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Brokerage investment savings accounts
October 21, 2022
11:40 pm
RetirEd
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Now this is interesting... the "in-nominee-name" deposit is CDIC covered, but is there a problem with the broker's cumulative coverage for all deposits capped?
RetirEd

October 22, 2022
5:38 am
Bill
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So, Norman1, to be clear..........

If I have $100K with Home Trust at Oaken and another $100K of HOM100 with a discount broker, in-nominee-name, I'm fully CDIC covered, is that correct?

And what if I have $150K of HOM100 with the broker? My impression of reading CDIC info is I'm covered for $100K, is that correct?

October 22, 2022
8:57 am
Norman1
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They will be fully covered by CDIC if they are registered as follows:

  1. Oaken: $100K Home Trust Company deposit held by Bill
  2. Discount broker: $100K Home Trust Company HOM100 deposit held by discount broker, in trust for Bill

A $150K Home Trust Company HOM100 deposit held by discount broker, in trust for Bill, would only be covered for $100K. There's no sharing of the individual $100K limits between the beneficiaries of a trust.

When a discount broker holds

  • $150K of Home Trust deposits in trust for Alice and
  • $10K of Home Trust deposits in trust for Bob,

Alice only has $100K of her $150K covered by CDIC. She does not benefit from Bob's unused $90K of CDIC coverage.

October 22, 2022
9:04 am
Norman1
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RetirEd said
Now this is interesting... the "in-nominee-name" deposit is CDIC covered, but is there a problem with the broker's cumulative coverage for all deposits capped?

The broker's cumulative $100,000 CDIC limit no longer applies when the broker discloses the individual beneficiaries and individual deposit amounts to the issuer of the deposits it holds as the nominee.

Yes, without that disclosure of beneficiaries and beneficiary deposit amounts, there is a $100,000 cap of CDIC coverage for all the deposits with a CDIC member it holds as the nominee.

October 22, 2022
10:42 am
Bill
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Thanks, Norman1. Certainty re CDIC coverage is vital with an outfit like Home.

October 23, 2022
2:25 pm
Doug
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Bear in mind, most of these ISAs will be unavailable to you, other than those of the your discount brokerage company's banking subsidiary. For example, with Scotia iTRADE, most of these ISAs are not sold through Scotia iTRADE. Equitable Bank's ISA is, as a legacy offering, is but Equitable Trust's ISA is not. All of the Scotia-affiliated entities (Scotiabank, Scotiatrust, ADS Canadian Bank, National Trust, Montreal Trust, and Scotia Mortgage Corp.) are.

If you deal with TD Direct Investing, you likely only have access to TDFG-affiliated ISAs and maybe one or two other non-TDFG-affiliated entity ISAs.

CIBC Investor's Edge customers will almost exclusively have access to CIBC and Renaissance ISAs, etc., etc. Renaissance ISAs, though a separate brand, are not a separate entity, and are treated as CIBC deposits, so if you hold a CIBC parent ISA and a Renaissance ISA in the same beneficial ownership, the deposit insurance limit is shared.

One potential loophole, though, in the banks' deposit insurance reporting is deposits you hold directly with parent entity and those you hold through a discount brokerage in nominee form. Though the ownership is beneficially the same, the bank and discount brokerage do not 'talk' to each other and likely your deposit insurance coverage is reported separately.

If you deal with Questrade, you likely have access to the greatest number of ISAs.

Cheers,
Doug

October 23, 2022
2:32 pm
Doug
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AltaRed said
I don't know which ones. Some will prohibit the purchase of these due to competition with their own offerings. I suspect RBC DI and TD DI would be 2 that might prohibit it. Maybe BMO IL, CIBC IE and Scotia iTrade too. The rest may be less restrictive.

It would be interesting for people to report back IF they find one that does (for member interest).  

Yep, ^ is true.

October 23, 2022
3:47 pm
AltaRed
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Doug said
Bear in mind, most of these ISAs will be unavailable to you, other than those of the your discount brokerage company's banking subsidiary.   

That is good enough though since they are generally (not entirely) all competitive within about 10-15bp.

October 27, 2022
8:08 am
Bill
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If I buy a CIBC gic in my Investor's Edge account does anyone know how I'd find out whether it would be held in nominee or client name?

October 27, 2022
8:44 am
AltaRed
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Bill said
If I buy a CIBC gic in my Investor's Edge account does anyone know how I'd find out whether it would be held in nominee or client name?  

Most likely have to phone and ask, but I'd expect it would be in nominee name.

October 27, 2022
4:11 pm
Norman1
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ISA rates are all over the place after prime rate increase today:

ISA Rate
Scotiabank Investment Savings Account, Series A (DYN6000) CAD 3.65%
Home Trust High Interest Savings Account, Class A (HOM100) 3.25%
RBC Investment Savings Account, Series A (RBF2010) CAD
TD Investment Savings Account, Series A (TDB8150) CAD 3.15%
Equitable High Interest Savings Account, Series A (EQB1000) CAD 2.95%
B2B Bank HIIA, Series A (BTB100) CAD 2.90%
BMO High Interest Savings Account (BMT104) CAD
Renaissance High Interest Savings Account, Series A (ATL5000) CAD
Manulife Bank Investment Savings Account (MIP510) CAD 2.80%
October 27, 2022
4:36 pm
Dean
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.
Hey Norman . . .

