Brokerage investment savings accounts | Page 5 | General comparisons | Discussion forum

Yeah, but Norman's chart is all about Series A as he specifically states. Most, if not all, of the brokerage ISAs have an F version.

The only differences are under what conditions can an investor access F series. In many cases, it is only if an investor has a third party financial advisor type account OR maybe a commission based transaction OR certain brokerages that allow the DIY investor to access F series.

We know Scotia iTrade account holders can access the DYN F series as one example and I know BMO Investorline account holders cannot access the BMT F series. I don't know about others.

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Update . . .

TDDI ISA-US$ (TDB8152) now @ 3.40% ❗

Dean

What you are referring to is the March 2022 OSC ban on trailer fee mutual funds being sold at DIY discount brokerage accounts commencing June 1 2022. There are numerous links on this matter such as https://www.advisor.ca/news/industry-news/osc-adopts-measures-to-facilitate-trailer-fee-ban/

That ban though is for mutual funds as an investment vehicle. The ISAs are deposit accounts, not mutual funds. They only use the mutual fund platform to facilitate transactions (buy/sell) of ISAs. They are thus not covered by the regulatory ban.

I think what Scotia iTrade decided to do was to simply include their ISAs under that umbrella to simplify their own processes and to avoid having to explain to customers why ISAs were not under that trailer fee ban. Whatever their reason, they clearly chose not to advertise (articulate) it and unless an investor made the effort to try and purchase the F class versions, they were happy to let the investor stay in the A series versions. I am glad I heard about it here and switched to F series a few months ago and effectively boost my yield by 10-15bp. It is not much but it all counts.

It appears Scotia iTrade may be the only one, or one of the few, of the discount brokerages who will allow their clients to buy their in-house F series ISAs.

AltaRed said
What you are referring to is the March 2022 OSC ban on trailer fee mutual funds being sold at DIY discount brokerage accounts commencing June 1 2022. There are numerous links on this matter such as https://www.advisor.ca/news/industry-news/osc-adopts-measures-to-facilitate-trailer-fee-ban/

That ban though is for mutual funds as an investment vehicle. The ISAs are deposit accounts, not mutual funds. They only use the mutual fund platform to facilitate transactions (buy/sell) of ISAs. They are thus not covered by the regulatory ban.

I think what Scotia iTrade decided to do was to simply include their ISAs under that umbrella to simplify their own processes and to avoid having to explain to customers why ISAs were not under that trailer fee ban. Whatever their reason, they clearly chose not to advertise (articulate) it and unless an investor made the effort to try and purchase the F class versions, they were happy to let the investor stay in the A series versions. I am glad I heard about it here and switched to F series a few months ago and effectively boost my yield by 10-15bp. It is not much but it all counts.

It appears Scotia iTrade may be the only one, or one of the few, of the discount brokerages who will allow their clients to buy their in-house F series ISAs.  

It could also be a passive way for Scotia iTRADE to attract new deposit business for the bank in a low cost way, and, additionally, to maintain and even gain market share at the expense of competitors with commission free trading offerings.

Cheers,
Doug

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According to my TDDI accounts, TDB8150 (CAD) is now @ 3.55%. TD's out-of-date documentation will probably be corrected on Monday.

Whoda thought ISA rates would go so high ❓❗

They're like a nice stock dividend, but without the risk.

Dean

JenE said
I find this topic interesting albeit rather incomprehensible. Where should I look, or go, for “beginner” information? Also, is there any advantage to holding these accounts over ordinary high interest accounts? Any information/insights, will be appreciated.  

JenE, to start, you do need to have a discount brokerage account (i.e., Scotia iTRADE).

Each of the Big Five-owned discount brokerages generally only offer their own parent company bank's brand of ISAs.

ISAs are fully insured by CDIC, under provisions related to trust account deposits. The deposits are registered in the legal name of The Canadian Depository for Securities, Limited, and then allocated to each IIROC investment dealer institution (i.e., Scotia Capital, Inc., in the case of Scotia iTRADE) in the case of non-registered accounts or their investment dealer's trust company custodian in the case of registered accounts. The ISAs are further held in trust in for each unique depositor, meaning if you have a joint brokerage account and a sole brokerage account, those are treated as separate depositors with separate CDIC limits for each.

A big advantage of ISAs held at brokerage firms is that you can easily hold deposits from multiple FIs, often sharing the same parent company, in a single account (each deposit is recognized by their FundSERV code).

Transfers to and from your brokerage firm are a bit different than with banks. Most brokerage firms allow you to add their firm as an online banking bill payee, which is great for smaller transfers (generally limited to $25-50,000). This is equivalent to pushing funds to the brokerage firm, and generally there is no hold period. They also allow you to set up something similar to bank-to-bank transfers, whereby you can pull money from an external bank account. They will usually give you instant access to at least $5-10,000 of that, but some, like Scotia iTRADE, will give you instant access to larger amounts, provided it's covered by existing, non-held deposits/account equity.

The one downside to them would be registered plan transfers whereby the transfer out fee is typically $125-150 per account. They will generally reimburse your transfer out fees when you transfer money in, if you're transferring in at least $15,000-25,000 per each account transfer. So bottom line, you will not want to "rate shop" in registered accounts and, with TFSAs, wait till December to manually withdraw your funds.

Trust that answers most if not all your questions.

Cheers,
Doug

AltaRed's last point is key, no-one talked about these for years on this site until recently when for some reason they're now competitive with other high interest accounts. I'm not sure why they're offering such high rates now or what the big banks are doing with these deposits, presumably most will be re-deployed in the markets when investors think it's go-time again so they're not a stable pool of long-term money. I've speculated that with some folks cashing out of markets the brokerages want to keep that money in the brokerage accounts as otherwise it might not come back.

I've used them in the past to put my brokerage account cash into and make a bit of interest while I'm deciding what stocks, etc to buy next, I think that's kinda what they're designed for. Also for those who care about CDIC coverage but don't care about return from their cash (some folks keep large pools of money in cash just because) they provide some diversity, e.g. TD offers 4 different TD group ISAs, each with its own CDIC coverage.

I agree if you're solely an interest rate shopper for your money it's not worth opening a broker account just for these, you have enough convenient options already.

That is true for folks that decide to have margin accounts and may be frequent traders. I wouldn't say the ISAs are key to that process but they are useful for that purpose. I don't do more than 2-4 trades in a year so my ISA in the brokerage account is strictly an 'investment'.

As Norman1 has suggested, there is nothing wrong with having a discount brokerage account just to hold an ISA, because it can be a material return if one is tieing up a lot of money and intends to maintain at least some minimum level of ISA investment over the long term to at least avoid account minimum fees. I just don't consider brokerage accounts as short term as one might do in a digital bank.