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Discount Brokerage Weekly Roundup – September 22, 2017

With the first day of fall arriving this week, it’s unbe”leaf”able how fast time flies. And while the news was busy reporting world leaders trading insults, stock market charts show that the investing world continues to be busy trading shares, as trends continue moving up and to the right. Curiously, charts tracking performance of Canadian online brokerages are hard to come by but fortunately we’ve put together something special for this edition of the roundup that looks at the trends in online brokerage performance.

This week, we take a deep dive into the latest Canadian online brokerage rankings from J.D. Power and crunch some numbers to uncover how Canada’s discount brokerages are keeping pace with changing investor needs. From there we’ll take a quick peek at what’s been happening on social media and what investors are talking about on the forums.

Rankings show Canadian DIY investors are happier than ever with online brokerages – sort of

The latest results from the 9th iteration of J.D. Power’s Canadian self-directed investor satisfaction study were published last week and paint an interesting, somewhat paradoxical, picture of the world in 2017 for DIY investors and Canadian discount brokerages.

On the one hand, the insights from a survey of over 2600 DIY investors surveyed in May and June of this year indicated that more than half of respondents indicated there is a “current or imminent need for full-service advice” suggesting that that online brokerages “have significant assets at risk of attrition if they are not able to meet this need.” Simply put, it looks like lots of DIY investors may be seeking to not DIY so much anymore.

Of course, why that insight is so interesting is because scores for DIY investor satisfaction with Canadian online brokerages have, at least for the past five years that we checked, not ever been this high on the J.D. Power rankings study. Top online brokerage this year, Desjardins Online Brokerage, managed to achieve a rating of 785 (out of 1,000), a score well above the highs achieved by Canadian brokerages since 2013. So what gives?

This was one a few curiousities that led us to take a step back to see what a long-term analysis of these annual survey results would reveal. After all, DIY investors looking for an online brokerage do so hopefully never having to look to change to another brokerage. The notion that maybe preferences or needs of investors are changing, especially when considering millennials, prompted us to look back on previous rankings for some additional context on these latest figures.

Canadian discount brokerage rankings, for the most part, present an annual snapshot into the opinions of investors or online brokerage researchers. While it does offer a ‘current’ view, one shortcoming of presenting data in this way is that it becomes tricky to establish what the track record is for a particular brokerage is over time. In the case of J.D. Power’s latest rankings, asking, for example, how consistent an online brokerage is at satisfying clients, might offer additional depth for someone looking for a longer term relationship with their online brokerage.

As such, we decided to put J.D. Power’s 2017 discount brokerage rankings into context by comparing results from the past five years’ (from 2013 to 2017 inclusive) worth of scores. And, to borrow from a buzzfeed style reference, what we found was very cool.

Now, before going down the data rabbit hole, we should mention that like investor preferences, the investor satisfaction study has also evolved over time – so take the year to year comparison with a grain of salt. Nonetheless, the rationale for comparing year over year results is based on the assumption that investor satisfaction (however it may be defined) is important as an end point.

To keep things simple, we’ve identified three things about the trends in the online brokerage data going back to 2013 that can add a lot of context for anyone thinking about opening an online brokerage account or even anyone thinking of jumping ship to another online brokerage.

Insight 1: Satisfaction is on the rise

The first very interesting insight is that the scores among Canadian online brokerages on the J.D. Power investor satisfaction study are improving for the Canadian industry as a whole.

This uptrend in satisfaction levels may be a reflection of the efforts put in by these brokerages to improve the customer experience overall, or (less likely) the lowering of standards by consumers as to what they’re going to get from an online brokerage. Based on efforts by big Canadian banks, for example, there have been numerous resources allocated to improving their image and client experience, in branches and online and it appears to be paying off.

Looked at another way, the good news is that Canadian DIY investors are more satisfied with their online brokerages than at any point in the previous five years. In fact, the firm that put in the lowest score in terms of investor satisfaction in 2017 (Questrade) scored 752 out of 1,000. To put that into context, in 2016 there were only two out of 10 firms with scores higher than 752 – BMO InvestorLine (762) and Desjardins Online Brokerage (774).

At the top end of the scale, Desjardins Online Brokerage, with a score of 785, earned a score higher than any other in the past five years and was followed closely by Qtrade Investor (778) which also scored higher than any other brokerage in the study over the past five years.

Insight 2: Brokerages are becoming more alike

Averages, however, don’t tell the whole story. Another very interesting observation is that the range between the top and bottom companies is narrowing. As the chart below suggests, scores for most Canadian online brokerages are converging making harder to distinguish between Canadian online brokerages.

Numerically the range between the highest and lowest reported scores fell from a high of 64 in 2013 and 2014 down to 33, a decline of almost 50%.

It will be interesting to see how online brokerages in Canada can differentiate themselves enough or create enough perceived value to encourage DIY investors to move assets from one firm to another. One way would certainly be through promotions. Another, however, as National Bank Direct Brokerage has demonstrated, suggests something bolder would be required. The J.D. Power survey of DIY investors was performed between May and June of this year, far in advance of the announcement that all ETFs at NBDB would be able to be traded commission-free. Even so, pricing is just one of a handful of factors that determine the scoring of the investor satisfaction study, so it will be interesting to see what happens in 2018.

Insight 3: Consistency counts

Finally, the third very interesting set of insights emerged by taking a long-term view of the Canadian online brokerage ranking data. If it sounds a bit math-y it is, but stick with it as it does provide some neat data.

