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Just to clarify, the 3.65% yield is already after the commission since it's baked into the quoted yields. So the investor at iTrade really does get a net 3.65% compounding annually.
What are you buying? 2022
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... I don't have iTrade so I can't verify check it up. Is that rate published as a net rate? If so, then it's after commissions. Otherwise, the 'standard' commissions of .25% is baked into the 3.65% meaning, 3.40 is your actual rate compounded annually if I'm understanding it correctly.
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... how can the "advertised" rate be "net" then when you get an annual compensation report telling you that you paid such and such amount of trailing commissions (behind the scenes) which aren't for mutual funds? [Besides, isn't that's the purpose of CMR2?]
Whether you care or not about on that measly .25%, there's still no free lunch and to answer scorpion's question.
Edit: Okay, I see you provided an answer on the "advertised" "net" rate in your post #160 explaining it's behind the scene from issuer to the broker. But my comment on the annual compensation report along with is there a free lunch still stands.
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It does not necessarily stand since that so called 'one time' commission paid by the issuer to the broker may be the 'administrative' expense associated with executing the order. Brokerages are compensated all the time by issuers for administrative expenses. Think about all the shareholder proxies that are mailed to you by the brokerage for AGMs, or the semi-annual or annual financial reports, or any number of other mailings. The brokerage does not do any of these at its expense. The issuer pays for those administrative expenses.
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^ Then why is there a trailing commission reported on accounts with NO mutual funds held (not even an HISA) but only stocks and GICs? The stocks' trading commissions (buy & sell) are reported seperately, in fact on each month's statement which sums up at the end of the year with that annual compensation report.
What is this "trailing commission" for when there're NO mutual funds in the account? Administrative costs to buy GICs or what? That t.c. # increases each time a GIC is added on the monthly statements.
What is this "trailing commission" for when there're NO mutual funds in the account? Administrative costs to buy GICs or what? That t.c. # increases each time a GIC is added on the monthly statements.
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I know of no situations where a trailing commission is paid on accounts with only stocks, ETFs and GICs and I have never seen any such thing in all my years with Scotia iTrade nor BMO Investorline. If you have experienced that, then some clarification is required. Of the two categories of payments listed in the Annual reports from my brokerages, I have only seen: 1) the one time commissions I have paid directly to buy or sell stocks and ETFs or to purchase bonds, and 2) the trailing commission for ISAs sold under the mutual fund umbrella.
Having said all that, there is a potential issue of double dipping in "% of AUM" accounts if the brokerage has received a one time 'commission' for selling GICs in addition to the % of AUM" fee. That is eloquently explained in these two links Why am I paying a commission when I invest in GICs? - MoneySense and GICs have a hidden commission - Quadrant I don't think OSC or IIROC has latched on to this double dip possibility and for those with "% of AUM" accounts that contain GICs, it is worthy of you challenging them on a possible double dip. Either rebate the GIC commission or do not include GIC assets in the % of AUM calculation.
Having said all that, there is a potential issue of double dipping in "% of AUM" accounts if the brokerage has received a one time 'commission' for selling GICs in addition to the % of AUM" fee. That is eloquently explained in these two links Why am I paying a commission when I invest in GICs? - MoneySense and GICs have a hidden commission - Quadrant I don't think OSC or IIROC has latched on to this double dip possibility and for those with "% of AUM" accounts that contain GICs, it is worthy of you challenging them on a possible double dip. Either rebate the GIC commission or do not include GIC assets in the % of AUM calculation.
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... have another look at your monthly statement. Under your Year-to-Date Fees Summary, you will see under the category "Payments BMO received from third parties" and boom ... the Trailing Commission listed in CAD. As said, I don't hold mutual funds under that account, only GICs, stocks and one HISA (forgot that). But that is a BMO (yes, mother BMO) HISA. That's not third party is it?
... no brainer on commissions paid for stocks/ETFs trades which is under its own fees categories of Transaction Charges. [The other category is Operating Charges of which I've yet to incurr any - whatever that may be.] I don't own bonds so can't say anything about their "fees".
With CIBC Investor's Edge, it's stated very clear in the YE Account Report with "Fees Paid By Others In Connection With Your Account and Payment From GIC Issuers ... $xxx.xx " This Year (CAD) aside from the other 2 categories of Operating Fees & Transactions Fees, similar to BMOIL.
... this is at the discount broker so no % of AUM stuff expected. And yet I can never get an accurate $ calculated so I just "estimate" the commissions charged, expecting it to be approx. .25% of my total GICs values.
Bottomline: Having read your links above (thanks) confirms there is no such thing as a free lunch - you do pay .25% commissions that the issuer pays directly to your brokerage. It's net off the rates offered by the discount broker o/w you can get an additional .25% on top of that rate (presumably) if you go directly to the issuer instead.
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Broker ISAs regardless of issuer still pay a trailing commission. That's been crystal clear all along and that will remain the case post-June 1st. If anyone holds ISAs in their brokerage accounts, there will be a trailing commission. And yes, a BMO managed ISA in a BMO Investorline account is a third party ISA. That ISA has nothing to do with BMO Investorline.
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Maybe yes, maybe no. Generally speaking, GIC rates for GICs through a broker channel are (and have been) generally slightly lower than those issued directly via retail by issuing institutions themselves. An example would be a Home Trust GIC issued through brokerages or GIC broker versus a retail GIC issued by Oaken Financial. But it is not always the case. There a number of recent examples of brokerage channel GICs having yields higher than their retail counterparts, and especially so by the big banks. There is no simple answer for any of this. GIC issuers may prefer promoting their GICs through the brokerage channel sometimes and sometimes through their retail channels. It is THEY that decide what they are willing to pay......when and where.
