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"GIC Simple" - offers a whole range of GIC's with better rates from smaller FI, on one platform.
October 27, 2020
8:31 pm
Pythagoras
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Anyone with experience with "GIC Simple" ( a 1-stop shop for GICs):

https://gicsimple.ca/

Anyone can confirm whether it is legit.

Can find almost nothing on them.

Thanks!!

October 27, 2020
9:16 pm
Norman1
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It is a company called CASHiQ Inc. that used to provide deposit brokerage through advisors. Looks like the company is also now trying to go directly online to investors.

Long term GIC rates are good. Short term ones not so much:

1 yr 2 yrs 3 yrs 4 yrs 5 yrs
GIC Simple 1.10% 1.44% 1.69% 1.74% 1.90%
EQ Bank 1.25 1.05 1.15 1.25 1.50
Oaken 1.40 1.50 1.60 1.75 2.00
Hubert 1.50 1.55 1.65 1.70 1.90
Peoples Trust 1.45 1.55 1.65 1.70 1.85
October 28, 2020
5:36 am
Pythagoras
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Thanks Norman1!
That table is very informative!

October 28, 2020
8:24 am
savemoresaveoften
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Are those rates same as buying direct from those FIs ? If so, how do they make money doing it ?

October 28, 2020
9:17 am
Norman1
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Generally, the answer is no. One will not get the same rate going through a deposit broker, like GIC Simple, Fiscal Agents, or GIC Wealth, as going through the financial institution's online-only channel.

For example, the "Equitable Bank" branded 5 year GIC, through deposit brokers, is 1.27%. The "EQ Bank" branded 5 year GIC, available online only, is 1.5%.

Similarly, "Home Trust" branded 5 year GIC, through deposit brokers, is 1.35%. Home Trust's "Oaken" branded online-only 5 year GIC is 2%.

That's because the deposit broker is customarily paid a commission of ¼% per year of the GIC's term by the issuer. Selling a five year GIC means a 5 x ¼% = 1¼% commission for the deposit broker.

October 28, 2020
10:46 am
savemoresaveoften
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Norman1 said
Generally, the answer is no. One will not get the same rate going through a deposit broker, like GIC Simple, Fiscal Agents, or GIC Wealth, as going through the financial institution's online-only channel.

For example, the "Equitable Bank" branded 5 year GIC, through deposit brokers, is 1.27%. The "EQ Bank" branded 5 year GIC, available online only, is 1.5%.

Similarly, "Home Trust" branded 5 year GIC, through deposit brokers, is 1.35%. Home Trust's "Oaken" branded online-only 5 year GIC is 2%.

That's because the deposit broker is customarily paid a commission of ¼% per year of the GIC's term by the issuer. Selling a five year GIC means a 5 x ¼% = 1¼% commission for the deposit broker.  

Thanks Norman. So no benefit over buying third party GIC thru a bank owned dealer basically. So one just pays for convenience, which one should not do when the yields are so low already. Lazy costs money

October 28, 2020
4:26 pm
Loonie
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What Norman has said doesn't always apply, especially with reference to FIs that don't have efficient online outlets.

If you see an attractive rate at a deposit broker, you can compare it to what is publicly available at that same FI at that time.

A couple of years ago I bought a GIC through a deposit broker. I checked with the FI and their rate was worse. According to the deposit broker, that's the way it should work.

FIs offer deals to deposit brokers when they want to raise money and don't want to do it themselves. Perhaps, with covid, they are short-staffed. Perhaps they have a liquidity need. Their in-house marketing reach may not be big enough. etc. They pay the deposit broker for this service.

Online-only FIs like Oaken and EQ are just alternate delivery routes for their parent institutions in the same way that deposit brokers are alternate routes.

October 28, 2020
4:54 pm
topgun
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savemoresaveoften said

Thanks Norman. So no benefit over buying third party GIC thru a bank owned dealer basically. So one just pays for convenience, which one should not do when the yields are so low already. Lazy costs money  

The GIC that matures 29th is a third party through iTrade. I was learning at the time. I checked rates today. I can do better. 47 bps on 5 yr.