We expected that firms that would be the most “predictable” or consistent, would have lower variation in satisfaction scores from one year to the next. We measured this by looking at the overall average of scores, and more importantly, at the standard deviation, or variability in the scores across time. Also, we expected that, if an online brokerage is doing a good job of keeping up with investor needs and preferences as measured by the investor satisfaction study criteria, then the scores should also be high.

So, in a nutshell, if the investor satisfaction scores are consistent and high that would make a strong case that the online brokerage is doing a consistently good job of satisfying its clients.

*note: gradients are applied to each column for improved visibility of high or low scores for each year; colours for standard deviation are reversed so low values are in green while high values are in red.

After crunching the numbers back to 2013, National Bank Direct Brokerage emerged as the best combination of strong satisfaction scores and low variation (standard deviation) from year to year. That is certainly a counterpoint to the drop they experienced in 2017 and it highlights the big picture that additional data can provide.

Another very consistent (albeit not as high scoring) firm was TD Direct Investing, which put in a close to average performance every year but whose clients also rated them as such. While it might not seem to be headline worthy, the reality is when it comes to business and investing, predictability is worth something.

It is also worth mentioning BMO InvestorLine in the long-term analysis as they also usually achieved better than average satisfaction scores with better than average consistency and so even though they have not won ‘top prize’ this year, data shows that they are a reliable choice to keep pace with investor needs.

At the other end of the consistency spectrum, firms with higher volatility in satisfaction scores also stood out, but not necessarily in a bad way. 2017 appears as a turnaround year for a pair of firms that have historically underperformed their peers in the investor satisfaction ranking.

The most evident change in performance was with Qtrade Investor, whose track record of scoring below average (going back to 2013) was handily shattered this year as they put in the second highest score (778). Interestingly, Desjardins Online Brokerage owns a significant stake of Qtrade Investor so the connection between these two online brokerages finishing at the top of the ranking may have something to do with these two firms comparing notes. Last week, there was also a piece in the Globe and Mail by Rob Carrick that provided additional context to Qtrade Investor’s strong performance in the Globe and Mail ranking of online brokerages vis a vis the J.D. Power rankings.

The other online brokerage that may be having a turnaround year is Scotia iTRADE. This year’s ranking was the first of the past five years in which Scotia iTRADE managed to score higher than average (albeit by two points). The fact that this was so different than years past is a signal that investor satisfaction with this discount brokerage was more positive in 2017 and is worth watching as they continue to roll out interesting initiatives (such as their social responsible investing tool).

As this analysis shows, there is something to be said for consistency. Unfortunately for many investors, innovation is about change and change comes with risks, so it is a double-edged sword when choosing an online brokerage that isn’t a trail-blazer or choosing one that is.

Even though how investor satisfaction is measured may change over time, everyone can agree that satisfied clients are generally a good thing. Taking the long-view on the most recent set of online brokerage rankings enables consumers to distinguish between who might be having had a unusually good (or bad) year, and who usually has good or bad year(s) when it comes to keeping clients satisfied.

Interestingly, the additional data from this year’s survey shows that providing access to advice, including robo-advice, as well as improving mobile trading experience (and user experience generally) might be areas for Canadian brokerages look to next to put more effort. The good news for DIY investors, however, is that it looks like much of what customers are saying about their online brokerages is good and that (hopefully) expectations of what makes an above average experience have been raised.

Discount Brokerage Tweets of the Week

Taking a peek under the hood at Canadian discount brokerage customer service this week. Mentioned by Canadian DIY investors were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Making a switch

The grass may be greener for one online investor looking to move to the big green brokerage. In this post on reddit’s personal finance Canada section, one user asks for some more information about making the switch to TD Direct Investing.

North of the wall

In this post from reddit’s personal finance Canada subreddit, an online investor with a US trading account looks to Canadian DIY investors for suggestions on an online brokerage that is ETF friendly.

Into the Close

Congratulations for making it through a marathon roundup. We kicked things off with a corny pun so here are many more to close out on. Have a great weekend and enjoy a few well-deserved, corny laughs.

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Discount Brokerage Weekly Roundup – September 15, 2017

Let’s see, this week’s headlines were dominated by the launch of the iPhone X, a massive data breach at a credit agency (Equifax), North Korea firing missiles over Japan, and a few record highs in the US markets. For DIY investors, it seems tricky to keep calm but the tale of the tape is not pricing in the end of the world, but rather more earnings ahead. Of course figuring what to tune into or tune out is part of learning the ropes for any investor.

In this week’s roundup we take a snapshot of the latest content offerings by Canadian discount brokerages to see which online brokerages are making strides in the production of content that investors want and will engage with in this multi-channel world. From there, we look at some upcoming investor-focused events that might also provide some clues as to some of the moves being made by Canadian online brokerages across the country. As always, we’ll take a look at what DIY investors were saying on Twitter and highlight some very interesting developments we stumbled across in the investment forums.

Homemade content

It might have taken some time, but a handful of Canadian online brokerages have gradually been improving their in-house content offering. While there are still several brokerages offering investor education, it seems that another content strategy, namely financial market research and commentary, has emerged as a type of content that DIY investors are keen to tune into.

It is against this backdrop that the activities of a few brokerages this past week offered an interesting cross section of where online brokerage generated content happens to be and which online brokerages are creating their own content for DIY investors. Specifically, it appears that bank-owned online brokerages are doing the most work in this area, with different brokerages trying out different approaches.

