Preparing for your child’s post-secondary education but worried about tuition costs? Well, you are right to worry about it. Statistics Canada has shown that the average annual tuition fee for undergraduate programs in 2022 was $6,580.
Since Canadian university education costs are expected to continue to rise, maximising your child’s Registered Education Savings Plan (RESP) is key.
With rising tuition fees, partnering with a reputable institution that offers exceptional investment options, top-notch customer service, and attractive government grants is crucial.
In this article, we have carefully researched and compiled a list of the best RESP providers in Canada, each offering unique features and benefits.
Whether you prioritise flexibility in contributions, diverse investment options, competitive fees, or maximising government grants, we have identified the providers that excel in these areas.
Join us as we delve into the world of the best RESP providers in Canada, empowering you to make an informed decision that sets your child on a path to success.
How We Chose The Best RESP Providers in Canada
Selecting the right RESP provider is crucial in ensuring that your child’s education savings are in capable hands. With numerous providers available, we understand the importance of considering several factors to determine the best option for your specific needs. Here are some key considerations we considered when evaluating the best RESP providers in Canada:
- Reputation and Trustworthiness: We started by thoroughly researching the reputation and trustworthiness of potential RESP providers. We looked for established financial institutions with a proven track record of managing RESPs, such as banks, credit unions, or reputable investment firms. We read reviews, sought recommendations from trusted sources, and verified their credentials and licensing with relevant regulatory bodies to gain further confidence.
- Plan Features and Flexibility: We carefully assessed each provider’s plan features and flexibility. We considered factors such as contribution options, withdrawal policies, and the ability to transfer funds to other beneficiaries within the family. It’s important that the providers offer flexibility in contributions, investment options, and the ability to adapt to changing circumstances.
- Investment Options: We evaluated the range of investment options available within the RESP plans offered by each provider. We looked for diverse investment vehicles, including mutual funds, GICs, stocks, and ETFs. Considering the risk levels associated with each option, we choose providers that align with better risk tolerance and investment goals.
- Fees and Expenses: We compared the fees and costs of several RESP providers. We looked for transparent fee structures and providers that offer competitive rates. We were mindful of any administrative fees, management expenses, or sales charges that may impact the growth of your savings over time. Choosing a provider with reasonable fees will help maximise the value of your RESP.
- Customer Service and Support: We considered the level of customer service and support that several RESP provider offers. It is important to find providers who are accessible, responsive, and willing to assist me throughout the process. Prompt and knowledgeable customer service can make managing your RESP more convenient and help address any concerns or questions along the way.
10 Best RESP Providers in Canada for 2024
We understand that finding a provider that aligns with your financial goals, offers comprehensive support, and provides attractive investment options will set your child’s education savings on the right path.
By carefully considering these factors and conducting thorough research, we narrowed down our options and chose the 10 best RESP providers in Canada.
Wealthsimple is a leading Robo-advisor in Canada that supports RESPs. They offer low-cost investing with no minimum investment requirements, allowing you to start with any amount.
Opening new accounts is easy; they provide Robo-advising and pre-built ESG portfolios. However, Wealthsimple currently does not offer a self-directed option for RESP accounts.
The fees for accounts under $100,000 are 0.50%, which decreases to 0.40% once the account exceeds $100,000. With an MER of 0.20%, Wealthsimple is a great choice for individuals looking for low fees, diverse investment options, and an automated investment experience.
Questrade is Canada’s leading low-cost discount brokerage and a strong competitor to Wealthsimple. They simplify banking for many Canadians, offering self-directed and managed RESPs. They support RESP accounts but have a minimum deposit requirement of $1,000 for new accounts.
Questrade offers the flexibility to manage your own investments with a self-directed RESP account or access pre-created portfolios through their Questwealth robo-advisor platform.
For Questwealth accounts with balances between $1,000 and $100,000, investors are charged a fee of 0.25%. Accounts with balances exceeding $100,000 are charged a fee of 0.20%. Additionally, investors pay the MER associated with the low-cost ETFs in their portfolios.