Examples:
- 5 year BNS GIC through Scotia iTrade @ 3.65%. One cannot get that at the bank and that has almost always been the case with the big 5 banks. FWIW, BMO and RBC 5 year GICs are 3.6% through Scotia iTrade too so it is not just the BNS parent ones
- 5 year Equitable Bank GIC through iTrade @ 3.61%. Same GIC retail at EQ Bank @ 3.7% which just increased to that level today.
- 5 year Home Trust GIC through iTrade @3.55%. Same GIC retail at Oaken Financial @ 3.7% which just increased retroactive to last week from 3.2% a week ago.
Added: BMO IL has exactly, or almost exactly, the same rates for the same issuers.
Added2: I would check RBC Direct Investing now too for a comparison but spouse is not in so cannot access that data
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Maybe I'm biased here, but I think the service provided by the discount brokerages (the GIC inventory) is a good product with excellent value, and low fees in the big scheme of things. Of course there are fees.
My dad still buys GICs the old fashioned way by going directly through a couple banks he uses. I pretty much always get higher yields than him, because I'm able to shop around through the discount brokerage. Sometimes he did get a higher promotion rate but on average I'd say the discount brokerage yields better results, even after fees.
I used to do something similar, largely buying GICs from my credit union. For a stretch of time their rates were always higher than what the brokerage had, but over a span of years I found that this cannot be relied on to always be true. There was a time when Outlook Financial always had superior rates but look today, their 5 year is only 2.80% and I can get 3.65% from a big 5 bank!
On average, I'm confident that I'm getting better rates by going through the discount brokerage, versus my dad's direct bank access and my own direct credit union access. I really think the best way to run a GIC ladder is to use a discount brokerage.
My dad still buys GICs the old fashioned way by going directly through a couple banks he uses. I pretty much always get higher yields than him, because I'm able to shop around through the discount brokerage. Sometimes he did get a higher promotion rate but on average I'd say the discount brokerage yields better results, even after fees.
I used to do something similar, largely buying GICs from my credit union. For a stretch of time their rates were always higher than what the brokerage had, but over a span of years I found that this cannot be relied on to always be true. There was a time when Outlook Financial always had superior rates but look today, their 5 year is only 2.80% and I can get 3.65% from a big 5 bank!
On average, I'm confident that I'm getting better rates by going through the discount brokerage, versus my dad's direct bank access and my own direct credit union access. I really think the best way to run a GIC ladder is to use a discount brokerage.
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I will add one more thought to this conversation.... In my post #169 examples for Home Capital Group and Equitable Group, the spread between retail and broker channels at 9-15 basis points is less than the commission paid by Home and Equitable to the brokers for the same capital. That means Home and Equitable are willing to pay more on GICs issued through brokers than through their own retail channels. Why would they do that? Let me speculate...
Reason 1: Home and Equitable don't need to employ CSRs to interact with retail investors and save on costs
Reason 2: Expanding on reason 1, if you spend any time on the thread at CMF focused on GICs and HISA rates, or the similar thread at FWF, or heaven forbid, the crowd at Canadian High Interest Savings Accounts why you, as a business owner, even go there? There is likely nothing more painful (and thus costly) for a FI than the administrative costs of them having to deal with retail investors on a one-on-one basis.
Reason 1: Home and Equitable don't need to employ CSRs to interact with retail investors and save on costs
Reason 2: Expanding on reason 1, if you spend any time on the thread at CMF focused on GICs and HISA rates, or the similar thread at FWF, or heaven forbid, the crowd at Canadian High Interest Savings Accounts why you, as a business owner, even go there? There is likely nothing more painful (and thus costly) for a FI than the administrative costs of them having to deal with retail investors on a one-on-one basis.
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^ To be clear, I'm not qualming about the .25% "commissions" paid to the brokerage.
Like James said, that's the price of convenience aka the (mine) no-free lunch concept of which you get to pick the best rates amongst the competitions. I'm fine with it.
Like James said, that's the price of convenience aka the (mine) no-free lunch concept of which you get to pick the best rates amongst the competitions. I'm fine with it.
I figure the next leg in the OIL & Gas bull market will be the oil service companies. I took a 8k position in Ensign Energy on Thursday. In my opinion it is a best in class operator and is run by some of the most astute people in the oil patch. Murray Edwards is the biggest sharehiolder and I believe he is the chairman of the board.
Bought a few ITM calls for PARA on the drop today. I think that content providers are being punished for NFLX subscriber losses and I'm not sure that's reasonable. We'll see, last time it was a short term hold and it worked out.
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For a brief moment contemplated buying DE:US. I get excited when I see daily drops of 5-7%. Down 15% from its very recent 52 week high but nowhere near 52 week low or even the share price back in February. Easy to get distracted by the volatility. Also considered a couple other orders in the commodities space. Hurry up and wait is likely the best thing I can do right now as the hawkish sentiment makes its way through the markets. In reality the overall market hasn't moved far from where it started the year and still up on a 1 year(short term) basis. Lots of earnings reports this week in the tech space which may whipsaw the Nasdaq.
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May consider buying 1 unit of GOOG in my rrsp either now or next month. Seems like it is at a decent price.
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And after all that noise the day was also relatively flat. Noise! Noise! Noise!
If there is a bounce it will be short lived. This market is facing a pile of resistance. Lockdowns in China, very troubling supply chain issues, 4 or 5 interest hikes over the next 9 months, shrinking sales and earnings . It is grin and bare time. What is disappointing is even companies with strong and growing earnings are getting negatively effected by this sentiment.
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