They want your assets under management, so they usually make transfers easy,” Trahair says.

Choose “in kind” transfers when possible

Ask the receiving institution whether they can accept your existing investments “in kind” — meaning the securities are moved as-is — rather than liquidating them into cash first. In-kind transfers keep you invested through the transfer process and avoid potential market-timing issues. They also prevent triggering sell charges or other fees that can arise when holdings are sold to effect a transfer. Note that some proprietary funds or specialized products may not be transferable to other platforms.

Watch for deferred sales charges on “in cash” transfers

Certain mutual funds charge deferred sales charges (DSCs) if sold within a specified window — commonly seven years — from purchase. These fees can be substantial. Check whether any of your funds carry DSCs and review their redemption schedule. If you’re beyond the DSC period you can sell freely; if not, you may be able to redeem up to 10% annually without penalty. Ulmer says advisors should identify DSCs during transfer planning — failing to do so can cost clients money.

Regulators in Canada banned the sale of new mutual funds with DSCs as of June 1, 2022, but existing DSC schedules still apply to older fund purchases, so it’s important to confirm each fund’s status.

Ask about account-closing fees

Although transfers themselves are generally fee-free, some institutions charge $50 to $100 to close an account. Ask the receiving provider whether they will reimburse or cover closing fees as part of bringing your assets to them — many will offer to do so to attract your business.

Read more about GICs as a good investment:

• The benefits and flexibility of family RESPs
• How to ladder your GICs in Canada
• Is now the time for retirees to sell stocks and buy GICs?
• Annuity vs. GIC: What makes sense for retiring?