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WARNING: Transfer-out fees from Tangerine for registered accounts
October 22, 2014
9:54 pm
kanaka
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My point is.....if you buy a GIC and fulfill your commitment till it matures, Both parties benefit. A transfer fee is a punitive money grab fee imposed on the client because they want to move on.

October 22, 2014
10:41 pm
jgclghrn
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First of all I do see your point as a shareholder in wanting to maximize your return. However as a customer I also want to maximize my return. Thats why I like the Credit Union model because there is a more reasonable balance between both interests.

Fees are designed to generate more profits. Banks already make money by lending my money out at a profit. If an institution has decided they won't charge fees they aren't doing this to loose money and have built that into their business model. However, if they turn around and change that policy they should allow all those who deposited their money based on the no-fee policy to get their money out free of charge and not be trapped because their deposit matures after some artificial deadline.

A transparent bank or discount brokerage discloses their account fees up front so you can decide if you want to use them or not.

I could live with a fee if I closed an account in less than say 90 days because the bank hasn't had a chance to make enough money off my deposits. However I have had these accounts for many years and consider this a pure profit grab.

TFSAs and RRSPs may have more oversight but I find it hard to believe that transfers and account closures aren't fully automated and a small incremental cost of doing business.

October 22, 2014
11:51 pm
Loonie
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In my opinion, these new fees have nothing to do with the need to cover their admin costs. ING operated without these fees for many years, and the operation of these kinds of accounts administratively has not changed as far as I know - the transfer forms are the same as they always were. It has everything to do with wanting to suck more profit out of clients, just because they can, or so they think.
Tangerine is already making tons of money out of these registered accounts because (a) they are an online bank and thus do not have the costs of maintaining branches; (b) they pay lower rates than most, if not all, other online banks. So there is no ethical need for them to grab even more money just because some people realize that they are not likely to ever get good rates there, and therefore decide to take their money somewhere else.
The institutions that are worth bothering with are the ones that have higher rates. People are far less likely to remove their accounts from banks with exemplary rates, and, thus, the "need" for transfer-out fees is significantly diminished, if it ever existed.
In any event, most institutions that do charge exit fees are willing to reimburse the client for exit fees paid elsewhere. So, it is a silly circular game that they are playing. If they all eliminated all their exit fees, then they would be in about the same place that they are now by charging them.
And, lastly, most people have GICs in these registered plans. You can't move them in and out willy-nilly. You have to wait for them to mature. So, I don't think it's very likely that the banks are dealing with such numbers of transfers-out that it is taxing their budget to do so. If they want people to keep the money with them, they should pay better rates. That is the way to retain your customers and keep them happy. As any business person knows, it costs a lot more to get a new customer than to keep an old one. It won't help their bottom line or their dividends if they are churning their customer base all the time.
Not only is this going to be unpopular with customers, it's a poor business decision in my books.

October 23, 2014
9:42 am
AltaRed
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Loonie, I can respect that transfer out costs obviously matter to some, enough for them to walk.

I have sons who work for the Big 5 banks and there has to be a certain amount of human intervention. It does take human intervention to sign off (if only electronically) on the paperwork and transfers to the receiving insititution and paperwork to the CRA and that costs money.

Straight cash transfers are the easiest, but I would suggest you could be wrong in your assumption that most people have only GICs in their registered accounts. Certainly not in the big banks where customers are also sold mutual funds. Transfers in kind take considerably more effort and time and paperwork.

ING, and some others (smaller institutions mostly I reckon) chose to absorb that cost but they probably had to, to attact sufficient business at least initially. Each institution decides on what their business model should be to balance attracting enough business vs margin. They most likely do it with considerable thought. Tangerine/Scotia probably doesn't care much about losing smalllish accounts where most people are likely to be most sensitive to transfer out fees and service costs.

October 23, 2014
10:14 am
Loonie
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When I said that I thought most people had GICs in these accounts, I was referring to the kinds of registered accounts that are offered by institutions such as Tangerine. They offer savings, GICs and, in the case of Tangerine, a small group of mutual funds. Anyone who wanted to invest serious money in mutual funds would go somewhere else where there is more opportunity for diversification.

I am not sure what a 'smallish' account might be at a place like Tangerine, but for GiC and savings accounts, there is basically a limit of 100,000 anyway, due to CDIC coverage. People with more money will be more likely to eventually centralize their funds in a full service financial institution.
Tang has put megabucks into attracting new business. I would hazard a guess that most of that new business will be smaller accounts. People with more money probably were already aware of Tangerine anyway and aren't likely to migrate there when they have more money. Why would they? The rates are terrible. I would suggest that the Tangerine model depends on a certain degree of inexperience among its customers. Once people have more money and/or realize that they are not getting optimum returns, they will go elsewhere. The only thing Tang really has going for it, in my view, is the ease of their online platform and pretty good customer service. This will be attractive, especially to young people, until they have more money and look elsewhere. But it will not hold any of us indefinitely.

