Blessed by the Potato

For the longest time, TD Direct Investing was the only game in town if you wanted to invest in a low-cost way in an RDSP. Big Cajun Man detailed the quirks of these accounts (and has provided lots of info on RDSPs in general).

Fortunately, there’s some competition now: National Bank Direct Brokerage is now offering RDSPs.

And NB is Nest Wealth‘s custodian broker, which means that there’s now a robo-advisor option for RDSP! I’ve long thought that the robo-advisor method would be really welcome for RDSPs, but it just hasn’t been an option for the first several years. I’m glad to see that it’s now possible, though there will be some manual processes to make it happen on Nest Wealth’s end (so you won’t yet see a link on their site — you’ll have to contact them and ask).

A few details: RDSPs are only available to those on their top-tier, $80/mo plan. That’s normally for accounts over $150k in assets, though you can opt to pay it if you want to open an RDSP even without the assets. Of course, you’ll have to decide if it’s worth it vs. using TDDI or NBDB (or high-fee mutual funds with other banks) if your accounts are small. There’s a $100/yr admin fee for additional accounts, and since your RDSP isn’t likely the only account you’ll have with Nest Wealth (e.g., if you’re opening one for your kids, then you may have your own RRSP/TFSA as well), you should expect that as well when doing your cost-benefit analysis. Still, that should be welcome news for a few people!

Update July 30, 2020: it looks like Nest Wealth has stopped supporting RDSPs (h/t Robb Engen). However, WealthBar now claims to offer them. They are likely also using National Bank as their custodian for RDSPs (they have several custodians in their roster).

Disclosure: I’m a member of Nest Wealth’s affiliate program and have used the affiliate link above — see the side bar for more.

Let’s make it clear up front that I like robo-advisors as an investing solution for many people — lots of people might save money learning how to DIY, but that is certainly not for everyone.

One lingering point of uncertainty was how they would deal with taxable (or “non-registered”) investment accounts. Once you’re out of TFSA/RRSP room, you’re left to invest in a taxable account, which means tracking and reporting requirements. Typical robo-advisor portfolios have upwards of 10 ETFs, and if you’re automating your contributions with bi-weekly contributions, you could be looking at hundreds of transactions to track for tax purposes. Their websites were certainly not clear on the point — if addressed at all, the language tended to say that they would “provide all necessary information” for taxes, which to my reading sounded like they would just dump the transaction reports from the custodian broker in your lap and tell you to handle it. That could be more work than the robo-advisor was saving you in the first place, and you might be better off with Tangerine or a simple 3/4-fund ETF portfolio on your own.

I had heard from a few users of difficulties along these lines, but didn’t have hard data, so I put some general warnings in the book and in a Because Money episode and left it at that — after all, most people will have plenty of RRSP and TFSA room and never need to worry about adjusted cost base (ACB) or realized capital gains/losses. But hearing some horror stories, it looks like a few are really falling down here and making life hard on users who are specifically trying to avoid this kind of complication when investing.

So I reached out to people on Reddit and my newsletter subscribers for user experiences, and also contacted several robo-advisor firms to learn more about how they handle this. I don’t want to bash anyone here for not stepping up, and I did not reach out to every firm so this is certainly not exhaustive, but I’m happy to say that there are at least three good options for those with taxable accounts:

Justwealth

I spoke with Andrew Kirkland of Justwealth, and they saw that the tax documents produced by the custodian broker would leave their users with some work to do. They wanted to go above-and-beyond, so they produced more usable realized gain/loss reports. At this point that is a manual process for them, but they’ve had two tax seasons as a firm to give them experience, and are working toward automating this.

I received sample reports and for what it’s worth the information you need for your tax reporting is summarized and easy to find.

Nest Wealth

Their unique flat-fee cost structure makes Nest Wealth better-suited for large accounts, where you might be more likely to have used up your TFSA and RRSP room. So I’m glad to have heard from them that they also help simplify reporting by tracking ACB and producing a simple realized gain/loss summary. They also sent me a sample of their reports to review and confirm that in my opinion a typical user would be able to find the information they need for taxes.

