Bank vs. Independent Providers: Choosing Your Corporate Investment Platform

Executive Summary

When setting up a corporate investment account, you'll choose between bank platforms and independent providers. Here's what you should know:

• Bank platforms (RBC, TD, BMO, etc.): Offer convenience and integration with your existing banking, but may have limited product selection and potentially higher fees
• Independent providers (Fidelity, independent dealers, etc.): Offer broader product access and potentially lower costs, but may require more coordination with your banking
• Key differences: Product selection, fees, convenience, service model, and advisor independence
• Who should consider what: The right choice depends on your priorities—convenience, cost, product access, service quality, and long-term relationship
• Hybrid approach: Some corporations use both—banking with a bank, investing through an independent provider

This article explains the differences, pros and cons, and how to evaluate which option is right for your corporation.

Mindset: Platform Choice as a Long-Term Decision

Before diving into the technical differences, let's think about platform choice from a long-term perspective.

Your corporate investment platform is not just a place to hold investments—it's a relationship that will affect:

• What products you can access (and at what cost)
• How easily you can coordinate with your banking and other accounts
• The quality of service and advice you receive
• Your flexibility to change strategies or providers over time

The Big Picture:

1. Platform choice affects product access: Different platforms offer different mutual funds, ETFs, and investment products. Some platforms are limited to their own products; others offer access to the broader market.

2. Fees compound over time: Small differences in fees (management fees, account fees, transaction costs) compound significantly over decades. A 0.5% difference in fees on a $1,000,000 portfolio is $5,000 per year—over 20 years, that's $100,000+ (before compounding).

3. Convenience has value: Having everything in one place (banking and investing) can save time and reduce complexity. But convenience shouldn't be the only factor.

4. Independence matters: Some platforms are tied to specific product families (banks often favor their own products). Independent providers may offer more objective product selection.

5. Service quality varies: The quality of advice, service, and support varies significantly between platforms and individual advisors, regardless of whether they're bank-based or independent.

The mindset shift: from "I'll just use my bank" to "I'll evaluate options based on my specific needs, priorities, and long-term goals."

Bank Platforms: Pros and Cons

What Are Bank Platforms?

Bank platforms are investment services offered by major Canadian banks, such as:

• RBC Dominion Securities / RBC Direct Investing
• TD Wealth / TD Direct Investing
• BMO Nesbitt Burns / BMO InvestorLine
• Scotia Wealth Management / Scotia iTrade
• CIBC Wood Gundy / CIBC Investor's Edge
• National Bank Financial / National Bank Direct Brokerage

These platforms are typically integrated with the bank's other services (business banking, credit, cash management).

Advantages of Bank Platforms

1. Convenience and Integration

• Single relationship: One bank for banking and investing
• Easy transfers: Move money between accounts quickly
• Unified statements: All accounts on one statement
• Relationship benefits: May qualify for premium banking services or better rates

2. Familiarity and Trust

• Brand recognition: Well-known, established institutions
• Perceived security: Large institutions may feel more secure
• Existing relationship: If you already bank there, you have a relationship

3. Comprehensive Services

• Full-service options: Some bank platforms offer comprehensive wealth management
• Multiple account types: Can handle corporate, personal, and other account types
• Additional services: May offer credit, insurance, and other services

Disadvantages of Bank Platforms

1. Product Limitations

• Proprietary focus: Banks often favor their own mutual funds and products
• Limited selection: May not offer access to all products in the market
• Potential bias: Advisors may be incentivized to recommend bank products

2. Potentially Higher Costs

• Management fees: Bank proprietary funds may have higher management expense ratios (MERs)
• Account fees: May charge higher account maintenance fees
• Transaction costs: Some platforms have higher transaction fees

3. Less Independence

• Product bias: Advisors may be limited in what they can recommend
• Less flexibility: May be constrained by bank policies and product availability
• Potential conflicts: Bank's interest in selling their products vs. your best interest

4. Service Quality Varies

• Large institutions: May feel less personal
• Advisor turnover: May experience more advisor changes
• Standardized approach: May offer less customized service

Independent Providers: Pros and Cons

What Are Independent Providers?

Independent providers are investment dealers and platforms not owned by major banks, such as:

• Fidelity Investments Canada
• Independent investment dealers (like WhiteHaven Securities Inc.)
• Discount brokerages (like Questrade, Interactive Brokers)
• Specialized corporate investment platforms

These platforms typically focus on investment services rather than full banking relationships.

