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Whats Your Recommendation?
May 9, 2020
5:07 pm
finance trance
Ontario
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Hello all! I hope you and yours are doing well in these unprecedented times. I am looking for some help before making some important decisions, and any feedback or thoughts are very much appreciated.

So, I am new to investing, though I have been watching from the sidelines for years, dreading all the research and paperwork involved in making the best decisions and setting up accounts with smaller institutions (offering the best rates).

First, is it smart to get an investment advisor to manage my funds (I am a student and really don't have much)? I care too much about my money to knowingly take an option that won't give me the greatest profit, however I notice from reading everyones' posts, this may require transferring from bank to bank to get the best rates. How often should I expect to transfer between accounts and institutions in order to get this desired/needed goal of the best management of my funds? I don't want anything more regular than a monthly basis at most, as this is just too much for me given my time commitments.

I was advised to put my money into a TFSA, and I see Motive currently has the best rate. I've seen a mix of bad and good reviews of their service on here, but I suppose it wouldn't matter if a financial advisor was doing the administrative stuff for me. Any thoughts on Motive? Could it be estimated that they will lower their rates in the next while? Or will someone else outdo them and I will then have to endure what seems like from your guys accounts; a big pain, hopping through hoops to transfer my money into the next best account on the market? I want to avoid the constant stress and time commitment it takes to invest professionally, but also still take advantage of the best options available to me.

Thank You Everyone,

Jake πŸ™‚

May 9, 2020
6:01 pm
Briguy
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Motive is good , and Hubert is another good one.
Advantage of Motive is that it also offers chequing accounts and debit cards, and advantage of Hubert is easy linkup of external accounts and no transfer out charges.

May 9, 2020
6:05 pm
finance trance
Ontario
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Thank you very much. Best rate is really what I'm looking for, but if Motive comes with hassles maybe the next best one is my path. Transfer out fee in all cases? Rats. Any idea on the regularity of transferring if you want the best rates?

Jake πŸ™‚

May 9, 2020
6:21 pm
MG
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Hi Jake,

My two cents is do not even consider an advisor if you just want to invest your money at the highest rate available. Advisors are not free. Some charge an annual fee and others a percentage of assets under management. No idea how much money you are talking about but if it is at all modest (being a student), interest rates are so low nowadays there is no room to pay for additional fees from an advisor.

Once you set up accounts at various banks or credit unions and the required links, it really is just a few keystrokes to move your money around. I would also suggest EQ Bank in addition to Hubert and Motive. Usually one of these has a promotion going as well so it is fairly easy to take advantage of. In addition, Tangerine usually pays a high interest for new clients for the first 6 months. That gives you time to set up other accounts you may wish to have. I would suggest you be prepared to move your funds around 2 or 3 times a year, if they are not in a TFSA. Usually one does not move TFSA money around more than once a year due to the CRA contribution rules which you should definitely learn about. Not sure if you want to tie any of your money in a GIC but you may be able to get a better rate that way (or not). I'm sure others will also chime in.

Good luck to you! sf-smile

May 9, 2020
6:34 pm
Briguy
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finance trance said
Thank you very much. Best rate is really what I'm looking for, but if Motive comes with hassles maybe the next best one is my path. Transfer out fee in all cases? Rats. Any idea on the regularity of transferring if you want the best rates?

Jake πŸ™‚Β Β 

If you stick with a consistently high FI like Hubert, Motive, EQ etc. you shouldn't have to transfer any money around. You could always transfer to a regular account and then transfer out if your money is in FI that charges transfer fees, but then it can't be reinvested in a TFSA till the following year.

I'd recommend for simplicity to stay with a consistenly high interest FI to avoid having to keep shifting money around, which you may have to do with other FIs such as Tangerine, Simplii, Duca etc.

I don't recommend needing a financial advisor unless you are ultra rich and exhausted your RRSP and TFSA and want advice on how to minimize your taxes.

May 9, 2020
7:03 pm
finance trance
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Thank you all very much, this is all truly invaluable information for me. No one in my family is very financially informed, and everyone on here seems to be as knowledgable about their options as I desire to be.

2-3 times a year is certainly not too much, relieved to hear that.

I was hoping the financial advisor would have a salary, and minimal fees or deductions from my investments if any. With this new information I may not go that route. However THE KICKER is I am not great at math, and would appreciate someone who is able to calculate which options will yield the best results (albeit this wouldn't be much work I presume), and how tax/other rules effects all these (maybe a bit more work). I can't stand reading through wordy financial paperwork and calculating this stuff, although perhaps I should get over this and suck it up. Further, maybe this advice/support issue is where this forum fits in haha.