Earlier this week, CIBC Investor’s Edge provided an ever-popular economic update featuring one its own economists, Andrew Grantham. This webinar presentation (which was just under an hour long) offered a very high level view of recent economic developments as well as trends and forces impacting markets and where the data appears to be pointing to opportunities for investors. Given the heightened level of controversy with the US political situation, many investors are unsure of what the economic ramifications will be of the U.S.’s actions, hence the additional popularity of economist presentations. That said, this presentation covered quite a bit ground, touching on topics ranging from interest rates to NAFTA to housing and more which means lots for investors to think about and digest when making investing decisions.

In contrast to the lecture style format of a webinar, TD Direct Investing has been investing in a bigger budget production called Money Talk. This production with professional video content and hosting is on par with business television news and the scope of topics covers the spectrum of personal finance and business news. This past week, their episode on technology investing with Bill Priest from Epoch Investment Partners was particularly insightful with a great balance of explanation on valuation of technology companies and investments as well as ideas and perspectives on where opportunities may lie in this fast moving space. Among Canadian online brokerages, TD Direct Investing (via TD) is almost certainly investing the most in terms of content generation with a long list of videos available on their website MoneyTalk.

Turning to user generated content, in particular social media, BMO InvestorLine once again took to Twitter alongside online personal finance commentators and a social media influencer (Lena Almeida – @Listen2Lena) to talk about investing. In this case, the Twitter chat was about TFSAs. It was a timely discussion as data from Statistics Canada earlier in the week highlighted that 62.5% of Canadian households contributed to at least one of three major types of registered savings accounts in 2015.

Among the questions asked were:

  1. Have you gotten started with a Tax-Free Savings Account?
  2. What kind of investments can you hold in a TFSA?
  3. How is a TFSA different from an RRSP?
  4. What are your questions about TFSAs
  5. What are you saving for?

This was a highly interactive session with a quick quiz type format as to what can or cannot go into a TFSA. To add some extra incentive to participate, there was a draw for $500 in prizes which caught the attention of more than a handful of Twitter users.

The use of Twitter and social media to connect with investors is something that appears to be gaining in popularity with Canadian online brokerages. Scotia iTRADE, for example, still has their #mymakeithappen social media campaign, which is tied to their website in which people share personal finance stories in exchange for a chance to win an Apple Watch Series 2.

Now more than a month into the contest, it is interesting to note that while more stories are being published to their campaign page on the Scotia iTRADE website, on Twitter, the hashtag hasn’t generated the same kind of visible participation as the #InvestSmart campaign from BMO. Admittedly, these are two very different formats of content, however, perhaps the cash offering from BMO was more salient for social media users than the Apple watch.

The biggest takeaway from the above mentioned list of digital content activities online is that the bank-owned brokerages are outpacing the independent and smaller online brokerages when it comes to social media presence. The smaller brokerages, who were previously more active on social channels, are allowing some of the larger players the opportunity to gain mindshare in the ‘innovative’ category. Whether it is in long form copy, social media or on video, smaller players are being quickly displaced by the work being done by some of the larger brands which means that DIY investors looking for content on investing or investor education, will likely be drawn to the bank-owned brokerages’ content channels or online contests while swiping or surfing online.

Interesting Events

Extraordinary Future (Vancouver)

There are a couple of interesting events for DIY investors coming up in the next week (and beyond) that offer some opportunities to learn about markets and offer up investing ideas.

The first is the Extraordinary Future conference happening in Vancouver on September 20th. This conference is a great opportunity to learn about the hottest technologies currently making waves with investors and technology companies.

Topics such as cryptocurrency and blockchain, virtual and augmented reality technologies, health technology, artificial intelligence and more will be discussed. Like most investment conferences, there will also be exhibition booths and some conference swag.

The conference itself is produced by Cambridge House International which many West Coast-based investors will recognize from the Vancouver Resource Investment Conference that happens every January and Toronto investors may recognize from the Cantech Investment Conference that takes place in Toronto.

Co-sponsored by the Canadian Securities Exchange, this event is definitely worth checking out for anyone curious about companies active in these areas as well as what thought leaders have to say about being able to invest in such new fields. Unlike some previous investment conferences, there is a cost to this conference (about $47 + tax) however it is possible to save 25% on admission with the code CSE25.

For more information on the show or to register, click here.

Options Education Day (Across Canada)

The annual Options Education Day events are poised to kick off in Vancouver and Calgary this weekend. Hosted by the Montreal Exchange, these sessions offer DIY investors a day-long intensive series of lessons on the world of options trading. With content catered specifically towards beginner or intermediate investors, these are usually great for both those who are just starting out or for those who are looking for more sophisticated approaches to trading options.

This year, there are three events taking place in September: Vancouver (September 16th), Calgary (September 17th), Montreal (September 23rd) and the final even in November in Toronto (November 4th).

Aside from the educational aspect of the day, which is great for DIY investors, what is also interesting about the Options Education Day is the sponsorship and participation of Canadian discount brokerages, who have a natural interest in connecting with DIY investors who trade options.

This year, as opposed to years past, we noted that fewer online brokerages are actually participating as sponsors in this event. It is particularly noteworthy to see and comment on which brokerages are sponsoring and in what locations, to see what that might suggest about who particular online brokerages might be targeting and which markets they might be most interested in.

Comparing sponsorships across regions, it appears that National Bank Direct Brokerage has committed the most in sponsorship (so far) by participating in all the cities in which the Options Education Days take place.

