Investors turning to the web for RRSPs

By Bryan Borzykowski | January 15, 2014 | Last updated on January 15, 2014
3 min read

This story was originally published in 2008.

With RRSP season in full swing, it’s likely most clients are scheduling meetings with their advisors. But not all — a healthy number of RSP contributors are doing things themselves by investing online.

“In the old days, people thought direct brokerages were a haven for stock traders or day traders,” says Jason Fuller, Bank of Montreal’s business development manager for Eastern Ontario. “That perception is incorrect. Individuals doing this are looking for ways to reduce portfolio costs and increase their rate of return. The online format allows them to do that.”

Fuller says many of BMO InvestorLine — the bank’s online brokerage site — users are comfortable with web banking and are familiar with the available investment choices. He says many of its clients invest in ETFs instead of mutual funds in order to save money, and they like the speed that online RSP investing allows them.

“You can invest in a GIC in 30 seconds at the most,” says Fuller. “You go into your account and take a cash component and invest in a long-term GIC. A couple of keystrokes and you’re done.”

While it sounds like it might be hard to compete with a computer — and trading fees as low as $9.99 a transaction — Louise Diotte, a CFP at Investors Group, isn’t concerned that she’ll lose clients to web-based investing. “You get what you pay for,” she says. “The people that seek our advice are the people that would prefer getting the right plan.”

What’s missing from the online experience, says Diotte, is the ability to work out a comprehensive financial plan, which is integral to RSP investing. She says there are computer programs that will help clients figure out what they need to retire, but missing one step, or not planning realistically, could be detrimental to that person’s future.

“You don’t want to get to retirement and then find out you don’t have enough to retire,” she says. “I would never want to be in a situation saying to anyone, ‘Sorry, you wanted to retire today, but unfortunately you can’t.‘”

Still, more people are turning toward DIY investing, and the trend will continue if more advisors don’t offer full-service financial planning. “If advisors want to bring people back into the fold, they have to offer something different than investment advice,” says Robert Abboud, CFP and president of Orleans, Ont.-based Wealth Strategies. “People say, ‘What am I paying for if I’m only getting investment advice? I’ll do it myself.‘”

He says when advisors start offering the “full suite” of financial planning services, clients won’t even think about online investing.

But advisors need to start shifting their business now, as it’s only a matter of time until more people get turned on to the web-based investing, mostly because of the lower fees. “It’s not competition because DIY firms are offering the same series of funds as us, so it’s not much cheaper yet, but they’re getting there,” says Abboud. “When they do become cheaper, then advisors will start losing clients.”

Fuller thinks advisors and DIY investors can work together, though. He says many of InvestorLine’s users utilize a financial planner in addition to investing online. “It’s giving a client a choice to say, ‘Here’s something I can do myself,‘” he says. “They still use a full-service advisor for some aspects of their portfolio, while still maintaining control over a percentage of it themselves.

“There will be a percentage that say, ‘Hey, I don’t need a full-service advisor,‘” adds Fuller, “but it’s not really like that.”

Bryan Borzykowski