Anyone have any other sites they think are helpful? I'v only frequented some rating sites and the odd blog. Nothing as comprehensive as here.

Kinda sucks interest rates are so low, I saw some of you mention how high they used to be, if only now... I truly have little idea what influences these rates though so I should have made a move on my money back when I saw them at 3%+ (GIC'S).

I figured a GIC was my best bet, but my advisor is saying TFSA, which I am fine with as then I can use those funds for an ETF (perhaps a smart-beta ETF?), which I planned on anyways. The weight between a GIC (or multiple/laddering) and a ETF, I still have to figure out, from my risk aversion.

I also am being advised to put half of my money into my student house, which my parents bought on my advice, getting the respective percent I put into the house when it sells in 5ish years. I know this is good move, but not sure if this is a smarter move than the other real estate options I have seen out there. Surely easier having to informally deal with parents though, instead of an institution.

CRA contribution rules are definitely something I should reread, forgot about those.

You guys are the best, thank you.

Jake πŸ™‚

May 9, 2020
9:32 pm
MG
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finance trance said

I figured a GIC was my best bet, but my advisor is saying TFSA, which I am fine with as then I can use those funds for an ETF (perhaps a smart-beta ETF?), which I planned on anyways. The weight between a GIC (or multiple/laddering) and a ETF, I still have to figure out, from my risk aversion.

Β Β 

Jake, a GIC and TFSA are not mutually exclusive. You can have a GIC in a TFSA and earn interest tax free. The only issue is that your money is tied up with a GIC so you need to be sure you will not need it for the term of your GIC. I would not recommend an ETF until you do more research. You generally need a brokerage account to purchase an ETF. Do you know what smart beta is? If you don't, you probably should not invest in it. Start slow.

May 10, 2020
10:41 am
pooreva
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finance trance said
I was hoping the financial advisor would have a salary, and minimal fees or deductions from my investments if any.

Usually (from my experience) service provided by financial advisers (FA) at Big Banks (BB) is free.
You have to have account at that bank (investors' account - usually fee free) and put some money.
Kick is that FA at BB will ALWAYS recommend and steer you toward BB products. Nobody will stop you having any mutual fund or any other product in your investor's account but they will frown upon you every time you show up and try to 're-balance' or 'reorg' your portfolio buying bank recommended products.
Meaning, you do not need FA to take care of your money; they care of bank's profit, not you.
If you have any money available and do not know what to do with them beside sitting in chequing account earning 0% interest, open TFSA at one of credit unions and buy GIC (1, 2 years) until you decide what to do next.
Or, if you are brave enough, since market is down at least 10% comparing to Jan/Feb, you can buy few reliable shares or mutual fund units hoping they will grow back in a year or two.

May 10, 2020
11:58 am
Bill
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finance trance, some good advice here so far. If you want the best rate you'll have to move around regularly. If you're ok with one of the better rates, drastically less moving.

For newbies, one way I think you can look at is there are essentially two choices: GICs/high-interest accounts (saving, no risk) and/or stock markets in one form or another (investing, varying degrees of risk).

To me, I'd recommend you first decide what % mix of these two options you want to have (this depends on your risk tolerance, time frame, ultimate goal, etc), then you'll have an idea how much money you're talking about saving and/or investing - e.g. if you're talking $5000 then is it really worth moving it around to get another .1% instead of just leaving it? That'll give you a better idea of how much time the management of your money is worth.

Another related but also somewhat independent issue to decide also is are you going to make use of registered accounts (essentially TFSA, RRSP) or not? If so, obviously you need to do some research to find out how they work.

Seems to me you need to make these basic decisions before you consider specific savings or investment products.

May 10, 2020
12:19 pm
Norman1
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finance trance said
I was hoping the financial advisor would have a salary, and minimal fees or deductions from my investments if any.

pooreva said
Usually (from my experience) service provided by financial advisers (FA) at Big Banks (BB) is free.
…
Kick is that FA at BB will ALWAYS recommend and steer you toward BB products. …

Meaning, you do not need FA to take care of your money; they care of bank's profit, not you. …

You may wish to read My little chat with the TD branch financial planner about Loonie's encounter with a TD Bank branch advisor.