Have a Great Day

October 30, 2020
6:23 pm
Norman1
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savemoresaveoften said

Thanks Norman. So no benefit over buying third party GIC thru a bank owned dealer basically. So one just pays for convenience, which one should not do when the yields are so low already. Lazy costs money

There is no benefit buying through a bank-owned investment dealer. That doesn't mean there isn't an advantage from time to time going through a smaller deposit broker.

That's because the bank-owned investment dealers are not really deposit brokers. They only do the GIC order taking of a deposit broker. They are too large and automated to do some of the things the smaller GIC issuers, with the better rates, look for in deposit brokers.

One of those things is raising controlled amounts of deposits. The issuer may be willing to offer a market leading GIC rate but only for a certain amount of money that it can lend out shortly. If the rate is not market leading, then there is a good chance no GIC buyers will bite.

Problem is that the leading rate has to be open for at least one business day. Otherwise, the broker will have an angry GIC buyer should the rate quoted in the morning disappear by the time the buyer comes by in the afternoon to drop off the cheque.

A market leading rate for one day at one of the bank owned investment dealers can end up bring way more money than desired.

So, some issuers won't go through one of the bank owner investment dealers.

One can see signs of this in this snapshot and earlier ones. Notice the difference in rates offered through bank-owned discount broker Scotia iTRADE and through deposit broker GIC Wealth.

November 1, 2020
2:12 am
Loonie
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A deposit broker customer may be unhappy if they miss a deal because they didn't get there fast enough, but I don't think the broker is required to keep it on the market for any given amount of time.

What I have seen is that the deposit broker may advertise that a particular offer will not last and advise interested customers to act fast. I've known them to be gone in a couple of days - which is ideal for the issuer.
The deposit broker has two clients, the buyer/investor and the issuer; and they have to keep both of them happy. The rate offered will depend in part on how fast they need the money and how much they need. If they offered 3% right now, they'd have all the money they need before noonsf-laugh

November 1, 2020
7:41 am
Norman1
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It's the GIC issuer, not the deposit broker, that needs to keep an offer open. The broker can only sweeten the rate a bit by assigning some of the ¼%-per-year commission to the buyer.

The deposit brokers do explain how things work to the GIC buyers to set expectations properly. One I dealt with explained that any rates offered are only good for that business day. So, if I like the rate quoted, I need to buy that day. Tomorrow, new rate sheets will arrive in the morning and that rate could be gone.

I think a deposit broker would drop an issuer that didn't keep a rate offered until the end of the day. It is quite normal for a GIC buyer to call, like the rate quoted, and drop by later in the day to do the paperwork.

November 5, 2020
9:51 pm
Loonie
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Norman makes a good argument for keeping at least some of your savings in a FI that offers chequing. You don't have time to get your money moved out of EQ (for example) if you are thinking of using a deposit broker.

For that reason, I value my accounts with Motive, AlternaBank, motusbank and Ontario credit unions. I've not yet run into an Ontario CU that doesn't offer chequing. Motus has many faults but one of the reasons I keep it is because of the chequing account, which has been very helpful at times.

November 6, 2020
8:44 am
Norman1
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It used to be one had to provide a signed cheque to the deposit broker to pay for the GIC.

I don't know now if any GIC issuers would accept a void cheque and then pull the funds from the account.

If they did, then one could provide that generated faux void cheque for an EQ Bank Savings Plus account.

November 6, 2020
4:39 pm
Loonie
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I was told at GICWealth not too long ago that they would send a courier at their expense to pick up the cheque once you were already known to them as a customer. Same with Monarch some years back. I don't think they would go to that expense (and incur that delay) if it weren't necessary.

November 7, 2020
4:56 pm
Norman1
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That's true. It sounds like paper cheques still rule in the deposit brokerage business!

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