Five Things That Mortgage Lenders Look For…

Five Things That Mortgage Lenders Look For…

When lenders like banks and credit unions are assessing your ability to qualify for a mortgage, they will look at two factors.

First, they want to make sure you have the ability to make the mortgage payments.

Second, they want to measure your willingness to make the mortgage payments.

These two factors are categorized and are simply known as the Five Cs of Credit.

The Five Cs are capacity, capital, character, collateral and credit.

Following is a brief explanation of each of the Five Cs:


Are you able to repay the loan? This is the most critical of the Five Cs. Lenders assess your capacity by reviewing your debt and payment history, something usually found on your credit report.


This is the amount of money that you have to invest in the property yourself. A lender likes to share some of the financial risk with the borrower. Under some circumstances, a lender will grant a loan with little or no capital if there is exceptional strength in the other four Cs.


This is a grey area. It’s an impression of how trustworthy you are to repay the mortgage. Lenders look at your length of employment to establish how secure you are, and they will look at your ability to save and to manage your credit as keys to your character.


This is a guarantee in the form of security for the loan. In the case of a mortgage, it’s the property itself. Collateral can also come from a third party who will guarantee the loan.


This is your credit history. This is essentially the only way a lender can predict your willingness to make future payments.


Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


Simple Steps to Clear Your Mortgage Debt Faster

Simple Steps to Clear Your Mortgage Debt Faster

A mortgage is likely your largest expense, so it makes a lot of sense to free up money by paying it off if you can.

Following are some easy ways to help you clear your mortgage debt a lot sooner:

  • Make a pre-payment each month. Get a copy of your loan amortization schedule or go to an online calculator.
  • Plug in some numbers, including an extra payment, to see how much you will save.
  • If you’re going to pre-pay, do it early in the mortgage. The interest on mortgages is heaviest at the beginning, so getting that down in the early years is a good strategy.
  • Make an annual lump sum payment. Most mortgages have an annual pre-pay option, which can be up to 20% of the principal.
  • Pay bi-weekly and add an extra payment each month.
  • Stay on top of mortgage rates. You might be able to refinance at a lower rate while still maintaining the same payment, thereby reducing the principal more quickly.
  • If you plan on moving, it’s probably not a good idea to pay off your mortgage. Put that extra money into a higher-yielding financial product like a mutual fund.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


Loyalty points, reward programs and credit cards revisited!

As a result of my last blog, I received some questions about loyalty programs and points and their true costs – including some from my nephew Derek.

Points, miles or whatever, they all have a value – so somewhere money is changing hands – and the only source is consumers – all of us – whether or not we collect points/miles or ?? we are paying something towards the prizes or awards that are claimed. In order not to offend any vendor or card company, I will use the name MERCHANT for the store/business/retailer/restaurant, POINTSPLUS as the name of the program and C-CARD for the credit card that may be used.

MERCHANT hopes to increase repeat purchasing in their business. They decide to have a business relationship with POINTSPLUS. POINTSPLUS says happy to have you on board, here are the costs. For your customers to get 100 points, you have to generate enough revenue to send to POINTSPLUS a total of $1000 plus a handling fee of 20% – so 100 points to the customer means it will cost you $1200.00. PP will do all administration, redemption etc. So now MERCHANT has to figure out how many points to allocate for each $1.00 spent in their business. If MERCHANT decides to add 2% to all prices, then 2% divided by $1200 means MERCHANT will need to add approximately 1.6 cents – call it 2 cents to every item sold and for every $60000 in gross revenue, MERCHANT will have collected $1200 in extra revenue. Doesn’t sound like much but they charge this extra cost to every customer – whether or not they collect POINTSPLUS – everyone pays it on every item.

