Even in a world of robo-advisors and trading algorithms, human traders and investors are still prone to believing in the power of luck. Of course, it being Friday the 13th, the more superstitious folks probably are focused on avoiding the bad luck. For Canadian discount brokerages, however, it seems like they’re betting on the power of luck to reignite interest in the world of DIY online trading.
In this week’s edition of the roundup, we highlight the latest online brokerage-run contests that have come to market. Next we’ll do a quick scan of updates from across several brokerages that are busy rolling out new features. As always we’ll take a look at the latest tweets from the online brokerage space and close out with what investors were talking about this week.
Exchanges Only: Scotia iTrade Launches Contest
After sitting on the sidelines for April, Scotia iTrade rolled back into action launching the latest revival of their commission free trade offer. This latest version of the offer, however, comes with a twist. First there are no ‘cash back’ choices as there were previously. Second, there is also a contest that is being branded as a ‘shopping spree on the TSX’ worth $10,000 attached to the promotion. Also back on the list of deals is the refer-a-friend offer at Scotia iTrade. More information can be found in our deals and promotions section.
This is not the first time (nor probably the last) Scotia iTrade has tried their hand at a contest. Last year they tried to entice visitors to their Investor Centre with a Twitter selfie contest, the prizes for which were movie passes.
So why do online brokerages run contests? Do they work? For the most part, contests are a great way for online brokerages to a) get potential customer information and b) to lower the cost of getting a client. As for whether or not they work, the question is really whether or not they are cost-effective which is tricky to measure.
What is interesting about the latest offer from Scotia iTrade is that it pairs together their familiar offer of commission-free trades with a headline grabbing amount of cash as part of a contest. While 50 free trades may not get attention, $10,000 most certainly will. Headlines aside, it’s important to take a look at all deals with a clear understanding of what’s being offered and what special conditions are associated with the offer.
When looking at the tiers of the offer itself, it is worth noting that individuals typically don’t see the number of free trades go up proportionately to the amount of money being brought in. For example, whether individuals deposit $100,000 or $1M, the number of free trades offered differs by 50. In fact, at $250,000 the number of commission-free trades does increase even if deposit size does; the ‘sweetener’ is the contest ballots which increase the odds of winning. It will be interesting to see whether someone would move and/or park $1M with Scotia iTrade for a few extra chances to win $10K.
Scheduled for January 2017, the draw for the shopping spree is quite some time away. For DIY investors who’ve entered and stayed within the terms and conditions, at least they’ll have enough time to make a list and check it twice.
Jumping into Fintech: BMO InvestorLine Stirs the Technology Pool
It almost goes without saying these days that technology is evolving exponentially. For banks and bank-owned brokerages in particular, the buzzword of the day is “fintech” or the convergence of finance and technology.
There are signs everywhere that startups are already provoking change at the bank-owned brokerages. Robo-advisors, for example, are directly challenging the wealth management divisions of the major Canadian banks so much so that several brokerages have either partnered with or created their own in-house robo-advisor (although they don’t want to label it as such).
This week, BMO InvestorLine showed signs they are stirring as they launched an invitation to clients to participate in an ‘advisory panel’ survey and are rolling out some changes to their login protocols.
In terms of the survey to clients, the survey itself is about 25 questions and covers topics designed to get to know who their clients are demographically but also where they may have other accounts and how users interact with the services provided by BMO InvestorLine.
One of the questions that was particularly interesting was a question in which users were asked about any other brokerages where they held accounts.
On that list were all of the major Canadian online brokerages, however there were also 3 robo-advisor firms on the list: Wealthsimple, Nestwealth and Wealthbar. This is clearly a signal BMO InvestorLine is curious to know what kind of presence the robo-advisors are gaining with their clients.
To encourage users to participate in the survey, BMO InvestorLine is offering a draw for $1,000.
In addition to the survey, respondents can sign up to be a member of the BMO InvestorLine “advisory panel.” It appears that BMO InvestorLine is hoping to create and tap a pool of individuals for feedback and create an engaged community of brand loyalists. Fortunately, there are also opportunities for participants to win money via ongoing draws that users get entered into for completing surveys.
Another interesting angle to the evolving ‘fintech’ story at online brokerages is that of security.
As client data and interactions shift decidedly to the online experience, security is of paramount concern at all Canadian brokerages. To that end, BMO InvestorLine is about to roll out 2 step verification in which users attempting to log into their BMO InvestorLine account may need 2 steps (such as entering in a username & password on the website followed by a notification code being sent to their mobile device) to confirm their identity.
The story on fintech goes beyond security and automation. It also means rapidly evolving features and functionality at a pace never seen before in this space.
Questrade, for example, is repositioning itself as a leader in the ‘fintech’ race among brokerages. Already they’ve opened up their app marketplace which enables 3rd party technology partners to add functionality to the Questrade platform. In addition, and most interestingly, they’ve also created an API that allows the community of Questrade users to come up with interesting tools and improvements to their trading experience in true DIY fashion.
For brokerages big and small, the race to adapt to a leaner technology model is ramping up. The future investors and traders – the ones who have the time horizon and risk profile to actively trade equities and options – are going to demand smooth user interfaces and digital experiences that look and feel current. This means that online brokerages, like BMO InvestorLine, will increasingly be asking and listening to what customers want and, most importantly, now they’ll have to figure out how to build it quickly.
Discount Brokerage Tweets of the Week
In this week’s tweets, technology is giving brokerages lots to keep them busy. Mentioned this week: Questrade, Scotia iTrade, TD Direct Investing and Virtual Brokers.
From the Forums:
Getting a DRIP
In this post from the RedFlagDeals.com investing forum, one user is interested in harnessing the power of compounding by using a DRIP. The only catch was actually knowing how to set it up at TD Direct Investing. Hear what others had to say about setting up a DRIP at their broker and at TD.
Earning for Learning
Putting funds aside for a child’s future educational needs is sound financial planning. Figuring which brokerage was best for RESPs was the focus of this post from reddit. Find out why one user was weighing either Questrade or TD Direct Investing as their top 2 choices.
Into the Close
It’s been quite a roller coaster week for folks trading on Bay St as well as those further south on Bay in the neighbourhood of Jurassic Park. We’ve talked a lot about luck in this week’s roundup and heading into the weekend it looks like the Raptors are going to need all the luck they can get their claws on. On a slightly different note – it’s great to see the magnificent response to the needs of folks in Fort Mac as the outpouring of support continues. Certainly there are things and people to feel lucky to have. Enjoy the weekend!