Account Opening Form

How To Open a Self-Directed Brokerage Account

Opening a self-directed brokerage account is an essential step toward taking control of your finances.  This forms an integral component of the Execution phase of the Fee-Only Financial Planning Process.  A self-directed brokerage account allows you to buy and sell stocks, ETFs and other securities.

In order to open an account, you will need some information accessible before you begin, as it will be required as part of the process:

  • Government-issued Photo ID
    • Driver’s License or Passport
  • Current account information if you will be transferring funds into your new account
    • Account #s for each account (RRSP, TFSA, etc.)
    • Institution name and address

The below walkthrough is specifically for our recommended brokerage Questrade, but the steps will be similar for any self-directed brokerage.  This process should take you about 30 minutes to complete but can be done in phases.

Note: We only recommend that you open an account if you will be transferring $5,000 or more.  When you have $5,000 or more, you will not be charged fees for inactivity in your accounts.

Self-Directed Brokerage Account Opening Steps:

  1. Go to questrade.com

  2. Click on “Open An Account” in the top right portion of the landing page

  3. Select the accounts that you wish to open.

Our recommendation is to open an Individual Margin, RRSP, and TFSA account.  These are the 3 basic account types that are appropriate for all Canadians.

Select the Self-Directed account options, not the Questwealth options. Questwealth accounts charge management fees for pre-packaged portfolios.  We have covered elsewhere how management fees negatively impact your portfolio

Questrade Account Opening Selection Screen

On the right-hand side of the screen, you will have the opportunity to enter an offer code.

If you enter the code “uajekubi” you will receive a $50 trade commission rebate.  This is offered as part of the Questrade affiliate program. To understand more, please read our affiliate policy.

  1. Create a user ID and enter your basic personal information

The name that you enter on this screen must match the government issued photo id that you will upload as part of the account opening process.

  1. Build Your Profile

Next, you will expand on the personal information provided in the previous step.

The questions that you answer in the next steps are standard procedure when opening an account with a financial institution.  These questions help to prevent money laundering and sanctions avoidance.  This is a good thing.  You can refer to the Questrade Privacy Policy if you have any questions or concerns.

You will have to enter information in 4 different categories:

      • Personal Information
      • Employment Information
      • Financial Information
      • Citizenship Information

Questrade Build Your Profile Screen

  1. Account Opening Questions and Documents.

For this next step, you have to complete some paperwork and answer questions for each account that you are opening.

From the account summary screen, click on an account to complete the setup.

Questrade Account Setup Selection Screen

There are a separate set of questions for each account, as well as paperwork that must be signed and submitted prior to being able to open your account.  It is during this step where you must upload the copy of your photo-id to the website.

Questrade Account Questions and Documents

  1. Fund your account

Now it’s time to put some of that hard-earned money of yours into your new account.

You have a few options at your disposal.

Questrade Account Funding Options

If you are transferring an RRSP or TFSA to your new accounts, you must use the ‘Transfer account to Questrade’ option.  Any other form of funding would result in a contribution to your account, which may put you over your contribution limits for either your RRSP or TFSA.

When transferring accounts, they can only be transferred into the same type of account (i.e. RRSP into an RRSP).

For a limited time, if you are transferring an account of $25,000 or more, you may be eligible to have your transfer fees that are charged by your current institution (the transfer out) covered up to $150 by Questrade.

If you are transferring your account, you will have 3 options available to you. 

      • Transfer in-kind
      • Transfer in cash
      • Partial

Transferring in cash means that your stock/ETF positions will be liquidated by your current institution and converted to cash.  This can have some unintended consequences, such as incurring brokerage trade commissions, or tax bills for realized gains (or losses) in your non-registered accounts.

Transferring in-kind means that you are moving your stocks and ETFs over while keeping your adjusted cost base/book values intact for tax purposes.  This is the recommended option.

A partial transfer would be for only a portion of your account, as opposed to the full value.  A cash transfer is appropriate if you are holding securities, such as mutual funds, which are unable to be held in your brokerage account.

Account transfers can take up to a month or more, depending on the financial institution.

Minimum initial funding in order to buy stocks or ETFs is $1,000 per account.

 

And that’s it!

Once your accounts are funded, you are now able to trade stocks, ETFs and other securities.

We have prepared a guide on how to execute a stock or ETF trade  for your reference.

Was this guide helpful?  Are there other guides that you would find useful? Let us know in the comments.


TAX underlined on a bankbook

You Can File Your Own Taxes!

Andy Williams said it best, “It’s the most wonderful time of the year!”

Okay, maybe not.

Taxes can be scary. 

Uncomfortable for some.  Frightening for many.

