Bert Titcomb would rather ski in Quebec's Gatineau Hills and take cruises with his wife Mariette than pore over dry mutual fund statements and track the progress of his retirement savings on his computer.
That's why the retired mechanical engineer a year ago consolidated six registered retirement savings plan accounts held by three different companies into one account at one institution, the Caisse Populaire credit union in Ottawa.
"My financial affairs were all over the map and there was far too much paperwork," says Mr. Titcomb, who, since turning 69 last year, has also relied on Caisse Populaire to collapse his RRSPs into registered retirement income funds.
"By consolidating, there was less chance I would get bogged down and miss the boat on an investment opportunity. And now that I'm into RRIFs, my financial adviser can monitor my portfolio and ensure I continue to be invested in the best possible places," he says.
Since his $350,000 portfolio was moved to the credit union, he spends one rather than five hours a month tinkering with his financial affairs and is confident that consolidation, with a big boost from rising equity markets, was responsible for a double-digit increase in the value of his retirement holdings in 2003.
And no longer is Mr. Titcomb swamped with paper: He receives 12 statements a year, rather than 40, leaving him plenty of time. "I'd rather go skiing than read a sterile mutual fund statement any day."
Consolidation also means he receives two monthly RRIF cheques rather than the six he would have received had his holdings remained scattered.
"Bert's portfolio was an administrative headache," says Pierre Goulet, branch manager at Caisse Populaire's Rideau d'Ottawa branch, where he oversees Mr. Titcomb's investments. "He liked to be involved in the decision-making process, but going to five or six different places to keep up with his funds was simply too much to deal with. Now, he can look at one statement, there is one bottom line and everything he needs to know is there.''
Having his client's retirement assets in one place also makes it easier for Mr. Goulet to minimize the income tax that Mr. Titcomb pays now that he's receiving payments from his RRIFs on top of other pension income.
Financial experts say that investors with retirement savings scattered in as many as 10 different places are not out of the ordinary, often because those who shop for RRSP bargains or purchase at the last minute have no allegiance to financial institutions, banks or discount brokers.
Debbie Ammeter, vice-president of advanced planning with Investors Group Inc. in Winnipeg, defines consolidation as having all retirement assets with one company, but says dealing with two or three companies is not a big problem for some investors.
"Some work with different institutions deliberately because they are not comfortable having all of their assets with one institution."
However, Ms. Ammeter stresses that the more plans an investor has, and the more widespread they are, the easier it is to lose track of or overpay fees and commissions and to fail to take full advantage of foreign-content limits for RRSPs.
"If you have a self-directed RRSP account, the fee for each one could be between $100 and $150 a year," says Chris Palmer, a financial consultant with Berkshire Investment Group Inc. in Halifax. "Five accounts times $100 or $150 is a good chunk of money."
And there's also an opportunity cost because properly allocating assets in a multitude of plans can be tough. "If you have money in many places, it is almost impossible to know if the way your portfolio is diversified is right for you," says Stephen Ison, an investment representative with Edward Jones in Oakville, Ont.
Having investments in a handful of different locations can also result in inconsistent advice, Mr. Palmer says. "It's like having two different doctors or dentists."
If you don't keep track of all of your investments, you could end up with money sitting idle and earning a negligible return when it could be doing better elsewhere, Ms. Ammeter says.
Consolidation also makes it easier to take full advantage of the rules governing foreign-content allowances of up to 30 per cent of an RRSP's book value invested in foreign securities.
"Because each RRSP is looked at separately by CCRA for purposes of the foreign content-rules, if you have $100,000 in one RRSP, you could invest up to $30,000 of that account in foreign content," Ms. Ammeter says. "But if you have 10 different RRSPs in 10 different institutions, each worth $10,000, you would have to go to each institution and invest up to $3,000 of each RRSP in foreign content to maximize your foreign content. You could not just pick three of the $10,000 RRSPs and invest them all totally in foreign content."
And if some of the RRSPs cannot accommodate foreign content at all -- for example, if one or more of the $10,000 accounts are GICs -- investors will lose out on the foreign-content opportunity inside that RRSP, she adds.
Consolidating several plans with one institution can also give an investor more negotiating power, says Patricia Lovett-Reid, senior vice-president at TD Waterhouse Group Inc., a unit of Toronto-Dominion Bank, who notes that for clients with larger portfolios, some institutions will waive annual RRSP account administration fees of $25 to $100 and offer better rates on other investments.
"The reality is that larger accounts get more attention and focus," Ms. Lovett-Reid says. "As a portfolio grows, you will have more options available to you. . . . Consolidation can mean more clout for a client."
Investors considering consolidation may, however, find that pulling their assets together could be costly because their mutual funds may have been purchased on a "back-end load" basis, which means a commission is paid when they are sold, Mr. Ison says, although these fees can be avoided if the funds are transferred without being sold.
Also worth considering is that many institutions charge an administration fee of $50 to $100 for each RRSP account transferred to another company, he says.
But Mr. Goulet says the fees and work involved in consolidating RRSP investments are worthwhile. "When you consolidate, you often have access to better products at a better cost . . . and by me being aware of a client's total performance, my added value [to a portfolio] is 1 to 2 per cent. When you add just 1 per cent to an existing 5-per-cent rate of return, that is a 20-per-cent increase, a big chunk of change," he says.
© The Globe and Mail
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