Sponsorship in Options Education Day City
Discount Brokerage Vancouver Calgary Montreal Toronto
National Bank Direct Brokerage X X X X
Desjardins Online Brokerage X
Interactive Brokers X X

Interestingly, Montreal appears to be the city which attracted the most discount brokerage sponsorship (three) suggesting there are some specific dynamics at play in the Montreal market to draw three online brokerages.

One obvious reason is because all three online brokerage sponsors have their respective headquarters in this city (the same city as the Montreal Exchange), so travel is not an additional expense to prevent participation. Another interesting observation is the tight competition between Desjardins Online Brokerage and National Bank Direct Brokerage – especially in Quebec – which might have been a driver for Desjardins to have a presence at this event.

Curiously, Toronto doesn’t yet have more than two online brokerages who’ve signed up to sponsor this event. With travel not really being an issue for several brokerages who are headquartered in Toronto, and given the size of the Toronto market, it is definitely interesting to see Interactive Brokers reach to sponsor the event in Toronto while other locally headquartered brokerages sit it out.

Perhaps the sponsorship list may change closer to the event (since Toronto’s Option Education Day is in November) but it might be a signal that Interactive Brokers is tactically going after the active options trader segment in key locations. Given Interactive Brokers Canada pricing structure, it is going to be very challenging for other online brokerages to beat them on execution price for options trading. The fact that there is only one other online brokerage present in Toronto on that day (NBDB) leaves plenty of room on the field for Interactive Brokers to shine in one of the largest markets for DIY investors in Canada.

Discount Brokerage Tweets of the Week

There was a mix of big and small news items across the board this week. Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Making a splash

Even on a quiet week in the forums, there was still some rather eventful news. Specifically, it looks like someone with the TD Direct Investing handle has joined reddit this week and contributed to the Personal Finance Canada subreddit. This is an important development because, up until this point, Questrade was largely uncontested as the only Canadian online brokerage fielding inquiries and responding to questions on reddit. Here is the post that TD chimed in on.

Build a Bot

Even in a world where robo-advisors exist, there are still folks who are just DIY’ers by nature. It was fascinating, therefore, to stumble across one user’s creation on reddit in which they’ve essentially created a DIY robo-advisor tool for everyone – free of charge that can be compatible with Questrade. Now, there are likely many many many caveats about using something like this, but as a proof of concept, it is pretty neat to see a community of DIY’ers who have some programming and investment understanding come together to build something like this.

Into the Close

So, the only thing left to say about this week is TGIF (not to be confused with TIFF). This is the last official weekend of the summer of 2017 so make the most of it if while you can! Have a great weekend!

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Discount Brokerage Weekly Roundup – September 8, 2017

Between natural disasters or man-made ones, this short week has felt much longer than even a regular one.  Of course, there’s still lots of important action to stay on top of, which is something all DIY investors (especially the more active among us) quickly learn is a reality of life in the markets.  This past week there were more than a few market moving announcements – from interest rates hikes to new settlement dates which traders had to maneuver around.

This week’s roundup looks at some market moving news of a new entrant to the Canadian online brokerage space and what that will mean for competitors and DIY investors alike. Next, we do a quick recap of several small developments including the kick-off to a popular investor conference as well as a stock market contest for students that aims to raise awareness for a great cause. As always, we’ll review what DIY investors had to say about Canadian discount brokerages and trading in general on Twitter and in the DIY investor forums.

Virtual Brokers acquired by CI Financial Corp.

It was bound to happen sometime. With pressures on commission pricing and a modest market-size, competing and succeeding in the Canadian online brokerage space in 2017 and beyond requires the scale to withstand commission price declines while monetizing clients through a variety of channels.

Perhaps that was among the factors that led to the major news this past week that wealth management firm CI Financial Corporation announced that it is acquiring BBS Securities, parent to Canadian discount brokerage Virtual Brokers. CI Financial Corporation is one of Canada’s largest independent investment fund companies, and though the terms of the transactions were not released, the safe bet is that Virtual Brokers just leveled up in terms of competitive ability.

According to reporting in the Globe and Mail,  “there are no plans to change any of the current funds offerings or trading fees” at Virtual Brokers, so for the moment clients can rest easy as the deal makes its way through regulatory approvals. Nonetheless, National Bank Direct Brokerage’s move to drop commissions on ETF buying and selling might still mean a shakeup of Virtual Brokers’ pricing is in the cards not too long from now, especially since CI Financial owns ETF provider First Asset.

Competitors to Virtual Brokers, including both the bank-owned brokerages and independent online brokerages, likely need to revisit their game plans now that Virtual Brokers is owned by a company with over $120B assets under management and that has a market cap of $7B. CI Financial is no small fry when it comes to the wealth management footprint in Canada and so the combination of the advisor network alongside substantially greater resources means that Virtual Brokers has discounted access to hundreds of thousands of customers who might also be interested in doing some DIY investing alongside their managed wealth.

For Virtual Brokers, the acquisition means that there are now some serious resources at their disposal.

As part of their news release, founder, CEO and president of BBS Securities, Bardya Ziaian, mentioned “Our firm will benefit from the financial strength and stability of CI, which will support investments in technology, product development and service.” For CI Financial, there is clearly an interest in the financial technology developed by BBS Securities and preparing for the technology arms race that has come to define the wealth management space in general.

Since CI Financial Corp (a publicly traded company) owns Virtual Brokers, it will be interesting to monitor the extent to which online brokerage contributes to the earnings and bottom line. For Canadian DIY investors, there is a strong possibility that Virtual Brokers may once again be able to aggressively revise their commission structure or add in value drivers for their clients that bank-owned brokerages may not be able to match. Either way, this translates into more mileage for the DIY investor dollar, which is always a good thing.