Wealthsimple

As the most popular robo-advisor, it’s good to see that Wealthsimple is tracking ACB for its clients. However, I have to add a tiny, itty-bitty asterisk to that, because some of their clients don’t seem to know it.

Documentation is comparable to regular broker. They will prepare a report with all transactions for the year. The ACB calculation you have to do yourself.

Most of the responses I got were about Wealthsimple, so it’s possible that there’s a PBKAC issue, or that older accounts (the account’s age, not the client’s) are on a different brokerage platform (because behind-the-scenes, Wealthsimple bought their own custodian brokerage but started on VB and some clients might have still been there in the last tax year and, well, it’s a long story). It’s also possible that their user documentation and guides just aren’t super-clear even when they are doing the work.

For example, they use non-standard terminology, which I mean I can’t totally fault them for because “non-registered” is just the worst descriptor for an account ever and writing for a lay audience is a constant challenge, but calling taxable accounts “personal” accounts is not super-clear either. To quote one user who got back to me:

They use “Personal, Joint, Corporate, and Smart Savings”. As a person who knows nothing, that confuses me. I don’t know what my accounts are. They’re all ‘Personal’ to me.

But of course, many people have no problem with it:

They track everything for me. Taxes this year was a breeze.

I’d say that if you’re starting from now, odds are good that if you go with Wealthsimple, they will track your ACB for you and make tax reporting easy.

Giant Caveat

For some reason, a few people like to spread their money out: opening accounts with multiple robo-adviors, or dabbling in DIY investing while also having a robo-advisor invest for them. A robo-advisor or brokerage or any firm cannot provide you with adjusted cost base information if they don’t have access to all the transactions that are happening for you. So if you’re out of RRSP/TFSA room and open up multiple taxable accounts, you are setting yourself up for a fair bit of work, as whatever numbers your robo-advisor provides will no longer be accurate. It will be up to you to track across your accounts.

To put the caveat more plainly, try to stick to one brokerage/robo-advisor if you have a taxable account. Having multiple accounts means that you will be the only one able to track your ACB/capital gains and you will have to ignore the figures a helpful robo might provide you.

Quick disclaimer: I am a member of referral programs for some of the robo-advisors mentioned — see the sidebar for affiliate links and deals. However, this is not in any way a sponsored post, and in at least one case the causality worked the other way around.

I’m a big advocate of keeping your portfolio simple and easy to manage. As I was doing laundry and found, yet again, that I’d left a Kleenex in the pocket of a pair of pants and had to pick out little bits of fluff, it got me thinking of this.

It’s so easy to over-estimate our ability to handle a little more complexity, to think that even when you’re busy it’s not big deal. Then you find that Kleenex in the wash. Again. This isn’t even an unforseeable or unavoidable error. It’s happened before, and yet it’ll probably happen again. Probably before the year is out, even.

It’s another reminder to me that we have to arrange things in a way that accounts for the fact that we all have periods of inattention or sleep deprivation, and even at the best of times human error happens. If the plan is to ignore things for a year or to at a time, there’s less room for execution risk.

A simple portfolio is more robust to negligence and human error.

On August 29th my pants fell down while walking around the living room. So yeah, I’m feeling pretty good about my weight loss this quarter.

After the last update, a few things came together and I finally just did the thing I knew I had to be doing all along (but didn’t because it was hard): I started tracking everything I ate. I used measuring cups and a scale, and put it all into the FitBit app’s calorie tracker function (I had several recommendations for myfitnesspal, but I already had FitBit there to track my steps, and it worked well enough). I started eating a lot more fruit (helped by the fact that Ontario peaches and nectarines were in season so I just bought cases of those) and veggie sandwiches, and tracking, and paying attention especially near the end of the day as I was running out of calories in my budget. I bought just an absolute fuck-tonne of chewing gum, and had light breakfasts and lunches when I wanted to leave the ability to have pizza for dinner. And even on vacation, and even with all-nighters as a grant deadline came up, I stuck to my budget (though on vacation I was aiming for calorie balance for the week rather than a deficit, and with the all-nighters I chewed so much gum the artificial sweetners caused… umm… intestinal distress).

