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Email this2:42 pm
April 6, 2013
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Loonie said
...
I was not aware of Norman's point about being an unsecured creditor, and that this would be frowned upon at the bank. When I did have over the limit in TD, they used to phone periodically and try to get me to move it to their investment depart (stocks and bonds etc). Perhaps this was a reason. On the other hand, if it bothers them so much, they could always refuse the money, which of course they never did.
I'm sure TD is quite happy to have the money and doesn't mind at all! 
TD, as well as many other financial institutions, is used to having investors who are unsecured creditors. They issue bonds, debentures, and notes to such investors. Such instruments are not covered by any deposit insurance and are not secured by any particular asset.
Your TD Canada Trust branch would "encourage" you to move money to their brokerage arm because TD can make more off of the money there through higher fee products. To encourage the branch, I highly suspect there would be "referral fees" that would be paid to the referring TD Canada Trust branch that more than offsets what the branch would be paid for the deposit money.
3:27 pm
October 21, 2013
Online
Yes, they were keen to inform me that there was someone in-branch who would meet with me and discuss things and that they had options that would not cost me money. I did not believe them. Everything costs money when dealing with BigBank! There was one honest person in that branch, an older teller, and she actually told me a better way to proceed!
For a while the in-branch advisor person sent me personalized notes and cards, but I guess she gave up, and I took out most of my money.
I much prefer the chocolates from Oaken to the notes from TD anyway!
5:30 pm
April 6, 2013
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She was probably a TD Waterhouse full-service broker from one of their TD Wealth companies. This is from Investing at TD and may explain her interest:
I want to work with a dedicated advisor›
Invest with professional guidance
If you have $100,000 or more to invest, an advisor at TD Wealth can provide straightforward advice to help build and preserve your wealth.
You're right. The banks don't do much for free. The extra costs would be embedded in the products.
Like the other big banks, TD has more than one CDIC member. I think a TD Canada Trust branch could offer to spread the money over separate GIC's issued by CDIC member The Toronto-Dominion Bank and by CDIC member TD Mortgage Corporation. That way, one can get up to $200,000 of CDIC coverage.
5:55 pm
November 4, 2014
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The Big 5 Canadian banks rely heavily on revenue from their brokerage stocks, bonds, REIT's, mutual fund, ETF's to a much lesser extent and other non-GIC investments that they sell.
They also get more fees from RRSP's, LIRA's, RESP's, RRIF's, TFSA's that have these investments and not just plain GIC's, term deposits etc.
They also save the deposit insurance premiums that they would have to pay to CDIC every year by selling these equity, bond, REIT's and other non-GIC investments.
Oaken Financial and other higher paying GIC, term deposit payers, Canadian banks, trust companies, credit unions are more focused in the lending of GIC, term deposit, savings accounts etc. funds for mortgages, lines of credit, auto loans, RRSP loans, consolidation loans, small business loans etc.
Usually, they are more focused on smaller clients with assets, investments, businesses and not more focused entirely on income and track record of employment income, business income.
7:24 am
October 21, 2013
Online
Norman1 said
She was probably a TD Waterhouse full-service broker from one of their TD Wealth companies. This is from Investing at TD and may explain her interest:
I want to work with a dedicated advisor›
Invest with professional guidance
If you have $100,000 or more to invest, an advisor at TD Wealth can provide straightforward advice to help build and preserve your wealth.
You're right. The banks don't do much for free. The extra costs would be embedded in the products.
Like the other big banks, TD has more than one CDIC member. I think a TD Canada Trust branch could offer to spread the money over separate GIC's issued by CDIC member The Toronto-Dominion Bank and by CDIC member TD Mortgage Corporation. That way, one can get up to $200,000 of CDIC coverage.
I suppose she might be a full service broker, but I didn't think they had those planted in all the branches. Mine was not a large branch or in a wealthier neighbourhood. I couldn't figure out what manner of beast she might be actually. I think she sent me a business card once but I didn't pay much attention as I had no intention of following up. If she were a full service broker, there would be an annual fee of 150 or so, and they swore up and down that there was no fee.
Interesting that their ad specifies "over 100,000", as that just happens to be where CDIC runs out. Clearly trying to pick up on this market.
This bank actually has 3 entities where you can put your money, the third being Canada Trust. I had to ASK in order to ensure my money was spread around to best advantage, as it was clear they were not going to do this on their own. I was dealing with a guy at that time - he had to go look it up to find out how many places he had available to put the money! Honestly! I took that as a clear sign that nobody there was likely to act in my best interests. Also, not all products were offered by all 3 entities, I discovered. Further, some of their GIC rates were so bad that I was better off in a "high interest" savings account at that time - which further restricts which entity one can use. They don't make it easy.
3:39 pm
April 6, 2013
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Loonie said
...
I suppose she might be a full service broker, but I didn't think they had those planted in all the branches. Mine was not a large branch or in a wealthier neighbourhood. I couldn't figure out what manner of beast she might be actually. I think she sent me a business card once but I didn't pay much attention as I had no intention of following up. If she were a full service broker, there would be an annual fee of 150 or so, and they swore up and down that there was no fee.Interesting that their ad specifies "over 100,000", as that just happens to be where CDIC runs out. Clearly trying to pick up on this market.
I think that's just a coincidence. I suspect $100,000 or more is where an interesting amount of money could be made by them.