With the ramp up to the ‘busy’ season starting soon, it will be very interesting to see how Canada’s discount brokerages respond. One thing is for certain, however, the newest player on the field will likely force that response to happen sooner rather than later.

Quick highlights

Toronto Moneyshow kicks off

What is arguably one of the largest investment shows in Canada is underway on September 8th and 9th in Toronto, with several Canadian online brokerages in attendance. We took a peek at the social media displays to see what kind of activity was taking place at the event with some snapshots of the action compiled below. Among the online brokerages in attendance are BMO Wealth Management (BMO InvestorLine), CIBC Investor’s Edge, Interactive Brokers and National Bank Direct Brokerage. Check out the @MoneyShows twitter feed for more updates and action from the show floor. (In case the tweets from the show are not loading, they can be accessed here.)

CIBC Investor’s Edge trades for a cause

Canadian bank-owned online brokerage CIBC Investor’s Edge was announced this week as the presenting sponsor in the virtual stock market challenge, the Capitalize for Kids Student Challenge, organized by Capitalize for Kids. Along with market platform company IRESS, who is supplying the software and market data used in the simulation, these firms are helping to raise awareness and funds for Kids Help Phone. Also, funds raised up to $75,000 will be matched thanks to a grant from Brain Canada.

The competition is open to any student at the age of majority who in enrolled in high school or a post-secondary institution for any amount of time between September 1st 2017 and December 31st 2017. Note that the deadline to register for the competition is September 30th.  The challenge itself takes place from October 2nd to December 31st

Top prizes in the competition consist of a combination of a cash credit in a CIBC Investor’s Edge account as well as a lunch or skype session with a CIBC Executive. Top prize in the competition is $2,000 cash credit in a CIBC Investor’s Edge account while second place nets $1,000 and third place $500, both of which are cash credits in a CIBC Investor’s Edge account. In addition to cash prizes, entrants may also have their written analysis of their portfolios evaluated and have their resumes screened by a number of well-known financial firms.

Full details on the competition are available at the Capitalize for Kids website. Also, check out the video below for more information on the competition.

Discount Brokerage Tweets of the Week

Despite the shortened week, there was still plenty of action on Twitter. Mentioned by Canadian DIY investors were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Importer Exporter

One of the realities of DIY investing is tracking trades in a spreadsheet. In this post from reddit’s Personal Finance Canada section, one user was looking for an easy way to export trading data from Questrade into a spreadsheet program. Fortunately, folks from Questrade provided a couple of tips to make it a snap.

Exchanging Ideas

Figuring out how to save on foreign exchange fees between Canadian and US currencies at CIBC Investor’s Edge sparked an interested discussion in this post in Canadian Money Forum. Worth a read for those looking for recent pricing on Norbert’s Gambit costs at this online brokerage.

Into the Close

Never a dull Friday. Our thoughts are going out to all of the folks impacted by hurricane’s Irma and Harvey and we’re hoping everyone can weather the storms safely. There’s no shortage of news to keep eyes glued to screens this weekend – from weather to scandal to sports, most of which will have markets chattering on Monday. Have a safe long weekend and rest up if you can, the next week looks to be a particularly busy one.

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Discount Brokerage Weekly Roundup – September 1, 2017

Heading into a long weekend where Canadian and U.S. stock markets are closed until Tuesday, certain investors are braving a long gulf of uncertainty. Meanwhile, a new and white-hot market in cryptocurrency continues to burn 24 hours a day, 7 days a week. In the digital era, “money” truly doesn’t sleep. For Canadian online brokerages, it is a brave new world where technology is rapidly changing where and how investors manage wealth, and forcing everyone in the world of money to move ever-faster to keep up.

In this week’s roundup, we look at the latest move by one bank-owned Canadian discount brokerage to disrupt the DIY investing space by offering commission-free ETF trading. From there, we profile the newest promotional offer to cross our deals radar from the robo space looking to leverage a social approach to building their client base. As always, we’ll review which Canadian discount brokerages were active on Twitter and which ones were being talked about by Canadian DIY investors in the forums.

Tipping the balance of power: Commission-free ETF trading gives National Bank Direct Brokerage an edge

This week, National Bank Direct Brokerage redrew the map for the Canadian online brokerage industry by eliminating commissions on ETF buying and selling on both Canadian and U.S. listed ETFs, and in doing so, have likely touched off yet another price war in an already competitive commission marketplace.

The skeptical among us, and in fact most seasoned investors, would be right in asking whether or not this is too good to be true – or at the very least, how National Bank Direct Brokerage expects to make any money. Looking into the details and also putting this latest move into context can shed some light on both those points.

First, is commission-free ETF buying and selling too good to be true?

Well, the good news is commission-free ETF trading is positive – sort of. There are some important details to this new pricing structure that DIY investors should be clear about that clarify exactly the conditions under which NBDB clients can trade ETFs commission-free.

The first, and probably most important, condition for the commission-free trading is that purchases or sales need to be made in 100 unit increments. That means that only online orders of 100 or more units at a time will be considered commission-free. Fractional buys and purchases (or sales) of less than 100 units at a time will be charged at the regular commission rates ($9.95 per trade).

Another important condition is that individuals must sign up to receive all of their documents electronically. In today’s world, it’s not that uncommon to be fully digital, however the onus is on users to ensure that the digital versions of trade confirmations and statements are properly stored.