3. Qtrade Direct Investing
Qtrade Direct Investing, a non-bank self-directed discount brokerage, falls under the umbrella of Aviso Wealth. This platform could be an excellent choice if you’re a credit union client and prefer to take charge of your RESP investments.
Unlike some providers, Qtrade Direct Investing doesn’t construct portfolios on your behalf. You have full control over the investment mix within your RESP.
However, if you prefer a professional to manage your money, numerous credit unions nationwide offer advisors who can assist you with RESP management.
CIBC Investor’s Edge stands as CIBC’s self-directed discount brokerage, providing a platform for existing CIBC clients who prefer to take charge of their RESP investments.
With CIBC Investor’s Edge, you have complete control over the investment mix within your RESP. The platform does not construct portfolios on your behalf. However, if you desire guidance from an advisor, the bank can connect you with a professional who can assist in establishing and managing your RESP.
5. RBC Direct Investing
RBC Direct Investing serves as the Royal Bank of Canada’s self-directed discount brokerage division, catering to individuals who prefer to take control of their RESP investments. If you are an existing RBC customer and desire the autonomy to manage your portfolio, this platform can be an excellent option.
RBC Direct Investing does not construct portfolios on your behalf, unlike other providers. It places the onus entirely on you to determine the investment mix within your RESP. However, if you prefer to work with an advisor, the bank can connect you with a professional who will assist in establishing and overseeing your RESP.
6. Justwealth Financial Inc
Justwealth specialises in offering target-date portfolios for RESP accounts, which are well-suited for aligning with the time when the funds will be needed.
These target-date funds have a specified maturity date outlined in their description. As the fund approaches this date, its asset allocation gradually becomes more conservative.
One advantage of Justwealth is that they do not require a minimum account size or offer a self-directed account option.
Regarding fees, Justwealth charges 0.50% for portfolios under $500,000 and 0.40% for portfolios exceeding $500,000. It’s important to note that these fees are separate from the MER fees associated with the underlying ETFs in your portfolio.
7. BMO InvestorLine
BMO InvestorLine is BMO’s self-directed discount brokerage, catering to existing clients seeking to take charge of their RESP investments.
With this platform, you have full control over the investment mix within your RESP, as BMO InvestorLine does not construct portfolios for you.
However, if you prefer to work with an advisor, the bank can connect you with one to assist in setting up and managing your RESP.
8. CI Investment Services Inc.
CI Direct Investing is a comprehensive platform that caters to RESP accounts by offering a robo-advisor and self-directed trading options.
When utilising CI’s robo-advisor, fees are structured as follows: an annual fee of 0.60% is applied to the first $150,000 of your investment, followed by a reduced fee of 0.40% for the subsequent $350,000. For amounts exceeding $500,000, an annual fee of 0.35% is charged.
It’s important to note that in addition to the management fee, any applicable fund or strategy MERs (Management Expense Ratios) will also be incurred based on the specific investments chosen for your RESP account.
CI Direct Investing ensures transparency in fees to provide a comprehensive overview of the costs of managing your investments.
9. Scotia iTrade
Scotia iTrade serves as Scotiabank’s self-directed discount brokerage, offering a valuable platform for individuals who prefer managing their own RESP investments while already banking with Scotiabank.
With Scotia iTrade, the responsibility of creating and maintaining the investment mix within your RESP rests solely on your shoulders. If you desire guidance from an advisor, the bank can connect you with one who will assist in establishing and overseeing your RESP.
10. TD Direct Investing
TD Direct Investing serves as TD Bank’s self-directed discount brokerage, providing a suitable platform for individuals who prefer to oversee their RESP investments. This option is particularly beneficial for those already banking with TD.
It’s important to note that TD Direct Investing does not offer portfolio construction services. As an investor, you have complete control over the investment mix within your RESP.
If you desire guidance from an advisor, TD can connect you with one who can assist in establishing and managing your RESP.
What Is an RESP and How Does It Work?
