In a world filled with TLDRs and endless opportunities to like, tweet, pin and share, finding the time or inclination to take on investing can be as much of a challenge as finding the money to do it with. And yet, as part of growing trend among Canadian online brokerages, would be and actual younger online investors (between the ages of 18 and 35) are increasingly being courted.
The latest promotion announced by BMO InvestorLine is aimed directly at the ‘millenials’ with the challenge to ‘procrastinate or prosper’. While the offer itself is interesting, the campaign and context around it is equally fascinating.
What the Numbers Say
Starting first with the offer itself, BMO InvestorLine is ponying up 35 commission-free trades (trades good for use for up to 90 days), a free investing eBook and they are prepared to waive the minimum balance fees on both registered and non-registered accounts (with a catch) for clients until they reach the ripe old age of 36. Also, for good measure, BMO InvestorLine is waiving the $5,000 minimum deposit requirement when opening an account.
The catch for the fee waive is that clients have to place 2 or more commission-generating trades within 6 months. Thus, the waiving of one fee actually requires the generating of another. Within a 12 month period that amounts to $39.80 per year in commission costs vs paying $100 per year if a client doesn’t meet the minimum balance requirements.
A little bit of extra homework reveals that the the offer to waive fees on non-registered accounts is actually standard practice. As such, the unique benefits of this offer are in the waived minimum deposit requirement and that registered accounts (such as RRSP accounts)can have minimum balances waived. With this offer trading activity can lower the total cost of the account for balances under $25,000 – a threshold that many under 36 may not hit.
In addition to the offer itself, there is also a contest with a cash prize of $3500 that individuals who sign up for a non-registered account may be eligible for.
A Digital Generation
More and more Canadian online brokerages are expected to start courting this segment of online investors, with three important players (Questrade, RBC Direct Investing and Virtual Brokers) already actively providing services or products for younger investors.
The challenge, then, is for younger online investors and those thinking about investing to be able to get up to speed on what their options are and find the best option for their needs.
Interestingly, the power of the digital age creates both the problem and solution for younger investors. On the one hand online brokerages can generate and distribute content much faster than ever before. This means there is lots more fragmented information for self-directed investors to sift through. On the other hand, the digital era has also spawned a number of tools such as our deals and promotions section as well as forums designed to make doing the homework on what options are out there much easier.
On the other side of the fence, the challenge to many online brokerages is to balance what they’ve learned about promotions and brand loyalty from baby boomers with the changing needs and preferences of the next generation of investors. And, although there may be more places to try and be seen, the biggest challenge will be staying relevant.
What it Boils Down to
Overall, then, the advantage of this offer appears to be for younger investors to be able to get up to 90 days in which to execute 35 trades commission-free, a free investing eBook from the Globe and Mail and a discount on the total cost of ownership of a non-registered account until the age of 36 or until the balance hits $25,000 (and stays there by their assessment date). The waived minimum deposit also makes this offer accessible.
While this latest offer from BMO InvestorLine may be worth considering, younger online investors will need to critically evaluate the kinds of information being sent their way via promotions and advertisements (did anyone notice the image on the iPhone of the 12 million dollar portfolio?) by all brokerages in order to make a well-informed decision.
Finally, even though the technology and tools exist to get more information more quickly, there is still time to do homework and make a proper decision. After all, for a younger investor, time is on their side.
Editors Note: The article has been updated to include information on the waived minimum deposit.