Finally, other important details that could impact users taking advantage of this offer are that commission-free ETF trades do not count towards active trader pricing activity levels, enable annual administrative fees to be waived nor do they help with getting free or discounted access to trading platforms.

In short, for the average investor – including the long-term passive investor, the ability to trade commission-free ETFs is a significant win.

According to Laurent Blanchard, President of National Bank Direct Brokerage, “More than ever, our aim is to innovate to meet the needs of self-directed investors. It’s our priority and today’s announcement is tangible proof. By saving on commissions, our clients will be able to build their portfolios and grow their wealth. This change benefits all types of investors.”

Yes, executing trades in volumes sufficiently high enough to qualify for zero commission pricing will require more organization and, potentially, a higher balance to take advantage of the offer, but savings on transaction fees are savings nonetheless.  On this last point, however, is where the answer lies as to whether or not NBDB can make money by effectively enabling free trading on ETFs (spoiler alert: they’re able to do it).

By including a minimum amount of 100 units to purchase in order to qualify for commission-free ETFs, there’s a reasonable likelihood that this would appeal to individuals with higher portfolio amounts – especially for passive portfolio holders.  As such, for NBDB, their commission-free ETF program might end up having slightly more appeal to individuals with somewhat larger portfolios than to individuals who are just starting out. Therein lies the value proposition.

Individuals with larger balances may also be looking for convenience in wealth and financial management, which would make National Bank and its constellation of traditional banking, lending and other financial services a natural fit. If individuals have multiple accounts at bank-owned brokerages, for example, there is now an incentive to consolidate at National Bank Direct Brokerage. And, it is that increased integration factor that appears to be an emerging trend for the online brokerage space, with notable examples in the U.S. online brokerages.

Screengrab from National Bank Direct Brokerage website

Two weeks ago, we reported on the move by Interactive Brokers to offer the ‘integrated’ approach to wealth management by linking a credit card into their wealth management mix. E*trade Financial, another US-based online brokerage, also offers chequing accounts and bill payments. On the commission-free trading side, both Robinhood and Merrill Edge have commission-free trading, the latter specifically offering commission-free ETFs.

The takeaway: online brokerages relying solely on commission revenue to survive are an endangered species – increasingly integrated financial and wealth management services will be the model that tomorrow’s online brokerages – bank-owned, credit union owned or otherwise will need to adapt to.  The writing is on the wall for high commission charges for order execution.

In that light, the latest move by National Bank Direct Brokerage is clearly a long-term strategy to get the attention, and hopefully business, of investors with larger portfolios. For those with modest portfolios, NBDB’s latest offer provides room to grow with the upside of occasional commission free trading. The added bonuses of being with a bank-owned brokerage, such as convenience of moving money into and out of banking accounts, might be enough to at least put National Bank Direct Brokerage into consideration.

Whichever way the Canadian online brokerage markets respond from here, the latest move by National Bank Direct Brokerage is reminiscent of the commission price drop from RBC Direct Investing in 2014.

Canadian bank-owned online brokerages are now in a world where a bank-owned brokerage is offering commission-free ETF trading. And, regardless of the conditions associated with the offer, nothing gets the attention of investors like something that sounds like a good deal. A bank-owned brokerage with no-commission trading on ETFs is just that.

Predictions are often perilous, but in this case, recent history offers a lesson for the online brokerage market in Canada: adapt quickly or risk obscurity. The one thing that we can predict is that DIY investors will continue to be the winners.

It pays to have friends: SmartFolio launches cash back Refer-a-Friend offer

Refer a friend programs are a great way for existing clients and their friends or family to mutually benefit from opening a new account. For early adopters in the online portfolio management and robo-advisor space, however, there is now another firm that is rewarding existing clients for referring new clients to them.

This week, BMO Nesbitt Burns’ online portfolio management service, BMO SmartFolio, rolled out a referral program as part of its growth efforts in this increasingly competitive space. The “Refer a Friend” program from SmartFolio offers $50 cash back to both the referring party and the referee.

Within the Canadian online portfolio management and robo-advisor space, there are a handful of firms that offer promotional referral deals which typically include waiving of fees and cash back incentives. What is interesting about SmartFolio’s approach to refer a friend programs, is that the referee’s referral bonus can be combined with an existing ‘mass market’ offer. Currently, SmartFolio is offering the first year of management free on assets up to $15,000, so the new referral bonus for the referee can be used in conjunction with this offer.

Another interesting component of the referral approach with SmartFolio is that they’ve managed to automate (or semi-automate) the process of facilitating a referral. In this referral program, SmartFolio clients get an individualized link that they can share directly with their friends/family. This is an efficient and easy way for both the individual doing the referring and the referee to ensure a bonus is generated. SmartFolio clients also receive an individualized referral code that can be shared with friends/family who would prefer to drop by a BMO branch to open their SmartFolio account.

With BMO InvestorLine, by comparison, the referral method relies on entering an email address of the referring party at the time of new account sign up.  Whenever a manual entry is involved, it typically takes more time and can lead to individuals not entering in correct information which can delay or potentially invalidate a bonus being offered.

Like all promotions, there are some important details to consider.

First, to qualify for the SmartFolio “Refer a Friend” bonus, the referee’s new account must be funded with a minimum of $5,000 and it must be kept open with this minimum amount for at least 90 days. If this is done, the $50 bonus will be deposited by the last business day of the month following the 90-day holding period. Another important condition to be aware of is that SmartFolio clients can get credit for up to 30 referrals per year.

