Did you know that you can make more money simply by asking for a better deal? Most people don’t realize that there is room for improving the financial arrangement or transaction, and therefore don’t ask. Or sometimes, people just don’t know how to negotiate or feel intimidated by the process.
The easiest way to make or save money is to negotiate the best bargain. This means knowing how the system operates and knowing how to ask. Quite simply, if you don’t ask for a better deal you won’t get one. It is a shift in attitude and approach for many people, but it will definitely reap financial dividends for you. Given the natural competitive environment of business, it is normal for companies to want your business and to bend to accommodate your needs–but you still have to make requests.
There are many opportunities to practice your negotiating skills, such as when you are buying a GIC or mutual fund, for example, or borrowing money for a line or credit or for your business.
Here are some ways to enhance your financial situation by applying various negotiating tips and strategies that work. You have nothing to lose and everything to gain–including self-confidence–if you use an informed, assertive approach when dealing with your money.
Guaranteed Investment Certificates (GICs)
When you check with your financial institution, you will find that there are many options available to you. The rate you see in the newspaper or shown in your local financial institution is referred to as the “posted” rate. You may logically assume that it is the best rate they can offer you. Most people do. However, most branch managers have the discretion to give you up to l/2 per cent or more interest than the posted rate, in order to get or keep your business. All you have to do is ask for an extra l/2 per cent. If you feel uncomfortable doing so, simply blame someone else–you could tell them that your accountant recommended that you do so, for example.
Financial institutions traditionally offer a l/4 per cent point if you put new money into a GIC or RRSP and a further l/4 per cent for transferring RRSP or RRIF funds from another institution, especially around RRSP time. However, you don’t need to move funds to get those rates. You can keep your funds where they are. In addition, ask for the full l/2 per cent or more regardless of the time of year. If you have a lot of money involved, (say, $l00,000 or more), then you can try to improve your situation by asking for a full 3/4 per cent or more over the posted rate for a fixed-term investment such as a GIC. This is especially important if you already have an established relationship with that institution.
In addition, if you are moving funds from one institution to another, ask the new institution to pay for any transfer fees charged by the other institution, and waive its own setup fees if applicable.
Self-Directed RRSPs or RRIFs
If you are looking after all the investments in your RRSP or RRIF by means of a self-directed program, there are ways you can save money. Almost all types of financial institution offer the self-directed option, including banks, trust companies and credit unions. You have to place it with a trust company or an institution that is acting as a trustee. The annual management fee ranges from about $25 to $200+, depending on the institution and the nature of services that they provide. You can ask to have the fee waived or reduced. If you are being charged an extra fee for various transactions, ask to have the administration fee waived. In addition, if the financial institution is charging you for activity in your account, such as purchases, redemptions or transfers, ask to have them waived or cut in half. If there is a lot of money involved, or if you have other financial relationships with the institution, the more negotiating leverage you have for a waiver of fees. There could be different transaction fees, depending on whether it is a stock, load or no-load mutual fund. If you are transferring funds to another institution, ask the new institution to cover the transfer fee. This is a common practice, but you want to ask to make sure you get that benefit.