A Registered Education Savings Plan (RESP) is a government-regulated savings account in Canada that allows parents and guardians to save for their child’s post-secondary education. It is a powerful financial tool with various benefits and incentives to encourage long-term savings.
If you’re planning to save for your child’s post-secondary education in Canada, a Registered Education Savings Plan (RESP) is a valuable tool to consider.
You must open an RESP account with a licensed provider to get started. Contributions can be made regularly, or as lump sums, and while there is no annual limit, there is a lifetime maximum of $50,000 per beneficiary.
One of the major advantages of an RESP is the potential to receive government grants. The most common grant is the Canada Education Savings Grant (CESG), which matches a percentage of your contributions up to a maximum of $7,200 per child.
Within an RESP, any investment earnings grow tax-deferred, meaning you won’t have to pay taxes on them until the funds are withdrawn for educational purposes. Once your child enrols in a qualifying post-secondary program, they can access the accumulated contributions, government grants, and investment income as Educational Assistance Payments (EAPs). While EAPs are taxable, students often have lower incomes during their studies, resulting in minimal tax liability.
You have options if your child decides not to pursue post-secondary education or receives scholarships. RESP funds can be transferred to another eligible family member or rolled over to your Registered Retirement Savings Plan (RRSP) if applicable.
Alternatively, you can close the RESP and withdraw the contributed amount, but remember that government grants and investment income may be subject to tax and penalties.
To determine the value of your RESP, consider your RESP contributions, your CESG compliance, and the average rate of your investment return. Assume you donated $1,000 annually to your child’s RESP for 17 years; you would have made a $17,000 investment. Consequently, the CESG would have provided you with $200 every year, or $3,400. Cumulatively, you would have $20,400 in total. However, if your annual average rate of investment return is 4%, after 17 years, your child would have a total of $30,774.50.
Benefits of Enrolling for RESP Solution
Enrolling on a Registered Education Savings Plan (RESP) solution offers several compelling benefits for both you and your child. Here are some key advantages to consider:
- Debt-Free Education: Enrolling your child in an RESP plan in Canada offers significant benefits, especially considering the rising cost of education. By providing a dedicated savings account, an RESP helps alleviate the financial burden associated with tuition fees and other educational expenses. This allows your child to pursue their dreams without worrying about overwhelming student loans or needing part-time jobs. With a jump-start in life, you give them a head start in life, fostering better academic performance, increased opportunities, and a brighter future.
- Government Grants: The Canadian government offers generous grants through the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) program to encourage parents to save for their child’s education. By opening an RESP, you become eligible for these grants, which can significantly boost your savings. It’s like getting free money to invest in your child’s future!
- Tax Advantages: RESP plans come with tax advantages that make them attractive for parents. The investment growth within an RESP is tax-deferred, meaning you don’t pay taxes on the earnings until the funds are withdrawn by your child for educational purposes. Additionally, when your child uses the RESP funds for education, they will likely be in a lower income tax bracket, resulting in potential tax savings.
- Flexibility and Options: RESP plans offer flexibility in terms of contributions and investment options. You can contribute according to your financial capacity, whether a small monthly or a lump sum. Moreover, RESP funds can be invested in various ways, including mutual funds, GICs, and stocks, allowing you to choose the investment strategy that aligns with your risk tolerance and financial goals.
What are the Types of RESPs in Canada?
Understanding the different types of RESPs available in Canada is essential when considering the best RESP plan providers. Here are the three types of RESPs to be aware of:
- Individual Plans: Individual plans are designed for a single beneficiary, making them ideal for those who want to focus their RESP savings on a specific child. This type of plan allows for personalised investment strategies based on the beneficiary’s needs, risk tolerance, and asset allocation.
- Family Plans: Family RESP plans accommodate multiple beneficiaries who are related by blood or adoption. This option allows for the distribution of funds according to each child’s individual needs. However, it is important to consider the varying ages of the children to ensure sufficient funds are available when each child is ready for post-secondary education.
