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Category: FYI/Blog

The Big Six banks will fleece you – if you let them

A federal agency has stripped away any remaining pretense that banks are trustworthy providers of advice, assistance, guidance, help or anything else along those lines.

The Financial Consumer Agency of Canada said in a report issued Tuesday that the corporate culture at the Big Six banks is sharply focused on selling products and services, and that there are insufficient controls in place to protect clients from aggressive sales practices.

To read full article click on the link below:

FAQ: Understanding Depositor Insurance in Canada

Here at GIC Wealth Management, we often receive questions regarding depositor insurance. Naturally, investors want to know whether their money will be safe “just in case” an institution fails.

To help you better understand how depositor insurance in Canada works, here is a simple and straightforward overview:

What is depositor insurance?

Depositor insurance protects you against the loss, in whole or in part, of deposits made at member institutions in the event that they fail.

Do financial institutions routinely fail?

No. Canada has a fundamentally strong banking infrastructure, and institutional failures are rare. However, it is nevertheless a remote possibility, which is why depositor insurance exists.

What financial institutions offer depositor insurance?

Hundreds of banks, trust companies, loan companies, insurance companies, credit unions and caisses populaires across Canada offer depositor insurance.

Is all depositor insurance the same?

No. Basically, there are four types of deposit insurance that you should be familiar with:

• Coverage provided by the Canada Deposit Insurance Corporation (CDIC), which is a federal Crown corporation.
• Coverage provided by the Deposit Insurance Corporation of Ontario (DICO), which is an Ontario provincial agency.
• Coverage provided by Assuris, which is a non-profit organization under Canadian Federal regulation to protect policyholders in the event that a life insurer should become insolvent.
• Coverage provided by private corporations in various provinces (e.g. the Deposit Guarantee Corporation of Manitoba), which are mandated to ensure that credit unions and caisses populaires operate under sound business practices, and follow transparency rules regarding reporting, auditing, compliance, and so on.

What depositor insurance is the “best”?

This question triggers considerable debate. Many people believe that CDIC and DICO protection are the “safest,” because they are backed by government (federal for CDIC, and provincial for DICO).

Naturally, any investment backed by the government is going to be safe. But this doesn’t mean that
investments backed by private provincial corporations and Assuris, respectively, are risky and exposed — because they are not.

To date, no member of a credit union or caisses populaires has lost a cent (of covered/insured funds) because of a failure — which itself is a rare occurrence. In virtually all cases, institutions in distress merge with a larger entity, which results in no negative impact to members (in fact, they often benefit from additional products and services).

And in the history of Assuris, only four insurance companies have failed — resulting in zero losses to Assuris-covered customers.

In our view, the short answer to which is the best protection is: all of them, because they all work together to ensure consumer confidence.

What is covered through depositor insurance?

The four types of depositor insurance noted above (CDIC, DICO and corporation-backed) offer different levels of protection.

CDIC insures eligible deposits for up to $100,000, including GICs with terms of five years or less. To see what’s covered by CDIC, visit:

DICO insures eligible deposits for up to $250,000 (this increased from $100,000 on January 1, 2018), including GICs for any term length. To see what’s covered by DICO, visit:

Assuris guarantees all policy holders that if their life insurance company fails, your accumulation annuity (or deposit product, GIC), will be transferred to a solvent company, retaining 100% of the value up to $100,000. To see what’s covered by Assuris, visit:

Corporations in other provinces offer different levels of depositor insurance, with some offering unlimited coverage. Click below to learn more about each program:

Who pays for depositor insurance?

Financial institutions pay for depositor insurance (and in the case of Assuris, insurance companies pay). Protection is automatically provided on eligible deposits/policies. You do not have to apply for it separately.

How do I ensure that my deposits are fully covered?

Your deposits will be covered if they are within eligible limits imposed by the respective depositor insurance program (CDIC, DICO, private corporation, Assuris).

How can GIC Wealth Management help me?

Ensuring that all of your deposits are fully covered can be easier said than done; especially if you are making several GIC investments.

At GIC Wealth Management, we will clearly map out your GIC investment options to help you get the insurance coverage you want and need. This may involve purchasing several GICs from multiple financial institutions, or if you wish, looking at options in other provinces.

Also keep in mind that our service is offered to you at no cost. We do not charge for our consulting, or for handling all of the details for your GIC purchase. We are registered brokers, which means that we are paid directly by GIC issuers.

Learn More

To learn more, contact us today toll free at 1-866-2-BUY-GICs (228-9442), or email us through our website here. We’ll respond to you promptly and look forward to answering all of your depositor insurance (and other) questions clearly and thoroughly. Our experience is your advantage.