Tax preparers have been making a lucrative living off of the general public for decades.  Similar to the average asset manager or financial advisor, they profit from your fear.  But you really shouldn’t be afraid.  Tax filing for most people and families is very straightforward.  In many cases, filing on your own consists of a very minimal number of steps.  Below I will outline the key things you should be doing and checking off your list to file your own taxes. 

PLEASE NOTE:  This should not be considered a complete guide for personal tax filing and is merely provided to assist with filing your own taxes.  Should you have a more complex tax situation or simply need assistance with filing your taxes, consult a tax professional.

Planning

I know, I get it.

Planning is the step that we typically like to do the least.  It’s the same reason that we don’t check the directions to our destination before we jump in the car and plug it into our GPS or Google Maps or Waze.  Societally, we are being trained to do things on demand.  However, planning is the single most important part of your tax filing.

Since 2018 has come to a close, the majority of the opportunities available for strategic planning have come and gone.  However, as you work through the process for the 2018 filing, this should be able to give you a sense of the opportunities available to you for the 2019 tax year.

In general, if you have any simple questions, the CRA website is a great resource and is generally well laid out and makes things easy to find.  When in doubt, the search function should get you to the information that you are looking for.  The site typically includes many simple examples laid out for a layperson to understand.

An excellent idea to aid in your tax planning and preparation is to enroll in the CRA e-service My Account for Individuals.  This tool gives you access to your notices of assessment, previous tax returns, RRSP/TFSA contribution room balances, as well as managing your personal information, such as direct deposit information and mailing address.

In addition to planning for your tax preparation, tax-planning is a critical component of the Novel Financial Fee-Only Financial Planning Process.  Our mantra is that every taxpayer should pay every single dollar of tax that they owe, but we want to help make sure that you don’t have to pay $1 more than is absolutely necessary through a well devised Fee-Only Financial Plan.

Document Collection

The most important part of a tax filing may not be the filing that you are thinking of.  Having a good document filing system makes the tax process exponentially easier.  Gathering your documents is a task that is best done throughout the year, and not right at the end.  Find a safe place for you to gather these documents together and make a habit of regularly storing them there.

Given that most of what we do is online today, many of these will be digital files.  Create a folder in your email, create a cloud storage account (such as Dropbox, iCloud Drive or Google Drive, OneDrive, Box, etc.), attach a USB drive to your key-chain or use your computer hard drive (with proper backups for physical storage!).  Novel recommends using a cloud drive, as it ensures that the most up-to-date security practices are used, and that you do not need to worry about backups/losing your data.  An excellent review of available cloud drive options is available here.  We also recommend that if you do receive hard-copy documents, take a picture and store it digitally.  At the end of the day, find a method that works for you and ensure that you stick to your document storage plan.

Try to store your documents in folders that are grouped based on document type to make things easier come tax time.

Examples of items to gather throughout the year, and that you should group separately:

  • Medical expenses
  • Union or professional dues
  • Charitable donations (official receipts)
  • Childcare costs
  • Moving expenses, if you moved for a new job or for education
  • Licensing examination fees (i.e. Tradesperson or Professional exams)
  • Support payment documentation (i.e. spousal support)

Items to gather at year-end:

NOTE: Not all of the above items listed will be relevant for your situation.

The CRA website offers a full list of deduction and credit opportunities.

Use Tax Software

Save some trees.  The option to paper file is available, but effectively no one does so.

If you haven’t tried using some of the various software out there, you may be surprised at just how easy they are to use.  There are many offerings available, and pricing varies by your needs.  In fact, some options offer a “pay as much as you’d like” option or offer free return filing for simple tax returns.

Here is a full list of NETFILE certified software options.  

As well, here is a review of some of the more prominent tax filing options available.

Tax Filing Time

Now that you are feeling comfortable to tackle the not-so-scary beast that is filing your own taxes, here is a helpful checklist to follow throughout your process.

  • Enroll in a CRA My Account for Individuals
  • Choose a NETFILE certified software provider
  • Start by taking the interview in the tax software or use the search function to find the document types that you have collected.
    • This may also help you identify what
  • Ensure that all of your T slips get entered somewhere in the software
  • Address all of your deduction and credit opportunities available to you
    • A good rule of thumb is that if you have a document saved, ask yourself, how did you use this on your tax return?
  • Be strategic with your RRSPs
    • Ensure that for your 2018 taxes, you have included the Mar – Dec 2018 and the Jan-Feb 2019 RRSP slips
    • Determine if you want to deduct in the current year or defer to 2019. You should potentially consider a deferral if your 2019 income will be much greater than in 2018, or will be in a higher tax bracket.
    • The software packages tend to focus on maximizing your refund in the current year, which may not be appropriate for your situation.
  • Review the errors and warnings in the software
    • The software out there typically provides warnings or suggestions at the end of the process. Determine if these apply to your situation and amend as required.
  • Ask for help
    • The average tax software has either a help or forum function available to help you through the process.
    • Some can even connect you with professional tax preparers to have your questions answered.
  • File your return using NETFILE, via the software that you have chosen
  • Save a copy of your NETFILE confirmation
  • Save a copy of your electronic tax return from the software
    • Select the option for the T1 and all supporting schedules, etc.
  • If provided with a Notice of Assessment at time of filing, save a copy as well
    • This will be your first official 2019 tax planning document!
    • This will also be available via CRA My Account once your return is processed, if not available immediately via the software.

