Financial Knowledge Draining Away

I was reading a very interesting article in the Bloomberg Businessweek† “Chowing Down on Boomers’ Brains“, which talks about the huge loss of “tribal knowledge” with the retirement of the Baby Boomers from the workforce, and it has me wondering just how well our Banks are going to deal with this “brain drain” from their ranks? Evidently some very large firms in the states (GE, GM and others) have this as a major risk in the near future.

As an example in my little part of the Government, about 25% of our department is going to retire this year. This might be an extreme example, but how we are going to keep all that “tribal knowledge” or “industrial memory” is not clear to me (as most folks are not being hounded to do “brain dumps” of what they know).

Retirement

Collective Knowledge Wandering off Into the Sunset

What does this have to do with banks, you might ask? The banks and government have 1 common stream, they both have very nice Pensions for their employees (in most cases), so in most cases folks who can retire, will retire (i.e. will not keep working because they can’t afford to retire).

If you want a concrete example of the danger of “brain drain due to retirement”, you need only look at the infamous Y2K fracas, where banks had to pay an exorbitant amount of money to “contractors” to repair COBOL code that could not deal with the concept of a year having more than 2 digits.

Is this going to happen again? I don’t know, but I just wonder how much “collective knowledge” in the banks (about day to day business, information technology and other operational areas) is simply wandering off into the sunset of retirement? I guess we will find out when we see how many folks are hired back on contract to maintain antiquated but essential systems. Another interesting angle to this discussion is that the CRA is a government agency and is most likely suffering the same issues with retirements as well? Maybe they will forget how to tax us? (OK, maybe that one is a stretch).

Can the banks plug the brain drain? Let us hope they are thinking about that.


– Note that while Bloomberg Businessweek is an expensive magazine to buy and read, it is available from the Ottawa Public Library (for free) using the Zinio application, keep that in mind.


Photo by satit_srihin. Published on 31 January 2016 at FreeDigitalPhotos.net

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TFSA Transfer Fees

So at the end of last year, I wrote about things to do at the end of the year, and I “poo poo’ed” someone who mentioned (in a comment) that you could skirt the TFSA transfer fees  if you took the money out at the end of December, and then deposited it in your new TFSA at the start of January. I thought, “How expensive could that transfer fee be?”, and luckily my friends at TD sent me a helpful update on my accounts that helped clarify it.

TFSA Swap

TFSA Year to Year Swap to Change Providers

“… TD Investment Services Inc. is introducing a new Transfer Fee of $75.00 plus taxes per transfer, effective March 1, 2016. This fee applies to each transfer of a TD Mutual Funds TFSA to another financial institution. This fee does not apply to a transfer to another TFSA within TD Bank Group. This fee will be collected from the bank account associated with your TD Mutual Funds TFSA that is currently used for purchases, pre-authorized purchase plans and redemptions. If you do not wish to accept this fee you may close your TFSA or transfer it to another financial institution without cost or penalty.
You can do so by informing us no later than 30 days after the date the fee comes into effect. Please note that, by using your TFSA or keeping it open after March 31, 2016, it means that you have accepted this fee. If you are considering a TFSA transfer, or require additional information, please visit your TD Canada Trust branch or call us at 1-866-222-3456 to speak to a Mutual Funds Representative today….”

Seventy Five Dollars? $75? Holy cow, talk about, “don’t let the door hit you on the way out customer service. Notice that you can avoid this fee, if you choose to close or transfer your account from your TD Mutual Funds TFSA vehicle. As I have mentioned I have had many interesting issues with my TD Mutual Funds RESP account, so my opinion would be to open an account elsewhere in the next month or so, and transfer your account there.

Also, my sincerest apology to any commentator who mentioned the idea of the transfer TFSA at end of year gambit as well, I guess there are situations where this might make perfect sense.

 

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Financial Redundancy

In the high-tech world the term redundant is actually a good thing. Most folks think of redundant in terms of jobs, and being declared redundant (i.e. being laid off, or the like), however in the high-tech world redundant is actually a vital part of reliability. If there are redundant systems in place, or redundant connections then there are backups in place to take over if one of the systems fails, and that is what I mean by Financial Redundancy.

Last week there was a very good tweet that inspired me to think about this concept.