Now for C-CARD costs. C-CARD has 3 kinds of cards – Bronze, Silver and Gold. Bronze is just a simple charge card – nothing extra included. Silver allows cardholders to collect flyer miles at the rate of 100 miles for each $1200 spent and Gold gives cardholders flyer miles plus automatic rental car insurance and lost luggage insurance. C-CARD charges MERCHANT a percentage of sales charged at 3 different rates depending on which version of card a customer uses. Bronze cards result in a charge of 1.5% to MERCHANT, Silver cards are 3.7% and Gold card use results in a charge of 4.7%.

MERCHANT knows they are not allowed to charge users of the different cards a different price, and the C-CARD user agreement doesn’t allow MERCHANT to give customers a discount if they pay cash, so MERCHANT has to add another 4.7% – to cover their maximum cost – to EVERY item they sell!!

So the POINTSPLUS loyalty program adds 2 cents to everything and C-CARD adds 4.7% then the merchant needs to add at least another 1% to cover their additional costs of trying to adminsiter all of this internally on their books – so now it is 2 cents plus 5.7% – to ALL customers whether or not the use any credit card at all or they belong to POINTSPLUS. Remember in-house programs and charge cards (usually from department stores) work exactly the same way!!

Hope this clarifies things and remember, There Ain’t No Such Thing As A Free Lunch!! Cheers

How to Figure Out Mortgage Payout Penalties

How to Figure Out Mortgage Payout Penalties

If you’re selling a home and have a mortgage that isn’t portable, you need to understand how mortgage penalties are calculated.

For example, if you’re only two years into a five-year fixed mortgage and you’re buying a new home but don’t have that portable mortgage, most lenders will charge you an early-payout penalty. The penalty will be outlined in your mortgage documents.

Most Common Penalty

The most common penalty is the greater of three months’ interest or the interest rate differential.  This means that whichever amount is the larger of these two figures will be your penalty.

Three Months’ Interest Penalty

If you are paying off your mortgage before the maturity date, most lenders charge the three months’ interest penalty, which is calculated by taking the mortgage balance, multiplying by the annual interest rate and dividing by four.

Interest Rate Differential

The interest rate differential usually means the difference between the interest rate on the current mortgage compared to the rate at which the lender can relend the money.


For example, if the mortgage has a balance of $125,000 at 6.25%, and there are two years left to go and the current two-year mortgage rate is 3.25%, the lender will probably charge $125,000 x 24 months x 3% (6.25 – 3.25) /12 = $7,500.  Some lenders might lower this amount because the entire interest payment is being paid immediately rather than being extended over the longer term.

Low Rates

When interest rates are low, and you are looking at debt consolidation or moving home, then it might be to your advantage to pay the penalty on the current mortgage and get into a new mortgage with a better rate.  Such a move can save you thousands of dollars in interest.

Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).


When the complacent CEO gets hacked

By Terry Cutler

When that home phone rings at a time of morning when sleep has moved into deep R.E.M., and the text messages start appearing it could only mean one thing to a CEO; there is a problem with the company security net. This could cost millions.

From best-case scenario to worse, you go over it in your head. Best Case? The security team caught a small breach. It isn’t enough to be overly alarmed, but it does warrant a phone call. Worse? Your monitoring system has spotted what security is calling “highly” suspicious activity over the company network. They are addressing the problem.

When the phone is answered you are told it is the ladder and the situation is expected to get worse.

This could mean even bigger money problems. Nasdaq, Sony, Citibank, whos hacks cost millions. Citibank’s hack attack ( in June of 2011 exposed personal information about some 200,000 customers. Since 2005, some 533 million personal records have been exposed, according to the Privacy Clearing House ( Sony’s 2011 hack of its PlayStation now reports that up to 70 million people had their personal data in jeopardy to hackers after a breach in 2011. Sony’s cleanup was estimated at 2 billion dollars.

In the meantime, the overnight customer service representative is reporting more than the usual complaints of unauthorized debits to their credit cards and banks, and your customer service department is overloaded with irate customers.

You’re next move? Admit it: you’ve been hacked.

