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NEW! MCAN Financial Digital GICs - no more need for a broker
February 15, 2024
3:50 pm
musicalmaestro
Ottawa
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I thought some here might find this interesting, haven't personally tried it out yet so look forward to seeing if anyone does:

New direct-to-client Guaranteed Investment Certificate (GIC) channel under the brand MCAN Wealth by MCAN Financial:

Basically means you won't only be able to get these through a broker anymore

Current rates not too shabby especially for the 1yr:

Term Rate
1-year 5.40%
2-year 5.25%
3-year 5.00%
4-year 4.80%
5-year 4.70%

February 16, 2024
12:33 pm
Dean
Valhalla Mountains, British Columbia
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.
Thanks for the Heads-Up , Maestro !

I see on their website (https://mcanfinancial.com/) that they are CDIC insured, have been in business for over 30 years, hold ~$4.1B in assets, and are subject to the OSFI.

And for those who might be interested, their stock ticker is 'MKP' on the TSX, and presently pays a dividend of ~9%.

Has anyone here invested in their GICs yet ?

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 16, 2024
2:21 pm
HigherRate1
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Indeed MKP.TO pay about 9% dividend. Why buy their GIC if you can buy the company itself because obviously they lend your GIC to make money. On top of it, dividend is taxed much more favorably than interest income.

But I wonder, how sustainable is the 9% dividend? That would mean their lending rate is >9%? Is that people's mortgage rate nowadays?

Are we all too old here to have a mortgage to know?

February 16, 2024
2:47 pm
Dean
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.
Good points , for sure ... but investing in stocks isn't for everyone, and there are many who sleep well at night, knowing their GICs are Insured.

But for those who do invest in stocks, MCAN (MKP.TO) might be one to consider, even if it's just for the dividends.

FWIW ... For the last 10+ years, MCAN's dividends have historically hovered between 7 & 10 %. Not too shabby, eh !

I'm not really into small caps anymore, but I just might consider waiting for
a dip ... and then buy in. sf-smile

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 16, 2024
3:08 pm
musicalmaestro
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Dean said
.
Good points , for sure ... but investing in stocks isn't for everyone, and there are many who sleep well at night, knowing their GICs are Insured.

But for those who do invest in stocks, MCAN (MKP.TO) might be one to consider, even if it's just for the dividends.

FWIW ... For the last 10+ years, MCAN's dividends have historically hovered between 7 & 10 %. Not too shabby, eh !

I'm not really into small caps anymore, but I just might consider waiting for
a dip ... and then buy in. sf-smile

    Dean

  

I wouldn't wait too long, earnings are set to come out at the end of the month and if Atrium (AI) who are one of their competitors' earnings that just came out are any indication than it might be a little while vefore seasonality and lower interest rates bring it back down.

I also recently came across MCAN after becoming more interested in Mortgage Investment Corporations and find their asset mix of residential mortgages, construction lending and GICs to be quite attractive.

February 16, 2024
3:19 pm
musicalmaestro
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HigherRate1 said
Indeed MKP.TO pay about 9% dividend. Why buy their GIC if you can buy the company itself because obviously they lend your GIC to make money. On top of it, dividend is taxed much more favorably than interest income.

But I wonder, how sustainable is the 9% dividend? That would mean their lending rate is >9%? Is that people's mortgage rate nowadays?

Are we all too old here to have a mortgage to know?  

MCAN isn't necessarily a traditional lender like a big bank. The current rates at big banks are just above 5%. That said, MCAN is lending out to those who may have slightly different finances - think gig workers with limited income history. By law they are required to pass along all their earning and hold at least 60% of their assets in residential mortgages.

On the one hand, the risk of default in the current interest rate environment is higher. On the other hand the gig economy and more difficult lending criteria means almost a constant flow of new people seeking out such lending.

Due to the size MCANs mortgage machines - while defaults and lower headline interest rates may lower income and yields eventually - one could also argue that with immigration and the current housing crisis there is almost certainly going to be an equal or even greater flow of new capital being required.

Reducing the cost to acquire capital by digitizing the GIC process and reducing the friction for investors is certainly compelling.

Full disclosure: Though I haven't bought their GIC I have bought the stock as I felt it made sense for me - but that may not be case for everyone else. Everyone needs to assess their own risk tolerance and preservation of capital needs.

February 16, 2024
3:22 pm
musicalmaestro
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Note: for anyone reading about the stock (MKP) dividends are taxed as interest income, so best to hold in a registered account in my opinion.

February 16, 2024
3:31 pm
Dean
Valhalla Mountains, British Columbia
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.
'The Maestro' strikes again ... Thanks !

