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Discount Brokerage Weekly Roundup – March 18, 2016

If you were like most folks this week, getting adjusted to the one hour less made things feel a little bit foggy. Of course, if you’re following what’s happening with the US elections, candidates are taking all kinds of swings at one another as the contest for presidency heats up. Here in Canada, discount brokerages, while keeping it polite, are nonetheless starting to raise the stakes with one another in a big way this week.

In this week’s roundup we start by first looking at one brokerage’s continued pursuit of mobile trading with the launch of their latest smartwatch trading app. Next we take a look at a small brokerage that seems poised to make a big splash in the deals and promotions pool with a newly launched offer. The event horizon makes a comeback this week and we round out with the latest comments from DIY investors on Twitter and forums.

Watching the Markets

This week Scotia iTrade unveiled their latest upgrade to their mobile trading experience: an Apple watch based app. Their latest addition to the mobile trading suite, which includes smartphone and iPad versions, enables Apple watch users to take a pulse of what’s going on in the markets as well as within their own portfolio.

While the Scotia iTrade Apple Watch app does not let users actually trade from the watch, it does enable users to get updates on balances, monitor watchlists and keep an eye on market activity. Given the dependency of the Apple Watch on the iPhone, however, the full set of trading features available on the iPhone app offers users much more functionality should they need it.

In celebration of their new release, Scotia iTRADE also held a mobile day at their investor centre in downtown Toronto.

Canadian online discount brokerage Scotia iTrade tweeting about their new Apple Watch trading app.

When considering the mobile trading landscape, Scotia iTrade is certainly not alone in their pursuit of the smartphone and now smartwatch space.

Most Canadian discount brokerages have some kind of dedicated app or specific mobile site to accommodate smartphone users. In terms of smartwatches, however, there are three online brokerages that have Apple Watch apps specifically built for DIY investors, and two bank-owned brokerages who’ve bundled some of their online investing functionality into their overall banking app.

The three Canadian online brokerages with Apple watch trading apps are:

  • Interactive Brokers
  • Qtrade Investor and
  • Scotia iTrade

What is interesting about the online trading experience on mobile is that the smartwatch is typically limited to providing alerts and updates. In that sense, its role is mainly to monitor what’s going on.

With the Apple Watch in particular, because it is tethered to the iPhone, how an online brokerage’s iPhone-based trading app functions is something individuals interested in these products should also consider.

In the table below, it is particularly noteworthy that almost all Canadian online brokerages, whether they are bank-owned or are independent, have ranked poorly in terms of user reviews. The best rated online brokerage iPhone trading app, based on client reviews from the Apple App Store, turns out to be Qtrade Investor with 4.5 out of 5 stars (based on only 23 reviews). At the other end of the spectrum, Questrade’s IQ app garnered only a 1.5 out of 5 stars and it was based on the highest number of ratings (463) received by any online brokerages’ mobile app.

Online Brokerage Overall Star Rating* # of Ratings Support for Apple Watch
BMO InvestorLine 2 63 No
CIBC Investor’s Edge 2.5 133 No
Interactive Brokers 2.5 179 Yes
Questrade iQ 1.5 463 No
Qtrade Investor 4.5 23 Yes
Scotia iTrade 3 105 Yes
Virtual Brokers 2.5 10 No
Notes * based on all versions

What stands out in looking at these user ratings is actually how unfavourable consumer ratings are of the mobile experience provided by Canadian online brokerages.

In sharp contrast to the muted ratings received by most Canadian discount brokerages, was the rating of robo-advisor, WealthSimple’s mobile app, which received a glowing 4.5 star rating (based on 51 ratings).

As financial services firms cross the threshold from just being about services to really incorporating technology (ie. Fintech) as part of the service experience, the gap between the incumbent online brokerages and the new entrants into the wealth management space is starting to widen.

For added proof, one need not look further than US online brokerage Robinhood, whose mobile-first design approach has earned them incredibly positive design and user-experience recognition and a 4.5 star rating across 10,107 ratings.

So, while being able to get updates on the market might be nice, there is still a heavy reliance on the smartphone app trading experience and as such, there is clearly lots of work that many Canadian online brokerages need to do in order to win the hearts, minds and design accolades of the newer players in the space.