Three credit card companies are on hold. Enough, you say. You’ve known all along, and on your way to work, the longest drive of your life. The year 2011 has been called the year of the hack, or at least more companies are admitting their security had been breached. Time to minimize the damage. On the drive to the office, you order company representatives to post a notification letter on the website, explaining the situation and assuring customers that the company is working on the problem. Offer credit-rebuilding services and flag unauthorized use of credit cards, and offer free stuff.

As CEO, you are aware of the value of reassuring customers and keeping them as valued customers. It’s the company’s bread and butter. A company’s reputation if founded on how customers are treated, and including them in the problem through notifications will help maintain the established reputation. Your head security consultant meets you at the door. He informs you that the hack is not as bad as first thought. In fact, only a few files were lifted, but the network was breached, and the consultant reminds you that security is not a reactive game, but one with a proactive approach.

What he is saying is budget more money for security – it’s better that way. Or pay the price of a large-scale hack!

The decision is clear, or is it?

Next week: why companies don’t budget for an eventual hack

follow me on twitter @terrypcutler


So What Goes in a Full Financial Plan Part 3 of 3

So – now the wrap up of this series.

Financial Planning is intensely personal and clients need to have complete faith and trust in their advisor to make the process work properly, effectively and efficiently. The relationship is the key to success.

It is for this reason, that top planners spend the first meeting just working on laying the foundation for a relationship to grow and blossom – listening is the key of course – the good Lord gave us two ears and one mouth – and good planners and advisors use them in that ratio! This is what as known as a “non-interview”.

I first learned about this concept about three decades ago by reading a book by a fellow named J. Douglas Edwards – “Questions are your answer” – copies are still available in used book stores and on-line – I highly recommend that everyone involved in the financial/estate/retirement planning process, read it – and read it several times. In fact, it is excellent reading for anyone in a sales, marketing and/or management role.

I want to touch on the reporting now – I can hear advisors and planners already saying that if they covered everything I listed in my two previous posts, the final report is going to be 100 pages in length! Well, that depends, doesn’t it ——– on the client.

Some clients are detail-oriented, number crunchers, navel inspectors, etc. – and for those people, a planner can create dozens of reports and many dozens of pages – looks impressive I admit – but of what value to the client?

I learned from studing about and listening to people like Jim Rogers, John Savage, Jack and Gary Kinder, Norman Levine, Charlie Flowers, Don Pooley, Hal Zlotnik, Rick Forchuk, Dick Kuriger, Jim Otar and many others – that simple is best.

In my experience, I have found that the planners who use the longest reports are often trying to impress clients with quantity as opposed to quality. Certainly the attitiudes of the client drive the entire process – including the reporting and some clients do want more details than others – but this is a fine line to follow.

I have found that there needs to be enough detail to illustrate to the client that their goals can be achieved given a certain set of circumstances, what changes they need to make and actions they need to take and I allow the client to determine how that is done. As an example, before I present a plan, it is my normal practice to ask them a few questions first, including: How much time to you want to spend at our next meeting reviewing the plans? Do you want to go over the entire plan in detail, or do you want just a high-level summary and then decide on what sequence to follow before getting deeply involved in the entire report? As part of my interview process, I ask clients very early on to indicate their priorities in dealing with their goals – and regardless of my personal preference or prejudice, I follow the sequence or timing as verbalised by the client – this is critical IMHO.

My preference is to give a high-level overview at the first reporting meeting – typically no more than 3 or 4 pages – I don’t want to frighten them or have them start to think they can’t change anything – spoon feeding in other words. Then the rest is covered over the next two or even three meetings so they aren’t overwhelmed and I use LOTS of pictures and graphs and as few tables of numbers as possible. If they ask for some specific details, of course I can produce them, but I don’t try to bury them.