The "financial advisors" at the bank branches are really disguised salespeople.

Don't take that "on salary and not on commission" marketing from the banks too seriously. One former mutual fund salesperson chuckled when I mentioned that to her. She shared that she used to work in a bank as one of those advisors.

It was technically true. She was not on commission and was paid a salary only. But, there was a points system.

She would earn different points depending on the products she was able to place. If she failed to meet her points target during the year, her manager would meet to discuss remedial action. Her understanding was that repeated failures to meet her points targets is a job performance issue and could lead to termination.

May 10, 2020
3:05 pm
finance trance
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MG said

Jake, a GIC and TFSA are not mutually exclusive. You can have a GIC in a TFSA and earn interest tax free. The only issue is that your money is tied up with a GIC so you need to be sure you will not need it for the term of your GIC. I would not recommend an ETF until you do more research. You generally need a brokerage account to purchase an ETF. Do you know what smart beta is? If you don't, you probably should not invest in it. Start slow.Β Β 

Thank you for the information. The GIC option I had looked into before, but from the somewhat decent research I have done, I have concluded that an ETF more or less tracks the market, and therefore will often beat out those options who try to beat the market. This is my likely ignorant understanding. I think I'm getting some of this from the 'couch potato' stance/blog though, which I assume is good stuff. I was pretty set on using one of the robo-advisors such as WealthSimple or ModernAdvisor to put some money in an ETF, what other research would you recommend before putting some money into an ETF? I thought they were on the safe side in terms of the long term.

I have a good idea what a smart beta is, however I would definitely need to read more before making a decision. I thought it couldn't hurt because an ETF was already a sound choice and it only promised a generally stronger result. Start slow is good advice for sure. Maybe I am a bit antsy because I have been waiting so long to invest.

Interesting about the brokerage, I did not really realize that fully. Any one you guys would recommend?

Thanks Guys!

Jake πŸ™‚

May 10, 2020
3:28 pm
finance trance
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Norman1 said

finance trance said
I was hoping the financial advisor would have a salary, and minimal fees or deductions from my investments if any.

pooreva said
Usually (from my experience) service provided by financial advisers (FA) at Big Banks (BB) is free.
…
Kick is that FA at BB will ALWAYS recommend and steer you toward BB products. …

Meaning, you do not need FA to take care of your money; they care of bank's profit, not you. …

You may wish to read My little chat with the TD branch financial planner about Loonie's encounter with a TD Bank branch advisor.

The "financial advisors" at the bank branches are really disguised salespeople.

Don't take that "on salary and not on commission" marketing from the banks too seriously. One former mutual fund salesperson chuckled when I mentioned that to her. She shared that she used to work in a bank as one of those advisors.

It was technically true. She was not on commission and was paid a salary only. But, there was a points system.

She would earn different points depending on the products she was able to place. If she failed to meet her points target during the year, her manager would meet to discuss remedial action. Her understanding was that repeated failures to meet her points targets is a job performance issue and could lead to termination.Β Β 

Haha, I had an experience going into the one banks' advisor who worked with my parents. Not knowing the above accepted rules so to speak, I basically ended up asking him multiple times, trying to reword it because he was avoiding answering, if I could put my money in the best accounts even if that meant not in his bank. His avoidance basically told me what I has assumed, which was he would only give advice if there was money in his bank. It makes sense on a corporate standpoint, but when they try to say they are family friendly, people-focused, on-your-side-type professionals, it doesn't really hold up as much.

The advisor I am now considering is not with a big bank, and I think just invests his clients money through his employer (big wealth management company). Trustworthy guy no question, but I liked the fact that he isn't skewed to one banks' accounts, or at least this is my understanding.

I'm less risk averse than perhaps some people, and I definitely have considered my timeline, goals and such, but I do need to finalize all these decisions.

"if you're talking $5000 then is it really worth moving it around to get another .1% instead of just leaving it?" Strong point, thank you.

I thought a RRSP was really not for me, as I am a student with less than 20,000, so maybe later? But a TFSA is very much something I have been recommended multiple times and will do.

I tend to rely on expert or people I trust opinions, as I prefer to do less research, especially considering sometimes you don't know who is writing the advice, or who is paying them.

Thanks!!!

Jake πŸ™‚

May 10, 2020
4:20 pm
Bill
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Agree, looks like RRSP is an option you can rule out at this time.

