Your Complete Guide to Index Investing with Dan Bortolotti

Would You Like Fees With That?

2018-06-17T20:12:02+00:00August 5th, 2010|Categories: ETFs and Funds|Tags: , |124 Comments

I’ve grown used to the antics of mutual fund companies and commission-based fund hawkers who criticize index investing. It’s predictable, pathetic and unlikely to change. What really disappoints me, however, is when the antics come from an investment company that I thought was one of the good guys.

Readers of this blog and my work in MoneySense know that I have often recommended the TD e-Series index funds for Couch Potato investors. They have the lowest MERs of any retail funds in the country, a long record of low tracking error, and the added benefit of being available online without a discount brokerage account. But this week I got an alarming email from Shannon, an investor in western Canada who is untangling herself from a large and notoriously expensive financial services firm. Shannon has decided to get started with index investing and, having read about the e-Series funds, gave TD a call. Here’s how she described the bank’s behaviour:

“First, we were encouraged to invest in regular TD mutual funds. When we said no, we wanted the e-Series index funds, we were told that the I-Series were just as good and could be bought at the branch. Again I said no, we want the e-Series because the MERs are lower, and they said they’re not that much different.  I said every bit counts, and they asked what were we paying on our other investments. I said between 2.75 and 3%. They said they had mutual funds with lower MERs than that, and higher returns than the index funds, so why didn’t they have a wealth management specialist call me?”

Sure enough, a TD rep called the next day and explained to Shannon that index funds simply aren’t a good a good investment, and that she should instead choose from TD’s lineup of actively managed funds, which carry fees between 1% and 2.7%.

It was classic upselling, like you’d get from a fast-food restaurant: Would you like any muffins or donuts with your coffee? Would you like to super-size your fries? Can I get you some fees with those mutual funds?

Amazingly, the TD rep failed to mention that the TD Canadian Bond and TD Canadian Equity funds failed to outperformed their e-Series equivalents over the last five years. (To be fair, they were neck and neck.) Or that the TD U.S. Blue Chip Equity Fund couldn’t even beat a lowly S&P 500 index fund over the last decade. I’m sure it slipped his mind.

“Why wouldn’t TD champion their own e-Series funds?” Shannon asks. “I get why they want me to pay higher MERs on their funds, but should it be this hard?” Of course it shouldn’t be this hard. And yet a search through other Canadian finance blogs suggests that Shannon’s experience is hardly unique:

  • reports that it took her six weeks to set up an e-Series account “mainly because when you walk into any TD branch, no one knows what the heck you’re talking about.”
  • Million Dollar Journey related a similar story: “There was some resistance when I mentioned the e-Series account. Even though it is a TD product, it is an online product only, and the personal banker wouldn’t even talk about it. I suspect it’s because they receive no commission or recognition for selling the TD e-Series products.”
  • Learn Save Invest says, “I had to actually direct the staff to the web page on TD’s site to explain to them what I wanted.”

It would seem that the easiest way to open an e-Series account is to fill out the online application and mail it in. If you do want to deal with your local TD branch, a number of bloggers suggest telling them you want to open a regular TD Mutual Funds account. Once you fill out the paperwork and get your signature on file with the bank, then you can go home and convert your regular account to an e-Series account. That will at least help you sidestep the bank employees who try to talk you out of it.

If you’ve had a good or bad experience opening a TD e-Series account, please post a comment and share it with other readers.


  1. Nicholas May 1, 2016 at 6:15 pm

    I went in today to look at e-series. The associate was very good. She knew that since I asked for e-series funds in the first place, that I am knowledgable in investments, and not interested in actively managed funds. She cut straight to the chase and gave me exactly what I wanted!

  2. Beverly May 3, 2016 at 8:31 am

    It’s now month 2 and I’m still working on the final setting up my e-series account. Just waiting to get actively managed mutual funds brought over from another institution. Endless series of bungles and a mutual fund rep at the TD branch who relentlessly refused to understand what I wanted and needed though I couldn’t have been clearer. He may have done well at charm school, less well at investment school. I never quite sorted out how much was cunning and how much was incompetence on his part.

    Anyhow, I’m almost there. Finally asked to see his manager and she’s much more on the ball and accommodating. The phone helpline people were crucial to the process and at one point emailed the bank rep to tell him what he needed to do. Told the TD manger that it had been the worst banking experience of my life.

    Had my fingers crossed that I’d be one of the lucky ones who came out saying it had been easy, painless. But that just wasn’t to be.

  3. Canadian Couch Potato May 3, 2016 at 4:52 pm

    @Beverly: Thanks for sharing your experience. In this case it sounds like one person’s incompetence rather than any systemic problem at TD. Of course, that doesn’t make it any less frustrating for you.

