While markets shut down early for the Easter weekend, those in the markets are all too familiar with the feeling of hunting for the analogous Easter eggs and being careful with how many they have in any one basket. Interestingly, the prizes and family time that have come to characterize Easter also seem to have inspired Canadian discount brokerages going into this long weekend.
In this week’s roundup we take a look at the latest basket of discount brokerage deals to cross our radar followed by a mind-blowing marketing move by one online brokerage. Next we hop on over to the upcoming investor education events and cap off the week with some timely investor forum chatter.
Ears to the Ground for Deals
This past week, the flurry of RSP-linked investing account offers from online brokerages officially came to an end. The end of March signaled the expiry of 10 deals from brokerages large and small. Players such as RBC Direct Investing, TD Direct Investing, HSBC InvestDirect and National Bank Direct Brokerage all had deals wrap up.
Those looking for a deal on an online brokerage account needn’t worry, however, as there are still 15 offers from 7 brokerages.
Stepping into April, there are a few noteworthy developments in the deals/promotions space. First, after a brief hiatus from the deals section, Virtual Brokers has decided to rejoin the promotions roster offering up a deal that looks to challenge other brokerages to a test of endurance.
The latest deal from Virtual Brokers consists of 25 commission-free stock or ETF trades which are good for use for up to one year. Most discount brokerages have commission-free trading offers that last between 30 and 90 days. Some of the exceptions include Desjardins Online Brokerage whose commission credit lasts 6 months or Questrade who has a $50 commission credit with no expiry date. The offer itself is similar to the recently expired RBC Direct Investing promotion which offered 20 commission-free trades which were also good for up to one year.
Offers with 100 or 500 commission-free trades might be great for highly active traders but would offer little value for less active investors which makes the latest move by Virtual Brokers DIY investors may turn to, especially with RBC Direct Investing’s offer now retired.
Another interesting development in the deals/promotions section was a raising of the ante by Desjardins Online Brokerage. Since October of 2012, they have been offering a $300 commission credit (on a minimum deposit of $50,000), however this month they have decided to raise the stakes by increasing this offer to a $500 commission credit.
For some context, the only other (current) offer of a $500 commission rebate is from Scotia iTrade which requires a minimum deposit of $500,000. The move may be a response to the recently expired promotion from National Bank Direct Brokerage (a key competitor to Desjardins Online Brokerage) who was offering $500 in commission rebates for deposits of at least $20,000. What makes Desjardins’ latest offer interesting is the combination of dollar amount and time to take advantage of the offer. The Desjardins Online Brokerage commission credit is good for up to 6 months, a timeframe (as mentioned above) that is far longer than most other commission credits currently available.
Finally, it’s also worth mentioning that Qtrade Investor has lowered the threshold to try out their online brokerage for individuals with less than $25,000. They currently have a transfer fee credit (of up to $150) for individuals depositing at least $10,000 (which is lower than their normal threshold of $25,000).
On a relative basis, having several deals at the start of the month is a sign that competition is ratcheting up going into the income-tax deadline season. While the bigger players have largely stepped back (for now), if and when they do step back in, it will have to be with even larger offers, which is another great piece of news for DIY investors.
Questrade Launches myFamily Program, Drops Mic
While Questrade remains the most active online brokerage in Canada to offer deals and promotions, they are also no stranger to getting creative to win new clients and loyalty from existing ones. Their latest salvo in the online brokerage competition, known as the myFamily Program, may just cause a tear in the financial services space-time fabric. Seriously.
Before jumping to why Questrade’s latest move may cause other Canadian discount brokerages to hit the panic button, it’s worthwhile to provide a bit of context.
Those who actively follow Questrade (and remember a time when there were NO inactivity fees) will recollect the moment that they introduced inactivity fees and the lengths that they went to then make it possible for clients to have those fees waived. One of the key components to the inactivity fee being waived is retaining a minimum balance of at least $5,000. While that threshold is low on a relative basis, for many younger or newer investors, it can still represent a barrier to getting into investing. This past week, however, meeting this threshold just got much simpler.
The recently announced myFamily Program from Questrade enables clients to reach that threshold by pooling the combined assets from up to five other Questrade clients – anywhere.
This is a big deal because historically, while there have been programs that have enabled clients to combine personal assets across other accounts with the same provider Questrade’s myFamily program crosses the threshold by linking individuals who just want to be linked together. For example, Scotia iTrade enables clients with combined assets of at least $50,000 across all Scotiabank services to qualify for $9.99/trade pricing and CIBC Investor’s Edge has enabled different individuals within the same household to pool assets or trading activity, however adding different people from (potentially) different addresses to a group in order to form a pool is not something other brokerages offer.
According to Questrade, the definition of “family” is “who you tell us it is.” Not only is this an exceptionally enlightened way to characterize a family in 2015, but it is also brilliant from a marketing and business development perspective. Questrade has demonstrated on many occasions how to get people to start talking about them (for better or worse), however they’ve also shown how to get people to like them.
The $5,000 minimum asset threshold is a modest bar to lower from a fee perspective. The bigger prize, however, is the fact is that Questrade has redrawn the map on getting individuals to find other individuals to join Questrade (e.g. client acquisition) and also have them stay (e.g. client retention) and also champion the brand (e.g. advocacy).
They have created a way to leverage the power of sharing in a world that increasingly wants to share everything (like lunch pics and selfies) and with a demographic of individuals who absolutely buy into sharing. More than that, they’ve shown that do-it-yourself investors can get ahead by doing something together.
Your move every other online brokerage.
Event Horizon:
April 7:
NBDB – Learn About Investment Basics – [Fr]
Scotia iTRADE – Volatility – Friend or Foe with Pro Market Advisors
April 8:
Scotia iTRADE – Options as a Hedging Strategy Using Put Options with Montreal Exchange
TD Direct Investing – Options as an Income Strategy
TD Direct Investing – Economic Update & Introduction to Fixed Income
Desjardins Online Brokerage (Disnat) – How to Analyze Any Stock or Market in 10 Seconds
NBDB – Tools and Technical Analysis with Michel Carignan – [Fr]
April 9:
TD Direct investing – Options as an Income Strategy
TD Direct Investing – Technical Analysis Series, Part 1 of 2: Candlestick Charting
From the Forums
Withhold your applause
While there are countless articles discussing the pros and cons of RRSPs vs TFSAs, the following post from the RedFlagDeals.com investing forum provides an interesting perspective on the unwinding of an RRSP account with an online brokerage and some of the hard lessons learned.
Slip and Slide
Tax slips and low-cost brokerages seem to be a hit and miss exercise. Here are a couple of conversations about receiving those all-important summaries from investors on different boards (talking about Questrade and Virtual Brokers).
- Financial Wisdom Forum – Questrade
- Reddit – Virtual Brokers
- Reddit – Questrade
That does it for this holiday edition of the roundup. While markets will be back up and rolling on Monday, here is an entertaining look what the President of the United States will be up to and how the Easter Bunny gets VIP access to the White House. Not ‘egg-sactly’ what Frank Underwood would do…Have a great weekend!
