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August 28, 2015

4 Star Fail

There are many companies out there that use a 5 point rating system, but they treat anything other than a top 5 point rating as a failure. Car dealerships, eBay and Uber come to mind as places I've heard of this system being employed. I don't get why you would use such a system. I understand and applaud the desire to reach for excellence and obtain it. I don't understand why you would consider anything less than 100% a failure. 60% and 80% (3 or 4 out of 5) are generally accepted as passing grades, a 4 star hotel isn't a place you are going to avoid nor are you going to stop eating at a restaurant with a 4 out of 5 rating. Why avoid using the entire range? If it really is the desire to limit the result to a simple pass/fail, employ a rating system that produces that result instead. Providing a scale from 0 or 1 to 5 and then only accepting 5 or other as valid results induces a bias in the results. Many people are going to provide a rating out of 5 using the full scale or even avoid using the top and bottom for anything but exceptional results. This can end up penalizing those who provide good or excellent products or service but don't warrant an exemplary rating. It also encourages coaching from the provider to avoid failures which further invalidates the results.

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August 14, 2015

Financial Turmoil

Within the past year I've changed nearly all the companies I deal with for financial matters because I became dissatisfied with them. Here's a rather lengthy description of the process and small reviews of my providers tossed in. Scroll to the bottom for a few referral bonuses too.

It started with GIC rates dropping where I held my TFSA account. But this continued a trend that had been growing for some time. When I started using Achieva (virtual credit union run by Cambrian) long ago for my high interest savings products they were providing the top rate or near the top rate of anyone. Over time, they've slid down the scale, ceasing to be the top rate, then falling to the middle of the top runners and then farther back. I held on as they were still pretty competitive and their services were fairly good. As I've started using other providers I found Achieva to be one of the most fully featured, and all around above average available. They also offer electronic transfers to other banks which is a great feature. I will keep my accounts open for later use. But that one rate drop on GICs was the trigger for me to start looking elsewhere.

I surveyed the market for a couple months looking for a single provider that had top rates for savings, GICs and each of those also contained within TFSA. I settled on Hubert (virtual credit union run by Sunova). They offer high rates, no fees and convenient electronic transfers between banks. They only offer a simple savings account however, so all other transactions are impossible. I quickly moved my unregistered savings over and put some of it into their 1-year quarterly redeemable GICs. I find their online banking interface very sparse and lacking some important information. Happily they have an online chat system to quickly get extra information and process any manual transactions that need to happen. I have had one poor experience recently where I asked for GICs to be redeemed at the end of their term (they automatically renew), but later received an automated email that one of them would still renew. I asked customer service again to set them to redeem. It was important to me that this transaction took place and I wasn't certain it would be fixable if it went wrong. I checked back with customer service again several days later and still one other GIC was not set to redeem. In the end, they have redeemed thus far, two more to go. My TFSA account balance is slowly moving over as GICs redeem. The TFSA rules make it a little painful to have to hold cash in the account till just before the end of year, withdraw it, then redeposit at the beginning of next year to keep the balance in TFSA, yet not break the contribution limits.

Royal Bank
I wasn't planning to make any more changes until RBC sent me yet another fee increase notice. A couple fee increase notices back, I was forced to make significant changes and open two new accounts to maintain a reasonable fee level. In actuality, these changes reduced my fees to zero for the most part. Which was good and I was satisfied to chug along with my collection of 8-10 accounts, having to do extra transactions and monitoring, but paying minimal fees. Each increase notice sucked, especially when you look at the billions the bank earns each quarter and this last one looked no different. Fees increasing and decreasing, always listed with the fees that are decreasing first, often in larger print, and which are usually on transactions that are rarely done. Then following, the fees that are increasing, usually on common every day transactions. My banking package insulated me from these changes for the most part so I wasn't too concerned about it. Until I noticed a financial forum post that got me to read the fine print. That suddenly exposed that my free fees would be going away with this increase.