As the competition between Canada’s digital online portfolio management providers (aka ‘robo-advisors’) increases, so too will the incentives in play. BMO SmartFolio’s referral program is a win-win solution for existing clients, new clients and of course for BMO Nesbitt Burns too. The fact that this offer can be combined with the current promo from SmartFolio means that anyone interested in testing the waters with SmartFolio can benefit from someone who has already done so.

[*disclosure note: has a referral program in place with BMO InvestorLine and BMO SmartFolio and may receive compensation for individuals opening a BMO InvestorLine account with code SPARXCASH or a SmartFolio account with code STSF and/or clicking through to the BMO InvestorLine or BMO SmartFolio websites]

Discount Brokerage Tweets of the Week

It was a tame week for folks on Twitter, with customer service queries taking the spotlight. Mentioned by Canadian DIY investors were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Deals on data?

For investors and traders alike, data is crucial to making good decisions. How often, and how quickly one trades or invests can determine whether having level 2 data is a worthwhile investment. In this post from, however, one user is looking to get the best price on some detailed information, and finds some pretty interesting online brokerage options.

Cross border shopping

In this post from reddit’s Personal Finance Canada thread, one user was looking for a little clarification on buying U.S. stocks for their TFSA at CIBC Investor’s Edge. Find out what money saving tips and insights other readers had to offer for a user hoping to save on exchange fees.

Into the Close

That’s a wrap on another eventful week. With the last long weekend of the summer upon us, hopefully you’re in a part of the country that isn’t going to require shoveling snow (amirite Labrador?) . And, speaking of snow, it looks like the Game of Thrones fans will have to find something to occupy their time between now and oh, sometime in 2019 when the next season rolls around. Good thing there’s never a dull moment in the markets.  Except when they’re closed for the holidays. In any case, hope you have a great and safe long weekend whatever you happen to be doing!

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Discount Brokerage Deals & Promotions – September 1, 2017

September is here and the fall selection of deals is almost upon us. With just a few weeks to go in the summer of 2017, the action in the Canadian discount brokerage deals section is nevertheless quite hot.

Although there are no new online brokerage deals to report at the outset of September, there is a new offer from the set of Canadian robo-advisors we cover as well as some shuffling of expiry dates on existing offers.

The biggest news for DIY investors, however, is National Bank Direct Brokerage’s official launch of their commission free trading on all ETFs. While technically not a promotional offer, it does warrant mentioning here, since it is a game changer for Canadian online brokerages.  Check out the weekly roundup post on this offer for more insight.

For DIY investors in the market for a new online trading account or looking to switch online brokers, the good news is that there are plenty of offers available across all categories.  Most notably there are still 8 offers for cash back or commission credits (11 if you include the referral offers which have cash back offers attached) which means there’s some added incentive to consider certain brokerages. Of course, there’s also the exclusive SparxTrading offer for those interested in a Questrade account which is among the more competitive offers on the table for a sign up bonus.

As usual, we’ll be keeping an eye out for more deals/promos this month but if there’s anything you spot that could be of interest to other DIY investors, add it to the comments section below.

Expired Deals

Heading into September, there was one offer that officially expired. National Bank Direct Brokerage’s cash back promotion expired, leaving only three providers in this space that currently offering promotions.

Extended Deals

Desjardins Online Brokerage has once again extended their 1% commission bonus offer. The new deadline to take advantage of this offer is December 31, 2017.

New Deals

BMO SmartFolio added an interesting offer into the promotional mix by launching a cash back referral offer. Of the group of online-brokerage affiliated robo-advisors, this is the first cash back referral offer in which referrers and referees can each receive $50 cash. The nice thing about this offer (in addition to the cash back) is that it can be combined with the existing SmartFolio promotion (so long as the deposit conditions are met). Be sure to check out the weekly roundup for September 1st for a detailed look at this promo.

Discount Brokerage Deals

  1. Cash Back/Free Trade/Product Offer Promotions
  2. Referral Promotions
  3. Transfer Fee Promotions
  4. Contests & Other Offers
  5. Digital Advice + Roboadvisor Promotions (new!)

Cash Back/Free Trade/Product Offer Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package. n/a Discounted Commission Rates none For more details click here none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive $88 in commission credits (up to 17 commission-free trades). Use promo code SPARX88 when signing up. Be sure to read terms and conditions carefully. $1,000 $88 commission credit 60 days Access this offer by clicking here: $88 commission-credit offer . For full terms and conditions, click here. none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2017
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive a $50 cash back rebate per quarter. To receive the cash back rebate, at least 20 commission generating trades must be made within a specified quarter. Use promo code: CSHBKQTR17 to access this offer. This offer is open to new clients only. Be sure to read terms and conditions for full details. $5,000 $50 commission rebate (cash back) per quarter (up to $200 cash back over the total period) To qualify 20 trades must be made within a quarter. $50 cash will be rebated in the following quarter. Eligibility period ends June 2018. For more information, click the terms and conditions here September 30, 2017
Open and fund a new account with Virtual Brokers with a deposit of at least $5,000 and receive cash back commission rebates on the first 20 Canadian or US ETF trades made by September 30, 2017. For commission-free Canadian ETFs use promo code: CADSETF2017 and for US ETFs use promo code: USSETF2017. This offer is open to new clients only. Be sure to read terms and conditions for full details. $5,000 $50 commission rebate (cash back) Trades must be completed by Sept. 30, 2017. Cash rebates will be deposited in Feb. 2018. For more information, click the terms and conditions here September 30, 2017
Disnat Desjardins Online Brokerage is offering new clients 1% of assets transferred into the new account in the form of commission credits (to a maximum value of $1,000). Minimum qualifying deposit is $10,000. To qualify, individuals will have to call 1-866-873-7103 and mention promo code DisnatFlex or email: [email protected]. See details link for more info. $10,000 1% of assets transferred in the form of commission-credits (max credits: $1,000) 6 months Disnat 1% Commission Credit Promo December 31, 2017
BMO InvestorLine Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account, with at least A) $100,000 or B) $250,000+ in net new assets and you may be eligible to receive up to A) $300 or B) $750 cash back. In addition, eligible individuals can receive an extra $50 as part of the refer a friend program. Use promo code SPARXCASH when signing up for the cash back offer. Be sure to read the terms and conditions for more details on the offer. A) $100,000 B) $250,000+ A) $300 B) $750 Cash back will be deposited the week of June 11, 2018. Fall cash back offer October 31, 2017