I've got the Perfect spot ... my TD Direct Investing TFSA. sf-smile

    Dean

P.S.
As a class, 'Mortgage Investment Corporations' are real mixed bag. A few are good, but Many are not. Fortunately, MCAN is one of the few Good ones.

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 17, 2024
3:54 pm
Doug
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The launch of a direct-to-consumer GIC origination channel is interesting by MCAN Mortgage Corporation, but not entirely unexpected (even it it was not on my near-term horizon). That said, I do not see where the OP seems to suggest they're discontinuing their deposit broker channel; in fact, as far as I'm aware, this is just an additional GIC sales channel.

Sadly, they've opted to use a KYC onboarding technology Innovation Federal Credit Union uses which (a) mandates having a mobile phone and (b) mandates government-issued photo ID and taking a selfie. I fundamentally oppose that method of KYC validation, at least in non-face-to-face channels, and believe the plethora of other FINTRAC-accepted methods of identity validation (including using Canada Post retail locations for in-person verification, the dual process method of a soft or hard credit check and a cleared cheque, or other methods) are far superior and less privacy invasive. So, for that reason, I will not become a client. It's a significant barrier to entry.

Moreover, I just don't see the benefit to creating yet another digital account to access the GIC rates available through deposit brokers and discount brokerages.

Indeed, from their own press release, they only have 7,000 GIC clients in the broker space, and they likely want to grow that business.

I also see that Don Coulter has recently joined MCAN as its President & CEO. He previously led, on an interim basis, ConnectFirst Credit Union into one of the largest credit union mergers in Canadian history, to be merged with Servus Credit Union, in a deal that is only subject to Competition Bureau approval (after their loss in the Rogers/Shaw case, sadly, this, too, will likely be approved). Before that, he led Concentra Bank into an acquisition by EQB Inc., and, before that, he led Coast Capital Savings Credit Union on its journey to become only the second credit union to be continued under federal legislation, with a hidden business model to merge with other provincial credit unions while publicly stating their business model was to grow organically, something they've yet to do.

The sad irony here is that Coast Capital Savings, which Coulter led, uses thirdstream for KYC onboarding, which is basically the "gold standard" in my view, as it requires no exchanging of government-issued photo ID.

Given that, it would not at all surprise me to see MCAN Mortgage Corporation taken out by a major Canadian chartered bank in the near- to medium term, with EQB Inc., interestingly, the strongest contender to do the deal, in my view. And, they just bought a 75% equity interest, with an option to buy the remaining 25%, I believe, in another MIC, so it is likely in their wheelhouse, and would add another $5 billion in on-balance sheet assets (only slightly smaller than the Concentra deal; the Concentra deal also included in larger AUA for its Concentra Trust business).

Note that MCAN Mortgage Corporation also owns MCAN Home Mortgage Corporation (not a MIC) that was previously known as XMC Mortgage Inc. When RBC bought ResMor Trust Company (doing business as Ally Canada), it kept only the automotive finance and GICs, wound down the HISAs and sold ResMor's mortgage book to XMC Mortgage). XMC Mortgage, in turn, sold the mortgage servicing rights to MCAP (the second-largest non-bank mortgage originator in Canada). MCAP is majority-owned by the Caisse de depot de placements du Quebec and, I just learned today, MCAN Mortgage Corp. owns a 15% stake in MCAP.

Footnote: As to the risk profile of MCAN as an investment, being OSFI-regulated doesn't necessarily make it somehow "less risky" than other MICs which are outside of OSFI regulation, however. All that does is give them access to an additional funding source, namely the GIC business.

Given that First National Financial is the largest non-bank mortgage originator, while Smith Financial buying MCAN is a possibility, I think that would raise larger competition concerns, given MCAN's position in MCAP, and being a forced seller of its MCAP business, which may be one of the impetuses for buying MCAP in the first place, may make it less attractive.

Cheers,
Doug

February 17, 2024
4:46 pm
kesa
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at the end of the day:

relatively easy sign-up (glitchy though)

CDIC

competitive rates even for $100

they’ll get my 95k.

February 17, 2024
4:48 pm
Doug
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kesa said
at the end of the day:

relatively easy sign-up (glitchy though)

CDIC

competitive rates even for $100

they’ll get my 95k.  

But you could've done this through your discount brokerage, way more seamlessly and quickly. 🙂

Cheers,
Doug

February 17, 2024
5:25 pm
musicalmaestro
Ottawa
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Doug said
The launch of a direct-to-consumer GIC origination channel is interesting by MCAN Mortgage Corporation, but not entirely unexpected (even it it was not on my near-term horizon). That said, I do not see where the OP seems to suggest they're discontinuing their deposit broker channel; in fact, as far as I'm aware, this is just an additional GIC sales channel.