I also had a simmering issue. One day I went to the bank to deposit a cheque. When I got home I got a notice in online banking of a "Verbal Consent Confirmation", it was vague and I certainly hadn't consented to anything. I contacted support suspecting something fishy or even fraudulent. They responded nonchalantly that this was just a confirmation message of my *requested* change. I reiterated that I hadn't changed anything and that I didn't consent to any changes and asked that they undo the changes. They responded with instructions for how I could change the settings back, but still were unconcerned and otherwise unhelpful. By now I had pieced together what had likely happened. While performing my deposit transaction at the branch, the teller must have made changes to my account. They certainly didn't ask or inform me of any changes they performed. Still unsatisfied with the response to this serious breach of trust, I forwarded my assumptions and my strong dissatisfaction with what had happened and the response. I was told my issue was forwarded to the branch and they would contact me directly. I never received any further contact. I brought it up again since and they still didn't demonstrate the level of care I would expect for a significant problem. With that simmering issue, the latest fee increase was the last straw and I was off to find a new day to day banking account.

Another market survey looking for a transaction account at the lowest fees turned up most banks offering free or discounted chequing accounts with packages if a minimum balance is held, in the range of $1,000-5,000. There were a couple exceptions, RBC discounting based on additional banking products held and used, Tangerine and PC Financial offering no fee accounts, Canadian Direct Financial also offered a no fee account and ICICI and Cambrian both offered accounts that were discounted based on having a direct deposit made into the account monthly. Even at today's meagre interest rates, having a minimum balance held at or near zero interest equates to a fee to me (it's certainly an opportunity cost) and those accounts were ruled out. I also ruled out CDF and ICICI as I found them a bit on the small side, there were some account intricacies at CDF and the ICICI website was frequently crashed. PC Financial I ruled out due to its tie in with Superstore and similarity to Tangerine.

I already had a savings account at Tangerine, opened during one of their promotions where you get a bonus amount for opening an account with a specific deposit amount. They were also nearly the first bank in Canada to launch deposit by phone, or more specifically, the ability to take pictures of a cheque and upload those images to the bank to deposit the cheque. The day they launched this, I received a cheque in the mail and used the service. It is extremely convenient and I was using them almost exclusively since to deposit cheques without leaving home. Quite some time later Cambrian launched the feature and then a while after their subsidiary Achieva. RBC just launched it while I was researching leaving them. Tangerine remains the most user friendly method of deposit by phone I've used. Tangerine also offers electronic transfers between banks, which makes using them as a secondary account very easy. I continue to use my account there, right now all my high interest savings has moved over for a temporary interest rate promotion. They often will have a promotion of some kind running. But back to looking for a transaction account. Tangerine didn't have as many transaction options available, there were some more irregular ones I've used that they don't provide, and their interest rates were a little lower. So in the end with Cambrian having a branch available nearby, being a full featured credit union with a large variety of transaction support, no fees and higher interest rates on both chequing and savings accounts, I made the choice.

Now I'm not going to say the process with Cambrian was all that smooth. It still runs like that small town bank, it feels a bit old fashioned, slow moving, a little behind the times, despite having all the modern features. In doing my research I was thoroughly confused by their system for refunding fees. It doesn't refund all fees, but the vast majority of fees are refundable and the few remaining that aren't are for transactions I've never done. The website and documentation is still quite confusing, as it's vague and somewhat contradictory. There is some curiosity as you can choose a chequing package and have it's fees refunded and it includes free transactions that would encounter fees that wouldn't be refunded without a package. Basically it became clear to me that I should take the most expensive and inclusive chequing package and roll with it. The mechanism used to end up with no fees is a little convoluted at first also. Fees are charged as normal, the chequing package charges on the last day of the month for example, then are refunded on the first of the next month. I did double check with them those fees charged at the end and refunded at the beginning of the month wouldn't trigger an overdraft on their own, and they don't. It also seems to be a manual process to qualify for the fee rebate. I spent a lot of time initially trying to get information via email and that was fairly frustrating as I would get the run around. Their website has a method to apply online, but it's basically just a referral. I spent a couple hours at the branch opening my accounts. I was rather disappointed to find that Cambrian doesn't offer online electronic transfers, even though Achieva does, as I've come to depend on this feature. So far, everything has been working as it should and I haven't encountered any issues. It's always nice to get the month's interest promptly during end of day batch processing on the last day of the month, along with a $1 credit each month for choosing not to receive a paper statement.

