Thursday, 22 March 2012

RESP's: Do Your Research

I was contacted by a rep from the CST foundation about a month after my daughter’s birth. Both my husband and I wanted to set up an RESP for my daughter, so we were interested to find out about the program. The rep offered to come to my home, as it was difficult for me to get out with a newborn. I thought that was convenient, and we set up an appointment.

When the rep arrived he explained to me the benefits of the program, including the interest rates and the fees. They would apply to the Government for the available grants on my behalf, use my contributions in a group plan in order to secure the funds, and I could contribute anywhere from $10 to $250 per month. It seemed like a good way to go, so we set up the RESP with the CST foundation.

A month later, I received the User Agreement Plan in the mail, and during a naptime one day I decided to read it. I was shocked to discover that the fees were extremely high - almost 10% of my entire contributions. There would not actually be any money going into the plan for almost 2 years, they would just be covering fees. Also, the payments were fixed so that if I could not contribute one month, there would be a penalty. These two points were not explained to me by the rep.

I had a meeting with my bank to find out about what they offer for RESP's. Although the interest rate was lower, so were the fees, and both my husband and I felt more comfortable putting our money with a bank.

We decided to cancel our CST plan and have the money transferred to our bank in an RESP.

A few weeks after I mailed my letter to the CST, I followed up with a phone call to the head office to make sure they received my letter in time (you have 60 days from the original sign up to cancel) and to arrange the transfer of funds to my bank. It would all be processed in about 5 days, so I was confident that my concerns were resolved.

A few days later, I received a call from another rep who wanted to know why I was canceling. I explained what I had researched and how I was feeling about the program. She of course was challenging my points. She wanted to know why I was okay with a lower interest rate with the bank. I said that although it was lower, so were the fees. She said that the fees were refundable in the CST program through interest. Well, wouldn't it be the same with the bank, as you are gaining interest there as well. She had no comment. "Didn't you see on the news last night that a high-up bank manager is making a million dollars a year?" was her response. "So you don’t make a salary or commission on your accounts?" I asked. No comment again. She finally said that she would have her husband call me, who was the original rep I had dealt with.

I checked my account on the day the funds were supposed to be transferred, and nothing had been done. I called the head office again and they said that the rep had called and cancelled!!! I was shocked, as she never said anything like that to me on the phone. I submitted my request again, but unfortunately, the 60 day cancel period was over. After a few hours on the phone talking to several reps and managers, I was able to still cancel the plan and have them honor my original request.

When setting up an RESP, RESEARCH, COMPARE PLANS, and FOLLOW UP to make sure your best interests are covered!!!

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