...
Doug  

Thanks for your input and interesting thoughts. Also to clarify, didn't quite realize this was already available through brokerages, so was suggesting people would NOT have to go through a broker now if they didn't want to. Apparently, this new option isn't exactly as extraordinary as I may at first have thought. But the discussions here sure have been interesting!!

February 18, 2024
4:36 am
kesa
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I deal primarily with 2 discount brokerages - I have never seen MCAN, or never noticed.

Have only seen MCAN at GIC brokers or buy direct but they are available in other certain channels eg:

https://www.financialservicesgroup.net/gic-rate-sheet#

nb. notice the spread ! https://mcanfinancial.com/our-businesses/mcan-wealth/gicrates/

edit: BMOIL has MCAN GICs

February 18, 2024
5:16 am
mordko
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Doug said
The launch of a direct-to-consumer GIC origination channel is interesting by MCAN Mortgage Corporation, but not entirely unexpected (even it it was not on my near-term horizon). That said, I do not see where the OP seems to suggest they're discontinuing their deposit broker channel; in fact, as far as I'm aware, this is just an additional GIC sales channel.

Sadly, they've opted to use a KYC onboarding technology Innovation Federal Credit Union uses which (a) mandates having a mobile phone and (b) mandates government-issued photo ID and taking a selfie. I fundamentally oppose that method of KYC validation, at least in non-face-to-face channels, and believe the plethora of other FINTRAC-accepted methods of identity validation (including using Canada Post retail locations for in-person verification, the dual process method of a soft or hard credit check and a cleared cheque, or other methods) are far superior and less privacy invasive. So, for that reason, I will not become a client. It's a significant barrier to entry.

Moreover, I just don't see the benefit to creating yet another digital account to access the GIC rates available through deposit brokers and discount brokerages.

Indeed, from their own press release, they only have 7,000 GIC clients in the broker space, and they likely want to grow that business.

I also see that Don Coulter has recently joined MCAN as its President & CEO. He previously led, on an interim basis, ConnectFirst Credit Union into one of the largest credit union mergers in Canadian history, to be merged with Servus Credit Union, in a deal that is only subject to Competition Bureau approval (after their loss in the Rogers/Shaw case, sadly, this, too, will likely be approved). Before that, he led Concentra Bank into an acquisition by EQB Inc., and, before that, he led Coast Capital Savings Credit Union on its journey to become only the second credit union to be continued under federal legislation, with a hidden business model to merge with other provincial credit unions while publicly stating their business model was to grow organically, something they've yet to do.

The sad irony here is that Coast Capital Savings, which Coulter led, uses thirdstream for KYC onboarding, which is basically the "gold standard" in my view, as it requires no exchanging of government-issued photo ID.

Given that, it would not at all surprise me to see MCAN Mortgage Corporation taken out by a major Canadian chartered bank in the near- to medium term, with EQB Inc., interestingly, the strongest contender to do the deal, in my view. And, they just bought a 75% equity interest, with an option to buy the remaining 25%, I believe, in another MIC, so it is likely in their wheelhouse, and would add another $5 billion in on-balance sheet assets (only slightly smaller than the Concentra deal; the Concentra deal also included in larger AUA for its Concentra Trust business).

Note that MCAN Mortgage Corporation also owns MCAN Home Mortgage Corporation (not a MIC) that was previously known as XMC Mortgage Inc. When RBC bought ResMor Trust Company (doing business as Ally Canada), it kept only the automotive finance and GICs, wound down the HISAs and sold ResMor's mortgage book to XMC Mortgage). XMC Mortgage, in turn, sold the mortgage servicing rights to MCAP (the second-largest non-bank mortgage originator in Canada). MCAP is majority-owned by the Caisse de depot de placements du Quebec and, I just learned today, MCAN Mortgage Corp. owns a 15% stake in MCAP.

Footnote: As to the risk profile of MCAN as an investment, being OSFI-regulated doesn't necessarily make it somehow "less risky" than other MICs which are outside of OSFI regulation, however. All that does is give them access to an additional funding source, namely the GIC business.

Given that First National Financial is the largest non-bank mortgage originator, while Smith Financial buying MCAN is a possibility, I think that would raise larger competition concerns, given MCAN's position in MCAP, and being a forced seller of its MCAP business, which may be one of the impetuses for buying MCAP in the first place, may make it less attractive.