RBC Direct Investing
There was one thing that almost stopped me dead in my tracks from changing my day to day transaction account, I also held investment accounts at RBC Direct Investing. I inquired as to the options to move money in and out of those accounts without having an RBC bank account and wasn't provided with any usable options. Money can be deposited via bill pay, but there aren't any options for removing it. So changing my chequing account would require changing my investment accounts as well. I really had no problems with RBC DI otherwise and would have kept my account there if I could. As things have progressed one of my investment accounts remains open at RBC DI for future use, even though it was supposed to close after the transfer out. They said since it's empty/inactive, no maintenance fees will be charged so I'll keep it around in case it becomes useful. There aren't a whole lot of options for an investment account provider and luckily there are some good reviews of most of them each year. Since all the accounts looked to be quite similar, I narrowed my decision to two of the top, Scotia iTrade and BMO Investorline.

BMO Investorline
Both offered a sign up bonus, BMO's turned out to be a little bigger, so I gave them a go. The bonus offers needed a healthy reading of the fine print several times over and I'll be waiting a few months more to get them credited. BMO has an option to sign up for an account online. After filling out a lot of forms online, you come to the end where you must print the form. The printed form comes out a little different than what is filled out online, a few more pages, a few empty boxes that weren't shown online. That whole form then needs to be mailed or dropped off at a branch. A little annoying for an online process, but since you need to stop by a branch to show ID, it wasn't that bad. The process was a little weird after that, as my application was processed quickly and I could access my account for a day or two. Then for several days I was locked out and then after I assume they validated and processed everything it was open for good. I filled out the simple account transfer form and submitted it to pull over my unregistered investment account from RBC DI. I was a little bit worried as both my accounts actually hold a non-trading investment that needs to move. After asking around and asking support I was assured it would transfer, and it did, a few days after everything else. I also got quite a few phone calls from various people at BMO, I'm not really sure why, but they were checking in and seeing if there was anything else I needed. All the people I called in to or that called me were helpful, some even offered some additional bonuses. The curious part was that they all were very clear to give me their name and number and asked me to call them directly if I had any other questions. I'm wondering if they are on commission, if this is just the regular way they operate or if they are trying to provide above average service because I'm transferring over larger amounts.

I guess I forgot to mention the other important factor that allowed me to select BMO, the available methods to transfer money. Depositing money into the investment account can be done via bill pay. Unregistered accounts can have Accountlink set up, which is a chequing account interface to the investment account, indeed you even can see it like a regular account in online banking. It provides 2 free debits per month. With that available I can do online electronic transfers in both directions from my bank accounts that support it. I can also write cheques, use an ATM/debit card with the account or perform transactions in branch. Registered accounts don't have this feature, but money can be transferred between accounts from my unregistered account. I do find that it takes a day to synchronize between the chequing account interface and the investment account interface. If you're looking at transferring an investment account, there are some quirks that have been nicely summarized on the Canadian Capitalist Blog -- How to Painlessly Transfer.... As for using BMO IL, much like any investment account, the online interfaces are flush with information and it can be complicated to find things. It's certainly got different idiosyncrasies than the interface I was using at RBC DI, but it has much the same features, just accessed in different ways, with information presented differently.

In using these various institutions I've come across a variety of security. Financial accounts are arguably one of the most important accounts you want secured. Achieva and Cambrian have tried to keep security up a notch. Access is via account number and a password with complexity requirements (a bit annoying). Account and password are entered on separate pages, with a chosen distinct image presented on the password page to help prevent spoofing. They require to you to provide a word (or phrase I think) that gets included in the subject of any email they send. Hubert security is a little more lax and dependent on you. Access via account number and password. Passwords are required to be changed to something different periodically. Most annoyingly, every time you login you get an email, while this might help identify a fraudulent login, the sheer quantity of them that need to be deleted has me thinking it would likely get lost in the noise. RBC has a pretty straightforward system, access number (or username if you prefer I think) and password, along with security questions for first time use on a computer. Tangerine has both pros and cons about it. Account number is entered on one page, a security question is asked on the next page, can be muted with a cookie if desired, then a chosen image and text is presented on the password entry page to avoid spoofing. Unfortunately the password is really a pin and limited to a max of 6 numeric digits. BMO I consider to be the worst. For IL, login is a single page with account number or username and password. Banking seems to have split it to debit card number on one page and password the next. The big downside is passwords are limited to a max of 6 characters. It would take only a few minutes to crack with an account number or username, account numbers would be easy to guess at and try. Hopefully there is a rate limiting system because it's dependent on it. The trading account also requires a second password which is used only when placing orders.

If you are interested in any one of the places I mentioned there are some bonus offers available, with benefits to both parties:

Terms may change after I post this, so feel free to contact me if you are interested and need more information.

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