The final score: DOWN 19 lbs BABY. WOO!

I posted 7 days in about how hard it was to fight the cravings, but I stuck it, and it got better. I only have bad cravings every few days (and mostly after about 12:30am), so it’s become routine enough that it doesn’t take a tonne of conscious willpower any more. My habit is to check FitBit — can I eat that? Computer says no. Also, it wasn’t like full intermittent fasting, but I did delay or skip breakfast most days and put a limit on eating after midnight (pretending, as one does, that I was a mogwai), which also helped.

It’s still a total mystery though why I managed to actually do it this time. Yes, I had some extra motivation (a bad score on my cholesterol test, my dad going into the hospital, another quarter where the same-old wasn’t really cutting it), but I don’t think I was all that lacking in motivation before. I did have a bit of a mind-shift internally where I realized how much of my eating was not due to physical hunger, but I really can’t put my finger on how I managed to flip the switch to knowing that chocolate is not an emotion. That’s a bit disappointing because it makes it harder to help other people find that last bit of motivation or mindset or whatever, and also worrisome because I don’t know how easy it will be to stick to better habits for the long run (or re-start the diet after the inevitable future slip-up).

Of course, even this is a relatively minor achievement in the grand scheme of things. I hit my goal for the year, but the loss is still a fairly small change, percentage-wise — few people would notice if I didn’t tell them, and I’m a long way from being described much more charitably than having a “dad bod”. My BMI is still not great, and I have to continue being good for a lifetime to keep it off. And the “never weight” was something I set back in grad school as like a “ok, it would be ridiculous if I got that fat” level. So even losing ~20 lbs from that point still just puts me at about where I was in grad school — and no one was mistaking me for skinny then.

Looking ahead, the final quarter of the year features Thanksgiving, my birthday, Halloween, and Potatomas. I’m going to keep tracking, and the itty bitty candy bars may be a good way to have some treats but not bust the budget — I’ll have to see if I can be trusted, or if total abstinence is the only way to go. Either way, I’m going to take the season into account and adjust my budget & target to be a minor deficit (and I won’t freak if it averages break-even some weeks). I’m less than two pounds off my original goal for the whole year, but if I can make it through to New Year’s holding steady at this weight, I’ll call that a win for the year. My next plan is to get down to the “overweight” range according to my BMI by June next year, which means losing another 15 pounds, more gradually. And then keeping it off for a lifetime.

Anyway, goal reached, so start the countdown: the price of the course is going back up!

One thing that I was amazed with when losing weight is how fast some of my other health issues settled down. FitBit tracks my resting heart rate, and that’s come down almost 10 bpm in just three months. I also used to have heartburn a few times a week, and last month only had it twice (though that is likely less losing weight and more the fact that I’m not eating a bunch of chocolate, chips, and other heartburn-inducing foods right before bed). If I go to a life expectancy calculator, I’ve lost enough weight this year to add a year back to my life (whoops, gotta adjust the savings plan now ;)

Footnote:
I noticed that I started calling it a calorie “budget” and not a “diet” or “allocation”, and that tracking let me immediately see my “funds” left each day. I’m explicitly trying to leverage my ability to be good with money to be good with food, but I needed an easy-to-use electronic tracker to get there. Also, I’m eating a lot of convenience-esque food: almonds that are packaged in small servings, so I know I get 170 cal/serving and don’t have to weigh them, etc. It’s more than double the cost for almonds vs. just buying the big jug, but I think it’s a non-negligible component to success so I’m more than happy to pay for it.