Last, but not least, as a professional financial planner, it is great to have a plan but unless it is implemented and there is regular follow-up (at a minimum of once every two years) to make adjustments as necessary – the whole thing collapses into a pile of snot with only some wasted money and good intentions left lying on the ground!

Anyway, that wraps up this series – hope you find some of the comments of value or at least thought-provoking – agreement is neither necessary, required or expected! Cheers Ian

So What Goes in a Full Financial Plan – Part 2 of 3

So here we go on part 2 of this 3-part series

Post-employment/work Income PlanningAll sources of potential revenue.

1) Employment pensions:
a) Type – Defined Benefit Plans, Money Purchase Pension Plan (Defined Contribution) Deferred Profit Sharing Plans, Employee Profit Sharing Plans, Employee Share Purchase Plans, Group RSP, etc. – past and present – valuations, statements, benefit formulas – early or late – contribution rates, maximums, etc.
b) Portability, commutability – formulas, etc.
c) Inflation protection – none, partial or fully indexed.
d) Pension choices available – spousal requirements, pension splitting options, etc.
e) Income buy-back availability.
f) Integration with OAS or CPP as applicable.

2) Personal retirement assets:
a) RRSPs, Spousal RSPs, Locked-In Retirement Accounts, Locked-in RSPs, Tax Free Savings Accounts, OPEN – depending on current purpose if in existence.
b) Valuations, statements, reasons for choices of investment holdings.
c) Plans for disposal of other investments/business interests/tax-shelters, etc. to supplement other retirement income assets.
d) CPP and OAS benefits statements – OAS maximization/claw-back minimization and planning.
3) Other Savings/Investments earmarked for other purposes/re-direction possibilities.
4) Review potential for partial employment or other post-retirement income supplements, potential inheritances, etc.

Education Planning – as appropriate For clients and family members as applicable.
1) RESPs, other in-trust holdings earmarked for education:
a) CESG and related possibilities including low-income education benefits for grandchildren/great-grandchildren.
b) Retiring student loans effectively.
c) Potential uses of Tax Free Savings Accounts for children.

Charitable/Philanthropic Intentions Family, living and/or posthumous recognition or benefits, donation planning.

Special needs – challenged or gifted Registered Disability Savings Plans, other government assistance plans, trusts, grants.

Wills, Codicils Inter-vivos/Discretionary Trusts, Alter-Ego/Joint Spousal Trusts, General and
Restricted POAs – including bank accounts, Limited POAs, Enduring POAs,
Representation Agreements (Living Wills), Multi-jurisdictional Wills/Multiple Wills for non-situs assets,
Planned inheritances, tax implications, contingent ownership issues etc.
choices for Executors/Co-Executors/Corporate/Contingent Executors, Guardianship
of the person and financial guardianship, conservatorships.

Marriage Marital regime, prior divorce, financial obligations from previous relationships that
survive death. Discuss domestic partnerships as appropriate.

Special tax-planning issues Restructuring cash flows, taxable inheritance planning. Review previous
personal, corporate, partnership, Limited Partnership financials, trust tax returns for missed items,
trends. Discuss Health and Welfare Trusts or Private Health Services Plans, as appropriate.

Risk tolerance assessment Separated by family member, goal specific – generic asset allocations, generic product

Gift planning Family and others – refer back to Charitable/Philanthropic.

Intergenerational Wealth Transfer Tax effective and efficient transfer of wealth – next and/or subsequent generations.

Implementation roadmap Suggested target dates, sequences.


Despite rhetoric and posturing from leaders, neither consensus on direction nor concrete solutions are in the offing for europe. and the United States is approaching that pesky debt ceiling again.

by James West

The evident slow motion suicide by monetary excess that our financial system is undertaking has not been slowed or averted by anything any government has done. Short of “printing” money in unison and on an industrial scale (now widely anticipated), there is nothing the boobs we call governors, economists and bankers can do. The ersatz recovery in the United States is now complemented by fake numbers in the major indices. In other words, those numbers are artificially induced through direct intervention in equities markets and the offices of the President’s Working Group on Capital Markets. The guy in charge of that austere- sounding bunch is looking for re-election in November, so you can be sure he’s got a vested interest in painting with only bright colours.

