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Best way to access rates that only go through financial advisers etc?
December 2, 2013
3:28 am
Loonie
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I get the point that quite often financial institutions offer better rates to customers who come to them via financial advisors/brokers etc. This is the opposite of what I would have expected, but perhaps it has something to do with what might be "bulk buying".
What is the cheapest and most non-intrusive way to get access to these rates for someone who doesn't really want a "financial adviser", and, more particularly, doesn't want to pay for one?
A while ago I found some rates that looked good at Manulife, although I forget which branch of Manulife it was. The only way to get them seemed to be to get in touch with one of their "advisers", which turned me off completely.

December 2, 2013
9:55 am
James
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Hi Loonie,

I would be interested in this as well. Last year, I did some testing and consulted 6 different financial advisers requesting better than advertised rates on various financial products (term investments, GICs, savings accounts, etc.). My goal was to find one rate that was even a small amount higher than Cannex's highest advertised rate in that specific category. All of the advisers offered rates at least 1-2% lower than the highest advertised rates.

At about the same time, I consulted Manulife about an RRSP product and you do need to meet with one of their advisers (must be an in-person meeting). I'm busy, so by the time I got around to setting up a meeting, Manulife had dropped their rate by 1% (within the month).

Just a heads up.

December 2, 2013
4:34 pm
SD2013
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December 6, 2013
9:43 am
kanaka
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I am, unfortunately with Manulife as a customer. I was with Peak and they moved over to Manulife. With the changeover I lost my adviser as he decided to retire. So now, I have an adviser that was with Peak in the same office. At this point I don't know if really care for my new adviser but will admit he gave us a recommended buy that is very solid and we like it. BUT I had to further research it and asked for the ticker and his response that it could only be bought from him through Manulife. It was an Invesco product. I was able to find it on my online brokerage, iTRADE. So much for his industry knowledge. When it comes to GICs he cannot match rates offered by the Winnipeg CU's although he did have home trust, for some reason he did not offer and stuck with the good old Coast Capital and agave me the same rate as the branch rate while they usually gave me a couple points more. NOT IMPRESSED!! So my next GIC to renew, I will ask if he can match the rates that are out there, if he says no, he looses all GIC's with my wife and I. He had his chance, right? If I go on my own I will make $2000 more per year in interest.

So what is my point? If you feel comfortable doing it on your own and can get better rates, do it! You may want an adviser to be only PART of your financial portfolio, while their preference will always to want all of your investments. If you advisor does the best for you while forgoing obtaining the best commission from the Mutual Fund Co or credit union, you have a good one! If you are about to loose $2000 a years times xx years.....hmmmmmm.

December 10, 2013
7:00 am
Loonie
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Thanks for the perspectives.
Somehow I'm not surprised at the shenanigans with the ManuLife rep. Good to be aware.

I'm wondering, in terms of answering my own question, what do you all think about using a "registered deposit broker"? I think they don't charge any fees. Their job is basically to sell GICs (perhaps other things as well; I don't know) from various institutions. They don't charge the investor any fees, I'm told. Has anyone had any experiences that would be helpful in this regard?

December 10, 2013
3:06 pm
grannymae
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I have used deposit brokers numerous times over the years. I have never been charged a fee for their services. I believe most are compensated by the institutions they place your money with.

December 10, 2013
4:14 pm
kanaka
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Loonie said

Thanks for the perspectives.
Somehow I'm not surprised at the shenanigans with the ManuLife rep. Good to be aware.

I'm wondering, in terms of answering my own question, what do you all think about using a "registered deposit broker"? I think they don't charge any fees. Their job is basically to sell GICs (perhaps other things as well; I don't know) from various institutions. They don't charge the investor any fees, I'm told. Has anyone had any experiences that would be helpful in this regard?

Just an FYI. My Manulife rep. is not high on selling Manulife products and offers a wide range of products BUT let's face it, they have their favourite suppliers that pay them the best commission while giving a better (but not the best) rate than a bank or CU to the consumer but not as good at what other financial institutions offer. So my Manulife rep. is a broker with many offerings of GIC's and there is no charge for a bit better of a rate as they do the paper work and most financial institutions have a contract division to solely work with financial advisers and brokers. I do plan to "use" him (Manulife rep.) and do have an exit plan. But always be open to revise a plan. As far as a broker, I dont know about that BUT for good rates I use Outlook Financial (service is so-so) in Manitoba as their GIC's are redeemable with penalty, Accelerate (best service ever!!!) but not redeemable, and Hubert who fluctuate too much to the point when they have a good rate....will I have money to invest at that time?? Check Implicity too. Since I am an old guy I have seen many a financial institutions go bust and leave their customers "without", and even if now they are insured, if they have the word "trust" in their name I wont deal with them.

