Bank Adviser made error - possible options

[visualk]

I had recently been visited by one of those mobile banking representatives to go over my retirement portfolio which this bank currently holds my RRSP mutual funds. I have a good sum invested and in speaking with the rep I decided I wanted to try out their direct investing RRSP account (this is an account where you can go in and make your own trades) and so I opened it up. In a separate institution I had some funds that I decided to transfer over to this direct investing account. I signed the necessary forms and he had the funds transferred over. No issue here. I open my account summary and find out to my disbelief that he also transferred my RRSP Mutual funds which were not supposed to have happened.

I wrote to the adviser and realized he made an error and fwd it on to his manager. They now have launched an investigation and now I have to wait for the outcome of it.

My questions are:

1) Has this happened to any of you?

2) After me sending a few emails to find out the status of the investigation I asked if my funds are frozen, they indicated no and said I can buy my original mutual funds at current prices. Does this screw me besides the fact I am now buying at a higher rate?

3) What should I do as the funds are sitting idle and not appreciating?

Not happy at all about this situation. I'm thinking I should do one of those CBC go public news stories but I'm probably over reacting.

[mazdavirgin]

Originally posted by visualk
I had recently been visited by one of those mobile banking representatives to go over my retirement portfolio which this bank currently holds my RRSP mutual funds. I have a good sum invested and in speaking with the rep I decided I wanted to try out their direct investing RRSP account (this is an account where you can go in and make your own trades) and so I opened it up. In a separate institution I had some funds that I decided to transfer over to this direct investing account. I signed the necessary forms and he had the funds transferred over. No issue here. I open my account summary and find out to my disbelief that he also transferred my RRSP Mutual funds which were not supposed to have happened.

I wrote to the adviser and realized he made an error and fwd it on to his manager. They now have launched an investigation and now I have to wait for the outcome of it.

My questions are:

1) Has this happened to any of you?

2) After me sending a few emails to find out the status of the investigation I asked if my funds are frozen, they indicated no and said I can buy my original mutual funds at current prices. Does this screw me besides the fact I am now buying at a higher rate?

3) What should I do as the funds are sitting idle and not appreciating?

Not happy at all about this situation. I'm thinking I should do one of those CBC go public news stories but I'm probably over reacting.

People seriously need some basic financial education.

1). No

2). Why would your funds be frozen? Why would it now be a higher rate?

3). Why the blazes would your funds now be idle? Do you have ANY idea wtf you are doing?

Coles Notes: You don't have a clue wtf you are doing or what you are actually buying.

[visualk]

Okay what do you propose I do?

They are sitting idle in the direct investing account and not invested into anything. I haven't been through a situation like this and I am waiting for the outcome of their investigation. As with all transactions there is fine print and I don't want to do something prematurely and want to seek the wisdom of beyond members.

As for the prices, why would the manager indicate current prices, I have had these mutual funds for several years.

[s2k_boi]

Just wait for their investigation.

If it is bank/advisor error. They will back date it back to the price that it sold off at and give you the same amount of units as if this transaction never happened. Each institution has their own processes to go through.

If the branch manager doesn't get it done, just escalate it along (again each bank has their process for this). ** making the assumption you never signed a transfer form to move everything to Direct Investing ** Otherwise, I don't believe it would have been processed - could always ask for a copy of it to show that you authorize this.

[dezmarez]

Just to clarify:
-You opened a Direct Investing account
-Signed a transfer form to have assets from another institution transferred to that Direct Investing account
-Didn't have any intention of touching your Mutual Funds
-OFI transfer didn't take place, but your Mutual Funds were transferred over in cash

[visualk]

Originally posted by dezmarez
Just to clarify:
-You opened a Direct Investing account - YES
-Signed a transfer form to have assets from another institution transferred to that Direct Investing account - YES
-Didn't have any intention of touching your Mutual Funds - THAT IS CORRECT
-OFI transfer didn't take place, but your Mutual Funds were transferred over in cash

- THE TRANSFER TOOK PLACE BUT SO DID THE TRANSFER OF MY MUTUAL FUNDS

the branch manager has indicated to me the following:

"You are correct that your dollar cost averaging over time would have affected the book value (or cost to you) of the Funds. When they were sold to cash, however, the book value isn’t relevant insofar as they were sold at the current value as a lump sum group.

The transfer took place when the fund was valued at 25.0634 per unit. This fund, as of today, is $26.2539 per unit. Of course, mutual funds fluctuate up and down, so the cost to you, or the units you are able to receive for your investment if you repurchase, would change each day."


Thoughts on the above?

[Xtrema]

Originally posted by visualk
The transfer took place when the fund was valued at 25.0634 per unit. This fund, as of today, is $26.2539 per unit. Of course, mutual funds fluctuate up and down, so the cost to you, or the units you are able to receive for your investment if you repurchase, would change each day."


Thoughts on the above?

This is simple.

