Oaken Financial review:GIC and savings account
As more and more players enter the financial services market, it becomes increasingly important for each one to set itself apart from the rest. Many have chosen to do this by specializing their services and focusing their efforts on serving only one particular portion of the market as opposed to offering a comprehensive array of financial products and services. In other words, as the financial services market becomes more saturated, financial institutions are seeking to set themselves apart by doing just one thing very well.
We, of course, don’t mean to imply that full-service institutions compromise the quality of their products and services simply by nature of their being full-service. But there’s something to say for an institution that is dedicated to a single purpose.
The subject of today’s review, Oaken Financial, has done exactly that. Oaken is one of several financial institutions that is dedicated to helping its customers grow their savings account. Oaken, therefore, does not offer chequing accounts, credit cards, or lending services. But don’t let this stop you from reading on to find out what Oaken has to offer and what sets it apart from its competition.
About Oaken Financial
Founded in 2013, Oaken is a division of Home Bank and is powered by Home Trust Company. Home Trust has served Canadians since 1987, and it has used the experience developed over these 30+ years to deliver, in its view, a refreshing alternative to the standard consumer banking experience. Oaken selected its name to indicate the things it seeks to provide to its customers: strength, stability, and security.
Oaken Financial is one more in a series of online banking options that Canadians have at their disposal. Different, however, from other online-only banks that we’ve looked at thus far, Oaken does maintain a handful of physical branches in Vancouver, Calgary, Toronto, and Halifax, so customers that prefer banking in-person can do so in those areas.
Oaken Financial is a member of the Canadian Deposit Insurance Corporation, meaning all Oaken deposits are insured up to $100,000.
Personal financial services
Like other savings-focused institutions, Oaken Financial offers both a high-interest savings account and an extensive portfolio of Guaranteed Investment Certificates. Oaken charges no fees to open or use its accounts, giving customers the freedom and flexibility to use their accounts as they need. Additionally, Oaken does not require its customers to maintain a minimum account balance in order to enjoy any of the features that Oaken has to offer.
Personal savings accounts
Saving is what Oaken was designed for and all its features are tailored to help its customers make their money work for them.
– Oaken High-interest savings account
The Oaken Savings Account is a high-interest savings account that currently offers a 2% interest rate. The interest rate is annualized, meaning Oaken calculates interest earned on the account balance at the end of each day. Oaken then tracks the accrued interest and deposits it at the end of each month, as is standard industry practice. Because interest is calculated daily, customers are free to withdraw their money at any time without forfeiting the interest accrued on the withdrawn amount.
The Oaken Savings Account provides customers with unlimited monthly transactions, all without ever incurring any surcharges.
– Oaken GICs
While Oaken does not seek to be a full-service online bank, it does seek to be comprehensive in one respect: GICs. Oaken offers a complete range of GIC options to fit the needs of any consumer regardless of their goals, the amount they have to invest, or the time they have available to invest. Oaken offers both registered and non-registered GICs. What is more, like its savings account, Oaken offers GIC to commercial as well as personal customers.
o Oaken Non-registered GICs
Non-registered GICs provide the ultimate flexibility when it comes to taking advantage of the GIC as a safe and secure investment vehicle. All GICs guarantee the depositor both the return of the principal deposit as well as the interest rate. Non-registered GICs carry no limits on the amount you can invest, placing them among the safest and most flexible investment vehicles around.
Oaken offers short-term GICs ranging from 30 to 364 days in convenient 30 to 60-day increments and long-term GICs ranging from 1 to 5 years in length. All Oaken non-registered GICs require a minimum investment of $1,000. Oaken’s long-term GICs carry some of the highest GIC interest rates in Canada. Additionally, Oaken offers customers the option of receiving periodic interest payments over the life of its long-term GICs, instead of receiving all the interest when the GIC matures. But we should note that Oaken pays a reduced rate for more frequent interest payouts. The rates Oaken offers as of this writing on their non-registered GICs are set out in the table below:
Oaken Long-term GIC rates
Term- Annual interest payment-Semi-annual interest payment-Monthly interest payment
4 years: 2.65%-2.60%-2.55%
Oaken Short-term GIC rates
Term Interest rate
Oaken Cashable GICs
Oaken also offers cashable GICs. A Cashable GIC provides customers with the benefits of a GIC without locking their money in for an entire term. Oaken’s cashable GICs are based on a 1-year term GIC and are subject to a closed period of either 30 or 90 days. This means that customers can withdraw their funds after either 30 or 90 days and still receive their entire principal plus all interest accrued up to that point.