Also strongly agree with your last paragraph. I also minimize my time on "research", plus pretty much all info is "sponsored" by someone or other. I'm far older than you and I've had a fair bit of success listening to a few people, in my circle usually, who I trust and (maybe even more importantly) who've demonstrated success over time (yes, I'm ageist, as they say today) in investing. Those people are harder to find at your age but you do find a few as the years go on. So I'm on the same page as you on that one.

May 10, 2020
4:53 pm
Loonie
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There is one phrase that you should become familiar with. It's "fiduciary responsibility".

If you don't know much about investing, then you shouldn't take advice from anyone who doesn't have fiduciary responsibility to you.

This is legally regulated. Those who have fiduciary responsibility are called "advisers". Those who don't are "advisorss". What a difference an e makes.

Those who sell mutual funds etc are somewhat obliged to only sell you thinks that are vaguely suitable, but that is a broad stretch and subjective. It is dependent on what you put (or allow them to put) on that form you fill out when you sign up for an investment, where they ask you your net worth, risk tolerance, knowledge about investing etc. There is, I suspect, a tendency to overestimate all of these as you don't want to look poor or stupid or like you are afraid to take risks (especially if male). Instead, you should make a point of underestimating your knowledge, risk tolerance and net worth, for your own protection.

Someone who has fiduciary responsibility is obligated to advise /sell you what is in your best interests. there is a huge difference.

May 10, 2020
9:21 pm
cruzinalong
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finance trance said
Hello all! I hope you and yours are doing well in these unprecedented times. I am looking for some help before making some important decisions, and any feedback or thoughts are very much appreciated.

So, I am new to investing, though I have been watching from the sidelines for years, dreading all the research and paperwork involved in making the best decisions and setting up accounts with smaller institutions (offering the best rates).

First, is it smart to get an investment advisor to manage my funds (I am a student and really don't have much)? I care too much about my money to knowingly take an option that won't give me the greatest profit, however I notice from reading everyones' posts, this may require transferring from bank to bank to get the best rates. How often should I expect to transfer between accounts and institutions in order to get this desired/needed goal of the best management of my funds? I don't want anything more regular than a monthly basis at most, as this is just too much for me given my time commitments.

I was advised to put my money into a TFSA, and I see Motive currently has the best rate. I've seen a mix of bad and good reviews of their service on here, but I suppose it wouldn't matter if a financial advisor was doing the administrative stuff for me. Any thoughts on Motive? Could it be estimated that they will lower their rates in the next while? Or will someone else outdo them and I will then have to endure what seems like from your guys accounts; a big pain, hopping through hoops to transfer my money into the next best account on the market? I want to avoid the constant stress and time commitment it takes to invest professionally, but also still take advantage of the best options available to me.

Thank You Everyone,

Jake πŸ™‚Β Β 

I never believed in financial planners. Personally I believe it is best to do it on your own. What are your priorities? I remember being a student. Work in the summer to pay tuition and books. Not much left for other needs. Money ran out before I started working in the summer. The first thing is CASH.

May 11, 2020
10:24 am
Norman1
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finance trance said
…
The advisor I am now considering is not with a big bank, and I think just invests his clients money through his employer (big wealth management company). Trustworthy guy no question, but I liked the fact that he isn't skewed to one banks' accounts, or at least this is my understanding.
…

His skew is not towards one financial institution. However, he and his employer won't be giving any advice about or offering products that don't pay them a certain amount of commission.

The customary deposit brokerage commission is equivalent to ΒΌ% per year. Customary equity fund trailer with a salesperson is 1% per year.

If the financial institution or mutual fund company refuses to pay them the commission, then the advisor and his employer will refuse to offer those products to clients.

You won't find the EQ Bank branded 1-year GIC paying 2.05% through such an advisor. But, you may find the Equitable Bank branded 1-year GIC paying 1.62% through the advisor.

May 11, 2020
10:36 am
savemoresaveoften
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Keep in mind IA makes a living by earning a fee off their client base (aka you). In general you are losing 1% each year just to "feed" the IA for their advice. And if they end up advising u to buy mutual funds, u are losing another 1-2% MER. You can see what I am getting at.

You are much better off learning investment in your spare time, which is a life long skill set one should have. As a newbie, consider mkt index etfs etc to start.

There are very very little % of IA that are really value added net of the fees to any clients of any portfolio size. Obviously if one just can not grasp the basics of investment knowledge no matter how hard one try, those are the ones that "may" benefit from having an IA.

Please write your comments in the forum.