  4. jules July 13, 2016 at 3:12 am

    Hi there :) I was told I need a TD webbroker account. I am not sure that is true. Could I buy e-series through a TD webbroker account? I was with a bank employee and she did not seem well trained. She also told me that any investments that I hold in a TFSA will be taxed unless it is a high interest TFSA. At this point I decided to leave the appointment because I knew this is not true. I am stil not sure about the webbroker account though…

  5. Canadian Couch Potato July 13, 2016 at 7:27 am

    @Jules: It’s possible to get the e-Series funds through a TD Mutual Funds account, which would be accessible through EasyWeb rather than WebBroker. But a better solution is to open accounts with TD Direct Investing, which would be accessible via WebBroker.

  6. Emily August 24, 2016 at 8:28 am

    I live in BC. It was very complicated to open the TD e-series fund. The first branch I went to, the adviser had no clue what the e-series fund was. The second branch I went to, the same thing occurred. I had to explain what it was to the adviser and then showed her the TD’s e-series fund page on her computer. She proceeded to sell me TD’s actively manage fund by stating that “I’m bound to limited options for the E-Series fund,” as opposed to the more options with their actively manage fund. I opened a mutual fund account with them that day. I have submitted the conversion form and now am waiting for my account to convert. Financial bloggers are right about the TD e-series fund, it is quite hard to open one, especially when the employee does not know what the hell it is.

  7. Canadian Couch Potato August 24, 2016 at 9:01 am

    @Emily: Sorry to hear about this experience. This is why I generally recommend opening an account with TD Direct Investing instead. All of the bank employees know how to do that, and you don’t have to tell anyone what you plan to use the account for, so there is no opportunity for them to try to steer you towards actively managed funds.

  8. Eemjay August 24, 2016 at 3:23 pm

    Hello Dan,, Appreciate if you can please write something about RDSP options! Some of us who opened initially with likes of BMO etc. please if you can provide some insight within available providers currently; what best can we do?

    As you know for families having member with disability this is great tool but not much flexibility.

    Thanks Dan.


  9. David E August 24, 2016 at 3:44 pm

    Eemjay – the following web page has a lot of information about RDSP’s especially with TD. As far as I’m aware, TD is the only brokerage that supports self-directed RDSPs.

  10. Canadian Couch Potato August 25, 2016 at 12:18 pm

    @David E: Thanks for sharing your experience here. Eemjay, looks like TD Direct with the e-Series funds would be an excellent option for the RDSP.

  11. Mitch September 1, 2016 at 8:42 pm

    @Mr. Potato – why do you recommend a TD direct investment account that has fees instead of a e-series mutual fund account that does not have fees as far as I can tell? They might be annoying to open, but it doesn’t seem that bad once you know what to do. I prefer regular small contributions over less frequent but substantial contributions.

  12. Canadian Couch Potato September 2, 2016 at 7:57 am

    @Mitch: TD Direct accounts have no fees as long as they are above $15,000. They are also much easier to open than a TD Mutual Funds e-Series account, and they are much more flexible, because you can also purchase ETFs, GICs and other investments in the same account.

  13. craig September 7, 2016 at 9:29 am

    TD now charges $75 + tax to transfer funds out of TD.

    This hidden fee was not in place when I opened my RRSP, but they moved the goal posts in 2015 and refused to refund the money.

  14. Eemjay September 7, 2016 at 11:12 am

    @David E: Thanks, yes i know that blog but i doubt TD-e supports RDSP. I have RESP/RRSP with TD-e but not RDSP as it was not supported. I will check with them again.
    Sadly,There is complete lack of interest in RDSPs from these big Banks.

  15. Alexa October 18, 2016 at 11:20 pm

    After recently reading a few blogs and books on personal finances, I’ve decided to move my RRSP and TFSA from a financial advisor over to TD Direct Investing (hurray!).
    I’m looking to do TD’s e-series funds as my portfolio is still small (approx 30K), and the negative Questrade reviews (and its less user-friendly interface) have me shying away from that option for the time being.
    If I understand correctly, I can ask TD Direct Investing to initiate the transfer, and since these are registered accounts, this will not create tax implications as the funds are not being withdrawn (please correct me if I am wrong here).
    Would an in-cash vs. in-kind transfer create tax implications or significant fee differences? I’m hoping to do in-cash to just start fresh at TD D.I., but I don’t want to be hit with whopping fees or surprises at tax time because of this.
    Thanks for the help!

  16. Canadian Couch Potato October 19, 2016 at 7:50 am

    @Alexa: Yes, TD Direct can arrange to transfer your existing RRSP and TFSA accounts, and this will not have any tax consequences. The in-kind versus in-cash choice also has no consequences in registered accounts. I would agree it’s best to do an in-cash transfer and just start fresh. You should know that your current advisor’s brokerage will likely charge a transfer-out fee, which is usually about $125 to $150 per account.

