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Discount Brokerage Weekly Roundup – June 29, 2020

Despite the progress being made in the fight against COVID-19 here in Canada, it will still be quite some time before things truly return to some sense of normal. For the time being though, uncertainty and caution abound heading into the long weekend here and in the US.

In this edition of the Roundup, we take a look at an interesting story that highlights the challenges that digital wealth management is posing to traditional financial advisors. Of course, digital platforms for wealth management also have some sobering news to come to terms with and are being forced to understand the importance of building strong training and communication elements in their service. As always, we wrap up with chatter from investors on the forums and on Twitter.

Sore Spot: Do Ads About Advisors Tell the Whole Story?

For many years, Canadians watching any major sporting or entertainment event on television have likely encountered commercials depicting people having uncomfortable conversations about investing. More specifically, uncomfortable moments about investing with financial advisors. After years of being criticized, it seems like advisors have had enough.

Questrade, the firm behind the campaign to encourage people to move away from financial advisors, is probably best known for their online brokerage services. Over the past few years, however, they have increasingly made inroads into the managed wealth territory, primarily with their digital wealth management (aka robo-advisor) offering.

Originally known as Portfolio IQ, and later rebranded to Questwealth in 2018, the move by Questrade into the managed asset world mirrors a trend in the online brokerage space in the US. In fact, the largest online brokerage in the US, Charles Schwab, generates a substantial amount of its earnings from management of wealth rather than revenue from trades (since they’ve gone to zero for commission rates, this difference is even more pronounced).

Making a splash in the managed wealth arena is no small feat, especially for a new entrant, which explains in part the decision to make a very visible, very provocative set of commercials that strike at the heart of what many investors see as a pain point: price. Specifically, the cost for financial advice.

This past week, an article appearing in Wealth Professional took aim at Questrade’s marketing campaign and its characterization of wealth advisors. In particular, one of the central arguments of the article is that the advertisements paint all advisors with a similar (negative) brush and that it doesn’t reference the fact that there are advisors who provide valuable services for their clients for a “fair” price.

Of course, Questrade is not alone when it comes to challenging traditional managed wealth fees. Other digital wealth management firms – like Wealthsimple – are challenging traditional providers of managed wealth services. Nonetheless, Questrade’s multi-year campaign is one of the most recognizable.

For many Canadian investors – especially those with dedicated wealth managers – it is difficult to understand the broader value of the services being provided if most of that service centres around mutual fund selection, a point made by the Wealth Professional article.

At its core, it seems unlikely and perhaps irrational that a company that is paying for advertising or marketing their product or service would not do so in a way that presents them in the most favourable light or that presents a specific use case. Add to that the challenge of taking a topic like personal finance and making it engaging enough for people to pay attention, and it starts to become clear that to get people’s attention, you have to present the information in a way that makes an emotional connection.

Another interesting takeaway from this article is that while Questrade has successfully managed to ruffle some feathers over the years, both in the online brokerage segment as well as in the managed wealth one, there hasn’t been as creative or concerted an effort by a counterpoint to advertise to Canadian investors.

While Questrade was certainly within their rights to deploy a marketing campaign (or several campaigns), there is also nothing stopping the stakeholders or competing financial advisories from advertising, either. And, therein lies the challenge and opportunity facing providers of financial services: they have to find a creative and compelling way to get onto the radars of their target audience and follow through with a digital experience that extends or represents what the personal experience would be like.

There are certainly situations in which clients appreciate the value and experience of an advisor. However, as Questrade and other online brokerages have shown, those situations can’t be the “easy” ones. The discount brokerage industry arose out of the order-execution job function previously done by many financial advisors. Robo-advisors arose from the desire to create an easy-to-manage solution for balanced portfolios that don’t cost as much as many mutual funds.

Financial advisors who truly delight their clients will see referral business be an important channel, and that kind of advertising is both the most valuable as well as the hardest to compete against.

Trading Online Highlights Risks of Poor UX

When it comes to trading online, especially in the past few months, there is no shortage of emotion.

For new investors, it is difficult to appreciate the number of moving parts (and therefore the number of possible failure points) that online investing requires to work exactly right. However, those who’ve actively traded the markets for any appreciable length of time know that it’s inevitable there will be some kind of technical hiccup or mishap.

Whether it’s a platform outage, flash crash, or some other event, for most casual investors, these are passing news stories. But for those who trade actively, these kinds of incidents can – and do – induce panic.

A tragic story earlier this month of the suicide of a young trader, Alex Kearns, highlights just how important it is for online brokerages to remember the consequences of their technical systems operating correctly, as well as for their user interfaces to work as intended and their risk management protocols to operate sensibly.

While the causes of suicide are complex, one factor that appeared to play a role was the belief by Kearns that an options trade had left him owing over USD $700,000. Specifically, the balance showing was negative because of an options trade that had yet to fully settle.

