The pandemic investment boom could cost the online brokerage industry some of its best clients.
Brokers, particularly large banking firms, have been unable to handle the volume of customer phone calls. Long waits are common and some callers are cut off before speaking to anyone. Who are all of these people calling a broker who makes low commissions economically viable by providing online services?
Most of the complaints I receive about the online brokerage phone service come from retirees, the people with the largest accounts and the need to keep track of their registered pension funds, which are subject to mandatory payout rules.
Bad phone service sounds like a joke problem at a time when a pandemic-induced investment boom has increased demand for digital investment channels like robo-advisors, investment apps, and online brokers. However, poor phone service is widespread and leads some online broker customers to consider full service advisors as an alternative.
A recent issue of the Carrick on Money email newsletter (subscribe here) contained a survey on online brokerage phone service. Of the 950 people who answered a question about whether they had trouble reaching their broker over the phone, 687 said yes. It’s true that people who are mad at their online broker are the most likely to take this survey. But 72 percent who have trouble getting through the phone are a big problem.
This is an even bigger concern when you are an online broker. Almost 40 percent of people who answered a question about whether they would consider switching to a human counselor said yes. Only more than 15 percent said they plan to close their online brokerage account and switch to a full-service company.
Some nuggets on the extent of poor phone service: 58 percent of respondents said they had to wait 90 minutes or more to speak to a representative, and 39 percent said their calls were cut off by their broker before someone answered.
A selection of complaints I received from readers in late 2020 and early 2021:
There are signs that brokers are making a little headway in better handling phone volume. Some readers have written positively about their company’s call back option where you leave your phone number and an agent will call you back later. Some brokers hire new employees and train them as soon as possible.
One reason broker resources are reaching their limits is because a bull market has fueled demand for online investment accounts and trading stocks. A sharp pullback in the market could help calm things down, especially if it doesn’t follow the kind of rocket-like rebound that took shape last spring.
You can find comments on social media that delays in answering phones should not come as a surprise to investors using a cheap online investment service. But online brokerage clients can still pay a lot even when trading commissions are cheap.
For example, brokers charge high fees to clients entering and exiting money in foreign currencies such as the US dollar. While some brokers pay little or nothing to clients who have cash in their accounts, they charge 4 percent and more to clients who borrow money for margin investments. Some firms also make money by routing customer orders for US stocks to certain third-party market participants.
The old school alternative allows human advisors to answer calls instantly, but they are not suitable for many online brokerage clients.
Most online consultants don’t have a minimum account size, while the best consultants usually serve clients with large accounts. Advisors can easily bill up to 1 to 1.5 percent of a client’s assets per year, while online broker commissions are $ 9.99 per trade and multiple companies have some level of zero commission trading for exchange-traded funds to offer.
Many advisors advise and plan in such a way that the fees they pay are more than justified, but many are just sellers offering only modest value for the online brokers’ order taking function.
The fact that many online broker clients are considering switching to advisors tells us more than just that investors are frustrated. In a digital world, you can still lose your best customers with poor phone service.
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When can you retire in Canada?
The Canada Pension Plan (CPP) assumes that the normal retirement age is 65, although you can get a reduced benefit at 60. 65 is the earliest time you will be eligible for Old Age Security (OAS).
How many years do you have to work to get maximum CPP?
His explanation begins with the fact that 39 years of contributions to the CPP at the highest level are required to receive the largest retirement pension possible. To top up your dues, you’ll need a paycheck that meets or exceeds the annual maximum annual profitability threshold, which is $ 55,900 in 2018.
What is the best age to retire?
When asked when to retire, most people say they are between 65 and 67.
How much do I need to comfortably retire at 65?
Based on the average annual spending for American seniors and the national average life expectancy at age 65 of 19.4, the average American will spend approximately $ 987,000 after retirement. And those who hope for a more comfortable and financially more secure retirement should save a little more.
How Much Do I Get From CPP?
|Type of pension or benefit||Average amount for new CPP beneficiaries (October 2020)||Maximum payment amount (2021)|
|Old-age pension (at the age of 65)||$ 689.17||$ 1,203.75|
|Disability pension||$ 1,031.55||$ 1,413.66|
|Survivor’s pension – under 65 years of age||450.50 USD||$ 510.85|
|Survivor’s pension – 65 years of age and over||$ 301.48||$ 722.25|
How Much CPP Will I Get When I Retire at 62?
|Age||Average monthly CPP payment amounts||Maximum monthly CPP payment amounts|
|62||$ 527.53||$ 921.85|
|65||$ 672.87||$ 1,175.83|
|68||$ 842.43||$ 1,472.14|
|70||$ 955.48||$ 1,669.69|
Is it better to collect CPP at 60 or 65?
If you are living on a limited income, it may be better to take CPP sooner and enjoy an improved quality of life while you can best appreciate it. Even if you don’t retire by the age of 60, you can still earn CPP. However, you and your employer must pay CPP contributions up to the age of 65.
Do you get CPP if you’ve never worked?
A pension that you can get if you are 65 years of age or older and have lived in Canada for at least 10 years – even if you have never worked.
What is the Average Canadian Retirement Income?
Although the maximum CPP / QPP monthly amount was $ 1,175.83 in 2020, the average monthly amount in October 2019 was only $ 672.87. The same applies to retirement benefits (maximum monthly payment of USD 613 for eligible retirees) and the guaranteed income supplement for low-income retirees.
Can I retire with 500,000 in Canada?
The case can be cited that $ 500,000 (or even a little less) is enough for retirement if you are used to a frugal lifestyle. But that would be just enough to survive. If you want to spend your golden years a little more comfortably, with travel and a few hobbies, a bigger nest egg is better.
How much money do you need to comfortably retire in Canada?
The « 4% Rule » is another popular way to find out how much you would need to save to retire in Canada. The idea is that you deduct 4% of your savings for each year of retirement. For example, to be able to spend $ 40,000 per year in retirement under the 4% rule, you would need to save $ 1,000,000.
How much is CPP at 60?
This means a permanent reduction in your monthly performance of 36 percent, but that is still money in your pocket today. The maximum payment amount for taking CPP at age 65 is $ 14,455 per year (2021). That amount would go down to $ 9,244.80 per year if you opted for a CPP of 60.
What advantages do you get at 60?
Possible advantages are –
- Unemployment benefit.
- Scholarships to support students.
- Pension Credits.
- State pension.
- New against old state pension.
- Universal credits.
- Free prescriptions and eye tests.
- Travel concessions.
What is the maximum CPP payment for 2020?
|Type of pension or benefit||Average amount for new beneficiaries (October 2020)||Maximum payment amount (2021)|
|Combined survivor’s and old-age pension (aged 65 and over)||$ 865.27||$ 1,203.75|
|Combined survivor’s pension and disability pension||$ 1,115.28||$ 1,413.66|
How do I get maximum CPP?
To qualify for the maximum, you not only have to contribute 39 years to the CPP, but you also have to contribute “enough” in each of those years. CPP uses what is known as the Annual Maximum Pensionable Income (YMPE) to determine whether you’ve contributed enough.