December 10, 2013
4:37 pm
GS1
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Loonie said

[snip]

They don't charge the investor any fees, I'm told.

[snip]

Ah, but someone is paying the rep and that compensation is likely coming from "lower" rates to the investor. I realize these folks need to be paid but, in my mind, the investor needs to know where the payment is coming from.

GS

December 10, 2013
9:38 pm
kanaka
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GS said

Loonie said

[snip]

They don't charge the investor any fees, I'm told.

[snip]

Ah, but someone is paying the rep and that compensation is likely coming from "lower" rates to the investor. I realize these folks need to be paid but, in my mind, the investor needs to know where the payment is coming from.

GS

You are right. So let us alll think about it. My investment advisor uses Coast Capital.
Their 5 year at the branch rate is 2.25%
My adviser gives me a bit better at 2.45%
Coast Capital gives my adviser maybe .25% commission
So Coast Capital, and others, can really have the 5 year rate at 2.7%???
And Accelerate 5 year rate is 3%.

So tell me:
Who is making the money on our investments?
Who is being short changed?

If any one wants a copy of the Coast Capital contract agreement between advisers, let me know I should be able to find it.

December 10, 2013
10:50 pm
SD2013
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December 11, 2013
11:08 am
GS1
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kanaka said

[snip]

So tell me:
Who is making the money on our investments?
Who is being short changed?

Question 1 - everyone who touches the transaction from start to finish.
Question 2 - no one listed in the answer to question 1 - as they know "the deal". And the investor is only "short changed" if (s)he doesn't know "the deal". And "short changed" is a relative term as some of the folks listed in the answer to question 1 are willing to accept a smaller fee.

When I buy a strip bond from RBC Direct Investing and pay, say, $80, I know RBC is taking a fee and I have assigned 2% in my calculations for the total fees I pay on all investments. That 2% fee is divided by the length of maturity of the strip bond and as I am currently buying 6 - 8 year maturity bonds the fee works out to 1/4 to 1/3 of 1% per year. That cost is much better than my buying a bond fund, even one with a 1/2 of 1% MER.

GS

December 11, 2013
11:40 am
SD2013
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December 12, 2013
8:18 am
GS1
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SD2013 said

GS, I do not know why you are buying 6 to 8 year strip bonds or why anyone would buy 6 to 8 year strip bonds which their current yields are not that attractive after paying their commission.

Fairly simple - to add to my laddered investments.

SD2013 said

If you are talking about 6 to 8 year provincial strip bonds with the highest gross market yields as of December-10-2013 which are between 2.65% to 3.10%.

You are left with 2.32% to 2.85% net yields after this 2.00% commission is taken into account. You would do much better with the highest 5-7 year GIC rates of 3.00%, 3.10%, 3.15% and 3.20%.

I am buying Corporate Strips and the rate isn't as high as I would like but I (or my estate) will not be locked in as we would be with a GIC.

SD2013 said

[snip]

Some 4 year GIC rates are close to 7 year provincial strip bonds yields or are short only by 10 to 15 basis points but the best value today with longer term provincial strip bonds in the 13.25 to 14.5 range yielding anywhere between 4.00% to 4.10% net yields which includes their commission or fee.sf-smile

[snip]

13.25 to 14.5 years from now I will be either 80.08 or 81.33 years old OR ash and so 13.25 to 14.5 year investments hold little interest to me.

Mrs GS and I have already made our fortune (as good or as bad as it is, is for others to decide). If I were to cash everything today and we were to cram all the resulting cash under my mattress, I am confident that by living a little more frugally, we would still be able to stay away from a dog food diet. We wouldn't likely be in Florida enjoying 85 degree temperatures as we are today, but we would be warm and cozy.

Being 30 today would have the benefit of my knowing so much more than I did when I really was 30 but I wouldn't want to be working in today's climate. I feel I got out "just in time" when I see what the workers of today are going through.

GS

December 12, 2013
9:28 am
SD2013
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