Among the many stories written about this incident, a common theme references the “gamification” of trading and user interfaces, which, in the case of online investing, muddies the waters when it comes to appreciating the consequences and severity of the actions being taken. It is a delicate but important balance to simplify and make an investing platform engaging but not do so in a way that removes important safeguards to protect clients and their capital.

For their part, Robinhood acted quickly and released a statement on their blog by the company’s co-founders as to what they intend to do in response. Three important steps they committed to taking were adding additional criteria for education relating to options trading, expanding options education, and improving the user interface. Robinhood also made a USD $250,000 donation to the American Foundation for Suicide Prevention.

The reality confronting the online brokerage industry – which is having its best year in memory with regards to account growth and new clients – is what they need to do in order to continue to innovate technologically but also to create a platform and market access experience that is in line with the experience and/or understanding (not just the risk appetite) of the instruments being traded.

As a result of this incident, it will become imperative for online brokerages to invest more heavily in creating clearer communications on how trading works on their individual platforms and what the “trading” cycle looks like – especially around settlement and money moving around and to better evaluate risk.

Discount Brokerage Tweets of the Week

From the Forums

Is It Impossible to Find Good Help These Days?

A curious forum user asks if there are any reasons to use private wealth management over DIY investing. Fellow Redditors weigh in on this debate and lay out the pros and cons of both in this post.

Till Debt Do Us Part

A Redditor in this post brings up the timeless question of whether or not they need to wait to be out of debt before beginning to invest, and a lively conversation ensues.

Into the Close

That’s a wrap on what is shaping up to be another very volatile period inside and outside of the markets. After such a rapid bounce in the market, there are more than a few skeptics out there regarding the sustainability of the recent market rise. Heading into a couple of big holidays this week, however, it seems like even more caution will be warranted for life inside and outside the market. Wherever you choose to celebrate the upcoming Canada Day (and Independence Day), here’s hoping it’s safe and enjoyable!

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Discount Brokerage Weekly Roundup – June 22, 2020

Summer is officially here. With warmer weather now upon us and progress – albeit slower than anyone would like – in the battle against COVID-19, it appears that there is reason for some cautious optimism. A group feeling particularly optimistic heading into the summer are Canadian discount brokerages. The combination of standard commission rates and higher trading volumes means a rising tide for the fortunes of Canada’s brokerages.

In this week’s edition of the Roundup, we hop back into the saddle after a week away and profile the interesting shift to Canadian online brokerages being candid about the numbers of investors opening accounts. From there, we focus in on the signs of change taking place at a pair of online brokers and the visual shift to become more diverse on their website. As always, we’ll close out the roundup with chatter from the investor forums and on Twitter.

Counting on Numbers: Online Brokerage Activity in the Spotlight

For Canadians, our neighbours to the south are a constant source of news and focus. In covering the online brokerage marketplace in Canada, however, the activities in the US take on an even greater significance. The US online brokerage space – and by extension the activities of retail investors that funnel trading activity through those brokerages – provides an interesting window into the trends impacting investors who choose to trade stocks online.

One of the biggest stories in the online brokerage space that we have been monitoring and reporting on since March of this year has been the spike in investor interest in participating in the stock market.

In what would normally be an environment that would “scare” investors away, the reality of the whipsawing market in hard numbers from US online brokerage shows just the opposite. The volatility in the markets has caused a surge in online investing account openings as well as record trading activity. Even though the word “unprecedented” has been tossed around a lot during the COVID-19 pandemic, the reality is that online brokerages in the US have never really seen this level of interest and activity in their history.

Which brings us to Canada. The news around trading activity among Canadian DIY investors and what that means to Canadian discount brokerages is only starting to trickle through.

Unlike their US counterparts, Canadian online brokerages are not publicly traded – at least not as a pure play, the way Interactive Brokers, Schwab, Ameritrade (which is in the process of being acquired by Schwab), and E*Trade (which is in the process of being acquired by Morgan Stanley) are. Those US online brokerages frequently and regularly comment on their performance, which includes standard key performance indicators (KPIs) on the success or health of the business. Included in those metrics is usually data on trading volume, revenue from trading, and the total number of customers, as well as new customer accounts, in any given period. Because the US online brokerages are publicly traded, they are required to disclose a lot more about their business than private companies are.

In the Canadian online brokerage marketplace, however, things are very different. Online brokers in Canada are normally coy or silent about the hard numbers regarding account openings, trading volume, and revenue generated from trading commissions. But these are not normal times, and the news cycle covering online brokerage activity among retail investors in Canada has a surprisingly high number of online brokerages disclosing information about the numbers of accounts opened and trading volumes – to a degree.

Over the past few weeks, Canadian online brokerages such as BMO InvestorLine, Questrade, Scotia iTRADE, TD Direct Investing, and Wealthsimple Trade have weighed in on the record levels of trading and account openings they have witnessed. This past week, BNN Bloomberg cited numbers from a recent Investor Economics report that showed close to 500,000 accounts were opened in the first quarter of the year here in Canada. The fact that online brokerages or BNN are talking about these numbers at all is highly unusual. However, when diving into the numbers themselves, it is also worth noting that there is no analogous disclosure mechanism in the US that would require or compel an online brokerage in Canada to reveal these numbers. In other words, it’s largely the honour system at play. The operative questions would be why – or at least why now – and what would they stand to gain by putting these numbers “out there”?