Advantages of Independent Providers

1. Broader Product Access

• Market-wide selection: Access to products from multiple fund families
• Best-in-class selection: Can choose the best products regardless of manufacturer
• More options: Typically offer more investment choices

2. Potentially Lower Costs

• Competitive fees: May offer lower management fees and account fees
• No proprietary bias: Not incentivized to push specific products
• Fee transparency: Often more transparent about fees

3. Advisor Independence

• Objective advice: Advisors can recommend products based on merit, not manufacturer
• Brand-agnostic: Can select from the entire market
• Client-focused: May be more focused on client outcomes than product sales

4. Specialized Expertise

• Corporate focus: Some independent providers specialize in corporate accounts
• Tax expertise: May have deeper expertise in corporate tax considerations
• Customized service: Often offer more personalized, relationship-based service

Disadvantages of Independent Providers

1. Less Integration

• Separate relationships: Banking and investing may be with different institutions
• Transfer complexity: Moving money may require more steps
• Multiple statements: May receive statements from multiple institutions

2. Perceived Risk

• Less familiar: May not recognize the brand
• Size concerns: May worry about smaller institutions
• Relationship building: May need to build a new relationship

3. Service Limitations

• No banking services: Typically don't offer banking, credit, or other services
• May require coordination: Need to coordinate with your bank separately
• Potential complexity: Managing relationships with multiple institutions

Key Comparison Factors

1. Product Selection

Bank Platforms:

• Typically strong in proprietary products
• May have limited access to non-bank products
• May favor bank-managed funds

Independent Providers:

• Typically offer broader market access
• Can select from multiple fund families
• May offer more specialized products (corporate-class funds, tax-efficient structures)

Question to ask: "What products can I access, and are there any restrictions?"

2. Fees and Costs

Bank Platforms:

• Management fees: Often 1.5-2.5%+ for proprietary funds
• Account fees: May charge annual account fees
• Transaction costs: Vary by platform

Independent Providers:

• Management fees: Often 1.0-2.0% for similar products
• Account fees: May be lower or waived
• Transaction costs: Vary by platform

Question to ask: "What are the total fees (management fees, account fees, transaction costs), and how do they compare?"

3. Convenience and Integration

Bank Platforms:

• High integration with banking
• Easy transfers and coordination
• Unified statements and online access

Independent Providers:

• Lower integration (may require separate banking)
• May require more coordination
• Separate statements and systems

Question to ask: "How important is having everything in one place vs. optimizing for cost and product access?"

4. Service and Advice Quality

Bank Platforms:

• Service quality varies significantly
• May have more standardized approach
• Advisor expertise varies

Independent Providers:

• Service quality varies significantly
• May offer more personalized approach
• Advisor expertise varies

Question to ask: "What is the advisor's experience with corporate accounts, and what is their approach to product selection?"

5. Independence and Objectivity

Bank Platforms:

• May have bias toward proprietary products
• May be constrained by bank policies
• Potential conflicts of interest

Independent Providers:

• Typically more objective product selection
• Less constrained by proprietary interests
• May be more client-focused

Question to ask: "Is the advisor free to recommend products from any manufacturer, or are they limited to specific products?"

How to Evaluate and Choose

Step 1: Define Your Priorities

Consider what matters most to you:

• Cost: Are you focused on minimizing fees?
• Product access: Do you need access to specific products or the broadest selection?
• Convenience: How important is having everything in one place?
• Service quality: What level of service and advice do you need?
• Independence: How important is objective, brand-agnostic advice?

Step 2: Research Options

For each platform you're considering:

1. Product selection: What products can you access?
2. Fees: What are the total costs (management fees, account fees, transaction costs)?
3. Service model: What level of service is provided?
4. Advisor expertise: What is the advisor's experience with corporate accounts?
5. Independence: Is the advisor free to recommend products from any manufacturer?

Step 3: Compare Total Costs

Don't just compare management fees—compare total costs:

• Management fees (MERs): Annual cost of fund management
• Account fees: Annual account maintenance fees
• Transaction costs: Costs for buying/selling investments
• Hidden costs: Any other fees or charges

Calculate the total cost over 10-20 years to see the real difference.

Step 4: Consider the Hybrid Approach

You don't have to choose one or the other. Many corporations use a hybrid approach:

• Banking: Keep business banking with your bank
• Investing: Use an independent provider for corporate investments
• Coordination: Work with advisors who can coordinate both

This gives you the convenience of bank banking with the product access and potentially lower costs of independent investing.

