Ready to start saving for your children’s post-secondary education? This post covers some of the best RESP providers in Canada.
What is an RESP
Registered Education Savings Plan (RESP) is a government of Canada program that was set up to encourage savings for post-secondary education or training programs.
All contributions to the plan will grow and compound on a tax-free basis. That is, the returns earned on the investment will not be taxed as long as they remain in the account.
As an added incentive, the government will match your contributions to your RESP account through a number of grants.
RESP subscribers have the option of opening an individual plan for each child or a family plan for all their kids that are related by blood or adoption. There are also group or scholarship plans that pool the funds of many beneficiaries together into one plan.
RESP Contribution Limit
The contribution limit of RESPs works differently from that of the other popular registered accounts like TFSA and RRSP.
With an RESP, there is a lifetime contribution limit of $50,000 for each beneficiary. There are no lifetime limits for the other registered plans at the moment.
Also, RESPs have no annual contribution limits. That means it is up to the RESP subscriber (parents/guardians) to decide if they want to contribute the entire $50,000 in a single year or spread it across several years to take advantage of the savings incentives.
RESP Savings Incentives
One of the biggest benefits of saving for your kids’ education using an RESP is the government grants you receive for your contributions.
There are 3 Government of Canada grants and 2 provincial grants.
- Basic Canada Education Savings Grant (Basic CESG): 20% match on the first $2,500 contribution per year. This grant is not income-tested so it is available to every RESP beneficiary irrespective of the parent’s income up to the year they turn 17.
- Additional CESG: provides an extra 10% or 20% on the first $500 depending on income
- Canada Learning Bond (CLB): another income-tested education savings incentive. Eligible beneficiaries get $500 in the first year and $100 in each subsequent year they remain eligible up to a lifetime limit of $2,000.
- British Columbia Training and Education Savings Grant (BTCESG): One time payment of $1,200 for BC residents.
- Saskatchewan Advantage Grant for Education Savings (SAGES): 10% grant on contributions made for Saskatchewan residents up to an annual limit of $250. The program was temporarily suspended in 2019.
The lifetime limit for CESG, both basic and additional, is $7,200.
You should know that some RESP providers will not offer all the government grants above. Most of them offer the federal government grants, but you should check with them if you live in a province with a 2 provincial incentives.
There’s a handy list of RESP providers in Canada showing the Government of Canada grants and Provincial education savings incentives they offer.
Choosing The RESP Provider
When it comes to picking an RESP provider, Canadians have several options to pick from. The link above has over 82 providers for example.
So which one is right for you? What are the things to look out for?
In choosing the best RESP provider for you, here are some factors to consider:
- The types of plan provided
- Account opening and Transaction Fees: Are there fees to set up an RESP plan? What of the on-going transaction fees and charges?
- Investment options: How will your contributions be invested and in what assets?
- The government grant offer: Does the RESP provider offer all the grants you qualify for?
- Managed or self-directed account: Do you want the RESP promoter to handle all the investment decisions or you prefer to be in charge yourself?
It is important to think about all of these before you finally decide on the best RESP provider for your needs. You’ll be contributing and investing for many years to come, so make some effort and try your best to get things right.
Tip: Avoid group or scholarship plans. They are inflexible, generally more expensive and the contracts are difficult to terminate without losing a bunch of money.
If you want to an easy way to get started with RESP without the high fees, then checking the providers below is a good starting point.
Best RESP Providers in Canada
So which is the best RESP provider in Canada?
We’ve shortlisted the top 5 based on their features, convenience, and fees.
Here we go:
1. Questrade RESP
Questrade is Canada’s largest independent online brokerage. In addition, it has a robo-advisor offering called Questwealth Portfolios.
It is the only one on this list that has both a managed and self-directed RESP offering. That is, you can either choose to let Questrade handle all the investing decisions for an industry low fee or direct the portfolio yourself.
Managed RESP – Questwealth Portfolio
Questwealth Portfolios have the lowest management fees among the robo-advisors. It starts at 0.25% and drops to 0.20% for deposits above $100,000.