Back-end loaded mutual funds used to generate 4½% commission immediately and about ½% annual trailer. If they had convinced you to place $100,000 in such mutual funds, there would be $4,500 in it for her and TD Wealth immediately and $500 annually for them afterwards.
With $10,000, it would not be as interesting: $450 immediately and $50 annually afterwards.
The $150 annual fee sounds like the annual admin fee for a general purpose self-directed RSP that one could put stocks, bonds, and mutual funds into. A general purpose SDRSP account may not be needed.
One possibility is that if one were only interested in mutual funds, many mutual fund companies have low- or zero-cost single-purpose RSP accounts that hold just their mutual funds. If the fund company charged $50/year, then she and TD Wealth may quietly pay the $50/year in anticipation of the one-shot $4,500 and yearly $500.
Another possibility I've seen is that, for such a large back-end mutual fund sale, the broker and their firm would offer to cover the $150/year themselves knowing that they would get $4,500 now and $500 each year afterwards.
This bank actually has 3 entities where you can put your money, the third being Canada Trust. I had to ASK in order to ensure my money was spread around to best advantage, as it was clear they were not going to do this on their own. I was dealing with a guy at that time - he had to go look it up to find out how many places he had available to put the money! Honestly! I took that as a clear sign that nobody there was likely to act in my best interests. Also, not all products were offered by all 3 entities, I discovered. Further, some of their GIC rates were so bad that I was better off in a "high interest" savings account at that time - which further restricts which entity one can use. They don't make it easy.
It looks like you ventured into some unfamiliar territory for that branch! I think you would have had a better experience at a branch that's used to customers with more than $100,000 on deposit.
The banks' computer systems are not always easy for their staff. One friend tried to exercise the prepayment privilege on his mortgage. At his branch, no-one knew how to do a mortgage prepayment in the computer. It was the first time he made an extra mortgage payment. It turned out to be the first time for the branch staff as well!
5:04 pm
November 4, 2014
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It is best to avoid getting stuck in these high fee mutual funds and other similar products as there are much lower cost 0.25% to 0.60% annual fee, no redemption fee ETF's these days.
I knew from a friend of mine with Investors Group way back in the year 2000, he could withdraw 1% per month from his mutual fund accounts and pay no early redemption fees.
Many people may not know this and pay much more early redemption fees 3, 4, 5, 6 years down the road.
For example, on $100,000, in 1 year, $12,000 would be withdrawn and there would be no $500, $600 fees on that money. This is not including the annual MER's of 2% to 3% a year on top of this.
My friend after 8 months withdrew the whole amount about $115,000 and paid about $5,000 in total early redemption fees.
The reason was that it was not worth to keep the money there when he could easily make up that money plus much more with investing in 6.25% to 6.5% of his money split between 20% in 5 year GIC's, 80% in 20 to 25 year government bonds, zeros over many years, decades.
These days it would be much more difficult to do this with 3.00% to 3.5% 5 year GIC's, 20 to 25 year government bonds.
2:08 pm
April 6, 2013
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I wouldn't invest in bonds through mutual funds. With the actual bonds returning the 3% to 3½% you mentioned, a large part of the return would be consumed by bond fund management fees of 1% to 1½%. It is highly unlikely a manager would be able to outperform the market by that much in investment grade bonds.
The fees of mutual funds are just part of picture. There's also the services from the seller that the client is supposed to receive in return for about half the fees.
Problem is that many fund sellers don't mention the commissions and annual trailer fees they are receiving from the fund company. Clients are unaware of the services they are supposed to receive.
Some sellers will suggest to unwary clients that they aren't paying anything. I've surprised people when I explain the management fees to them and how fund companies pay out about around half the management fees they collect to sellers as trailers.
Now, some sellers do try to earn their share of the fees. Unfortunately, I only know of one agent who falls into that small category. Most of the time, one only hears from one's "full-service" broker once a year, around RRSP season, when he or she calls to see if one is making an RRSP contribution.
4:29 pm
November 4, 2014
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Norman1, yes you are right, bond mutual funds usually have annual fees, MER's 0.75% to as high as 2.5% depending on the type meaning short, medium, long term and Canadian, foreign, corporate, government etc.
There is another important factor that many bond investors are not aware of or do not understand as well, buying individual bonds directly has a term certain maturity date.
This is very important because you can hold them to maturity and no their value but bond funds, bond mutual funds and bond index funds have a bunch of bonds that more or less are bought and sold at different times in their fund so you don't have a specific maturity date and known future maturity value.
In such a low interest rate environment of 3.0% to 3.5% bond yields, this is more important than ever before.
These bond funds could drop 10%, 20% or more if rates rise 0.5% to 1.00% over the next year, 18 months, 2 years.
All the annual MER's, early redemption fees etc. plus capital losses of 10%, 15%+ can add up to a big loss of 30%+ that many bond mutual fund investors believe is a safe investment and will be really shocked down the road.
5:04 pm
November 4, 2014
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For short term or shorter term money as the topic first started, there are 2.00% up to 2.60% savings accounts, GIC's up to 30 months.
One could ladder these if they do not need full liquidity so they mature in savings accounts, cashable GIC's 2.00% to 2.10% to 18, 24, 30 months ranging from 2.25% to 2.60%.
It all depends what the money is needed for or maybe needed for.
Please write your comments in the forum.