Step 5: Evaluate the Advisor, Not Just the Platform

The quality of advice and service often matters more than the platform itself:

• Experience: Does the advisor have experience with corporate accounts?
• Expertise: Does the advisor understand corporate tax considerations?
• Approach: Is the advisor brand-agnostic and focused on your best interests?
• Relationship: Can you work well with the advisor long-term?

Worked Example: Comparing Options

Let's look at a concrete example to illustrate the differences.

Scenario

Corporation Details:

• Corporate investment account: $1,000,000
• Expected annual return: 6%
• Investment time horizon: 20 years

Option A: Bank Platform

Assumptions:

• Management fees: 2.0% (proprietary bank funds)
• Account fees: $500 per year
• Product selection: Limited to bank products
• Convenience: High (integrated with banking)

Annual costs:

• Management fees: $1,000,000 × 2.0% = $20,000
• Account fees: $500
• Total annual cost: $20,500

20-year cost (assuming portfolio grows):

• Approximately $400,000+ in fees over 20 years

Option B: Independent Provider

Assumptions:

• Management fees: 1.5% (market-wide selection)
• Account fees: $0 (waived)
• Product selection: Broad market access
• Convenience: Lower (requires coordination with bank)

Annual costs:

• Management fees: $1,000,000 × 1.5% = $15,000
• Account fees: $0
• Total annual cost: $15,000

20-year cost (assuming portfolio grows):

• Approximately $300,000+ in fees over 20 years

Comparison

Annual difference: $5,500 per year
20-year difference: $100,000+ in fees (before considering portfolio growth)

Trade-offs:

• Bank platform: Higher cost, but more convenience
• Independent provider: Lower cost, broader product access, but requires more coordination

The choice depends on priorities: Is the $5,500+ per year in savings worth the additional coordination? For many corporations, the answer is yes, especially over 20 years.

Decision Checklist

Use this checklist to evaluate platform options:

Product Selection:

• [ ] What products can I access on each platform?
• [ ] Are there any restrictions on product selection?
• [ ] Do I need access to specific products (corporate-class funds, tax-efficient structures)?

Costs:

• [ ] What are the management fees (MERs) for similar products?
• [ ] What are the account fees?
• [ ] What are the transaction costs?
• [ ] What is the total cost over 10-20 years?

Convenience:

• [ ] How important is having everything in one place?
• [ ] How easy is it to transfer money between accounts?
• [ ] How important are unified statements?

Service Quality:

• [ ] What is the advisor's experience with corporate accounts?
• [ ] What is the advisor's approach to product selection?
• [ ] What level of service is provided?
• [ ] Can I work well with the advisor long-term?

Independence:

• [ ] Is the advisor free to recommend products from any manufacturer?
• [ ] Is there potential bias toward proprietary products?
• [ ] How objective is the product selection?

If you've evaluated these factors: You're ready to make an informed decision based on your priorities and circumstances.

Fact-Check & Sources

Important Notes

• Platform features, fees, and product availability change over time
• This article provides general educational information only
• Your specific situation may differ based on your corporation's needs, priorities, and circumstances
• Always verify current fees, products, and services directly with providers
• Regulatory requirements and platform capabilities vary

Regulatory Considerations

• All investment dealers in Canada are regulated by provincial securities commissions
• Investment advisors must be registered and meet regulatory requirements
• Product availability depends on dealer registration and platform capabilities
• Always verify that your advisor and platform are properly registered

Related Articles

• Corporate Investing Services - How we help structure corporate investment portfolios
• The SBD "Grind" & Your Corporate Portfolio - Understanding tax considerations in portfolio design

Full Disclosure

This content is for information and education only. It explains general concepts about investment platforms that may apply to incorporated business owners, but it is not personalized investment, tax, or legal advice.

Platform Considerations:

• Platform features, fees, and product availability change over time
• Always verify current information directly with providers
• Your specific needs and circumstances may differ
• Past performance and features do not guarantee future results

Investment Considerations:

• Past performance does not guarantee future results
• Investment returns are not guaranteed
• All investments carry risk of loss
• Fees and costs affect returns

Regulatory:

• Mutual funds are offered through WhiteHaven Securities Inc.
• Insurance products and certain other services are provided through iAssure Inc.
• These activities are neither the business nor the responsibility of WhiteHaven Securities Inc.
• This article discusses general platform types and is not an endorsement of any specific platform or provider

Professional Advice:

• This article is not a substitute for professional advice from your investment advisor, CPA, or lawyer
• Work with your professional team to understand how platform choice applies to your specific situation
• Evaluate platform options based on your priorities, needs, and circumstances

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