Personal Finance

Private Banking

  • Last Updated:
  • Mar 22nd, 2017 12:15 am
Deal Addict
Jan 14, 2011
1151 posts
340 upvotes
joey003 wrote: I believe the default setup is flat $100/month and access to all products without any other fees (any account types, visas, etc). Along with that access to preferred currency exchange rates (though I've seen tellers override that anyway), and direct access via phone/email to a private banking rep (this I think is the most valuable). They can help do anything via phone/email, and if anything ever needs to be signed in person (applications, renewals, etc), they'll come to you.
So basically roll reversal, they kiss YOUR ass.
Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
Like someone else mentioned, not investing involves risk. Any time you hold wealth in the form of currency you're really just holding it in the form of a medium that is intended to be exchanged for goods, services or other assets in the short-term. If that's the plan, or the plan is to make the exchange some time within the next 5 years, put it into a GIC or savings account.

If the plan is to spend the money 10+ years from now, or to have it continue to create intergenerational wealth, then there's nothing riskier - nothing more guaranteed to erode your wealth - than keeping it in currency form. Whatever the inheritance is worth to you today, it's probably a huge amount. If you don't touch it, hold it in cash, and it passes on to your kids when you die however many decades from now, will it still be worth as much to them?

A couple of responses to other posts in this thread:
  • Indexing is great and all so long as you stick with the strategy long-term, which unfortunately isn't the case among self-directed investors in real life. People start an indexing strategy (ie: "Couch Potato Investing") with the best intentions but then the markets sour and they give it up. Likewise passive investing beats active investing the way it has for a number of years, everyone proclaims active is dead, then the markets crash and active does better again, and we start this cycle anew. Long-long term, yes passive beats active in most cases, but people keep shifting their money from one to the other over 5-10 year cycles.
  • CDIC versus Credit Union guarantees: ALL of the major banks and trust companies guarantee 100% of the money deposited with them. CDIC is an additional backstop in case those banks fail and can't live up to their guarantee. CDIC is the only infallible guarantee because the people backing it (GoC) can print their own money. Provinces are in the same boat as the banks, can't print money, and most of them have worse balance sheets than the big 5 banks.
I'll just throw it out there: I'm a fee-based and fee-only CFP not affiliated with any banks and licensed in B.C.. I do CDIC eligible, B.C. credit union GIC and other fixed income crap too (when clients insist). As well, I manage low-cost ETF portfolios for various risk levels and objectives, or otherwise coach fee-only clients on how to build and manage ETF portfolios themselves. PM me if you want to talk. :)
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Sr. Member
Feb 10, 2015
608 posts
228 upvotes
Xavier88 wrote: You're correct, this is new territory for me.
- When I say "tucked away", I mean cheque/savings account. Investing, to me means allocating a certain amount of capital into something hoping for a solid return....this usually involves a level of risk.
- In regards to inflation, I believe even the current low interest savings accounts will be able to provide comfortable lives for generations to come.
- I think a lot of wealthy families also have a dollar amount end goal, I'll be already there. But will def consider other options.

As it stands, will hit up private banking for the basics, and look into investing on my own before going down that path.

Thanks for the advice.
I'm going to come across like a huge jerk but whatever.

You're an idiot. You have a once in a lifetime chance and you are going to squander it. Wealthy families stay wealthy by making their money work for them not by sticking everything in a savings account (where it will be eroded by inflation) and drawing down the principle.
Newbie
Feb 7, 2017
13 posts
9 upvotes
DanTh3Man wrote: I'm going to come across like a huge jerk but whatever.

You're an idiot. You have a once in a lifetime chance and you are going to squander it. Wealthy families stay wealthy by making their money work for them not by sticking everything in a savings account (where it will be eroded by inflation) and drawing down the principle.
That's not true in my case.
Deal Addict
Aug 4, 2006
3428 posts
2377 upvotes
Toronto
RFD probably isn't the best place for this type of advice, but RBC seems to usually win the awards in Canada https://www.rbcwealthmanagement.com/pri ... wards.html

As some have said, you can invest in indexed ETFs, but will need to then manage these yourself, including tax planning, wills/estate management, trusts, tax reporting, etc. At least with one of the private banks you do get service - don't hesitate to ask for references, how long they've been in private banking, and what the full gamut of services offered is, including pricing. I believe most private banks will provide you a free assessment of your situation if you sit down with them and then provide you with projections, how they can serve you etc. You pay fees on all investment products, whether it's the MER, TER, admin fees, account setup, trading fees, etc, but the difference in value from investing yourself and having to manage all accounts vs an all in one provider is up to you.

