GICs through discount brokers | GIC discussions | Discussion forum

You can still do better diversifying yourself. The convenience of having one source of many all with their own CDIC coverage is nice. But also compare as attached fresh off of iTrade (owned by BNS) to the GIC Chart here.

I think Meridian etc don't need the money very badly right now. If they did, they'd offer more, wouldn't they?

I think it depends to a large extent on how much money you have in GICs. The more you have, the bigger difference those extra bps can make.

When I get to the stage where managing all this is too much bother, I'll probably just use a deposit broker and maybe keep some on auto-renewal at reliable FIs. You can do almost as well with a deposit broker as you can do on your own, and occasionally better. They look after all the transfers; you just decide from among their offerings.

If one has a discount brokerage account (or even a full service commission brokerage account), most folks would have, in aggregate, enough funds across accounts to qualify for account fee-free TFSA, RRSP/RRIP, non-registered accounts. I really don't know anyone who pays account fees any more based on aggregated sums.

Virtually all discount brokerages will reimburse up to $150 in transfer fees (get it in writing/email/text first). At least that is the way the big 6-7-8 discount brokerages work.

The trouble with what Loonie, GICInvestor, and perhaps others forget about is there may be only a 50/50 chance of an investor becoming aware they are losing their cognitive abilities, and further to that, an accident, heart attack, or a stroke or? could render one incapacitated at any time. The longer one waits, the higher the risk of an unplanned event.

What I have done for my POA and Executor, kept in my electronic Estate folder, is keep a list up to date of all the important materials, including FI and account numbers of every financial account, and push/pull EFT links, and I also have a hand drawn flow chart showing all the links between accounts. I also have PDFs of all my account statements in My Documents folder. That way, if I drop dead or have a stroke before I complete this post, the materials are always up to date! Lastly, they know how to find the password for my LastPass password manager for online access to my entire world.

And as I have said many times, I don't have the inclination to have accounts all over the place. My assets are all in 2 big bank institutions with the exception of a US domiciled chequing account and one online banking FI (HISA/GIC). I have no desire to ever have accounts with more than one FI on the list of institutions on this forum at any given time. If I want more interest than what I can get with a GIC with a discount broker, I will buy a 5 year BBB/BBB+ corporate bond with a regulated* entity instead, that likely betters any GIC rates quoted in this forum.

* Such as a secured note with a utility, pipeline or telecom, etc.

GICinvestor said

I sort of agree with that. If I was to pass away my spouse would be lost, as far a managing the investments. And if the decision was to be made that way I would go back to what I know...Manulife.

But how would you:
Accept the lower rates
Accept the fee for a non registered/RRSP/RRIF Account
Accept the additional fee for the TFSA Account
Deal with transfer fees for registered accounts

The like is:
Only one person to deal with for probate and POA
No out of province issues as I would have now
Can do everything by phone or email instructions  

Rates through deposit brokers are only slightly lower than what one can get on one's own - and occasionally higher, as with the Habib Bank deal a through GIC Wealth earlier this year. I would accept that as fair trade-off for not doing it all myself. I look upon the work I do to get the best rates as a kind of part time retirement job for which I get paid. It pays me well enough to be worth my while.
Deposit brokers don't charge fees. They make their money from the issuing institutions.
Transfer fees are typically reimbursed, except by those FIs which do not, themselves, charge them. Not a concern for me. I have been getting rid of my RSP GICs anyway, and only have 2 right now. Will never have more than 5 TFSAs. The most this could cost would be about $150/yr, which is unlikely.

Perhaps we're talking apples and oranges here. I referred to a deposit broker. Perhaps you thought I meant discount broker?

AltaRed's solution may make sense for people who are largely invested in non-GIC products, but I don't think it's the best answer for those who are in GICs.

AltaRed said

Maybe not, but AFAIK, brokerages are the only places where one can buy a wide range of assets... from stocks, bonds, mutual funds, GICs, and more exotic things, and make it a 'one stop shop'. Few people would have only GICs in their portfolio, and isn't that all that a deposit broker can do? And the deposit broker likely can't get the investor any better GIC interest rates than a discount brokerage as in the Scotia iTrade list up thread?  

I think you would be surprised how many people ONLY have GICs.

I have subscribed to a daily rates update from a deposit broker for some time. The rates tend to be in the same range as the ones posted on this forum's GIC list. They are normally in the middle of that range or the lower end; occasionally, they are the highest ones available anywhere. They are normally better than those offered by discount brokers.

These are the rates quoted by my deposit broker on July 11 for minimum $25K:
1 year 2.50%
2 year 2.55%
3 year 2.60%
4 year 2.80%
5 year 2.85%

These are the rates quoted by my deposit broker for July 11 without the 25K minimum, for registered and non-registered funds:
1 year 2.40%
2 year 2.60%
3 year 2.65%
4 year 2.75%
5 year 2.80%

The rates cited for iTrade for July 11 by Doug (#3 above) were:
1-year: 2.100
2-year: 2.190
3-year: 2.220
4-year: 2.290
5-year: 2.340

As you can see, in all cases, the deposit broker's rates are significantly higher than iTrade's.

While it's obvious that an investment brokerage, discount or otherwise, has the widest range of investment products, this is not what everybody wants or needs.

It's not a question of discount brokerages not being permitted to do more than take orders. If that were the issue, then one would expect to get the very best possible rates through full service investment brokers and wealth managers. But that is highly unlikely. I doubt the full service brokerages offer anything better than the discount ones, even though their staff are supposed to be helping their customers. Years ago, we had one of those guys and I had a lot of trouble convincing him to even get me some long provincial bonds, which were then at 12%, never mind GICs. I did succeed and happily held them to maturity, but all he really wanted to sell me was stocks and mutual funds with high MERs, deferred charges, and trailer fees.

If you want GICs, the best place to buy them is simply NOT a brokerage firm, discount or full service, although it may be convenient if you have other investments with the brokerage and especially if you are not planning on investing a lot in GICs anyway. I don't know why you assumed it would be otherwise.

Your concept that very few people would invest in GICs only may reflect your personal experience and that of people you interact with, but it's not wise to make assumptions about everybody else.

I am not privvy to exactly how the deposit brokers get their rates, but, from speaking with them I have the impression that it's basically a question of bulk buying. They offer the provider a way to get significant investment capital by outsourcing all the fiddly work of getting clients and setting up individual GICs and dealing with people like us directly. The providers pay them for this service, and we benefit. I do know that some of the clients of deposit brokers are corporate and have very large amounts to invest.

Deposit brokers don't actually hold the client GIC's.

The GIC's I've purchased through a deposit broker were under my name in the records of the GIC issuer. Issuer had my name, address, and other details, just as if I bought them directly from the issuer. Issuer would mail me the T5 tax slips and account statements.

I used to receive individual statements and T5 slips from each issuer of the GIC's I bought.

If one ends up with GIC's from five different issuers buying through a deposit broker, then there's five places where one's identity could be stolen from.

Given the discussion, this chart (3rd column and last column for 2016) is interesting. Doesn't really respond to the back/forth between Loonie and I on GIC holdings because we can't tell from this what RRSPs/RRIFs/TFSAs really hold for assets.

But the breakdown for non-pension assets suggests virtually every Canadian has deposits at FIs (makes sense) but the amount is small per family ($5k). There may be more data in StatsCan but it is not worth my energy to go looking. Can't really extrapolate that to Private Pension assets.

https://www150.statcan.gc.ca/n1/daily-quotidien/171207/t002b-eng.htm