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Reversing Mutual Fund Purchases

in Mutual Funds

Written in 2014, but this still happens with the one TD Mutual Fund account that I still have. Your Risk Profile is what they base things on, and they will make you live up (or down) to it.

TD’s Mutual Fund group proved yet again why I don’t particularly appreciate dealing with them. Some might ask, “Why do I have so many TD Mutual Fund accounts?” surprisingly because I had a group of CT Mutual Fund Accounts that changed over to TD Mutual Fund accounts. I should have just closed them and gone with TD Waterhouse accounts, but hindsight is 20/20.

One of the accounts is my “Emergency Fund.” I decided to move funds from a T-Bill Fund to a Bond Fund (E-series) for more potential growth. A Bond Fund is a little riskier than a T-Bill account. It was not, however, like I wanted to buy the TD North African Sahara Sand Fund or something complex like that (keep that in mind).

Transacation Cancelled
Transaction DENIED!!

The Mutual Fund Circular Cancellation

The transaction went through (it showed up in my list of funds in my account). Then a day later, TD cancelled the transaction. I received the following e-mail:

Dear Investor,

We appreciate your business and thank you for your request.

For security reasons, we have not included your name and account number in this communication.  Please do not reply to this e-mail.  It is our policy not to send, nor to ask our customers to send account and trade-related information by e-mail.

After further review of your trade, we are required to reverse your trade request because it may not be suited to your current investor profile.  We have based this assessment on the information you provided us regarding your personal circumstances, investment knowledge, objectives, time horizon and risk tolerance.  Not only do we want to help you make the best investment decisions, we are required to assess the suitability of all mutual fund account transactions.  Please contact a Mutual Funds Representative1 to review and update the information we have regarding your Investor Profile.  

A not very helpful email from TD Mutual Funds

Stopping Grandmothers from taking their funds and dumping them into a Chinese Hay Bailing Mutual Fund is good. How is moving from a Money Market account to a Bond Fund that risky?

The transaction went through, the Mutual Fund transfer appeared, and then they reversed it! Wonder if anyone got a commission on that?

What to do Next?

I called up and spoke to a pleasant young man. He informed me that I hadn’t updated my investing profile for a while. We went through each question, and at the end of it, I was still not an aggressive enough investor to buy the TD E-Series Bond Fund (TDB909 ). I have been advised before that I am Too Conservative in My Investing.

At that point, we entered into a hypothetical situation. I might have asked the young man what I needed to do to invest in whatever I wanted in the Mutual Fund account. The accommodating young man may have suggested we review a few of my answers. I might have changed my answers a little to reflect a more aggressive investing stance in this hypothetical situation. This might have happened after someone might have explained what each response might mean. At the end of it, I might have been allowed to transfer my T-Bill Index Fund holdings into the TD E-series Bond Fund.

What Should I really Do?

I really should transfer these accounts into TD Directline accounts. TD Mutual Funds needs an “I Understand the Risks and Wish to Do It Myself” declaration, absolving them of any wrongdoing, should I decide to buy the “Buggy Whip and Bumpers Mutual Fund,” or the like?

{ 6 comments }

  • Edward October 20, 2014, 1:54 PM

    The banks really have to cover their asses from people who make bad decisions and then blame the bank for allowing them to make that decision.
    However, I thought the e-Series was self-directed? Meaning that we’re allowed to do what we will with it?
    Before I was into index e-Series investing I used to occasionally get mutual fund trades cancelled on me (as you describe above) and have to call them. I probably used some pretty explosive language when telling them to remove the barricades. I haven’t had a problem in years *BUT* if I have to sit down with somebody at the bank for something I say, “We might as well do that stupid investor profile thing while I’m here”. I’ve probably done it about 5 or 6 times since 1997.
    …I wonder if they had an onslaught of panicky investors in the past two weeks on their web site trying to sell equities and buy bonds? That might have sprung an extra “don’t be stupid” failsafe in their system.

    Reply
    • bigcajunman October 20, 2014, 1:59 PM

      Not sure, but the “Change this normal mutual fund account into a SUPER E-series account” form didn’t come with a new investing profile, and I guess that overrode any E-series covenant implied (as in, I am asking to use E-series Index funds, so I know a little bit about investing). Yes, I am assuming this is the bank attempting to cover their arses, but it doesn’t mean I have to like it.

      Reply
  • Robert M October 20, 2014, 11:45 AM

    Hi,

    It is interesting that you are too conservative to buy a TD Bond fund. I’d love to know the criteria for that decision. Would you qualify (?) for a regular TD bond fund instead of the e-series bond fund?

    If that is true, then I would put their feet to the fire. TD has several classes for the bond index fund. The e-series fund has an MER of 0.5 while the SAME fund with advice thrown in has an MER of 0.86.

    Being the untrusting person that I am, it sounds like they wanted to keep you in a fund with fees for embedded advice.

    The sad part of this is that it shows that TD doesn’t really have a fiduciary responsibility for their clients interests. These funds are EXACTLY the same and to steer people to a fund with a higher cost so that they can provide advice is self serving and ultimately self defeating.

    For the record, I have TD e-series in a TD Waterhouse account and I have never had issues with my purchases.

    Time to go back to my happy place. Good luck.

    rob…

    Reply
    • bigcajunman October 20, 2014, 12:19 PM

      The keeping me in a higher MER fund, might be happening, but the Money Market fund I was in was low, but I suspect that kind of shenanigans might happen, but I don’t have any examples that I know of. I have my E-series Canadian Bond Fund in place, so that will have slow growth, but that is fine, it is an emergency fund, after all.

      Reply
  • Bet Crooks October 20, 2014, 10:12 AM

    That is truly horrible customer service!

    You might want to confirm you are not going to get zinged with an annual fee on top of this starting next year. BMO has started charging $10 a year for mutual funds in a RRSP account (on top of the MERs etc.). A reader warned me of this and I think it’s appalling.

    Reply
    • bigcajunman October 20, 2014, 10:25 AM

      WTF? A charge to have mutual funds in your RRSP? That is gratuitous and gouging (in my estimation). Wow

      Reply

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