But the underlying ETFs the portfolios hold have their own separate fees – about 0.13% for Questwealth Balanced portfolio. Even after adding the fees for these ETFs, you are still looking at a lower cost than the management fees at other robo-advisors.
Investors can buy ETFs for free but there’s a fee to sell them or trade stocks. The brokerage cost is 1cent per share, minimum of $4.95 and a cap of $9.95. This is also one of the lowest fees in the industry.
Canadians can now trade stocks commission free on Wealthsimple Trade, but RESPs are not supported for now so it’s not an option.
If you’re willing to spend a few minutes every month or each time you need to invest, you can set up a low-cost RESP portfolio with “all-in-one” ETFs at Questrade.
Your only investment costs will be the MER of the ETF you invest in – about 0.20% for ishares asset allocation ETFs for example. Read this post on how to start investing with one-ticket ETFs.
Related Post: Questrade RESP Review
2. Justwealth RESP
Justwealth’s Education Target Date Portfolios sets it apart from other RESP offerings by robo-advisors. Target date funds are an innovative investment product that are designed to align a portfolio’s risk with when the investor will need the funds.
In plain English…
The portfolio will start out with an higher risk (more allocation to equities), but the fund will gradually shift towards less risky investments as it gets closer to when the funds will be needed (maturity date) – that is, your child’s enrolment date.
In other words, Justwealth RESP portfolios have a time horizon of about 18 years.
Unlike Questrade, there are no minimum account sizes. The annual management fee starts at 0.50% of the value of your assets:
- $500,000 and below – 0.50%
- Above $500,000 – 0.40%
But there’s a minimum fee of $2.50 per month on RESPs or $4.99 for other accounts. There’s an extra 0.20% MER on the ETFs Justwealth invests in for a total cost of about 0.70%
Other features of Justwealth RESP are:
- Access to a personal portfolio manager
- No transaction fees
- A huge selection of ETF portfolios
If you want an RESP portfolio that will be hands-off and automatically adapt its holdings as your child gets older, then Justwealth is a good fit.
3. WealthSimple RESP
WealthSimple is Canada’s largest robo-advisor with several products across the different registered accounts.
There are no minimum investment amounts with Wealthsimple so you can start saving and investing with little amount.
The management fees also start at 0.50% for deposits up to $100,000 but drops to 0.40% above that. In addition, the underlying ETFs add another 0.20% as MER for a total of 0.60% to 0.70%
Wealthsimple is a great option for people that value simplicity and a great user experience.
4. CI Direct Investing (formerly Wealthbar)
The robo-advisor has 2 sets of portfolio: low-cost ETF portfolios and private investment portfolios that invests in real estate, mortgages, options and other alternative assets that are usually accessible to only high net worth investors.
CI Direct Investing RESP fees are:
- First $150,000: 0.60%
- Next $350,000: 0.40%
- Above $500,000: 0.35%
The MER of the ETF portfolios are between 0.16% and 0.25%, while the Private Investment portfolios range between 1.00% to 1.40%.
Like Questrade, you also need a minimum of $1,000 to start investing in RESP.
You get the following when you setup an RESP account at CI Direct:
- Your own dedicated financial advisor and financial planning
- Access to a diversified portfolio
- No trading fees
- Transfer fee rebate of up to $150 when you move an account with a balance of $25,000 and above from other financial institutions.
Opening an RESP Account
The requirements for opening an RESP account for your kids may vary depending on the financial institution you choose.
But at the minimum, you’ll need to provide the Social Insurance Number (SIN) for yourself and your kid(s), along with a birth certificate.
With the robo-advisors, you will be able to complete most of the forms and documents online and sign using electronic signatures.
If you get stuck anytime during the process, you can always reach out to the RESP provider for clarifications.
Final Thoughts on Best RESP Provider
At the end of the day, the best resp provider for you depends on your personal preference and circumstances.
You’ll still get the same government matching on your contributions and tax-free growth irrespective of the RESP promoter you go with.
And if you change your mind or your situation changes in the future, you can always move your plan in many cases, unless you’re in group plans that are usually not flexible.
So don’t get stuck at the analysis stage. Compare the features of the different RESP accounts and start investing for your kids’ education today.
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