I just came off my TD WebBroker account. TD's TDB8150 is now @ 3.25%, but they haven't had a chance to update their documentation yet.

Things are changing 'Fast', eh. sf-smile

    Dean

sf-cool " Live Long And Prosper " sf-cool

October 28, 2022
3:12 am
Jim Sherat
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Dean said
.
Hey Norman . . .

I just came off my TD WebBroker account. TD's TDB8150 is now @ 3.25%, but they haven't had a chance to update their documentation yet.

Things are changing 'Fast', eh. sf-smile

    Dean

  

my wife and I have parked funds temporarily in TDB8150 in our respective registered Webroker a/c's for many years. It became a waste of our time when rates sunk to 0.15% at one point, then 0.25% and sat there through the Covid period. Now it's attractive again ... so much so, it's time to look at opening Unregistered accounts and use TDB8150 vs HISAs [pretty much anywhere].

Isn't it strange that the TDB HISA still sets interest at 0.05% for any amount over $5K, zero under that level. Are people that disinterested that they actually put money in there just because of the Account name ? I don't get it.

October 28, 2022
5:49 am
Norman1
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We may not get it. But, the big banks, like TD Bank, do understand their market and know how to dominate it without paying leading rates on deposits.

Globe & Mail article Banks block online sale of cash ETFs that compete… (July 4, 2022) quotes statistics from Investor Economics, a unit of ISS Market Intelligence.

Investor Economics reported that, as of December 2021, high interest savings accounts in Canada held about $541 billion. In spite of their lower rates, the high interest savings accounts of the Big Six banks captured over 75% of that!

October 28, 2022
5:58 am
Jim Sherat
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That's an amazing statistic, Norman; but maybe it's an easy call from the perspective of High Wealth individuals, who've accumulated more than enough for themselves and their beneficiaries, for many lifetimes. No need to worry about earning interest, and increasing their tax burden ... or take on any risk in the equities markets. Keep it simple and stash it in what most would agree is a relatively safe haven ... Big Six Banks. Makes sense.

October 28, 2022
7:54 am
AltaRed
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I suspect it may not have much to do with high net worth individuals. Many every day folk, especially seniors, likely stick to their lifelong plan, banking with their big brick and mortar bank for chequing, savings and GICs without considering going anywhere else.

It would be interesting to know what the big banks hold in the way of retail deposits via bank branches versus what investors hold in nominee name through the big bank brokerage businesses (discount and full service). The G&M article did not differentiate between brick and mortar branch HISAs and ISAs held within brokerage accounts.

October 28, 2022
8:09 am
Bill
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Jim, it should be pretty quick to open unregistered account if you already have registered account there. In conjunction with some other accounts my wife opened one with TDDI probably 10 years ago or so that she's never used until now with these unusual ISA rates and it was still active, so once they're open they seem to just sit there forever.

Who knows what comprises the bulk of high interest accounts at the big banks? I do know a number of people (including family members) who've opened "high interest" accounts at Tangerine and some big banks and the fact they're named as such is good enough for them, if they don't make much interest they just figure it's because rates must be low these days.

October 28, 2022
10:07 am
Loonie
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I don't think it's likely the high net worth people who are holding most of this unproductive cash at the big banks. The banks are pretty clever at converting them to the 'investing" side of the banking business.

It's more likely those with much more limited resources, for whom a higher interest rate would not make much material difference, even if they knew where to find one and felt confident about it.
If you have fairly minimal savings, it wouldn't make much difference.
Something over half of Canadians are apparently living paycheque to paycheque, including lots of middle class people. They are probably more active as clients of the loans dept of the bank than of the savings dept.

October 28, 2022
10:48 am
Dean
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Dean said
.
Hey Norman . . .

I just came off my TD WebBroker account. TD's TDB8150 is now @ 3.25%, but they haven't had a chance to update their documentation yet.

Things are changing 'Fast', eh. sf-smile

    Dean

  

Their documentation has been updated now ... TDB8150

    Dean

sf-cool " Live Long And Prosper " sf-cool

October 28, 2022
4:18 pm
Norman1
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ISA Rate
Scotiabank Investment Savings Account, Series A (DYN6000) CAD 3.65%
B2B Bank HIIA, Series A (BTB100) CAD 3.25%
Home Trust High Interest Savings Account, Class A (HOM100)
RBC Investment Savings Account, Series A (RBF2010) CAD
TD Investment Savings Account, Series A (TDB8150) CAD
Equitable High Interest Savings Account, Series A (EQB1000) CAD 2.95%
BMO High Interest Savings Account (BMT104) CAD 2.90%
Renaissance High Interest Savings Account, Series A (ATL5000) CAD
Manulife Bank Investment Savings Account (MIP510) CAD 2.80%

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