The start of the 2016 trading year has been more than a bit loonie. Circuit breakers tripping and then being pulled in China, RBC raising mortgage rates in Canada and the price of oil continuing to plunge have made for quite an opening act to 2016. For Canadian discount brokerages, planning for their busiest season in 2016 just seems to have gotten much more interesting as they are now tasked with enticing DIY investors into opening online trading accounts.
In this week’s roundup, we take a look at the best bet Canadian discount brokerages have to woo investors in our recap of the new promotions that appeared in week one. Next we take a look at one brokerage’s strategy to appeal to the younger generation of investors and potentially encroach on turf well defended by low-cost brokerages. From there we’ll recap the upcoming investor education events and the activity of DIY investors on Twitter. Lastly we’ll close out with some interesting conversations on the Canadian investor forums.
Discount brokerage deals tick up
The discount brokerage deals and promotions activity showed signs of coming back to life this past week. Heading into January, the number of advertised promotional offers fell to 11 however unlike the major stock market indices, there was a modest uptick with a total of three additional offers joining the list.
The promotional offers were a mix of extensions and revivals of deals we had seen earlier in 2015. It was interesting to note, however, that most of these offers had expiry dates that fell just after the RRSP contribution deadline of February 29th.
Both BMO InvestorLine and Questrade tossed in a pair of offers this past week. For BMO InvestorLine, it was a case of repackaging offers that had officially expired at the beginning of January.
The first offer, which is their refer-a-friend promotion, actually changed quite substantially. BMO InvestorLine is now offering to give $50 cash back to both a referrer and referee if the referee deposits at least $50,000. Previously BMO InvestorLine was offering up to $300 cash back to individuals for referring new clients and $100 to new clients that opened accounts with at least $250,000.
BMO InvestorLine’s other offer to launch this month provided individuals with either $200 (on deposits of at least $100,000) or $600 (of at least $250,000) cash back plus 100 commission-free equity trades (commissions to be rebated later in the year). This offer is substantially larger than the commission-free trade offer that expired early January. In the case of that promotion, individuals were being offered 20 commission-free trades which were good for a year and $200 cash back for deposits of at least $100,000.
The battle for the $100,000+ deposit threshold seems to be a two-horse race at this point between Questrade, who is offering up a $500 Apple gift card and BMO InvestorLine with their $200 cash back + 100 trade promo.
At the other end of the deposit spectrum, Questrade put forward two nearly identical commission-free trading offers. The offers consist of either one, two or three months of commission-free trading depending on the deposit levels. Interestingly, the major difference between the offers is the lowest deposit tier of one offer is $1,000 and the other is $2,000. These two offers give Questrade the clear lead in terms of the number of promotions (7) being offered by a brokerage to self-directed investors with 6 of those offers having a minimum deposit of either $1,000 or $2,000.
Another interesting observation in the deals arena is that Scotia iTrade has yet to replace its major offer that expired at the end of December. They did step back into the deals race by extending their refer-a-friend offer but it remains to be seen if they are launching something bigger and bolder heading into the RRSP deadline.
Be sure to check the deals and promotions section regularly through January and February as there are likely to be more announcements of offers in the coming weeks.
Fountain of youth
One of the major buzzwords around the financial services and wealth management space in 2014 and 2015 was ‘millenials’. Specifically, many Canadian online brokerages were trying to figure out ways to make their products and platforms more appealing to the ‘up and coming’ generation of investors.
This past week, it was interesting to note that Desjardins Online Brokerage is now offering a program specifically geared towards individuals between the ages of 18 to 30 years of age.
At first blush, the new program known as ‘Broker@ge 18 – 30’ seems to tick the most relevant boxes for younger investors. Specifically, there are no inactivity fees and no asset minimums to maintain free registered accounts. To sweeten the deal, Desjardins Online Brokerage is also including $50 in commission credits. This program applies specifically to Disnat Classic which is generally geared towards less active investors. On an interesting note, Desjardins also managed to snap a picture of a very “millennial” group of individuals huddled in the Desjardins investor centre.
Looking across the Canadian discount brokerage space, there are only a handful (currently) of incentive programs offered to ‘young’ investors. Virtual Brokers, for example, has their Kickstarter program aimed at students and recent post-secondary graduates; Interactive Brokers has a lower minimum deposit requirement ($3,000 vs $10,000) for individuals 25 years old and younger; and Questrade offers to waive account inactivity fees for clients 25 years and under . While BMO InvestorLine did have a youth-oriented offer for a good portion of last year, there is a lack of bank-owned Canadian discount brokerage that offer up a youth-focused program along with similar incentives.
As was the case at the outset of 2015, Desjardins Online Brokerage is launching 2016 with a new program and it is likely that this move into the younger investor segment will not go unnoticed by their cross-town rivals National Bank Direct Brokerage, but also by the independent brokerages Questrade and Virtual Brokers who actively market to the younger investor segments.
Tweets of the week
With all the activity in markets this past week, there was definitely an uptick in chatter on Twitter. Interestingly many of the tweets provided user feedback to the latest platform rollouts from TD Direct Investing and also Questrade.
It’s a New Year, and a busy week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to yield hounds, those who are interested in trading strategies, and new to investing. Primers on options, technical analysis, and tax free savings accounts (TFSAs) round out this week’s selection.
From the Forums
Best brokerage for TFSA?
With TFSA’s on the minds of many DIY investors, this post from RedFlagDeals.com investor thread asks if there is a brokerage that may be better than others when it comes to TFSAs. While we’re a little hesitant to crown a single brokerage as the best brokerage for TFSAs, there are some interesting points made by the posts in the thread.
Questrade vs. Tangerine
While not an apples to apples (or oranges to oranges) comparison, the slow and steady DIY investor crowd tends to ask about the value of going with one or the other of these low-cost providers. In this post from the reddit PersonalFinanceCanada thread, there are some interesting perspectives offered to a recently debt-free DIY investor.
Into the Close
That’s a wrap for the first week of 2016. For those watching the NFL playoffs, it might just be a more volatile weekend than the week that just finished. Nonetheless, it should be a great way to think about something other than rattled markets for a few days. See you next week!