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Review: Dalbar Direct Brokerage Service Evaluation 2014

And the Winners Are..

Dalbar moved away from the model of declaring a sole winner of their Direct Brokerage Service Award replacing it with a new standard known as the “Winner’s Circle”. There are a couple of important differences to the Winner’s Circle compared to the previous Direct Brokerage Service Award.

First, in order to qualify for the Winner’s Circle, firms have to score above a particular threshold across all categories. What this means is that no firms can fail a particular category and still gain the distinction. Another important difference is that more than one firm can achieve the distinction even though they have different scores – meaning that there is no “winner” per se.

For 2014, the Winner’s Circle recipients were RBC Direct Investing and HSBC Invest Direct, both of whom achieved the designation last year and have won the Direct Brokerage Service Award in years past. Encouragingly for self-directed investors, the average scores for the field increased this year to 72/100 up from last year’s 69. Scores ranged from a high of 79 to a low of 66. Interestingly, only three firms were “above average” this year – the two designees and National Bank Direct Brokerage. BMO InvestorLine who was above average last year, slipped underneath the average this year.

The firms profiled for 2014 were the same as in 2013 and included (listed in alphabetical order):

  • BMO InvestorLine
  • CIBC Investor’s Edge
  • Disnat (Desjardins Online Brokerage)
  • HSBC InvestDirect
  • National Bank Direct Brokerage
  • Qtrade Investor
  • Questrade
  • RBC Direct Investing
  • Scotia iTrade
  • TD Direct Investing

Not evaluated this year were:

  • Credential Direct
  • Interactive Brokers
  • JitneyTrade
  • Virtual Brokers

The Bottom Line

According to the latest Dalbar evaluation, client service among discount brokerages is about the same as where it was in 2014.

With many brokerages spreading client service agents across digital, telephone and in-branch, allocating resources to the ‘call-centre’ may continue to be constrained. The economics of competition make scaling up a call-centre an expensive proposition. In addition, finding good people who are experienced enough and willing to stick it out in client service is also becoming increasingly rare. With fewer people choosing to use phones, smaller online brokerage firms may place their efforts toward the digital side – such as with chat or social media.

For DIY investors that value phone interactions as part of choosing the right online brokerage experience, firms that already have a strong call-centre or telephone infrastructure in place are better options than those who don’t.

Dalbar’s Winner Circle designation may help reveal strengths in client service at HSBC InvestDirect or RBC Direct Investing however without knowing the numbers, it’s difficult to draw any definitive conclusions about the rest of the pack.