Expired Offers

Last Updated: Sept. 1, 2017 11:55 PT

Referral Promotions

Company Brief Description Minimum Deposit Amount Incentive Structure Time Limit to Use Commission/Cash Offer Deposit Details Link Deadline
Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements. A) $1,000 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+ $25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back Cash deposited into Questrade billing account within 7 days after funding period ends (90 days) Refer a friend terms and conditions Code Number: 476104302388759 none
Scotia iTrade If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link. A) $10,000 B) $50,000+ A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50) 60 days Refer A Friend to Scotia iTrade tbd
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details. $50,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs 45 days after minimum 90 day holding period(subject to conditions). BMO InvestorLine Refer-a-Friend June 30, 2018

Expired Offers

Last Updated: Sept. 1, 2017 11:55 PT

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $135 in transfer fees $135 $15,000 Transfer Fee Rebate Details none
Transfer $20,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees $135 $20,000 Transfer Fee Rebate none
Transfer $25,000 or more from another brokerage and Credential Direct will cover up to $150 in transfer fees. Use promo code SWITCHME when signing up to qualify for the transfer promotion. $150 $25,000 Credential Direct Transfer Fee Rebate none
Transfer $25,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details. $150 $25,000 Transfer Fee Rebate none
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 $25,000 Transfer Fee Promo none
Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to contact TD Direct Investing for further details. $150 $25,000 Contact client service for more information (1-800-465-5463). none
Transfer $25,000 or more to Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Transfer Fee promo tbd
Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made. $135 $25,000 Confirmed with reps. Contact client service for more information (1-800-567-3343). none
Disnat Disnat is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code DisnatFlex. See details link for more info. $150 $50,000 Disnat 1% Commission Credit Promo December 31, 2017
BMO InvestorLine Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account, by transferring in at least $200,000+ in net new assets and you may be eligible to have transfer fees covered up to $200. Use promo code SPARXCASH when signing up to also be eligible for cash back offer. Be sure to read the terms and conditions for more details on the offer. $200 $200,000 Fall cash back offer October 31, 2017

Expired Offers

Last Updated: Sept. 01, 2017 11:55 PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Disnat Desjardins Online Brokerage, in conjunction with MoneyTalks, is offering 3 months of the “Inside Edge” investor information service to Desjardins Online Brokerage clients. Use promo code DESJ2016 during checkout to qualify. Be sure to read full terms and conditions for more information. n/a MoneyTalks Inside Edge Discount none
Scotia iTrade Share a story about a personal finance goal or moment (max 1000 characters) and complete the contest submission form and you may be eligible to win one of three monthly prizes of an Apple Watch Series 2. Contest is open to all Canadian provinces except residents of Quebec. Be sure to read contest terms and conditions for full details. n/a Terms & Conditions available here: Scotia iTRADE #MyMakeItHappen Contest; Entry link available here. October 31, 2017
Disnat Desjardins Online Brokerage is offering $50 in commission credits for new Disnat Classic clients depositing at least $1,000. See terms and conditions for full details. $1,000 Broker@ge 18-30 Promotion none
Scotia iTrade Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details. $1,000 StartRight Free Trade offer none

Expired Offers

Last Updated: Sept. 1, 2017 11:55am PT

Digital Advice + Roboadvisor Promotions

Robo-advisor / Digital advisor Offer Type Offer Description Min. Deposit Reward / Promotion Promo Code Expiry Date Link
Discounted Management Open and fund a new Questrade Portfolio IQ account with a deposit of at least $1,000 and the first month of management will be free. For more information on Portfolio IQ, click the product link. $1000 1st month no management fees KDKFNBBC None Questrade Portfolio IQ Promo Offer
Discounted Management Open a new account with BMO SmartFolio and receive one year of management of up to $15,000 free. See offer terms and conditions for more details. $5,000 1 year no management fees STSF October 31, 2017 SmartFolio New Account Promotion
Cash Back – Referral BMO SmartFolio clients will receive $50 cash back for every friend or family member who opens and funds a new SmartFolio account. Friends and family referred to SmartFolio will receive $50 cash back for opening and funding an account, plus automatic enrollment into SmartFolio’s mass offer in market at the time. See offer terms and conditions for more details. $5,000 $50 cash back (referrer) $50 cash back (referee) Unique link generated from SmartFolio required. None SmartFolio Website
Transfer Fee Coverage Transfer at least $25,000 into Virtual Wealth when opening a new account and you may be eligible to have up to $150 in transfer fees covered by Virtual Wealth. $25,000 up to $150 in transfer fees covered None None Contact customer service directly for more information.
Last Updated: Sept. 1, 2017 11:55 PT