The point being made is that you need to have a separate bank account in a different bank or savings concept (trust company or the like) just in case your main bank account or bank gets compromised in some way. What do I mean by compromised?

  • Your account has been hacked and thus locked out so you have no access to it, until the issues with the security intrusion is remedied.
  • Your bank “goes down”. This can be a myriad of possible issues including: Interac failure, Computer system crash, bank is hacked (as mentioned in the tweet), etc.,
  • Your bank fails? Yes, this is ridiculously drastic, but it has happened, and I am sad to say, it will happen again (ask the folks who had money in Savings and Loans in the states)

Really the question is what do you do if you don’t have a redundant money supply to fall back on? You could use your credit cards, and you already have a redundant system there don’t you (pretty much everyone has more than 1 credit card, a Visa, a Mastercard, an Amex, maybe even a Diners Club), so why don’t you have some redundant savings in place too?

Redundancy

This Seems Redundant

An idea is maybe putting your Emergency Fund (which we all should have in some fashion) at a different bank? That way it really can help in an emergency.

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What the Hustler Taught Me About Banking

One of my favorite movies is “The Hustler” (the original with Paul Newman and Jackie Gleason). Mr. Newman played “Fast Eddie” Felson an up and coming hustler who wants to be a success, and his goal was to beat Minnesota Fats (played by Mr. Gleason). The movie is an intricate set of stories, one of which is the basis of my thematic premise about banking and the Hustler.

The Hustler at Amazon

The Hustler at Amazon Canada

“Always leave a mark with some money in their pocket, that way they keep coming back”

That is how banks have done it for years, but now they are finding new and more exciting ways to bleed some money out of you, but not so much that you decide to bank somewhere else (also, they are all doing it, your only other option is to put it in your mattress).

My opinion of the banks’ thinking in this area? Let me quote Fast Eddie from the Colour of Money:

“Money won is twice as sweet as money earned.”

They aren’t earning all this extra money, they are winning it off you, think about it.

My apologies if I sound like I am picking on the Banks, this is actually true of all the Service Industries we deal with, especially the Cell Phone Companies, the Internet Providers, the Phone Companies, and the Insurance Companies.

Better learn how the game is played, or you are going to get hustled.

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Cheques, Cameras and Banking Apps

My loathing of having to go to my local bank branch has caused me to review one of my rules about doing on-line banking on wireless devices (and using wireless phone networks). Pretty much every bank now offers “free cheque” deposit using your phone or tablet, (and their ATM machines are effectively doing the same thing i.e. photographing your cheque and clearing it that way).

You simply take a picture of the front and the back of the cheque, with your mobile phone (inside of your banks mobile banking app), input in the app how much the cheque is for (with a note to associate with it as well), note on the actual cheque that you have done the deposit (and when), keep the cheque for 10 days (to make sure it clears) and once it clears, shred the cheque (TD offers this, as does Tangerine and a few other banks).

Secure Wi Fi

Only Work in a Secure Wi Fi Environment

Previously I have ranted about the insecurity of doing your on-line banking over a wireless network (it’s also incredibly bad to do your on-line banking in an Internet Cafe or on any computer that you don’t control (even the one in your office, assuming your place of work is safe can be a dangerous assumption)), however, given using this new service means I don’t have to go to my “brick and mortar” bank, I will qualify my rant about wireless on-line banking.

  • Surprisingly it is better to use this on your a cellular data network (the security on those networks is much better than you might think), so if you are going to use this service and you are not at home don’t use public wi-fi or any stuff like that, use your cellular data network.
  • Don’t use Public Wi-Fi, Restaurant Wi-Fi, or “Hey look I found open Wi-Fi”, for anything, but especially not for Internet Banking, seriously, you aren’t doing that, are you?
  • If you have a home Wi-Fi Network and it is not open (i.e. you use WPA2, WPA or WEP protocols) then you can use your home Wi-Fi (also don’t broadcast your SSID either) for on-line banking.


An interesting issue can arise (that I read about on this Reddit Thread) that if you try to deposit a post dated cheque early (using your camera and your mobile phone app), you are going to end up being in a bit of a mess. To sum it up, the bank will negate the deposit, and the cheque you have will be useless, as it has been refused by a bank, so whomever wrote you the cheque will have to write you a new one (this is why it is well worthwhile reading the /r/PersonalFinanceCanada Reddit sub).

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