- Group Plans: Group RESP plans, or scholarship funds, pool contributions from different contributors. These plans are intended for children of the same age who will attend post-secondary education. Contributors agree to make predetermined contributions, including their Canada Education Savings Grant (CESG) grants, for the benefit of all group members. Payments to individual children are determined based on the overall value of the pool and the number of beneficiaries attending post-secondary school in a given year. It’s worth noting that group RESPs have strict rules for contributions and withdrawals, which can result in penalties or limitations on accessing funds for education.
What are the RESP Investment Options?
An RESP provides a tax-advantaged way to save for your child’s education and offers a range of investment options. These options allow you to potentially grow your savings over time and maximise the funds available for your child’s educational journey.
When setting up an RESP, you’ll have various investment choices based on your risk tolerance and financial goals. Here are some common investment options within an RESP:
- Mutual Funds: Many RESP providers offer a selection of mutual funds, which are professionally managed investment portfolios. Mutual funds can provide diversification by investing in a mix of stocks, bonds, and other securities. They offer the potential for growth over the long term but also carry some level of risk.
- Guaranteed Investment Certificates (GICs): GICs are low-risk investments that guarantee a fixed rate of return over a specified period. They offer stability and capital preservation, making them an attractive option for risk-averse investors. GICs within an RESP can help protect your principal while earning a predictable interest rate.
- Stocks and Exchange-Traded Funds (ETFs): For those comfortable with higher levels of risk and seeking potentially higher returns, individual stocks and ETFs can be considered. Investing in specific companies or broad market indexes through ETFs allows you to participate in the stock market’s growth. However, it’s important to research and assess individual stocks or choose well-diversified ETFs carefully.
- Savings Accounts: Some RESP providers offer savings accounts as a conservative option. While savings accounts may offer lower returns than other investment options, they provide stability and liquidity. They can be an appropriate choice for those prioritising capital preservation and having a shorter investment time horizon.
Remember, your investment options within an RESP can significantly determine your savings’ growth and potential returns. By selecting investments wisely and monitoring their performance over time, you can enhance the funds available to support your child’s educational aspirations.
RESP Contribution Limit
Registered Education Savings Plan (RESP) has no annual contribution limit like TFSA or RRSP accounts. However, the amount you contribute each year can affect the government grants you receive.
Every RESP beneficiary has a lifetime contribution limit of $50,000. This limit applies to all accounts established for that beneficiary, and you can reach this maximum limit at once or gradually over a period of up to 31 years after opening the account.
To receive the maximum annual government grant of $500, you must contribute a minimum of $2,500 annually.
It’s important to note that the lifetime contribution limit does not include government grants deposited into the RESP account.
If you exceed the lifetime contribution limit, any excess contribution will be subject to a 1% monthly charge until the excess amount is withdrawn.
RESP Government Grants and Savings Incentive
When it comes to saving for your children’s education, one of the greatest advantages of using an RESP is the government grants you receive for your contributions.
There are several types of government grants available, including those provided by the Government of Canada and certain provincial grants:
- Basic Canada Education Savings Grant (Basic CESG): This grant offers a 20% match on the first $2,500 contribution per year. The best part is that it is not income-tested, meaning it is available to every RESP beneficiary, regardless of the parent’s income, until the year the child turns 17.
- Additional CESG: This grant provides an extra 10% or 20% on the first $500 contribution, depending on income.
- Canada Learning Bond (CLB): The CLB is an income-tested education savings incentive. Eligible beneficiaries receive $500 in the first year and $100 each subsequent year, up to a lifetime limit of $2,000. You can read my article on Canada Learning Bond (CLB) for more information.
In addition to the federal grants, some provinces offer their own incentives:
- British Columbia Training and Education Savings Grant (BTCESG): BC residents can receive a one-time payment of $1,200.
- Saskatchewan Advantage Grant for Education Savings (SAGES): Saskatchewan residents can benefit from a 10% grant on contributions up to an annual limit of $250. Please note that the program was temporarily suspended in 2019.
These grants can significantly boost your RESP savings and provide valuable financial support for your child’s education. By taking advantage of these incentives, you can make the most of your RESP and help secure a brighter future for your children.