3 Reasons Why GIC Wealth Management Offers Higher GIC Rates than Banks and Credit Unions

We all know that when a great offer seems “too good to be true,” that it often is — and reading the fine print before we sign on the dotted line protects us from making a bad decision, and suffering from a case of buyer’s remorse.

However, there are also times when a great offer is simply that: a great offer. There are no catches or strings, and moving forward is safe and smart. And one such scenario is using GIC Wealth Management to purchase your GICs.
Of course, you shouldn’t take our (or anyone else’s) word for this. There are three logical reasons why we offer higher GIC rates than banks and credit unions:

1. Lower Overhead Equals Higher Rates

Unlike banks and credit unions, we don’t have to maintain an expensive branch network. As a result, we pass the savings to our customers in the form of higher interest rates. In other words: we don’t need to make as much profit per sale to cover overhead and staffing costs. Plus, we’re paid directly by the GIC issuer, why is why our clients don’t pay us a cent.

Speaking of GIC issuers: one of the first things we tell our prospective clients is that we don’t issue GICs. We are brokers. That’s why our clients make their payments to the GIC issuer — not to us.

2. We Have Access to Smaller and Lesser-Known Institutions that Pay Higher Rates

While there are dozens of banks and around 700 credit unions and caisses populaires across Canada, most people would probably struggle to name 10. What’s more, they typically have accounts or other products with one or two. We have access to a vast nationwide network of smaller and lesser-known government regulated financial institutions that offer higher rates, and who rely on brokers like us to find new clients.

Plus, these financial institutions insure deposits (up to eligible amounts) via CDIC, DICO, or their respective province’s program if they’re outside of Ontario.

3. We Don’t Use Dynamic Pricing

Dynamic pricing is essentially when the cost of something — whether it’s a flight, car or tickets to a hockey game — changes from customer to customer. Businesses love dynamic pricing, but most customers hate it, since it means they might pay more for the exact same thing compared to someone else.

This is important to note, because banks and credit unions often use dynamic pricing when they sell GICs. This means some clients get lower rates than others — sometimes because they don’t have significant deposits (e.g. RRSPs, TFSAs, etc.), and sometimes because they simply don’t know that negotiating is an option. They accept the posted rate, the same way that they accept the sticker price on an item at the grocery store.

Simply put: we don’t engage in dynamic pricing. Every client gets the highest possible rate (or rates if they purchase multiple GICs), and there is never any worry that someone else might have negotiated a better deal.

Another Advantage: Value Added Service

In addition to getting higher rates, there is another key reason why many people choose GIC Wealth Management to purchase their GICs: to get value added service and support that many banks and credit unions don’t provide — especially when employees often try to push clients towards purchasing mutual funds, and away from GICs. As noted by the Globe and Mail’s Robert Carrick: “Beyond higher rates than the big banks, the benefit of dealing with a deposit broker is the service of having someone handle all the paper work for you while ensuring you stay onside with deposit insurance rules.”

What’s more, all of our value added services are offered to clients for free. We don’t charge a cent. As noted above, we’re paid directly by GIC issuers.

The Bottom Line

Some offers are indeed too good to be true. But others are straightforward and safe. The above reasons explain how and why we offer higher rates and better service than banks and credit unions. Frankly, the only regret that our clients have is that they didn’t find us sooner!

Learn More

To learn more, contact us today toll free at 1-866-2-BUY-GICs (228-9442), or email us through our website here. We’ll respond to you promptly, and look forward to answering all of your questions clearly and thoroughly — whether you are a seasoned GIC investor, or are making your first purchase. Our experience is your advantage.

Bank of Canada increases overnight rate target to 1 1/4 per cent

The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.

To read full article please click on the link below:

Rob Carrick article highlights benefits of working with Deposit Brokers

January 4, 2018

Rob Carrick

Posted with permission from The Globe and Mail

There is no end to the indignity of being a conservative investor these days.

To start, rates on guaranteed investment certificates are ultralow by historical standards. Adding to the pain is the fact that GIC issuers have barely responded, if at all, to the rate increases initiated by the Bank of Canada in the second half of last year. One way to fight back as an investor is to use a deposit broker.

A deposit broker is like a mortgage broker – you benefit as a client by getting access to a variety of interest rates offered by multiple firms rather than dealing with a company selling just its own products. How much of a rate advantage is there with a deposit broker? According to the new Broker Advantage Index, a deposit broker can typically get you an additional percentage point of interest or more compared to the posted rates at big banks.

To read full article please click here.