Maintaining Perspective

At the end of 2008, during the absolute worst of the crash, resource stocks represented by the S&P TSX Venture index bottomed out at 697 towards the end of December. By the end of July 2009, the index had recovered to 1179, roughly ten points higher than it closed this past Friday. It crashed from 2718.75 to 697 in less than six months, and seven months later, it had recovered just 482 points. That was in large part thanks to the TARP, TELF, and stimulus packages announced by the United States government.

Since the post-2009 high of 2423 reached in March of 2011, we have again seen the market sliding back towards the sub- 1000 mark, but this time, its happening so slowly, that its toll on public company treasuries in the junior resource space is far worse. Companies deferred raising money throughout 2011, as the feeling was that the markets were poor, and they would wait for improvement. Well now the markets are worse,and more companies are running on fumes. Deals are getting done. But those are either development stories, or the investors are management, or they’re squeaking through after terms are revised in favour of investors. The worst sign of all is seeing financings announced for $100,000 – $500,000 that were first announced as $ 1,000,000+ financings. The terms are revised for a lower principal amount, plus generally the price is adjusted downward.

Second tier investment banks are going to start swallowing each other in Toronto, and that’s just opportunistic industry cannibalism that is the default survival strategy for that particular layer of the food chain.

Gold and Silver Rally in August?

The gold bugs, among whom I do not count myself, are clamouring for a breakout in the gold price (and by implication silver as well) in August. I have found myself in opposition to that opinion, for several reasons.

But first, I want to discuss the glaring inconsistency among gold manipulation proponents that renders their position weak. If you believe the gold price is manipulated downward by central banks and government to create the appearance of a healthy (er?) U.S. dollar and economy, how can you predict a breakout to the upside in the gold price based on fundamentals? Either the gold price is controlled or its not.

I concur with the concept that the price of precious metals is manipulated, and look to CFTC rules that permit the issuance of contracts many times in excess of what is reasonable, considering the annual production of gold and silver, in both short and long interest. And it is that regulatory failure that facilitates the ability of the major financial institutions involved in the making of the gold futures market to influence prices upward or downward. The natural influence of the laws of supply and demand are significantly compromised when a paper supply of a commodity can be issued and traded out front of the spot price.

Precious metals’ controlled price is the primary fraud maintained by the U.S. to ensure the complete sham of US dollar value, itself the foundation upon which our make-believe prosperity rests. Until there is meaningful regulation of the monetary metals that prevents the banks from originating contracts for gold in quantities more than 100 times that which can be produced in a year, there is no hope of that happening. The basic laws of supply and demand are defeated when financial institutions can create an infinite artificial supply. One day, future generations will look back on this period and marvel at both the scale of the fraud perpetuated daily by governments, and the capacity for delusion and apathy on the part of the electorate in thinking that all is as it should be.

Where’s the Bottom?

A lot of junior mining players are calling this a “bottom”, and the TSX Venture chart does seem to have stopped falling,

and now is drifting more or less sideways. Debt issues continue to plague Europe, and the United States has its next rendezvous with the Debt Ceiling at some point towards the end of Q4 this year. The creativity being expended in the mainstream press to convey the idea that any kind of democratic process exists in the financial services sector is laughably confounded by the never-ending barrage of scandals emanating from the sector.

Here’s the simple question we must consider:

“Is a healthy risk market possible while the debt in 8 out of 10 of largest economies continues to grow unsustainably, and while economic growth is stalled?”

The answer is obviously no, so where’s the bottom of the market? The fact that its levelled out and started to move sideways is a good sign, but by no means indicates a reversal is in the offing.

