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Discount Brokerage Weekly Roundup – February 7th 2014

If there’s one thing that the world can agree on, it’s that those little asterisks can be a pain in the…well you know where.  Many self-directed investors have come to accept them.  Even the opening ceremonies for the Olympics certainly weren’t immune to bad case of the unexpected asterisk.

This past week, however, another major Canadian online brokerage followed the lead of RBC Direct Investing by dropping the asterisk from their standard commission fees.   In this week’s roundup we’ll look at the offer as well reactions from investing community about the latest commission-price move.  The investing community was also a part of another online brokerage’s focus – specifically the Quebec investing community.   Finally, we’ll cap off the week with a selection of interesting discussion threads.

Two Discount Brokerages and Counting

Although we knew it would be inevitable, it was certainly anybody’s guess as to which bank-owned brokerage would follow RBC Direct Investing’s move of lowering and simplifying standard commission trading fees.

That mystery was solved early Friday morning when the official announcement was made by TD Direct Investing that they too were lowering their standard commission fees from $29+ down to $9.99.   Interestingly, however, the rumours about the move were swirling on the forums a day ahead of the announcement apparently when clients were tipped off by client service reps that the move was coming.  Nonetheless, with the official announcement, TD Direct Investing also updated their fee & commission guide to reflect the change in pricing.  Here are some of the details:

First, standard commission rates for all TD Direct Investing account holders goes to $9.99.

Inactivity fees (or as they call it “Custody Fees”) of $25 per quarter are charged for non-registered accounts that have less than $15,000 in combined assets across all TD Direct Investing accounts. There are, however, several ways in which the fees can be waived.

For those with less than $15,000, inactivity fees can be waived if:

  1. They have a TD Direct Investing Registered Account
  2. More than 2 commissionable trades are made within 6 months
  3. A preauthorized savings/investment/contribution program is established with a minimum contribution of $100/month

While other brokerages, big and small, are doing anything but cheering, it appears that Canadian retail investors are celebrating the move by TD. Investment forums and Twitter lit up with (mostly) cheers from consumers regarding the move.

Investing Online in Quebec

National Bank Direct Brokerage released results of a survey they conducted regarding self-directed investors in Quebec.  This announcement provided a useful window into the DIY investing crowd in Quebec, specifically showing the percentage of individuals interested in managing their own portfolios.   The survey data show that 38% of those aged 18-34 invest independently and that almost half of this group expect to manage their assets themselves five years in the future.    Interestingly, almost all (96%) of those surveyed did research across multiple information sources before investing.

This data is interesting to compare with the findings from a BMO InvestorLine study from August 2013. Although the BMO InvestorLine study looked more broadly across Canada at the information sources consulted (and ‘trusted’) by Canadians, financial websites seemed to be consulted less in the BMO study (~29%) than in the National Bank Direct Brokerage study (54%).  While difficult to compare these studies directly, it is an interesting difference between the two.

From the Forums

Amidst the hubbub about TD’s commission price drop announcement, there were still a number of interesting conversations on the major Canadian investing forums.

I Heard a Rumour

Of course, we’ve included the link to the TD Direct Investing thread on RedFlagDeals where readers can check out the full conversation from rumour to announcement.

Banking on Change

This forum post shows that price alone may not be enough to keep an investor from looking for greener pastures.  Apparently features also matter. Check out what the community had to say when one RBC Direct Investing client starts shopping for another brokerage to go to.

That does it for this week’s roundup.  It’s now time to cheer for your favourite Olympic teams – good luck to all the athletes especially the Canadian crew.  In case you missed the SparxTrading February newsletter that went out earlier this week (which you can sign up for in the sidebar), here is the featured image – appropriately themed of course.

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