  17. Steve October 21, 2016 at 2:18 pm

    I opened a TD Direct Investing account and started purchasing e-Series funds last year. I have to say it was a completely painless experience. I filled out the form online, waited the recommended 2-days, and then dropped into a TD Branch. I waited about 15 mins to meet with someone. He checked my ID, asked me some basic questions, and I went on my way. I opened a TFSA with Canadian and US accounts. I was starting with zero dollars, so to avoid the $25/quarter fee, I mailed in a PAP form to transfer $100/monthly from my PC Financial account directly into the TD account. I then setup my TD account as a bill in the PC Financial System so I can setup automatic payments without mailing in a form, or use it to drop in lump sums when I want. I have been buying e-Series funds regularly. I have incurred zero fees doing all of this. Recently, I started using the account to buy some dividend paying stocks for the first time. They tack on $9.99 per trade. I love the TD Direct Investing web portal, it has lot’s of helpful information and learning tools. This has been a great way to learn about investing. Thank you for helping me get started!

  18. Spencer January 18, 2017 at 5:08 pm

    Hi there,

    I’ve been looking more at investing. I’ve finalized (in my head) that couch potato is the way to go.

    I also have a disability, have the DTC. I’m now looking at opening an rdsp. From my research it would seem that TD e-series may be the way to direct my long term investment savings with the rdsp. Do you know if it would be possible to gain access to e-series with this type of account? Or am I doomed to a life of actively managed funds?


  19. Canadian Couch Potato January 19, 2017 at 7:49 am

    @Spencer: You can open an RDSP through TD Direct Investing and this will give you access to the e-Series funds:

    Good luck!

  20. Spencer January 19, 2017 at 6:28 pm

    @CCP Thanks Dan!
    I just wasn’t too sure if there were any added layers of complication in gaining access to the e-series.

  21. Anderson January 30, 2017 at 1:23 am

    I had a great experience. I simply told the rep (and the young man shadowing her) that I wanted to open a direct investing account to buy e series index funds in a TFSA. She told me she had never heard of that but that she would investigate it. She told me that I must be referring to a TD Waterhouse Direct Investing account. She did all the necessary work and had it finished in about 20 minutes. I went to my other bank, got a PAD form, took it back, and it was done. She set up the pre authorized payment (direct deposit from CIBC to TD Direct Investing account) She said I should receive an email within one week with the log in information.

  22. Sean February 12, 2017 at 10:21 am

    I went to talk to a Financial Services Representative / Mutual Funds representative at TD Bank. I inquired about e-series and explained I was interested. He said he thought it would be too difficult for a new investor to manage this. He said he didn’t have any experience with e-series, but then went on to say he didn’t recommend it. He said many people start with e-series, find it too complicated and then end up purchasing TD Mutual Funds. He made the TD Mutual Funds sound easy and accessible and was ready to set them up on the spot. I told him I wanted to wait and he has set up a follow-up appointment next week to finalize a decision. I plan on telling him I want to set up TD Direct Investing accounts for both myself and my wife.

  23. Kirsten February 12, 2017 at 3:17 pm

    When I first opened my RRSP account at TD 6 years ago, I knew I wanted index mutual funds. There was a lot of resistance from the advisor I saw but when she realized I was determined she was able to follow through and help me distribute my money into the index funds I wanted.

    I went this year to rebalance my index funds, and sell my only non-index mutual fund that had no e-series counterpart. My intention was to do the paperwork myself to open and transfer my TD RRSP in-kind into an e-series RRSP. I didn’t say anything about my plans to the (new) advisor because I was worried I would get a lot of resistance again. But, the advisor asked me if the reason I was already invested in index mutual funds was for the low MERS and I said, yes that’s one of the reasons… To my surprise, she then suggested I consider the TD e-series funds and that she could do the paperwork and submit it for me at the same appointment! And so she did, and less than 2 weeks layer my new account was active, a PPP was in place linkrd to my CIBC chequing acct, and my RRSP was transferred into equivalent e-series mutual funds (although with lower MERS of course)! What a turn-around from my first experience with TD!

    Right now we are in the process of transferring my husband’s RRSP at RBC to their Direct Investing brokerage since we were told he could not by their index mutual funds from his RRSP bank account. Again, resistance and lack of knowledge on the part of the RBC advisor has been an issue, but if you persevere they will comply with your wishes.

  24. 8675309 December 16, 2018 at 6:03 pm

    Been looking into moving away from rdsp being its just doesnt make much interest & since the increase to the odsp asset limits have thought about going for a high interest tfsa(not under the DI banner due to its fee structure)

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