Cheers,
Doug  

Wouldn’t it essentially kill their mortgage business if MCAn is taken over by a chartered bank?

February 18, 2024
5:18 am
savemoresaveoften
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musicalmaestro said
Note: for anyone reading about the stock (MKP) dividends are taxed as interest income, so best to hold in a registered account in my opinion.  

Thanks for the heads up!

February 18, 2024
7:38 am
Norman1
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kesa said

Have only seen MCAN at GIC brokers or buy direct but they are available in other certain channels eg:

https://www.financialservicesgroup.net/gic-rate-sheet#

nb. notice the spread ! https://mcanfinancial.com/our-businesses/mcan-wealth/gicrates/

edit: BMOIL has MCAN GICs

MCAN Mortgage Corporation is not offering any of their GIC's via Scotia iTRADE at the moment.

Their offerings are not the best through BMO InvestorLine:

1-year 2-year 3-year 4-year 5-year
Highest
(via BMO InvestorLine)
5.23% 4.98% 4.77% 4.61% 4.48%
MCAN Mortgage
(via BMO InvestorLine)
5.19% 4.87% 4.65% 4.50% 4.37%
MCAN Mortgage
(via MCAN Wealth)
5.40% 5.25% 5.00% 4.80% 4.70%
February 18, 2024
7:57 am
Doug
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mordko said

Wouldn’t it essentially kill their mortgage business if MCAn is taken over by a chartered bank?  

Not necessarily. MCAN Mortgage Corporation, like many MICs, provide alternative mortgage solutions, such as mortgages for businesses, bridge financing, construction financing, mortgages for self-employed individuals, mortgages for rental properties, and so-called "alt-A", "alt-B", or subprime mortgages, not all of which are offered by chartered banks or which are offered under more restrictive terms.

EQB Inc. recently acquired an initial 75% equity interest in ACM Advisors Ltd., which manages several Mortgage Investment Corporations and/or mortgage funds, that also has about $5 billion in mortgages under management and administration. So, collectively, it's about the same size as MCAN Mortgage Corporation. MCAN has some other assets, such as the ability to raise CDIC insured deposits, as well as its 15% stake in MCAP, which could also be attractive to EQB, I think.

https://eqb.investorroom.com/2023-12-14-EQB-Completes-Acquisition-of-Majority-Interest-in-ACM-Advisors

Cheers,
Doug

February 18, 2024
8:02 am
Doug
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Norman1 said

kesa said

Have only seen MCAN at GIC brokers or buy direct but they are available in other certain channels eg:

https://www.financialservicesgroup.net/gic-rate-sheet#

nb. notice the spread ! https://mcanfinancial.com/our-businesses/mcan-wealth/gicrates/

edit: BMOIL has MCAN GICs

MCAN Mortgage Corporation is not offering any of their GIC's via Scotia iTRADE at the moment.

Their offerings are not the best through BMO InvestorLine:

1-year 2-year 3-year 4-year 5-year
Highest
(via BMO InvestorLine)
5.23% 4.98% 4.77% 4.61% 4.48%
MCAN Mortgage
(via BMO InvestorLine)
5.19% 4.87% 4.65% 4.50% 4.37%
MCAN Mortgage
(via MCAN Wealth)
5.40% 5.25% 5.00% 4.80% 4.70%

  

Thanks for checking, Norman. Yeah, I didn't see it in Scotia iTRADE, either, but recall having had seen it at one time. As you correctly hinted, Scotia iTRADE changes the issuers of GICs on offer from time to time.

I suspect the difference between GIC rates from the broker channel and their new direct-to-consumer channel accounts for the broker sales commission to be paid to the deposit broker. It's unfortunate MCAN no longer lists their broker GIC rates on their website.

That being said, one also has to consider the added complexity, and costs, having accounts and GICs with so many institutions creates for one's heirs/successors and for their executor(trix). So, for that reason and MCAN Wealth's restrictive KYC digital onboarding process, I will not become a client. (Same reason I won't become an Innovation Federal Credit Union client.)

Cheers,
Doug

February 18, 2024
3:59 pm
Loonie
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I bought an MCAN GIC through deposit broker last year. It was the best rate going at the time for term I wanted.

I expect these will continue to be available through deposit brokers when MCAN needs a cash influx, and those rates will exceed MCAN rates through discount brokers or buy-direct.

Many FIs use all these channels, but at different rates depending on minimum investments commissions, contracts, etc.

February 19, 2024
2:40 am
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Doug: Wow, that's a lot of acronyms! It is always helpful to fully spell out an acronym the first time you use it, unless it's as generic as GIC (Guaranteed Investment Certificate).

RetirEd

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