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Beware of Interactive Brokers - Margin Call on RRSP

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  • Jan 16th, 2019 11:35 am
[OP]
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Jul 30, 2005
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Downtown Toronto

Beware of Interactive Brokers - Margin Call on RRSP

Have been an Interactive Brokers user for a long time with a margin account.

Late last year I moved my RRSP over to them as well.

Today I got an interesting alert from IB, that I had a "Liquidation Warning" aka a Margin Call... on my RRSP.

This couldn't be right, I thought, so I looked at my stocks and sure enough, they sold 100 shares of one of them, and what a coincidence, at the lowest price of the day to the penny.

So I called them up to find out what happened, and as it turns out, there is a $12.50 quarterly fee for an RRSP.

For some reason I was under the impression when I opened the account that because of the account size (it's high 6-figures), any fees would be waived.

Well, it turns out this fee does not get waived, but this is a horrible customer experience.

Given this fee was coming up, they should have either informed me at least a few days in advance so that I could had sufficient time to do something about it, not "You have 10 minutes to comply" like ED209 in Robocop, or just sold enough to cover the fee.

And to top it off the person I spoke to on the phone had a "not my problem" attitude. I call bullshit on this because even Koodo tells me when I run out of data in my plan in advance.

Very disappointed in Interactive Brokers. I heard many horror stories online about their horrible customer service and well, I finally experienced it.

So for those with an RRSP with IB, make sure you keep some cash on your IB account.

At this point I'm questioning whether I want to deal with them at all and may look to move my margin account (a 7-figure account) elsewhere.
28 replies
Newbie
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Sep 6, 2018
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Intersting story.. im just surprised your cash balance on that account was so low..

On the plus side.. it was only $12.50... Im sure if you really wanted to.. you canbuy back the stock .. worst case the price of the stock has gone up a little bit.
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Apr 23, 2009
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Kestral wrote:
Jan 3rd, 2019 10:31 am
Have been an Interactive Brokers user for a long time with a margin account.

Late last year I moved my RRSP over to them as well.

Today I got an interesting alert from IB, that I had a "Liquidation Warning" aka a Margin Call... on my RRSP.

This couldn't be right, I thought, so I looked at my stocks and sure enough, they sold 100 shares of one of them, and what a coincidence, at the lowest price of the day to the penny.

So I called them up to find out what happened, and as it turns out, there is a $12.50 quarterly fee for an RRSP.

For some reason I was under the impression when I opened the account that because of the account size (it's high 6-figures), any fees would be waived.

Well, it turns out this fee does not get waived, but this is a horrible customer experience.

Given this fee was coming up, they should have either informed me at least a few days in advance so that I could had sufficient time to do something about it, not "You have 10 minutes to comply" like ED209 in Robocop, or just sold enough to cover the fee.

And to top it off the person I spoke to on the phone had a "not my problem" attitude. I call bullshit on this because even Koodo tells me when I run out of data in my plan in advance.

Very disappointed in Interactive Brokers. I heard many horror stories online about their horrible customer service and well, I finally experienced it.

So for those with an RRSP with IB, make sure you keep some cash on your IB account.

At this point I'm questioning whether I want to deal with them at all and may look to move my margin account (a 7-figure account) elsewhere.
Sorry for you, OP. But IB's policies are very well known so you shouldn't be surprised. They liquidate, period. They are low-cost high-tech broker as you have yourself experienced. They are excellent at what they do and customer service is not what you sign up IB for. If you want customer service, go to TD and they will bend backwards to please you (at high total cost, of course).

This is hardly a reason to move your 7-figure margin account to another broker. If your account size is this big, think of the benefits (cheap Forex, cheap options, commissions and cheap everything). Their commission on US options are ridiculously cheap. No other broker can match this.
Deal Addict
Jun 27, 2007
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OP, IB customer service and attitude sucks, it's true.
I would jump ship immediately if there was an alternative.
Really hoping TastyWorks makes it to Canada
It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃
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Jan 16, 2011
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In 15 years I have never paid a fee for any of my accounts (TFSA, RRSP, Margin, US, 3*RESP...) through TD DI. I have never had them sell anything on me either, I had an alert that I had a week to deposit money once and got it sorted out in plenty of time. IB defiantly isn't something I'd look at after a post like this.
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Nov 22, 2015
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kr0zet wrote:
Jan 3rd, 2019 11:26 am
In 15 years I have never paid a fee for any of my accounts (TFSA, RRSP, Margin, US, 3*RESP...) through TD DI. I have never had them sell anything on me either, I had an alert that I had a week to deposit money once and got it sorted out in plenty of time. IB defiantly isn't something I'd look at after a post like this.
You pay for the service through your trade commissions though. Pointless to compare an online discount brokerage to a full service brokerage like TDDI. I fail to see how any of this is IB's fault.
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Apr 23, 2009
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kr0zet wrote:
Jan 3rd, 2019 11:26 am
In 15 years I have never paid a fee for any of my accounts (TFSA, RRSP, Margin, US, 3*RESP...) through TD DI. I have never had them sell anything on me either, I had an alert that I had a week to deposit money once and got it sorted out in plenty of time. IB defiantly isn't something I'd look at after a post like this.
How do you even compare the two things when there is a sea of difference between commissions and fees?
[OP]
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Jul 30, 2005
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ruchir wrote:
Jan 3rd, 2019 11:15 am
Sorry for you, OP. But IB's policies are very well known so you shouldn't be surprised. They liquidate, period. They are low-cost high-tech broker as you have yourself experienced. They are excellent at what they do and customer service is not what you sign up IB for. If you want customer service, go to TD and they will bend backwards to please you (at high total cost, of course).
That is a pretty hard fail in customer service in this day and age. Even a stock takes 2 days to clear. For IB to give a couple days notice for something coming up is not a huge deal (it's a few lines of code to send an email), that's the bare minimum even a no frills place should do. As said, even Kooodo lets you know when you've used 50% and 100% of your data plan.
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ruchir wrote:
Jan 3rd, 2019 11:43 am
How do you even compare the two things when there is a sea of difference between commissions and fees?
Apparently I have zero fee's and IB has fees, easy comparison there... As for commissions I do on average 3 trades a month, some months more and some less. If I am paying more in commissions but zero in fees, sounds like pretty close to a wash plus I dont get suprises like the OP.

Easy comparison to me, but I'm a simple trader what do I known.
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Apr 23, 2009
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Question needs to be asked, why OP went to IB in the first place?
Their policies haven’t changed in years. Why is this a surprise?

There is no reason to be with IB if :

You don’t do margin or options or forex conversion or hardly have any transactions.
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Also - why IB sold 100 shares to cover $12.50?

AFAIK, they will sold minimum shares needed to cover.
[OP]
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Jul 30, 2005
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Downtown Toronto
ruchir wrote:
Jan 3rd, 2019 12:37 pm
Also - why IB sold 100 shares to cover $12.50?

AFAIK, they will sold minimum shares needed to cover.
Today I learned that when IB sells shares to cover, they sell in 100 share lots.
Newbie
Nov 19, 2017
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out of curiosity, do you not have any stocks that pay dividends (given a high 6 figure account it should be >>> 12.50)? Or are you always reinvesting down to single digit dollars?

I have my TFSA with IB and always worried about fully investing everything but end up doing so if I am very confident with my dividend stocks in said account
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Kestral wrote:
Jan 3rd, 2019 12:44 pm
Today I learned that when IB sells shares to cover, they sell in 100 share lots.
That is very strange because I have had 1 or 2 shares liquidated on a few rare occasions when my margin fell short.

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