TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

A rant about our modern financial industry

Discussion in 'Off Topic' started by green1, Oct 12, 2015.

  1. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    So I've bought an inventory Model S, it's in transit from a service centre on the other side of the country. In the mean time I have to pay for it. This is supposed to be easy because I've saved and invested diligently and have all the money I need to cover the purchase. What I didn't count on was how long it takes to move bits from one database to another in 2015.

    A bit of an explanation, I don't have $100k sitting in my chequeing account, instead it was mostly in investments, I didn't start cashing out those investments until after I had put down a deposit on the car. Here's where the delays start:
    $100k in investments, mostly in US stocks (a large portion in TSLA for what it's worth) So I have to sell those and convert to Canadian dollars, my brokerage charges an outrageous 6% for currency conversion, so to avoid paying $6000 in fees I do a Norbert's Gambit which involves purchasing stock in a company listed on both US and Canadian exchanges, bought a stock on the NYSE, journal the stock accross and sell on the TSX
    Here's where the first delay comes in, brokerage can't journal the stock from NYSE->TSX until the trade has settled, 3 days, then it takes 3 days to do the journalling.
    So that all happens, I sell the stock on the Canadian side and I try to get the funds out of the brokerage account in to my bank account so I can send them to Tesla, brokerage won't release the funds until the second trade has settled (another 3 days)
    Then there's a limit of $25,000 per day withdrawal, so 4 days to withdraw $100k, (I'm now on day 2 of this process)
    Then we'll have to wait 2 days for the electronic transfer to make it's way from the brokerage to the bank
    Then my bank will want to hold the funds for 5 days
    Then apparently a wire transfer can take 3-5 days to get the money to Tesla.

    So all told it's over 20 days... no, scratch that, BUSINESS days (so weekends, and statutory holidays like today (Canadian Thanksgiving) don't count)

    How on earth is our financial system so screwed up that this should take this long when everything is computerized and electronic? and it's not like I'm dealing with some backwoods hick companies that have never heard of the internet, these are companies that deal almost exclusively online, their understanding of modern technology was one of my selection criteria when picking organizations to deal with!

    I'm now looking at the very real possibility that my car will have been prepped and shipped thousands of km, (and all on Tesla time!) faster than I can move money I already have from stocks to Tesla. and this could cause me to have to delay delivery by up to 2 weeks!
     
  2. jdw

    jdw Member

    Joined:
    Jun 1, 2015
    Messages:
    169
    Location:
    Montreal, Canada
    I feel your pain ... I use Royal Bank Direct Investing which offers 1 day no fee journalling. You still have to own the right dual listed equities (i.e. RBC, AAPL etc). I never hit the $25000/day problem with RBC. My total delay, since I already owned the dual listed equities was about three days to journal, sell and transfer cash out.
     
  3. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

    Joined:
    Mar 24, 2013
    Messages:
    4,219
    Location:
    Denali Highway, Alaska
    A worthy rant, to be sure!
    In a truly efficient world, you ought to be able to send Tesla not your money.....but those TSLA shares. Wouldn't that be a giggle.
     
  4. Rockster

    Rockster Active Member

    Joined:
    Oct 22, 2013
    Messages:
    1,005
    Location:
    McKinney, TX
    We recently moved some personal ROTH IRAs and a corporate 401k for our very small LLC and it took one entire month. At one point, we had to Fed-x original documents between three entities in three different cities because only original documents were accepted for that part of the process. And at each transfer stage, someone had to sit on the money for a few days. And, the firm from whom we were removing our funds charged us many hundreds of dollars in account closing and processing fees, clearly understanding that they were safe in gouging us since we had already declared our intent to no longer be their customer.
     
  5. HankLloydRight

    HankLloydRight Fluxing

    Joined:
    Jan 18, 2014
    Messages:
    5,751
    Location:
    Connecticut
    To the OP, at least in the US when I bought an inventory car, I gave Tesla a personal check at delivery. No bank or certified check either. It took a couple of days to clear my bank. When I asked about taking a regular personal check, the delivery person said "we know where to find you". ;)

    Can you write checks against the brokerage account? If so, you could probably just do that to pay Tesla. Ask your delivery person what you can do.

    *I had to use a personal check because the "pay now" button on the TM website for my account was "broken" and they couldn't fix it, so they said just bring in a check.

    - - - Updated - - -

    As part of my girlfriends divorce settlement, she got one of her x-husband's retirement accounts. In the UK. Talk about red-tape! Imagine trying to transfer a UK retirement account in his name, in pounds, to my g/f's name,in dollars, to a bank in the US! I think it took almost a year to get that settled out requiring lawyers on boths sides.
     
  6. Ampster

    Ampster Member

    Joined:
    Oct 5, 2012
    Messages:
    614
    Location:
    Hermosa Beach CA USA
    Some banks waive fees but make it up on float. Today, one has to run a spreadsheet to know the most efficient route.
     
  7. NigelM

    NigelM Recovering Member

    Joined:
    Apr 3, 2011
    Messages:
    13,257
    Location:
    Sarasota, FL
    It's not screwed up technology at all, it's deliberate. This is the bank's/institution's way of getting extra income without charging you more fees; they get to to debit accounts and then use the money for a few days before passing it on to the receiving party. This is worth trillions of dollars of cash flow on a daily basis to a wide variety of institutions. Even Tesla does it (how's that for getting back on topic?) as the refund deposit for a cancelled reservation is done by check, not wire, and the checks are sent out 2-3 weeks after the cancellation has been confirmed; that's pretty much standard practice for most companies.
     