Thus, if you're putting megabucks into trying to get new customers, and most of them do not yet have huge assets, it would seem to me that you WOULD care if they were upset about fees.

I also think it's about time the banks recognized that the small amount of paper work that they do in relation to these accounts is part and parcel of the cost of doing business. They are already paid for this service through the spread between what they offer us (peanuts, especially in the case of Tang) and what they get from borrowers or wherever else they invest the money. If their problem is that customers are restless and are inordinately inclined to be moving their investments elsewhere, then the solution to that is to make Tang itself more attractive, so that people won't have the desire to pull their money out. This is how you truly build a business for the long term, and how you can stand out. The Big 5 pay crappy rates but they can get away with it because they are full service institutions and offer people a lot of different services. Tang is not in that league.

I still think they're basically doing it because they think they can get away with it. It's like government and taxes. They find all kinds of ways of introducing extra fees, and clawbacks and what-not in order to avoid admitting that they are effectively raising taxes. There is no question but that the banks could ALL absorb these costs. One need only look at their balance sheets and dividend records to realize that. But, no, they have CHOSEN to ding the customer as much as they think the market will bear. And that, as always, is the bottom line.

It's only if we object, and withdraw our money, that they will get the message. Oaken has proven a very viable alternative so far. They too may institute these fees in due course if AltaRed's premise is correct. But maybe they'll be smarter than that. There's always hope! And there's always a newer smarter institution coming down the pike. Tang was great when it was ING and when it was new.

October 23, 2014
10:25 am
Loonie
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I intend no disrespect to your sons, AltaRed. I'm sure they're hard workers, as you obviously are to have figured out all the things you have learned.

However, I think all of us who have had jobs have had the experience of watching co-workers make work expand to fit the time available, and then claim that they are overworked. I have certainly seen it many times, and I just can't believe that others have not.

I would love to see some journalist get in behind the scenes and actually document what goes on to move a registered account from one place to another, and how long it takes. Just curious. Marketplace, are you listening?

October 23, 2014
10:30 am
kanaka
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Loonie said

I intend no disrespect to your sons, AltaRed. I'm sure they're hard workers, as you obviously are to have figured out all the things you have learned.

However, I think all of us who have had jobs have had the experience of watching co-workers make work expand to fit the time available, and then claim that they are overworked. I have certainly seen it many times, and I just can't believe that others have not.

I would love to see some journalist get in behind the scenes and actually document what goes on to move a registered account from one place to another, and how long it takes. Just curious. Marketplace, are you listening?

I was thinking the same.....but you are more diplomatic!!! Bank fees are like property taxes. Mismanage your payroll and just hike up the tax rate (bank fees) to cover. I visit, every now and then, one of two BMO branches and cant believe how many employees are pretending to work in their offices. As I was in management for 40 years, I feel quite qualified to identify my findings.

October 23, 2014
11:29 am
Loonie
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I have found the regulations on how much notice the bank must give regarding changes in fees. They have to give 30 days if you get statements, and 60 days on their websites. This is a federal regulation.
http://www.fcac-acfc.gc.ca/Eng.....orati.aspx

October 23, 2014
1:09 pm
AltaRed
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I was thinking the same.....but you are more diplomatic!!! Bank fees are like property taxes. Mismanage your payroll and just hike up the tax rate (bank fees) to cover. I visit, every now and then, one of two BMO branches and cant believe how many employees are pretending to work in their offices. As I was in management for 40 years, I feel quite qualified to identify my findings.

I won't argue as I go to the ATM in the lobby every 2 months or so to get some cash for things I cannot use a CC for and I sometimes see idleness during the work day. It is tough to staff enough for the busy times of the day and yet not overdo it for the other 80% of the time.

FWIW, my sons (in management) are rarely home before 6pm on what should be a standard 8 hr workday.... but isn't. So I will let that speak for itself. I am told the paperwork is getting worse what with money laundering, etc, etc. Not better. I would be careful about generalizations.

October 23, 2014
5:33 pm
AltaRed
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I have no objection to anyone voting with their feet if they are concerned about a $45 transfer out fee (about 10 Starbucks I think). It is good for the rest of us that a portion of the population does this (keeps everyone else's pencils sharp). I just don't think expressions of what appears to be anger in some of these posts is appropriately placed.