This interest rate manipulation debacle comes as no surprise to those of us who are of the conviction that the manipulation of precious metals prices to preserve a good impression of currency health has been a pox on gold and silver prices for nearly 20 years. There has been lots of hay made in that circle as to the likelihood that the exposure of the interest rate scandal will prompt the exposure of the gold and silver manipulation fraud. I don’t share that enthusiasm, as its an old story and so lacks the sensationalism attractive to the press that the interest rate scandal held. But hope springs eternal, and maybe there will be some more attention diverted to that issue. Theoretically, such scrutiny could catalyze a new gold rush that junior explorers would love.

The Solution

There’s a nearly 100% degree of certainty in global markets that the only solution available to banks is the injection of more stimulus into the G20 economies, not just as a way to keep credit paralysis from setting in again, but as the only option available to maintain the illusion of economic growth.

In fact, the U.K., Japan, and China are already knee deep in new stimulus measures, from buying gilts in the case of London to easing mortgage qualifications and reducing bank capital requirements in Beijing. These too, are acts of desperation. The final temporary solution will likely be massive capital injections across the board in the weak G8 countries led by the United States. The only question is, how much? $10 trillion would certainly induce a commodities rally, but that would prove just as temporary as the more than US$20 trillion in public funds injected by the world’s governments and central banks since 2008.

Increasingly, the only way out is a complete revision or the world monetary system and the establishment of a new global currency (The IMF’s “Special Drawing Rights” or SDR is a likely candidate), coincident with a mechanism to forgive the vast majority of sovereign debt. In my opinion, that is the strategy under execution here. Its no coincidence that the world’s major currencies are growing incrementally less viable in concert with one another. Just imagine the “Global Reserve Bank”.

Speculating in  Risk Averse Waters

My observations of the market in these last few months have yielded some useful intelligence. I’ve been trying to focus on the various investment classes that are likely to perform well in risk averse scenarios such as the one we have today.

Among equities, the stocks that maintain positive compression (i.e. investment interest that will convert to buying on positive news) are the following:

1. Exploration companies with “real” assets that make a substantial discovery. (eg. Africa Oil Corp. [TSX.V:AOI], Goldquest Mining Corp. [TSX.V:GQC]); or that are the subject of a takeover bid (eg. Extorre Gold Mines Ltd. [TSX:XG] );

2. Technology companies whose products are disruptive, and on the cusp of commercial adaptation. They tend to move up as new deals are announced. (eg. Orbite Aluminae Inc. [TSX:ORT], NXT Energy Solutions Inc. [TSX.V:SFD], and Mesocoat Inc., majority owned by Abakan Inc. [OTCQB:ABKI]**, Natcore Technology Inc. [TSX.V:NXT]).

The last time the bloom was off the mining rose for prolonged periods was in the nineties with gold wallowing around under $300. That was the period when the technology bubble formed as high school drop outs rolled out internet strategies that were unintelligible to Wall Street, who invested anyways motivated by the fear of losing out.

If the spending in financial marketing is any indication, it looks like mining’s fall from grace may yet again be technology’s opportunity.

Casting a glance around the world, though, there’s not a lot to induce optimism for the rest of 2012 or even 2013. I hear it said almost uniformly that markets are going to turn around at some point in 2012. I fear that is wishful thinking. With the risk aversion permeating markets thanks to the never ending saga of European debt, and that story about to get worse with the revelation of the next debt ceiling hit in the U.S., the futures is looking grim indeed.

J.D. Power and Associates Reports: The Big Banks in Canada

 A Decrease in Satisfaction with Fees along with Declining Perceptions of Bank Reliability  Contribute to a Decline in Customer Loyalty and Advocacy at Retail Banks in Canada

 TD Canada Trust and ING Direct Canada Each Rank Highest in

Customer Satisfaction with Retail Banks in Canada in their Respective Segments

 TORONTO: 19 July 2012 —Overall customer satisfaction with the Big 5[1] and midsize banks in Canada has declined this year, due largely to a decline in fee satisfaction, according to the J.D. Power and Associates 2012 Canadian Retail Banking Customer Satisfaction StudySM released today.

