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Kevin Greenard: Depositing funds to your investment account

Every day our team fields phone calls and emails from clients asking how they can put money into their investment account. The inquiry is from the mindset of what is the most efficient way to make the deposit that is secure, easy and fast.
Kevin Greenard

Every day our team fields phone calls and emails from clients asking how they can put money into their investment account. The inquiry is from the mindset of what is the most efficient way to make the deposit that is secure, easy and fast.

Many of our clients that are working are generating more income than they are spending. This is especially the case, once the mortgage is paid off. When this is the case, the focus normally turns to using the accumulated funds to build up investments savings in non-registered accounts, Registered Retirement Savings Plans (RRSP), Registered Education Savings Plan (RESP) and Tax Free Savings Accounts (TFSA).

Some of our retired clients are making deposits into their investment accounts. In some cases, the pension and other income they receive exceed their expenses, and they would rather have us invest these funds than have them sit in a bank account earning very little.

When our clients sell a house, major asset (i.e. boat, plane), business, or receive an inheritance, they will often call to request guidance on how best to get the proceeds to us to invest within their accounts. Below are a few of the most common ways clients can make deposits into their investment accounts.

Cash deposits

Every institution will have their own specific policies but the expectation is that branches will generally not accept cash deposits of any size, unless there is an exceptional service situation (e.g. to facilitate a client covering a small debit balance); however, this is possible only when the branch has appropriate procedures and controls in place to handle cash deposits. It should be noted that travelers’ cheques are considered as cash deposits and typically will not be accepted. The best course of action would be to deposit the cash to your bank account and then use one of the methods below to fund your investment account(s).

Mailing or dropping off a personal cheque

One of the easiest and simplest ways of funding your investment account is to write a personal cheque and either mail it to us or drop it off at the branch. In this case you would make the cheque payable to the institution. It is always worth confirming who to make the cheque payable to. For example, with the rebranding our firm is now referred to as “Scotia Wealth Management”; however, when clients are writing out cheques to deposit to their account they should make the cheque payable to “ScotiaMcLeod”.

Do not make the cheque payable in the name of your Wealth Advisor or portfolio manager. For segregation of duties, the mail is not opened by the portfolio manager, but rather another staff member in the branch that will immediately secure the cheque and ensure it is deposited to the correct account. To avoid any confusion, we recommend writing the investment account number in the memo section of the cheque (i.e. Account 123-45678-90). If your deposit is funding to a few different accounts such as TFSA and RRSP contribution, you can simply write one cheque for the total amount, and it can then be allocated to the proper accounts (i.e. $12,000 cheque to be allocated into two different TFSA account — $6,000 each). When this is done, we recommend that you put both account numbers in the memo field with the respective dollar amounts written beside each account number.

Draft or Certified Cheque

A lot of clients that we have spoken with have the thought that a draft is more reliable than a personal cheque. This is a natural assumption given that when you have a draft issued from a bank account the funds are pulled out immediately. However, when a draft is deposited, we are required to prove the source of funds and require the issuing bank to confirm that the draft was in fact issued from your account. In general, Bank Drafts are not a preferred form of payment and we encourage clients to issue a personal cheque or use one of the electronic options mentioned below to make deposits.

Electronic Transfers from Scotiabank to Scotia Wealth Management

For those that use the same institution for both their banking and their investments, making deposits can be done electronically. In the case of Scotiabank and Scotia Wealth Management — you would simply log on to your online access and transfer between accounts such as a chequing account and an investment account. If you do not have online access to your accounts, you could use the telephone banking services to have them complete the transfer for you. Alternately, you can use the good old fashioned way and go into your local branch and have a branch representative complete the transaction for you. Whichever way is your preferred method, it is always a little bit easier when you deal with the same institution.

Direct Debit from Scotiabank to Scotia Wealth Management

With some of our clients that do their day to day banking with Scotiabank, we have a signed agreement on file that allows us to pull funds directly from their Scotiabank chequing or savings account and move it directly to their non-registered account. In this scenario, a client would send us an email asking us to take money from their Scotiabank account on file and move it to their Scotia Wealth Management non-registered account. Once we receive the request, we would always confirm verbally with the client that this is their intention, and once we have confirmed, we submit the request. The funds then arrive in the investment account on the same day.

Direct Debit from non-related bank to Scotia Wealth

It is not a requirement for our clients to have their day-to-day banking with Scotiabank. Some prefer to use a bank that is in closest proximity to where they work or live. Some of these same clients like the idea of forced savings and putting aside a certain dollar amount every month. When a client is wishing to set up a regular stream of savings, we can automate this process by having the client sign a Pre-Authorized Contributions (PAC) form. The PAC form is also used with clients who have their day-to-day with Scotiabank. This is an automated way to set up a steady stream of investment saving regardless of where you do your banking.

Electronic Transfers from non-related bank

If you bank at a non-related bank then there are still ways in which you can electronically deposit funds to your Scotia Wealth Management accounts. In this scenario, it is done just as if you were paying one of your bills, such as B.C. Hydro, Fortis Gas or your telephone.

1. Add the associated investment account as a bill payee (i.e. ScotiaMcLeod)

2. Provide the account number of the account you would like to make the deposit to (for ScotiaMcLeod it would be ten digits)

3. Process the amount you want to deposit as a bill payment to the investment account

The set-up will vary between each institution and if you require more assistance you should contact the financial institution of where you are sending the funds from. If clients have never done this before, we will suggest that they test the electronic method by transferring one dollar. We will then confirm the transfer on our end, before they proceed with transferring a larger dollar amount. Each financial institution will impose a daily limit on these transactions. If you wish to do larger deposits electronically then we would recommend doing it as a wire transfer which is the next option mentioned below.

Wire Transfers

Doing a wire transfer could make sense when you are looking to electronically transfer larger dollar amounts or if you are looking to transfer funds in a currency other than Canadian dollars. Say, for example, you have received a large inheritance from a relative who lives in the United Kingdom and you would like the proceeds to be deposited to your Scotia Wealth Management investment account. The quickest and most convenient way to have the funds transferred is by having the sending institution send it as a wire payment. Some typical information you will need to provide to the sending institution would be:

• Beneficiary Institution

• Transit

• Canadian Routing Code

• Swift Code

• Account with Bank SWIFT Code

• Beneficiary Customer

• For further Credit

This information is easily obtained by asking your portfolio manager to provide you with the details specific to your account and institution.

Another situation where having your funds sent via wire transfer makes sense is if you are transferring a large amount from your regular Canadian bank in either Canadian Funds or US funds. The information required is similar to the information mentioned above and again can easily be provided by your portfolio manager.

Third Party Deposits

A third party deposit is usually defined as a deposit (cheque or wire) made payable to a client where the payor is different from the name on the account where the funds are being deposited. An example of a third party deposit could be when a client works for a company that matches his or her RRSP contributions and sends a cheque monthly to the client’s Group RRSP account. Another could be where a grandparent would like to add some funds to their grandchild’s RESP account set up by the parents. In all of these cases, there is going to be enhanced scrutiny on the deposit due to the fact that third party deposits can represent money laundering activity.

In order to accept the third party deposit, a few things that we are required to do are determine why the third party cheque or wire is being deposited, what is the relationship of the third party to the client, contact the issuer of the cheque or wire to determine the appropriateness of the deposit, and contact the financial institution involved with the cheque or wire to determine if the funds are available.

Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director, wealth management, with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at Call 250-389-2138.