As long as the bank has admitted fault, however many units you have transferred out by accident, you should have the exact same units back. Regardless what it's worth then and what it costs now.

If they transfer 20.5 units, you get 20.5 units back of the exact same fund. Pure and simple.

As long as these funds are transferred between registered accounts, there should be no tax impact.

But if bank doesn't accept fault, you can try Go Public. But make sure you have enough documentation on your hand to proved that you have never approved the transfer, even signed by mistake.

[know1edge]

.

[Pacman]

Were the funds transferred "in kind" or sold for cash and then re-purchased?

[dezmarez]

Originally posted by visualk
- THE TRANSFER TOOK PLACE BUT SO DID THE TRANSFER OF MY MUTUAL FUNDS

the branch manager has indicated to me the following:

"You are correct that your dollar cost averaging over time would have affected the book value (or cost to you) of the Funds. When they were sold to cash, however, the book value isn’t relevant insofar as they were sold at the current value as a lump sum group.

The transfer took place when the fund was valued at 25.0634 per unit. This fund, as of today, is $26.2539 per unit. Of course, mutual funds fluctuate up and down, so the cost to you, or the units you are able to receive for your investment if you repurchase, would change each day."


Thoughts on the above?

Pretty simple fix.

They should be able to repurchase the Mutual Funds at the $25.0634. I would make it clear to them you weren't aware that you were signing transfer documents for your existing mutual funds.

I find it unlikely that they transferred those assets without you signing a transfer form.

Don't have to worry about taxes as this sounds like it was RSP to RSP.

Funny thing is, if the market went the other way you wouldn't want them to correct it Just repurchase at the lower amount.

[Super_Geo]

Originally posted by visualk
The transfer took place when the fund was valued at 25.0634 per unit. This fund, as of today, is $26.2539 per unit. Of course, mutual funds fluctuate up and down, so the cost to you, or the units you are able to receive for your investment if you repurchase, would change each day."

Your response should be (and let's pretend you had 1000 shares)

The sale of 1000 shares at 25.0634 was not authorized by me, and as we have discussed was due to an error by your institution. I would like to emphasize that you are suggesting that I take a financial hit on re-purchasing 1000 shares at a higher price, and I do not find that an acceptable outcome.

I will transfer the exact sum back into the account, and would like you to re-enter my prior position at the exact price level that you sold it at before. Furthermore, there should not be any transaction fees associated with the two erroneous trades.

[Super_Geo]

Originally posted by visualk
...I'm probably over reacting.

You're certainly not overreacting. They messed up, they have a paper trail showing they messed up, and if you doormat, they'll be more than happy to just hand you the loss and move on. Make a big deal about it. You can PM me and we can approach them together if you'd like.

[visualk]

Thanks man, I totally appreciate your advice. Your right I don't want to be a doormat and hence the reason I am reaching out to Beyond members. Its better to have all the info first before making a decision.

As for questions from others, there isn't any tax implications, both accounts are in my RRSP. Currently the cash is sitting in my direct investing account.

[know1edge]

.

[triplep]

Originally posted by know1edge


There's a big tax difference between directly transferring the mutual funds between the RRSPs, and the bank selling your mutual funds, and transferring the cash over to the new RRSP (and then repurchasing the mutual funds)
From the below quotes and the ones I already mentioned above, sounds like the second case, but I can't tell because you're not being clear

How is there a big tax difference? Money never actually left the RRSP.

[visualk]

So the bank got back to me finally and the results of the investigation is that they did in fact erred - no surprise there and will be returning the same number of units at the same value they were sold at.

Now my question is these funds have sat idled in my direct investing account not appreciating for about 2 months - so could the bank model out what my gains and losses would have been?

Anything else I should consider?

I am a little new with the situation and any advice would be appreciated.

Thanks!

[sabad66]

Originally posted by triplep



How is there a big tax difference? Money never actually left the RRSP.

as long as there was never actually a withdrawal out of an RRSP account it doesn't matter if it's cash or equities or mutual funds or anything being transferred between RRSP accounts.

[sabad66]

Originally posted by visualk
So the bank got back to me finally and the results of the investigation is that they did in fact erred - no surprise there and will be returning the same number of units at the same value they were sold at.

Now my question is these funds have sat idled in my direct investing account not appreciating for about 2 months - so could the bank model out what my gains and losses would have been?

Anything else I should consider?

I am a little new with the situation and any advice would be appreciated.

Thanks!

It won't matter because you're getting the same # of units back. Fluctuations over the last 2 months won't matter.

Unless of course there are mutual funds that pay dividends? Not sure if that's a thing, but if there were any dividends paid out (either in cash or more units) while you didn't own them then you would have missed out on those.

[know1edge]

.

[atgilchrist]

If you're getting the units back at the sold price, doesn't matter what the current price is, and the bank will eat the difference if the funds are higher now.

Also, don't ever trust the branch level advisors at a bank.

What is your intention with the self-directed account?