Term Withdrawn after 30 days Withdrawn after 90 days
o Oaken Registered GICs
Oaken also offers its customers the ability to hold their GICs in a registered account such as a Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). We’ve set out the basics of these accounts in the past here, so we’ll save some time here by not going through them again. But to briefly recap, those accounts are designed to either reduce the account owner’s instant tax obligation or defer the account owner’s tax obligation to the future when the account owner is retired and therefore likely falls into a lower tax bracket. But, in exchange for their tax-advantaged features, registered GICs come with restrictions on the amounts you can deposit annually and when you can withdraw your funds.
One type of registered account that we haven’t covered yet, however, is the Retirement Income Fund, or RIF. The RIF is an account that is designed to pay its owner a certain amount of money each month until either the account is depleted or the owner passes away, whichever comes first.
Recall that the law provides you cannot contribute to an RRSP past the end of the year in which you turn 71, and at that point you must instead begin to withdraw the funds you’ve stashed away over the course of your career. To do that, you convert your RRSP into an RIF.
The government establishes the minimum payout that you must take from your RIF each year. This amount is determined by multiplying the market value of your account by a set factor that is correlated to your age. That factor ranges from .0395 at age 71 to .15 at age 95 and up. This means that at age 71, Canadians are required to withdraw 3.95% of their RIF balance that year, and the required withdrawal gradually increases to 15% of the account’s market value over the next 24 years. You can of course withdraw more, but if you withdraw only the minimum amount, you will not have any tax withheld at the time of dispersal. Instead, you’ll receive a form from your bank indicating the amount of the disbursement, which you’ll then report on your annual tax return and pay tax on as usual. You can elect to receive withdrawals monthly, quarterly, semi-annually, or all in a single lump sum.
The rates that Oaken pays on its registered GICs are set out in the table below:
We should also note that Oaken requires a minimum deposit of $10,000 for GICs placed in a Retirement Income Fund.
Business financial services
While the other online-only banks we’ve looked at so far have offered their services only to personal customers, Oaken Financial seeks to serve both individuals and business alike. Oaken recognizes that it’s just as important for businesses to save money as it is for individuals.
For this reason, Oaken offers its savings account and its GICs to businesses, too, regardless of their method of organization. The Oaken savings account and Oaken’s GICs, therefore, are available to corporations, partnerships, associations, and non-profits. Trusts can also take advantage of Oaken’s high-yield GICs and Oaken’s unique periodic payment option.
The Oaken Mobile App
No online bank would be complete without a streamlined mobile app. After all, we access the internet from our phones and tablets these days almost as much if not more than from desktop or laptop computers.
Oaken’s mobile app allows customers to view a summary of all their investments, both personal and commercial, access account documents, manage electronic transfers, manage and direct GICs, configure automatic transfers, and export account data to financial management software.
How does Oaken stack up to the competition?
Oaken Financial is unique in that it serves both commercial and individual customers. Recognizing that commercial customers, in particular, have at least an ethical duty-and many times a legal duty-to avoid taking risks with others’ money, they offer their full suite of GICs to businesses as a safe and secure way of achieving a guaranteed return. Additionally, customers will appreciate Oaken’s option to receive periodic interest payments on their GICs instead of having to wait until the GIC matures.
Oaken has successfully carved out a niche in an increasingly crowded financial services industry by developing flexible and creative savings options. Oaken’s comprehensive menu of GICs are sure to satisfy the particular needs of any Canadian who’s looking to take advantage of the safety and security of a GIC regardless of how much time or money they have to invest.
Thanks for reading, and, as always be sure to visit Oaken’s website, give them a call, or visit one of their physical branches to get a full sense of the company and decide whether they’re the right fit for you and your money.