When transferring funds from one institution to another, there are three different options to choose from:
- Entire account in cash (Most Common): Your institution will sell your holdings and move the money to us, but keep in mind you may be charged DSC or trading fees, which Wealthsimple cannot reimburse.
- Entire account as is: We move your holdings to us as they are today. When setting up the transfer request, you'll be able to indicate whether you'd like us to sell or hold onto your existing holdings. If you'd like us to hold onto them, we'd encourage you to set up a call with our portfolio management team to have a discussion on how you'd like us to manage your investments (this will be the final step in the transfer set up process).
- Part of the cash in my account: You can partially transfer any cash amount that is already sitting in your account to us. Before submitting your transfer, you need to liquidate your holdings with your other institution generate enough cash for the amount you've requested.
There are no tax implications for transferring non-taxable accounts (like your RRSP, TFSA, or RESP).
Now you know what they are. But which one should you choose?
Typically, transferring your entire account in cash is the most common method our clients choose. But there are a few circumstances where it's better to transfer your funds “as is.” One is if your relinquishing institution charges for trades, meaning there will be a fee associated with converting your portfolio into cash. The other is if you own mutual funds that have DSC (Deferred Sales Charge) or LL (Low Load Charge) next to their name; you'll need to make sure you don't get penalized for selling the mutual funds before their maturity date.
Frequently asked questions about in kind (as is) transfers (ie. liquidating your holdings after they've been transferred):
- Are there any tax implications if Wealthsimple sells your assets?
- Good question! If you're transferring a non-taxable account (e.g., RRSP or TFSA) there will be no adverse tax consequences. However, if you're transferring a taxable account (e.g., Personal or Joint) there could be tax consequences on any capital gains earned.
- Are there any fees if Wealthsimple sells your assets?
- We don't charge you any fees for selling your holdings. However, some mutual fund companies may charge you DSC fees that we don't cover. Depending on your mutual fund company, they may charge you a DSC (Deferred Sales Charge) fee if the funds are sold before the date the DSC has expired. You can check if deferred sales charges apply to the mutual funds you want to transfer by contacting the mutual fund company or by asking your broker or advisor.
- What if you don't want Wealthsimple to sell a particular asset(s)?
- When you create your in-kind transfer request, you have the option to not sell your holdings and schedule a conversation with our portfolio managers to let us know how to manage your holdings. If your preference is to not sell, we will hold any assets with a Deferred Sales Charge or a significant Capital Gain or Loss (in a taxable account ONLY) you've asked us not to sell, however, we will not monitor or trade these assets with the rest of your portfolio. Unfortunately by not selling, many of Wealthsimple's benefits such as portfolio rebalancing and tax-loss harvesting will not be supported for these assets either.
We know this stuff is a little complicated. If you have questions about transferring funds (or anything else) please create a request and a Relationship Manager will assist.