Virtual Brokers Goes All In on Trading Deal

For savvy traders, patience and timing are a virtue. In this case of deal watchers, this past week Virtual Brokers has launched a monster offer that has, surprisingly, not yet garnered much attention. We suspect that might change quite soon.

Earlier this week Virtual Brokers launched a promotion that offers 3 months free of their $150 USD/mo Edge Trader Pro trading platform which is part of their commission-free trading plan. The minimum deposit to qualify for this offer is $5,000.

What is remarkable about this offer is that it is actually one of the most aggressive free trade offers seen to date.

By signing up for this offer, it appears that an individual would be able to trade commission-free for 3 months with a deposit of $5,000. This seems to be the case since Edge Trader Pro is a required to qualify for the commission-free trading plan, however since the platform fee of $150 USD/mo would be waived, individuals could then trade commission-free (equities only and ECN fees/admin fees/handling fees still apply) for the period of the promotion. At least that’s what the terms and conditions of this offer seem to suggest.

Historically, the only brokerage that has consistently offered 3 months of commission-free trading has been Questrade however for to qualify for 3 months of commission-free trading, an individual would have to pony up a deposit of at least $100,000. Another interesting observation on Virtual Brokers’ latest deal is that there is no deadline stated in the terms and conditions despite it being marketed as a limited time offer.

A little more math, however, puts this offer into further context as to why it is such a big deal.

With 3 months of fees waived, the annual spend for being on the commission-free trading plan with a reasonably standard application-based trading platform totals $1350 USD which breaks down to $112.50 per month (for 12 months). For traders of US equities this works out to about 11 trades per month at the standard commission of $9.95 + any ECN fees or special handling fees – a threshold that many active traders can easily hit.

So, many folks might be wondering what the catch is. For starters, to stay on this program, whether on purpose or by accident will still cost $150 USD/mo once the free trial period expires. What this means is that individuals should carefully consider whether this is the right fit for their trading needs. Another important detail in the terms and conditions is that the $150 USD/mo applies to the Edge Trader Pro platform only, the data plan for which might not really be enough for most very active traders. Finally, Virtual Brokers reserves the right to change the offer at any time during the process, so users need to ensure they monitor the terms of the offer for any modifications that may arise.

With all of the above in mind, how this plays out for other Canadian discount brokerages will be very interesting. Virtual Brokers’ latest offer feels like someone going ‘all in’ at the poker table. One thing is certain, however, and that is that Virtual Brokers’ latest deal will finally uncover how serious other Canadian brokerages are about acquiring the most coveted tier of client: the active trader.

Event Horizon

Spring is in the air, and it’s an exciting week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts and those interested in risk management. Technical analysis and registered accounts round out this week’s selection.

March 22

NBDB – Stop Orders: A Winning Solution Worth Knowing – [Fr]

Scotia iTRADE – Introduction to Candlestick Charts with Pro Market Advisors

March 23

TD Direct Investing – Building Wealth Through Registered Accounts

TD Direct Investing – Introduction to Investing in Options

March 24

Scotia iTRADE – Introduction to Index Options with Montreal Exchange

Tweets of the Week

This week’s tweets show once again that clients are increasingly turning to Twitter as a customer service touch point for brokerages big and small. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing.

From the Forums

Eminent Domain

Well, this is not one you see everyday. In this post from Reddit’s personal finance Canada section, one disgruntled Virtual Brokers user decided to leave after receiving a warning regarding the domain name being used to access streaming quotes (from Quotemedia). Worth a read as more than one individual came across the same issue.

Plan B

Having an employer group RSP plan is a great perk, however savvy investors know that sometimes there are ways to stretch their investment dollar further. In this post from the Reddit personal finance Canada section, one investor wanted to know if it was possible to get the best of both worlds by taking advantage of Questrade’s commission-free ETF buying. Find out what other people had to say about their own experiences trying to do the same.

Into the Close

With spring just around the corner, and St. Paddy’s that just passed, green seems to be the theme heading into the weekend – especially if you managed to be the lucky winner of an increasingly large lotto jackpot. Of course if you’re still betting against Canadian Vancouver real estate, with the recent interest rate announcements in the US, you might be inclined to see red for a while longer. Regardless, have a great weekend and strap in for a wild start to the spring next week!

via GIPHY

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