 The decline in satisfaction directly impacts loyalty and advocacy metrics, both of which have dropped year over year. The advocacy metric, or the percentage of customers who say they “definitely will” recommend their bank to family and friends, declines by five percentage points, while customer loyalty, or the percentage of customers who say they “definitely will” reuse their bank in the future, declines by four percentage points, compared with 2011. In addition to the impact of the decline in satisfaction, loyalty and advocacy rates have also been negatively affected by deterioration in customers’ perceptions of their bank’s brand image, which is most notably reflected in declines in perceptions of reliability and financial stability.

The primary cause of the decrease in fee satisfaction is an increase in the number of changes to fee structures, with 27 per cent of customers experiencing changes, compared with 17 per cent in 2011. As a result of fee structure changes, satisfaction with fees has declined by 25 points to 592 (on a 1,000-point scale) from 2011.

 “Not only are customers frustrated with changes to their fee structure, but many are also confused by the changes, leading to the lower satisfaction,” said Lubo Li, senior director of the financial services practice at J.D. Power and Associates. “Banks may try to offset the dissatisfaction with these changes by proactively communicating with their customers and ensuring that they fully understand what the changes are and why they are occurring.”

 The Shift to Digital Banking

Online usage has increased during the past three years to 86 per cent in 2012 from 80 per cent in 2010. Online usage now exceeds branch usage, which has fallen steadily during the past three years. In addition to increased online usage, mobile phone usage has also increased since 2010—doubling to 8 per cent.  

 “As digital banking has surpassed traditional branch-based banking as the channel of choice, it has become a primary differentiator among the brands. It’s a key differentiator for the highest performers in the Big 5 and midsize banks segment and a contributor as to why some midsize banks outperform the Big 5 Banks from an overall customer satisfaction standpoint,” said Li.

 With customers’ increased focus on digital banking, it is even more critical that banks’ websites satisfy customer needs; however, online satisfaction has declined by eight points in 2012, compared with 2011. Online satisfaction is down, due primarily to lower ratings for ease of navigating website and range of services performed online.

The study also finds that despite the shift to digital channels, branch locations continue to be an important driver of satisfaction. To address this, banks need to focus on ensuring tellers and representatives are not only courteous to customers, but also equipped to address all of their needs. In addition, simple touches and amenities—such as complimentary reading materials, beverages, or television—are a cost-effective way to lift satisfaction.

 Financial advisors, included for the first time in the 2012 study, may have a positive impact on satisfaction. Overall satisfaction is 824 when the advice provided by a financial advisor completely meets customers’ needs, compared with 735 when no advisor is assigned. However, overall satisfaction is 700 when a financial advisor provides advice that only partially meets their needs. Customer satisfaction declines even further to 585 when the advice does not meet their needs at all.

 “Offering assigned financial advisors is a risk, but one that pays off with highly satisfied customers if the advisor takes the time to fully understand and address the needs of customers,” said Li. “If the right personnel are not on staff, it may be better not assigning anyone.”

 According to Li, Canadian banking customers may improve their overall retail banking experience by considering some basic tips:

 Stay engaged with your bank and keep informed of new products and services; consider utilizing the bank’s financial advisor.

  • Make sure you fully understand your bank’s fee structures.
  • Find out which discounts you may qualify for (e.g., student, senior, total holdings with the bank and minimum balance).
  • Educate yourself about the bank’s available online and mobile capabilities. Also be aware of any costs associated with using those services and whether the features meet your ongoing needs.

 The study, now in its seventh year, examines customer satisfaction with their primary financial institution in three segments: Big 5 Banks, midsize banks and credit unions. In all segments, customer satisfaction is measured across seven factors (listed in order of importance): account activities; account information; facilities; product offerings; fees; financial advisor; and problem resolution.

