GIC Broker's Rates ... Nice! :-) | GIC discussions | Discussion forum

Dean said
.
If you haven't checked them out lately, see the Bottom of this ➡ Page.

I've never dealt with a GIC Broker before, but I think that's about to End.

Other than High minimums, are there any Downsides in dealing with them ?

Thanks,

Dean

  

those indicative rates are more than likely from non CDIC CU issuers

kesa said

those indicative rates are more than likely from non CDIC CU issuers  

Not sure about today, but GIC direct's one year GIC was with Haventree which is under the CDIC. Good chance all the others were as well, but didn't ask.

Dean said
.
If you haven't checked them out lately, see the Bottom of this ➡ Page.

I've never dealt with a GIC Broker before, but I think that's about to End.

Other than High minimums, are there any Downsides in dealing with them ?

Thanks,

Dean

  

You would need to find a GIC broker that services your own area, set up an account and check their rates and issuers (banks and credit unions). Some of the credit unions restrict membership to residents of their own province. For example, I believe that today's highest rates are from WFCU (Windsor Family Credit Union), which limits membership on their website to Ontario residents.

The other downside, from my experience, is that at maturity of the GIC, the post-dated cheque for principal is sent by the issuer to the broker, payable to the client. The client has the choice of asking the broker to use the cheque to renew the investment with the same or different institution or to mail the post-dated cheque to the client. In the latter case, the client needs to go to the bank to deposit the cheque as there is no EFT.

To purchase a GIC, there is also no EFT, so a cheque, payable to the GIC issuer, must be picked up by the broker or sent/delivered to the broker.

I believe that the minimum investment amount is established by the broker and the issuer. $25k might be the most popular minimum.

agit said
"..........The liability of FSRA to insure deposits held at Ontario credit unions is limited to the assets of the Deposit Insurance Reserve Fund.........." link here

"As of March 31, 2021, the DIRF was $365 million (or 80 bps of insured deposits"

any concern of the above  

absolutely, not touching it

One question that might be worth considering in this thread is what is the difference between rates from a broker and rates available directly from a FI that would persuade a depositor to add this additional layer of organization between them and their money?

For me, it would be somewhere around 30 basis points. Do others have lower, or higher, thresholds for investing through a deposit broker?

Currently, it looks like some brokers have rates that are 40 - 60 bps ahead of the rates directly available from FIs in the GIC chart, depending on the term of the GIC. If that remains the case later in the year, I'll be getting some experience in working with a broker.

Rail Baron said
..... what is the difference between rates from a broker and rates available directly from a FI that would persuade a depositor to add this additional layer of organization between them and their money?....... 

RB,

The reason FI's issue GIC orders through brokers is simple economics, in my view. A broker has access to clients who have money available, usually in larger amounts than most clients of the FI have easy access to. A GIC issued through a broker for $50,000 or $100,000 or more requires a lot less admin work for the FI than they would have by selling 50 x $1000 GIC's to their own retail clients.

It's worth paying a bit more than their retail rate to save on the admin cost.

Dealing with a broker does not add a layer of admin, but quite the opposite. The broker does all the work, sends you a statement of your holdings, and you maintain your own records of your overall holdings. The annual interest paid on GIC's bought through my broker is deposited to my bank account via EFT.

Once your relationship is established with your broker, you can probably settle your purchase over the telephone..with a lot less effort than booking GIC's with most FI's including the online favorites of Forum members.

Brokers' rates can change from one day to the next, and sometimes the broker can be offering unadvertised specials that are offered to clients who are known to have substantial liquid cash available...a reason to have a relationship.

My conclusion: Find a broker and establish a relationship, then buy the GIC that pays you the most from wherever you can get it as long as you are comfortable with the issuing FI.

Stephen

Nehpets said
A broker has access to clients who have money available, usually in larger amounts than most clients of the FI have easy access to.

Why do you believe that brokers have a stable of clients, from which they can draw upon these larger amounts?

Currently over $500 million under management!

https://www.bnnbloomberg.ca/one-year-gics-see-boom-in-popularity-thanks-in-part-to-interest-rate-hikes-1.1912016