What is a self-directed RRSP?
As its name suggests, when an investor has a self-directed RRSP, it is because he takes care of this investment portfolio himself. Tax deductions will remain the same, but there will be no fees payable for financial planning advice.
“An investor can only have this type of RRSP, but he can also choose a hybrid mode, that is to say that one part is self-managed and the other administered by a financial planner. There is also the formula of robots which do not give advice, but which will take care of determining the investments. Sometimes, a client takes care of his investments himself, but gives us a partial mandate to provide occasional financial planning advice,” explains William St-Sauveur, tax specialist and financial planner for Planica Financial Services.
How does it work?
First, to hold a self-directed RRSP, you must open an account on a transactional site. “Person
Disnat, Wealthsimple, Questrade, RBC, etc., there are dozens of platforms on the market. To ensure that you are doing business with a recognized organization, the AMF puts online a register of companies and individuals authorized to operate. Once on the site, you will have to fill out a questionnaire and you will have to select the type of account desired, in this case the RRSP.
Who is the self-directed RRSP suitable for?
Julien Michaud confirms that there has been a real resurgence of interest in self-directed RRSPs since the pandemic. In the country, 44% of investors who have this type of RRSP make this choice because they simply like this type of management, according to the Ontario Securities Commission. Nearly 34% of them do so because they consider advice to be too expensive. At 60%, the majority are men and the average investment is $60,000. Interestingly, 64% of them are satisfied with their experience.
Mariane Gilbert, senior wealth management advisor at Desjardins Wealth Management, however, issues this warning: “You have to have time because it takes a lot of energy. They are often finance enthusiasts who have above-average knowledge in this area. You must also be a person who controls your emotions and does not make decisions impulsively. »
What are the missteps to avoid?
Among the potential dangers named by experts are selling at the wrong time, not diversifying your portfolio, not asking questions about the reasons for having an RRSP and not completing your investor profile. “The role of an advisor is to ask the right questions to get you to think about your goals. You always have to know why you do things when you act alone,” says Mariane Gilbert.
No one knows the future and the past is not always a guarantee of the future. Don’t try to hit home runs and, above all, don’t fall in love with a title.
Julien Michaud, actuary at the Financial Markets Authority
How to find out more?
Even if this type of management takes away clients, William St-Sauveur believes that self-directed RRSPs are here for good. “I see this in a positive light because it means that more and more people are interested in their personal finances and there is nothing stopping us from having a hybrid mode to obtain financial planning advice. »
For those who wish to try the experience, the AMF has put online a section reserved for independent investors and provides the public with a tool to determine their investor profile. It is also possible to test your knowledge for free by trying Bourstad, which offers stock market simulations.