  8. Electricfan

    Electricfan Member

    Joined:
    Aug 24, 2013
    Messages:
    969
    Location:
    Houston
    Maybe this is stupid, but could you borrow the money? Pay Tesla, then repay the loan in full when you get your money. Would only be out 2 weeks of interest. I'd pay that for two weeks of driving!
     
  9. ohmman

    ohmman Maximum Plaid Member

    Joined:
    Feb 13, 2014
    Messages:
    4,785
    Location:
    North Bay, CA
    Much of this seems to be your institution's restrictions or inefficiency, combined with the Canadian/US border situation. The $25k a day limit is something I've not seen; is that a Canada restriction?

    How would this work for me in the US? I'd sell my stock, the funds would be immediately available on low interest credit, or I could wait 3 days for settlement. I'd get a wire from my brokerage to Tesla, which is a same-day affair. If I didn't mind paying 3% annual interest on 3 days of $100k loan, I could do it all the same day. The border crossing surely complicates things.

    I'm guessing if you didn't have to do your Norbert's Gambit, that would have all gone more smoothly. 6% is atrocious.
     
  10. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    Without the gambit I would have saved 3 days, hardly material really, just adds to the list.
    As for borrowing funds, paperwork to set it up is guaranteed to take longer than the time I now need it for (I can do up to 20k on existing lines of credit, but that doesn't help)
    Personal cheques are common for stuff in the US but much less so in Canada and nobody takes one without a significant delay to make sure it clears. This is mostly due to regulatory differences between the two countries.
    The 25k a day they try to pass of as a limitation of electronic find transfers, but my suspicion is that they just don't want me to withdraw my money.
    And NigelM you're bang on. It's deliberate, but infuriating. This sort of nickel and dining and delay tactics turns what should be less than a day in to a full month to get ahold of my own money. I'm frustrated now, but if this ends up delaying my delivery I'm going to be pissed.
     
  11. ohmman

    ohmman Maximum Plaid Member

    Joined:
    Feb 13, 2014
    Messages:
    4,785
    Location:
    North Bay, CA
    Strong recommendation for readers of this thread - if your brokerage offers a guaranteed line of credit against your holdings (most do), you should set it up even if you never plan to use it. I always set mine up when I open the account. There are a number of situations where you might want access to your capital but don't want to liquidate your holdings, and it comes in handy there. This thread is just one of those examples, but there are many.
     
  12. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    Actually this isn't one of those cases. I can borrow from my brokerage account against the equity in it, but that doesn't work when you're trying to take the equity out.
     
  13. ohmman

    ohmman Maximum Plaid Member

    Joined:
    Feb 13, 2014
    Messages:
    4,785
    Location:
    North Bay, CA
    I'm not saying you're wrong, just that I don't understand exactly. In this case:

    -Brokerage account with 120k USD in holdings (example)
    -Loan account for up to 100k USD against holdings

    1. Take out 100k loan. (120k in holdings, 100k in USD, -100k USD balance on loan)
    2. Use 100k USD for a check, wire, etc to pay Tesla. (120k in holdings, -100k USD balance on loan)
    3. Liquidate holdings over whatever period it takes in order to pay back the loan. (20k in holdings, 100k in proceeds <--> -100k in loan balance)

    This is how it has always worked in brokerage accounts I've held.
     
  14. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    Partially is the way they lend, really is only designed to be used as margin for investing. But mostly is that I didn't realise I had a time problem until I was too far along the process.
     
  15. ZachShahan

    ZachShahan Member

    Joined:
    Dec 3, 2014
    Messages:
    497
    Location:
    Sarasota, FL / Wroclaw, Poland
    I was about to write essentially the same but with fewer words and details -- good you beat me to it. :D

    But was also going to note that they're basically always quicker at taking your money than giving it back. Again, because [what Nigel wrote].
     
  16. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    Well, it's official. The financials have now delayed my delivery :(

    I got a call saying they can deliver tomorrow morning if I can pay up, but 1/3 of the money is still stuck in limbo. I have no way of pulling 30k out of thin air without incurring a minimum of a 5 day hold, so all I can do now is wait for my bank to decide to let me at my own money.

    How frustrating that Tesla, a company renowned for it's delays, can prep a car and ship it thousands of km before 2 financial organizations can transfer a few bits between databases.
     
  17. brianman

    brianman Burrito Founder

    Joined:
    Nov 10, 2011
    Messages:
    15,487
    I definitely wouldn't lay this all at the feet of the banks. The government hand has a significant impact here.
     
  18. ohmman

    ohmman Maximum Plaid Member

    Joined:
    Feb 13, 2014
    Messages:
    4,785
    Location:
    North Bay, CA
    Really sorry to hear it. Hopefully things go through shortly for you.

    I just realized you thought I was talking about margin before; I actually meant leveraged lines of credit. I know it's too late now but again, worth setting up for future situations.
     
  19. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    3,927
    Location:
    South Surrey, BC
    Bummer, but if there is any consolation I can offer you is that it will be well worth the hassle and the wait.
     
  20. green1

    green1 Active Member

    Joined:
    Mar 25, 2014
    Messages:
    4,105
    Location:
    Calgary, Alberta, Canada
    I knew what you were talking about, but the brokerage only offers margin. My bank has lines of credit, but the unsecured ones max out at $10,000 and the secured ones take forever to set up (and cost a few hundred dollars to get up and running)
    I've managed to get all the money together in one spot finally. And now I ran in to one more unexpected snag. Turns out my bank doesn't do wire transfers!!! So now I have to go the bank draft route, which the bank says they'll have ready for me in 2-3 business days, and then I have to courier it to Tesla which will take another couple of days.

    My car is sitting in town here, delivery driver called me and wanted to drop it off tomorrow morning, but I just can't get the money to move fast enough.
     

Share This Page