I suspect most of the firms providing freebie services are not publicly traded entities that have to compete with the market at large for investor dollars. There IS something for everyone out there.

October 24, 2014
3:44 pm
Loonie
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Oaken is a wholly owned subsidiary of Home Capital Group Inc., a publicly held company that trades on the TSX under the symbol HCG. http://www.oaken.com/wps/porta.....aboutoaken

Oaken does not charge transfer-out fees.

In my view, they provide a forward-looking banking alternative which offers superior rates to customers without alienating them with unnecessary fees. Both share prices and dividends have been increasing. They were named by the Globe and Mail as a "small cap stock to watch" in July.

October 24, 2014
4:08 pm
Loonie
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It doesn't make any difference to me what Home Trust does. Thus, I did not include it.

Home Trust does not take new investments directly. I believe they only sell through brokers now. If you click on "client" on the Home Trust website, you are directed immediately to Oaken. The middle man always has to be paid, one way or another. Oaken is their new forward-looking brand, directly accessible to the public.

And, as I said earlier, Oaken may indeed institute fees at a later date. However, for the moment at least, they understand that customers don't want fees. The older banks have become complacent in this regard.
I want to do business with the ones that respect me as a customer.

October 24, 2014
5:17 pm
AltaRed
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For what it is worth, many folk on various forums have swarmed to Oaken. I have respect for what Home Trust is doing with Oaken but not sure what their ultimate objective is. Maybe as Brian says, it is to build the customer base ahead of margin but only time will tell. Home Trust GICs are among the best payers on discount brokerage sites but not as good as Oaken's direct to customer model.

I buy GICs only through discount brokerage accounts because I want things in one place with maturities to go to cash, but I do have a few HISA savings accounts with, for example, Peoples and CDF. I don't yet have a reason to go to Oaken for a HISA.

October 24, 2014
5:43 pm
kanaka
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I have recently signed up to Oaken. I find their rates good and they are very professional and helpful deal with. While I have mentioned in the past I am retired and I am phasing out my adviser. I do see that my adviser is making .25% on all my GIC investments and I look over the last 10 years I have lost $2000 per year a long with another $300 in annual fees. So multiply that by 10 years.....$23,000. I have the time and confidence to go on my own. And yes, it is nice to have various investments all reported on one statement.....but I can do that for my self too, by using excel and a little time each month. So it appears to me that Oaken may have identified a market of "do it yourselfers" and have passed their advisor rate plus adviser commission to the Oaken customer.

Do I like my to receive a statement from my adviser monthly, then changes to quarterly. NO
Do I like to receive my advisers statement 3 weeks after month end. NO
Do I like to wait for a week and half for a RRIF payment to be transferred to me. NO
Do I like to open a RRIF account and then months later I ask for a RRIF withdrawal and at that time my adviser has to confirm (wasting time) the link to my personal bank account that should have been done when the RRIF account was set up. NO

JUST VENTINGsf-yell

A few nice features I have found:
Oaken has on line push/pull.
ITRADE has on line push/pull.
ITRADE has on line push from a TFSA account to a personal bank account.

October 25, 2014
9:08 am
Loonie
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Personally, I'm not planning on buying shares in Oaken/Home. I only mentioned that it was listed on the TSE because AltaRed suggested that it might not be a publicly trade company since it is willing to forego transfer fees.

Oaken has CDIC insurance. CDIC can afford to reimburse us completely in the unlikely event that a small bank like Oaken were to go under, so I have no concerns. Small is beautiful! - at least until it gets taken over by something bigger.

October 25, 2014
2:24 pm
AltaRed
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Loonie said

Personally, I'm not planning on buying shares in Oaken/Home. I only mentioned that it was listed on the TSE because AltaRed suggested that it might not be a publicly trade company since it is willing to forego transfer fees.

Not to be picky, but I what I did say was "I suspect most of the firms providing freebie services are not publicly traded entities that have to compete with the market at large for investor dollars" and that is true. Most is not all, nor did I specifically point to Home Trust.

FWIW, I hope Oaken continues to do what it does. Keeps everyone else on their toes.