 TD Canada Trust ranks highest in overall customer satisfaction among Big 5 Banks for a seventh consecutive year, achieving a score of 769. TD Canada Trust performs well in all seven factors.

 Among midsize banks, ING Direct Canada ranks highest in overall customer satisfaction with a score of 834. ING Direct Canada performs particularly well in four of the seven factors: fees, account information, account activities and product offerings.

 The 2012 Canadian Retail Banking Customer Satisfaction Study is based on responses from nearly 12,000 customers who use a primary financial institution for personal banking. The study includes the largest financial institutions—banks and credit unions[2]—in Canada and was fielded in February and May 2012.


Customer Satisfaction Index Ranking                                                           J.D. Power Circle Ratings

Big 5 Bank Segment                                                                            For Consumers

(Based on a 1,000-point scale)


TD Canada Trust                                                  769                                         5


RBC Royal Bank                                                   751                                          3

Big Five Segment Average                             748                                          3

BMO Bank of Montreal                                      743                                          3

Scotiabank                                                            740                                           3


CIBC                                                                         722                                           2


Midsize Bank Segment                                                                                    J.D. Power Circle Ratings

(Based on a 1,000-point scale)                                                                        For Consumers


ING Direct Canada                                                  834                                          5


President’s Choice Financial (PCF)                   775                                        4


Manulife Bank                                                           764                                         3

National Bank of Canada                                       760                                        3

Midsize Bank Average                                           759                                        3


Laurentian Bank of Canada                                  728                                        2

ATB (formerly Alberta Treasury Branch)      715                                       2

HSBC Bank Canada                                                   689                                       2


Note: Alterna Bank is included in the study but not ranked due to small sample size.


Power Circle Ratings Legend:

5 – Among the best

4 – Better than most

3 – About average

2 – The rest


About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company providing performance improvement, social media and customer satisfaction insights and solutions.  The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit J.D. Power and Associates is a business unit of The McGraw-Hill Companies.


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[1]Big 5 Banks include BMO Bank of Montreal, CIBC, RBC Royal Bank, Scotiabank and TD Canada Trust.

[2]Rankings are not provided for credit unions, as they do not meet market share requirements for the study.

Commodity Prices

My take on what’s happening. Because Europe is now in complete meltdown mode, the world is panicking.

    • Greece will have no choice but to soon pull out of the euro.
    • Spain, already reeling, will fall next. It can’t possibly fund the nearly $1 trillion of debt it has coming due in the next 12 months, yet alone bail out its failing banking system.
    • Italy will soon start to totter. The contagion will definitely hit the country, one of the most indebted in all of Europe.

And all of this is happening right here and now, made all that much worse because Europe’s economy is now sliding deeper into a recession … while the U.S. economy is also now rolling over to the downside.

So with all this panic, why are commodity prices swinging so wildly? Why aren’t they just skyrocketing, acting as the inflation and government collapse hedges that they are so well known for?

It’s rather simple.

First, the initial stages of any panic usually lead to massive asset liquidation, no matter what the asset, and a flight of capital into cash (including U.S. bonds, which are a form of cash). So that causes massive downdrafts.

Second, right now the European Central Bank (ECB) appears to be taking a tough stance, refraining from money printing. Print they will, but not until their back is up against the wall. Probably when a big bank or financial institution fails in Europe.

Third, it will take more than just the ECB to stem the panic. If the ECB prints on its own, it’s merely going to give the signal that things in Europe are worse than they appear.

Put another way, it’s going to take coordinated central bank actions around the globe to stem the panic. But even here, I don’t believe that’s going to happen till both Europe and the United States’ backs are both against the wall.

That’s going to happen. And ultimately it’s going to send commodities and tangible assets through the roof again.

But in the meantime, wild swings and large downdrafts are going to become commonplace.