And… ta-dah! You have officially filed your own taxes.  Was it truly that daunting?  I believe that you will have found that filing your own taxes isn’t as difficult as you might have thought.  Another benefit of doing this for yourself is that you now understand the process and typical items that could be potential tax planning/saving opportunities.  Novel would be happy to discuss potential tax planning opportunities for 2019 with you as part of your Fee-Only Financial Plan.  Contact us to discuss tax planning strategies as well as to discuss how to best utilize your tax refund!

Conversely, if you are still uncomfortable filing on your own or have questions, Novel can support you through the planning process and will refer you to qualified tax preparers.

Questions, comments, anything to add?  Please reply in the comments section.  We would love to hear from you.


Desk with phone notebook and plants

A Novel Beginning

You’re probably thinking, “Great.  Another financial services firm”.

You are probably not alone.

If that were the case I would completely understand.  There are literally thousands of organizations out there that address some component of the financial services market.

The problem is that most of them don’t care about you.

The average fund manager cares about their performance relative to their benchmark and the amount of their assets under management (AUM).

The average financial advisor cares about their commissions and their management fees charged on assets under management.

The typical bank wants to direct you to products that they sell, not the best available products, or products that are best suited for you.

The fee-only financial planning approach works in stark contrast to these conflicts of interest.

How The Fee-Only Financial Planning Journey Began

The unfortunate realities of the typical advisor model played out for me recently.  My Mother invited me to join her at a meeting with her financial advisor, as she wanted to make sure she was on the right track.  She recently retired from a career as a teacher and was transitioning from the accumulation phase of her life into the drawdown phase.  The plan that was set out for her to follow was a logical one.  The options presented were very reasonable from an approach and strategy standpoint. 

When it came time for execution, this is where the reasonability went off the proverbial cliff.  This came to light as I asked 3 critical questions:

  1. What is the fee structure of this financial plan/arrangement?
  2. What product options do we have within the financial plan framework?
  3. Is there a more cost-effective way to implement this financial plan?

With respect to the fee structure, the advisor was going to be investing in a balanced fund charging 2% of AUM.  In addition, the advisor would be taking a 1% of AUM management fee on top of the costs of the funds.  In total, this plan would cost 3% of AUM each and every year.  Something to keep in mind is that we could substitute AUM with life savings in any sentence in this article.  What this ultimately means is that the investments would have to return 3% just to break-even!  As you know, interest rates are very low in the current environment and earning 3% is not a given.  How do you think you would do in the 100-metre dash if you started from 130 meters away?  Why would you want to put your life savings in the same situation?

When it came to product options, we did have some to choose from.  Segregated funds, mutual funds and annuities were all provided as options.  Each of these options has their own merit and can provide value to certain individuals depending on their situation.  However, I asked if there was a way to move to a lower cost ETF based approach.  The advisor’s response was, “I am not licensed to sell ETFs”.  So, now you only get to choose from products that they have agreed to sell? 

These investment products undoubtedly have a commission being paid to the advisor from the fund company, because for every client an advisor can direct to them, it means that the fund company will now get paid each and every year that you invest with them.  For 1% of my life savings, I would expect that an advisor could bring all appropriate options to the table for me.

Lastly, I asked if they would be open to moving to a flat fee-based model as opposed to the percentage of AUM model that they were currently utilizing.  They declined to entertain the idea. That’s their prerogative as a business person, but it was worth a shot. 

At the end of the day, this is a classic example of an expensive advisor using expensive products because it suits them best, not their client.  Luckily, it’s your prerogative to explore other options!

Harsh Reality of Working With a Typical Financial Advisor

My mother and I inevitably left their office following the meeting. We had some discussion and she quickly realized how much money had been paid to this advisor over the years. Literally 3% of her hard earned money was given away every year.

It was this day that drove me to launch Novel Financial.  I wanted to be able to provide quality financial planning advice to all Canadians at a cost that was commensurate with the service being provided.  Thanks to this meeting, it turned out that on this day Novel had inadvertently also found its first fee-only financial planning client.

Your best interests are our best interests.  That’s Novel.

Learn more about the Fee-Only Financial Planning Advantage.


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