Sorry for your loss and best of luck with the future of what seems like quite the inheritance. Be careful of people asking to manage your money, especially if online. Do your research, ask for references.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
4028 upvotes
BC
Xavier88 wrote: That's not true in my case.
What part is not true? The part about not investing it and just "parking it somewhere safe" like a savings account seems to apply in this scenario, based on your posts:
Xavier88 wrote: Not looking to invest. [...] just want to park most of my money in a safe place.
... but maybe you meant something else he wrote wasn't true?
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Sr. Member
Jan 23, 2009
946 posts
1932 upvotes
Ontario
Xavier88 wrote: Short of a bank going under, there's no risk that I know of. Other than that, will look into property and a few other physical assets.

Asset protection asset protection asset protection - all advisor are working on commission - stock market is at all time high - we just entered the 9th years of the bull market - interest rate start going up in the USA - 2 big banks raise alarm over Toronto housing 'bubble' - Good luck
Deal Fanatic
User avatar
Dec 16, 2015
5405 posts
5751 upvotes
Distance: 50 Metres
Whyy only 8 figures? Work your $20mil and make it into at least $200mil

Why even earn paltry 5 figures salary? Work it out and aim higher.
To the moon
Member
Mar 1, 2016
453 posts
442 upvotes
screwdriver223 wrote: If you want something completely "safe" you would probably want CDIC insurance, which caps out at $100,000 per institution. If you are saving seven figures, then it becomes impractical to have CDIC insurance for the entire amount, and are thereby taking on additional risk (albeit small).

Inflation is around 2% right now. "High" interest savings accounts may pay 2% now. (Sure, Tangerine may have a 3% promotion, but it caps out at 500K so you wouldn't be able to use it for the majority of the funds). Interest is taxed as regular income. So, you'd make 1% post-tax, which means your real purchasing power drops by 1% each year.

The "risk" of using only "safe" investment vehicles is that your money is slowly eroded over time as your returns do not compensate for inflation. So, these "safe" accounts do carry a real long-term "risk". If you really want to provide for future generations, a diversified portfolio of equities and a smaller component of fixed income is probably far more appropriate.

You have some major decisions ahead, and I would recommend taking the time to learn about investing. If you have the interest, I would recommend a book like The Four Pillars of Investing.
CDIC insurance does not "cap out" at $100,000 per institution. It caps out at $100,000 per institution per insured category...a significant distinction for someone trying to preserve capital who appears extremely risk adverse.
Member
Jun 26, 2007
464 posts
99 upvotes
GTA
My in-laws work with a private wealth management adviser at RBC Dominion Securities. We are satisfied with the services so far. They have nowhere near the amount you are getting but I know he manages many many wealthy families.

I think for the amount that you are inheriting you would benefit from wealth management IMO. I will PM you the info and you can explore further.
Jr. Member
Feb 12, 2007
189 posts
16 upvotes
Toronto
BigDurian wrote: CDIC insurance does not "cap out" at $100,000 per institution. It caps out at $100,000 per institution per insured category...a significant distinction for someone trying to preserve capital who appears extremely risk adverse.
Sorry, you're correct. I oversimplified. But why is this a significant distinction? Even if the OP had never contributed to a TFSA or RRSP, that would only provide a maximum of $200,000 of coverage. If the OP wanted to save (for the sake of argument) $10M in risk-free accounts, wouldn't that still require ~100 different institutions? If he had a spouse and they had joint accounts as well, isn't that still ~33 different banks? It just doesn't seem like a practical way of "parking it somewhere safe". Is there a loophole or something with the other categories (?trusts) that allows large amounts to be kept at one bank?
Deal Addict
Jul 19, 2004
1791 posts
1181 upvotes
Vancouver
screwdriver223 wrote: Sorry, you're correct. I oversimplified. But why is this a significant distinction? Even if the OP had never contributed to a TFSA or RRSP, that would only provide a maximum of $200,000 of coverage. If the OP wanted to save (for the sake of argument) $10M in risk-free accounts, wouldn't that still require ~100 different institutions? If he had a spouse and they had joint accounts as well, isn't that still ~33 different banks? It just doesn't seem like a practical way of "parking it somewhere safe". Is there a loophole or something with the other categories (?trusts) that allows large amounts to be kept at one bank?
Banks have several entities that is covered under CDIC. You would put $100k under each entity so that it is covered. Most big banks has 3 or 4 entities that are covered under CDIC. If you have 4 accounts under your own name, 4 accounts joint, and 4 accounts in your spouse's name that would already be $1.2 million. Also, each category of the following is covered separately so potentially you can have even more amounts covered:

Separate protection
CDIC covers eligible deposits in the following categories, each to a
limit of $100,000. These include:
deposits held in one name;
deposits held in more than one name (joint deposits);
deposits held in trust for another person;
deposits held in registered retirement savings plans (RRSPs);
deposits held in registered retirement income funds (RRIFs);
deposits held in tax-free savings accounts (TFSAs) ;
deposits held to pay realty taxes on mortgaged properties.

http://www.cdic.ca/en/about-di/how-it-w ... fault.aspx

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