October 26, 2014
9:09 pm
Rick
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Here's my situation @ Tangerine; RSP GIC Maturing March 2015 (and one in 2016). Renew @ Tang option: 1 year (if rates are the same in 2015) for 1.35% and get just under 400 in interest for the year then combine it with the 2nd one and transfer them together for one fee of $45. OR... transfer one each year. First one, pay the fee and put it in a CDF 1 year term for about $525 interest for a net gain of $125. That's at regular rate. With the bonus .25% as a CDI customer, it's just under $600 in interest for a net gain of almost $200. No-brainer. The fee is really a non issue when it comes to deciding what to do with my money. Actually, at $45 it is cheaper than most charge to do a registered transfer. Works out to about a .03% difference in interest rates a year. Not that I'm here to defend Tangerine. They have been steadily losing me as a customer since they were taken over,their rates became rather lack-luster and their gimmicks just irritate me. So the question is; will Tangerine just piss off more people by instituting this policy and entice them to move their money elsewhere for better rates than it will to encourage people to keep their money in Tangerine? Maybe they see the writing on the wall and just want to cash in on the mad rush by the masses to move their money elsewhere. Too bad...they used to be an innovative company that paid above average rates and seemed to genuinely care about their customers. At the very least, the policy should be grandfathered so any funds locked in when there was no transfer fee would not be affected. Any funds deposited after Jan 1 2015 would then be subject to a transfer out fee. That would be the fair thing to do.

October 26, 2014
10:08 pm
Loonie
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AltaRed said

Loonie said

Personally, I'm not planning on buying shares in Oaken/Home. I only mentioned that it was listed on the TSE because AltaRed suggested that it might not be a publicly trade company since it is willing to forego transfer fees.

Not to be picky, but I what I did say was "I suspect most of the firms providing freebie services are not publicly traded entities that have to compete with the market at large for investor dollars" and that is true. Most is not all, nor did I specifically point to Home Trust.

Not to be picky... but it had been mentioned in posts 6 and 25 above that Oaken provides "freebie services", and was thus a matter of record in this thread. In my books, that qualifies it to be an institution that falls under AltaRed's umbrella of suspicion of not being publicly traded, without being specifically named by him/her.
I commented on one fee-free institution, which would necessarily be part of any assessment of whether "most" such institutions not charging fees are publicly traded. As such, I believe it is relevant to the question.

October 26, 2014
10:13 pm
Loonie
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Rick said

At the very least, the policy should be grandfathered so any funds locked in when there was no transfer fee would not be affected. Any funds deposited after Jan 1 2015 would then be subject to a transfer out fee. That would be the fair thing to do.

I think you're absolutely right about that, Rick. This would require a change in the regulations - see link in post #28 above. I think this is a huge part of what people find offensive, that rules are being changed unilaterally mid-stream. It offends any basic sense of fairness to change the rules during the course of an agreement. I suggest that the rules need to be strengthened. Contact your MP if you want to see the rules tightened.

In the meanwhile, can you get CDI to reimburse the $45, Rick? Many, if not most, will do this, making the whole fee-charging operation a bit of a circus, and creating more work which ought not to be necessary.

October 26, 2014
11:25 pm
Loonie
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AltaRed said

I have no objection to anyone voting with their feet if they are concerned about a $45 transfer out fee (about 10 Starbucks I think). It is good for the rest of us that a portion of the population does this (keeps everyone else's pencils sharp). I just don't think expressions of what appears to be anger in some of these posts is appropriately placed.

To some people, $45 may represent 10 Starbucks.

However, picture for moment the person who saved and managed to put $3000 into their first RRSP this year, a 1 year GIC, on the understanding that Tangerine did not charge fees - a fact which was advertised in big letters on their website until a few days ago. It may not be a lot, but this is their first investment and represents some scrimping for their family.
By next year, they have learned a bit more and want to move their money to an institution where they can get a better return, and they plan to invest more money.
However, during the course of their one-year investment, they learn that there is now an exit fee of $45. The receiving institution which they have chosen does not want to reimburse the fee because either they do not charge fees themselves or because the amount is too small to justify it in the mind of the receiving institution.
This client will lose at least the ENTIRETY of the paltry interest earned at Tangerine when they transfer the RRSP. In fact, assuming the rate was 1.4% or less (I believe it was 1.40% early in the year, but am not positive; it's currently 1.35%), this person would actually lose some of their principal!
They will probably decide to move the money elsewhere anyway, because of the better return. But, I think it's fair to say, they will never bank with Tangerine again, and they will tell all their friends and relatives that they were badly treated. Losing customers this way doesn't bode well for Tangerine or BNS or, ultimately, for stockholders, if they don't pull up their socks. As any marketer knows, it costs a whole lot more than $45 to replace a customer, especially if some of their friends and relatives go with them.

By the way, I personally stand to lose nothing. If I did, I would certainly be angry, and I would consider that anger very appropriate.
However, I am making sure that people I am in contact with are made aware of the situation because I believe this is unethical. It's the least I can do. How dare they push their new slogan of "no unfair fees"! Changing the fee structure unilaterally during the course of a GIC is unfair by any measure that I am acquainted with.

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