What is a Self-Directed Account?
A Self Directed account can hold a wide variety of investments choices in a single consolidated account, with purchases, sales and transfers conducted efficiently and without delay. This also makes it easier to keep track of all your investments and maintain your desired asset mix.
Self-Directed accounts are available for a wide variety of Account Types: Tax Free Savings Account (TFSA), RRSP accounts (including Spousal and Locked in), and non-registered accounts.
Most Self-Directed Accounts have an annual trustee fee. This fee is paid to the trustee to cover the administrative costs of overseeing the plan.
What are the Benefits of Self-Directed Account?
- Consolidated statements. Often investors who deal with many different companies are inundated with paperwork. Consolidating your Investments into a single plan makes reporting easier and you will have one statement per plan regardless of how many financial institutions you are dealing with.
- Product consolidation. Investors who are dealing with many different institutions tend to have too many investments and duplication within their portfolio. Self-Directed accounts allow investors to see the bigger picture and reduce the number of holdings in a portfolio.
- Easier administration. The administration for self-directed plans is centralized. Self-Directed plans make it easier to trade investments particularly when you are moving money between financial institutions.
- Product selection. There are a number of products/investments that qualify for a Self -Directed Plans. You can choose from conventional investments like GICs, Bonds, mutual funds and stocks. But Self-Directed plans also allow you to invest in mortgages, small business corporations, and other non-conventional investments. Self-Directed accounts do give you a choice and control over product selection.
- Diversification by company. No single company has all of the best products in the market place. In fact, according to research, every company has good products and bad products. If you have all your investments with one company, you are likely to have good products and bad ones. One of the goals of having a Self-Directed Account is to try to determine the strengths of different companies and try to select products that are their strengths.
- Managing Foreign content. Foreign content is monitored on a plan by plan basis. If you are dealing with more than one financial institution for your RRSPs for example, each company is responsible for monitoring the foreign content. Self -Directed RRSPs makes foreign content monitoring much easier, because you only have to monitor it from one source. Self-Directed plans also have the added benefit of making it easier to choose the foreign content investments.