Retirement Mistake No.14: Not Using The Services of Deposit Brokers
Posted In: Retirement Planning for Entrepreneurs

What are Deposit Brokers?

Deposit brokers are independent retailers of financial products and services. Those people specialize in “guaranteed” investment products such as GICs, term deposits, and Canada Savings Bonds. They work diligently to provide you with the best independent advice on information affecting your deposit product needs. Deposit brokers maintain daily information on current interest rates. They help you achieve the best possible return on your deposit investment. They also work on your behalf to find the best investment available from all financial institutions including trust companies, banks, insurance and fund companies. And best of all, there is no fee for this service!

How do I Know My Deposit is Safe?

Recently, people have asked me a lot of questions about the safety of investments.

Deposit insurance is available for qualifying deposits. Banks, trust companies, and mortgage and loan companies must be members of the Canadian Deposit Insurance Corporation (CDIC) or Credit Union Deposit Insurance Corporation (CUDIC). The insurance on deposits can be up to $100,000 with banks and trust companies and unlimited with BC credit unions. Check your provincial guide for credit union deposit insurance.

Life and health insurance companies can be members of the Canadian Life and Health Insurance Compensation Corporation (CompCorp, now called Assuris), which also insures deposits. Published listings of these member institutions may change from time to time due to corporate name changes, buyouts, or amalgamations.

There are limits to insurance protection, and not all deposits are insured. Certain terms and conditions may apply. For example, the maximum deposit term covered by CDIC is five years; there is no such limitation under CompCorp (Assuris). For detailed information on deposit insurance coverage, contact your financial institution.

What Type of Financial Products are Available Through Deposit Brokers?

Most deposit brokers are full-service investment advisors offering a complete range of financial products and services including: term deposits, guaranteed investment certificates, short-term deposits, cashable certificates, RRSPs, RRIFs, LIFs, annuities, mutual funds, and life insurance. Therefore, you can get the best rates and widest selection of investment options at no cost to you by using the services of a deposit broker. Deposit brokers, unlike most investment advisors, have access to large-volume deposit product selections. Financial institutions use the deposit brokerage channel to offer these deals which can then be offered to investors efficiently and at top returns, completely free of fees or commission. A deposit broker receives compensation directly from the financial institution. To find out more, contact your financial advisor.

To find out how you can invest safely and with additional financial institutions, you can contact each institution and find someone to help you, or you can call a deposit broker, who deals with most banks, trust companies, and insurance companies. Contact the Registered Deposit Brokers Association <> for more information.

Why Can Deposit Brokers Offer Higher Rates Than Other Financial Institutions or Advisors?

Deposit brokers receive daily information on current interest rates and current product availability from financial institutions all across the country. The demand, volume, and availability of product vary daily and by institution, creating opportunities for better rates. These can be best accessed by a deposit broker working to understand investor needs and the best possible product solutions. Retirees on Vancouver Island like deposit brokers because of convenience and consolidation of investments on one statement (while diversifying through different institutions). In addition, they find great rates on their deposits and, most importantly, keep their money safe.

Good News for GIC Investors

Canadians have an increased level of deposit insurance thanks to the 2005 Federal budget. The amount of deposit insurance coverage in CDIC member institutions has risen to $100,000. “We are very pleased that this increased level of deposit insurance protection is now available to Canadian consumers,” said Guy Saint-Pierre, President and CEO of CDIC. CDIC, a Crown corporation, provides insurance to depositors against the loss, in whole or in part, of deposits made at member institutions in the event of their failure. The maximum basic coverage that is available for all eligible deposits that are held in the name of a depositor at a single member institution is $100,000 (principal and interest combined). CDIC provides separate (up to a maximum of $100,000, including principal and interest) for each of  the following types of eligible deposits:

  • The deposits held jointly, in the name of  two or more persons.
  • Those held in trust.
  • Those held in RRSPs or RRIFs.

Therefore, if you have a joint account, a RRSP account, and a RRIF account with one financial institution, you could have up to $300,000 insured through that single institution.

How to be eligible for CDIC deposit insurance protection

To be eligible for CDIC deposit insurance protection, deposits must be in Canadian currency, payable in Canada; repayable no later than five years from the date of deposit; and placed at a financial institution that is a CDIC member.

In addition, some types of deposits and investments offered by member institutions are NOT insurable by CDIC. Among the most common types are:

  • Foreign currency deposits (for example, accounts in US dollars).
  • Term deposits that mature more than five years after the date of deposit.
  • Debentures issued by banks.
  • Treasury bills.
  • Mutual funds.
  • Stocks.
  • Investments in mortgages.

For more information, contact your financial institution or visit <www.>.

What this power is I cannot say; all I know is that it exists and it becomes available only when a man is in that state of  mind in which he knows exactly what he wants and is fully determined not to quit until he finds it. – Alexander Graham Bell

There is no chance, no destiny, no fate, that can hinder or control the firm resolve of a determined soul. – Ella Wheeler Wilcox


Published with permission from Grant Hicks






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