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Discount Brokerage Weekly Roundup – June 8, 2018

As any seasoned investor knows, the stock market is one very big voting machine. And, while there is no ‘leader’ per se, those stocks that get to the top are those that enrich their shareholders. Heading into the end of this week, there’s certainly been a lot of news about politics, which has everyone guessing what’s coming next. For online brokerages, figuring out how to understand the human angle of this market is going to keep a lot of folks very busy these next few months.

It’s been a heavy week for rapid news so we thought we’d slow things down a little by focusing on an emerging trend from one Canadian discount brokerage that is likely to set the tone for ‘online investing’ in the near future. From there, we’ll take a snapshot of the latest tweets from DIY investors & online brokerages this week and close out with interesting chatter from the investor forums.

Going Digital, Getting Human

As a Canadian online investor, it’s not often that you get to hear from the head of an online brokerage outside of a quarterly newsletter. Despite the fierce competition among Canadian online brokerages, it seems that many of the leaders of these firms prefer to stay out of the spotlight, which is why a recent interview from the President of BMO InvestorLine, Silvio Stroescu, caught our attention.

The interview, which appeared on a BMO website – – was part of a podcast by wealth psychology expert Kathleen Burns Kingsbury, and covered a number of interesting topics related to investing online, with a particular focus on women’s experiences with investing.

For added context, what makes this interview particularly interesting isn’t just the content of the interview itself, but also the bigger picture that it fits into. Specifically, it is interesting to see BMO InvestorLine (and SmartFolio’s) digital strategy take shape in a way that their peers aren’t keeping up with. More on that in a moment.

The overall theme of the interview was that ‘online investing really is for everyone’ which is an interesting premise to start from, and probably a reflection of where the “online investing” conversation has shifted to in 2018. Specifically (and especially for BMO InvestorLine) online investing doesn’t necessarily mean DIY investing any longer. The presence of digital/automated/robo advice services, as well as the hybrid AdviceDirect at BMO, mean that going online doesn’t require the same kind of time, mental or emotional commitment that comes along with DIY investing.

It was through this lens that this interview looked at ‘myths’ of “online investing” as well as the impact that technology has had and, perhaps the most interesting, the behavioural insights about investors and the role gender plays.

The latter portion of the interview in which Stroescu details the evolution of SmartFolio is particularly revealing. In this section he reveals how, though the use of Twitter chats, BMO discovered that there was a much deeper emotional component to wealth management and how big of a role that anxiety plays. It was especially noteworthy to learn that in the Twitter chats (which we’ve covered in prior Weekly Roundups) participation was largely female and that there was an open dialogue about the anxieties of investing. In contrast – and also fascinating – was the insights gained from focus groups in which male participants, through their body language, also displayed anxiousness and discomfort in talking about online investing even though they did not come out and state explicitly that online investing made them uncomfortable.

Specifically Stroescu stated:

What we noticed happening was, when we asked the questions about how comfortable are you with investing, the verbal response was, ‘comfortable.’ You wouldn’t hear a lot of anxiety in their voice, yet, when we looked at the body language and the facial expressions, if you could picture people cringing as they say the word comfortable, it showed us that verbally, we didn’t get a high degree of confidence, didn’t get a high degree of anxiety. It was somewhere in the middle. But the facial expression and the body language actually showed a greater tilt towards people being anxious about investing, period.

While there’s a lot to unpack from that statement, the takeaway is that building confidence is not necessarily the same as alleviating fear; it’s remarkable that it was the very human process of observing body language and non-verbal cues rather than the words people used that revealed this phenomenon.

Earlier it was stated that beyond the content itself, it was interesting that how this interview fits into a much bigger digital picture for BMO InvestorLine (and SmartFolio).

What makes this interview remarkable is that unlike many of their peers (both bank-owned and non bank-owned brokerages) is that BMO InvestorLine has made great strides in their online presence. This podcast, the Twitter chats that created a conversation around investing online and perhaps most notably, that their president has a Twitter account and uses it often are signals that there is a level of digital savviness that their competitors are not able to replicate.

In an era when ‘president with a Twitter account’ has come to cause people to hesitate, BMO InvestorLine enabling their president to have and use a Twitter account doesn’t come off as scripted, and even in an interview within a BMO site, the content delivers an interesting, engaging message (rather than being overly self-congratulatory or a sales pitch for services).

For DIY investors, and for the broader category of ‘online investors’ BMO’s approach to providing the ‘digital advice’ as well as the ‘self-directed’ services is probably a model that will be more widely deployed in the future. Of course, it is also their digital and social media savvy that might spur their competitors to “invest” more in creating more human, and ultimately more interesting, investor experiences.

Discount Brokerage Tweets of the Week

From the Forums

Voting for (keeping) Change

Savvy investors, no matter what stage they’re at, are always looking to maximize their gains. For beginner investors, however, it can be tricky to know exactly which move makes the most sense for the effort involved. In this post, from reddit’s personal finance Canada thread, one beginner investor is looking to the internet to help choose between Questrade and BMO for a TFSA.

Paid Parking

For many DIY investors thinking about online brokerages, the focus is generally on a lot of things like commissions or platforms, but very seldom does the topic of where to put uninvested cash come up. That said, this week there were two interesting posts about investors getting the best return on ‘dry powder’ – this post from reddit’s personal finance Canada thread looks at what to do with ‘spare’ cash in Questrade while another post, from the Financial Wisdom Forum, provides some insights from a thread on Interactive Brokers.

Into the Close

That’s a wrap on another frenzied week. The spotlight certainly had no shortage of movement this week, however it did land on a very tragic ending to a very inspiration person – Anthony Bourdain. Loss is always a tough note to close out on, but in that there is also the importance of remembering hope and encouraging one another to connect. So, on that note, have a great weekend and if you can, find a way to extend a hand to connect or reconnect with someone, perhaps over a simple meal. It all starts with hello.

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