From parcel delivery to vacuum cleaners to financial management, it seems like robots are here to stay. With the NASDAQ finally breaching its previous all-time high, led there of course by the technology giants, there’s no doubt that robots and gadgets are powering the drive. For many online discount brokerages confronting this brave new world, their choices seem to be either join the party or step off the dance floor. For the moment, at least, it looks like several discount brokerages are willing to dance.
In this week’s roundup we take a look at the latest online brokerage to get connected to a fast growing stock exchange followed by one online brokerage that’s looking to add to its stable of registered account offerings. Following that, we quickly look at the raising of the TFSA contribution limit followed by some interesting action and numbers behind the robo-advisors and what they mean for online brokerages. We cap off the round up with a tour through the upcoming investor education events followed by some interesting lessons from the investor forums.
BMO InvestorLine Connects to the CSE
This past week the Canadian Securities Exchange announced the addition of another Canadian online brokerage, BMO InvestorLine, to its list of brokerages allowing direct trading access and real-time quotes. The list of online brokerages now offering direct trading and real-time quotes to the CSE has now expanded to include all bank-owned Canadian discount brokerages as well as most of the independent Canadian brokerages. Earlier this year, TD Direct Investing became a major addition to that list as well. According to the CSE, Desjardins Online Brokerage is in the process of getting on board. Not yet hooked up to the CSE are Interactive Brokers as well as Jitneytrade. For more information on the brokerages enabling direct online trading and real-time quotes to the CSE, click here.
RDSP Now Available at National Bank Direct Brokerage
Earlier this week, National Bank Direct Brokerage became one of only two Canadian online brokerages (the other is TD Direct Investing) to offer the Registered Disability Savings Plan (RDSP). The RDSP is a registered account that enables individuals who are eligible for the Disability Tax Credit to grow investment income within the plan on a tax-deferred basis.
TFSA Limit Raised
Another registered account that is popular with DIY investors made headlines this week. The Tax Free Savings Account (TFSA) got a big boost by having the maximum contribution amount per year raised to $10,000 from $5500. While there was a substantial hike telegraphed a few weeks ago, the confirmation came in the official budget announcement earlier this week. From a practical standpoint, it appears that financial institutions are already allowing TFSA contributions from Canadians looking to top up their contribution even though the budget has not officially passed through Parliament. For DIY investors, expect to see more in the way of marketing from financial institutions (Questrade is already on it) and media coverage on the TFSA in the weeks to come.
With earnings season in full swing, it was an interesting week looking at the performance of the US online brokerages. While Canadian discount brokerages will almost always lag what the US brokerages are up to, in at least one respect they are not that far behind their counterparts in the US.
While normally we might focus on trading metrics or asset growth, the bigger story emerging out of the financial results has been the impact of robo-advisors to the earnings of Charles Schwab. According to their latest earnings report, Schwab’s ‘robo-advisory’ unit has attracted a staggering $1.5B after just six weeks. And they’re not the only online brokerage taking advantage of the popularity of these robo-advisory models. Interactive Brokers also recently announced their acquisition of Covestor, a firm who lets individuals mirror the trades of other investors actively or passively.
The activity in this space isn’t limited just to the US, however. Already there are signs in Canada that this space is about to explode. Earlier this month it was reported that Power Financial Corp is agreeing to ante up to $30M into Wealth Simple. Interestingly, one Canadian discount brokerage appears to be capitalizing strategically on the robo-advisor trend. Robo-advisor firms WealthSimple and Wealthbar both appear to have relationships with Virtual Brokers. Virtual Brokers’ direct competitor Questrade, chose a slightly different strategy by building their own robo-advisory known as Portfolio IQ.
Given how fast technology is moving in the financial services sector, waiting and seeing is no longer something brokerages can afford to do for too long. As the influx of client assets into robo-advisors clearly demonstrates, the market is talking, the only question is how long will it take for the larger online brokerages to respond.
From the Forums:
Heading into the Close
Heading into the tax filing deadline, there are many DIY investors who are aware of or about to learn a hard lesson about the importance of record keeping. In this post from the Financial Wisdom Forum, there is a particularly instructive lesson about making sure to regularly collect/download/store transaction histories – especially when closing down accounts.
At Least the Chairs Are Comfy
There are probably no shortage of classic internet memes that could capture the experience from this post of an individual attempting to open an online trading account with TD Direct Investing in an offline setting. More and more, consumers are expecting online interactions to be easy however as online brokerages of all sizes have shown, competing IT demands tend to mean some features get priority over others. Perhaps the most interesting thing was that another online brokerage didn’t chime in to showcase their online account opening abilities.
That does it for this week’s roundup. For most folks there will be lots of hockey and/or relaxation on the menu – not so for the DIY trader at the centre of a scandal involving the great ‘flash crash’ of 2010. If you’re a Vancouverite, you might appreciate the effect that ‘spoofing’ can have (am I right Mother Nature?) with the wicked “Spring” weather going into the weekend. So, for those who choose not to venture outside, check out this interesting read on whether or not the lone trader Navinder Singh Sarao is a hero or villain.