How to Open an RESP Account
Opening an RESP account for your child or beneficiary requires meeting certain requirements, which may vary depending on the chosen financial institution. Generally, you will need to provide your and your child’s Social Insurance Numbers (SIN) and the child’s birth certificate during the registration process. It’s essential to confirm the specific requirements with your potential RESP provider.
Before opening an account, ensure that the provider aligns with your needs. Consider the available investment options, associated costs, and any limits or fees associated with the plan. If you encounter any confusion during the process, don’t hesitate to contact the RESP provider for assistance.
To open an account with one of the best RESP providers in Canada, follow these steps:
- Choose a provider from the options mentioned or refer to the government list.
- Provide your SIN, the beneficiary’s SIN (your child), a government-issued ID, and a void cheque for contributions.
- If opting for a robo-advisor account, most forms and documents can be completed online, including electronic signatures. Wealthsimple offers a seamless online process.
- If you prefer a bank RESP, you can book an appointment online to speak with an advisor at a branch.
By following these steps and providing the necessary information, you can successfully open an RESP account for your child’s future education.
How to Make an RESP Withdrawal
When it comes to withdrawing funds from your RESP account, the process is straightforward and designed to support your child’s post-secondary education expenses.
When making withdrawals from your RESP account, funds are categorised into two types:
- Post-Secondary Education (PSE) Payments: These withdrawals come from your own contributions. PSE withdrawals are not taxable since you have already paid taxes on these funds. You can make PSE withdrawals at any time and without limits.
- Education Assistance Payments (EAP): EAPs include investment income earned in the RESP and government grants. Here are some rules to consider:
- Your child must be enrolled in a qualifying or specified educational program.
- During the initial 13 weeks, your child can withdraw up to $5,000 of EAP and any amount thereafter.
- For part-time studies, your child can withdraw up to $2,500 of EAP for each 13-week period of enrollment.
Final Thoughts on the Best RESP Providers in Canada
When it comes to securing your child’s educational future, choosing the best RESP provider in Canada is paramount. With numerous options available, it’s crucial to consider factors such as reputation, plan features, investment options, fees, and customer service.
After thorough research and evaluation, you can make an informed decision that aligns with your financial goals and provides the best support for your child’s education savings.
Remember, the right RESP provider can make a significant difference in maximising the growth of your investments and accessing valuable government grants. So, take the time to explore your options and select the provider that offers the best combination of benefits and features.
Start your journey towards securing your child’s education today by finding the best RESP providers in Canada.
FAQs on the Best RESP Providers in Canada
What Kinds of Post-Secondary Programs Qualify for RESP?
Post-secondary programs that qualify for RESP are colleges, universities, CEGEPs, trade schools, and other certified institutions.
How Will I Receive Payments from My RESP Plan?
Your child or beneficiary must present evidence of enrollment in a qualified program to your RESP plan. Some RESP plan providers make payments on a particular period. Others allow you to choose. On the other hand, some plans withhold earnings until the student enters the program’s second year.
What if My Child Does Not Enroll in Post-Secondary School or Does Not Complete the Program?
You get a refund of your contributions without any charges. In most circumstances, you will get a return on your earnings too. However, some RESP plans may reserve and distribute your earnings to their members.
What if You Change Your Mind after Signing Up?
If you’re under a group or scholarship plan, you may terminate it without penalty within 60 days of signing up. Other plans have different timeframes and conditions in this regard.
How Much Money Does the Government Contribute to an RESP Annually?
The government contributes 20% of your initial $2,500 annual contribution to your RESP, up to $500 per beneficiary annually.
Can I Transfer RESP to Another Child?
Yes, you can transfer your RESP to another child without penalty once the child is under 21.
Can I Withdraw from RESP for Non-Educational Purposes?
Yes, RESPs can be used for non-educational purposes such as establishing a business or buying a house. However, there are penalties for using RESP other than for educational purposes. Apart from the tax implications, you must fully return any government-contributed money in the RESP.