For convenience many retirees will convert RRSPs to RRIFs prior to age 71 and for the pension tax credit when 65. Wealthsimple when you convert a RRSP to a RRIF will not allow you to hold US $ in your RRIF. So effectively in all US security transactions the account holder is charged 1.5% FX fee. Getting a divendend on a US security, Weatlhsimple will convert it to C$ and take 1.5%. want to buy more US securities in the RRIF, pay 1.5% FX fee to Wealthsimple. You have no ability to hold US $. I understand the benefit from a revenue perspective to this practise, however from a customer standpoint it induces customers to hold Canadian securities over US securities. This increases portfolio risk. I would suggest they may want to review these practices as BMO lost a class action suit previouisly for this practise. The legal case you shares stark similarities with the concerns over how digital brokerages handle currency conversions in registered accounts—is Macdonald et al. v. BMO Trust Company et al. In June 2021, the Ontario Superior Court of Justice officially approved a $100-million settlement against Bank of Montreal (BMO) subsidiaries, including BMO InvestorLine Inc., BMO Nesbitt Burns Inc., and BMO Trust Company.

Here are the key details of the lawsuit and the subsequent settlement:

The Core of the Lawsuit

Originally launched in 2006, the class action alleged that BMO charged its clients an undisclosed, hidden markup/fee on foreign exchange (FX) conversions within registered accounts (such as RRSPs, RRIFs, LIRAs, and TFSAs).

Whenever a client bought or sold a U.S. security, or received a U.S. dollar dividend within their registered account, BMO automatically converted the funds to Canadian dollars while shaving off a percentage spread—all without adequately disclosing the practice or providing an easy mechanism to hold USD to avoid it.

The Court's Ruling & Liability

Before the parties settled, the case actually went to a summary judgment. In February 2020, the Ontario Superior Court found the BMO defendants liable for:

• Breach of trust
• Breach of fiduciary duty
• Breach of contract