One important reason is because the traditional media is putting a spotlight on the issue, it is a great time to get additional exposure without having to dip too far into an advertising/marketing budget. Having a platform like BNN reach out to discuss the state of the markets and the retail investor angle is certainly a great way to gain exposure on a topic that is central to their business. A second reason to start flexing on numbers is to indicate to potential clients the “popularity” of the brand with online investors.

The saying in the stock market is that higher prices lead to higher prices. When it comes to sharing how many online investors call a particular brokerage home, it spotlights an important – and difficult to contest – set of attributes about a brokerage: that they are where people ultimately decide to open accounts. In a muddied world of “best online brokerage” statements, the number of actual online trading accounts that a Canadian brokerage can demonstrate can go a very long way in shaping whether investors feel confident in a particular brokerage.

The forces that have driven online investors to open up online trading accounts – namely uncertainty around the impacts of COVID-19 – are likely to be in place for some time. As such, it will still likely impact the number of newer investors coming into the markets and result in elevated trading volumes. For Canadian online brokerages, that means the forecast for online trading is bullish.

That said, for online brokerages, there is clearly a shift in strategy taking place during these market conditions. From contractions in advertising and incentive offers, to increased conversations about the industry, markets, and their own strengths and success, Canadian discount brokers are once again finding ways to distinguish themselves from one another. That is going to be even more important now that new entrants are coming into the fray and vying for investor attention.

Signs of Change

In addition to the news being heavily focused on the COVID-19 pandemic, there has also been an important focus on diversity, inclusion, and ending discrimination. In the online brokerage world, indeed in the world of financial services, one interesting angle we have observed over the years has been the visual portrayal of an investor.

Historically – and, more precisely, within the past five years – there has been a gradual shift in the way in which the Canadian online brokerage industry has started to think about what an online investor “looks like,” and by extension what that translates into on their websites.

This past week, there were two important visual developments noted at Interactive Brokers and Virtual Brokers.

In the case of Interactive Brokers, the hero image (the primary image that a user who visits a website sees) was replaced: from the iconic Wall Street – or even white male – investor to a professional-looking female. Visually, this is an important shift for Interactive Brokers, whose commercials and imagery have largely leaned into the portrayal of the target client as the active (male) trader. In fact, the images shown below compare what Interactive Brokers had on their website in April and what they have replaced it with just recently. While there is still work to do as far as capturing visual diversity – in particular, ethnic diversity – it was nonetheless commendable to see the change in visual direction, especially at the homepage level.

Another Canadian online brokerage that has taken an important visual direction change is Virtual Brokers. This past week, a new layout on the homepage appeared in which the people profiled look very different from those who were there previously. Below are images from the website (snapshots taken at the end of 2019 and this past week) that show how dramatically different the portrayal of people (DIY investors) now feels, especially in light of the conversation around diversity and inclusion.

While changes to visual imagery or website layouts are generally not something that makes the news, the conversation about being discriminated against or being biased against because of skin colour or gender is a conversation taking place right now. Whether or not the timing of these changes is coincidental or deliberate to what is going on right now with respect to greater awareness of discrimination around the world, looking at these two changes that have taken place through the lens of diversity and inclusion drives home the point that how online brokerages – especially Canadian online brokers – think about DIY investors needs to change. At the very least, leadership (and every level of the organization) should be conscientiously asking, how representative of the Canadian population’s diversity is their brand? Are they truly listening and reflecting the social fabric? Or are they perpetuating biases around who can be an investor or who can be wealthy and what they should look like?

Progress may not always happen quickly or in a straight line, but it is clear when you see it, and these days, we certainly would welcome seeing more of it.

Discount Brokerage Tweets of the Week

From the Forums

Week In, Weak Out?

A Redditor turns to the forum to ask if it’s smarter to invest weekly or biweekly in this post. Fellow users reflect on the negligible impact of such a short timeframe while considering the amount of effort it may take.

Walk in the Park

In this post, a DIY Investor wonders where the best place to “park” their money is while they save for the down payment on a house. Fellow forum users share advice and their past triumphs and missteps in the same journey.

Into the Close

That’s a wrap for the first Roundup of the summer. With many parts of Canada opening up again, hopefully there are lots of opportunities in the days ahead to enjoy some good summer weather (responsibly, of course!). Traders will certainly be treating the markets like a barbeque and keeping an eye on just about everything that’s happening daily. Here’s hoping good news is less than rare this week!

 

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Discount Brokerage Weekly Roundup – June 8, 2020

Many seasoned investors know that the stock market acts as a giant voting machine on what things are worth. What many people gloss over, however, is the fact that stock markets often start figuring out what something is worth by looking into the future and ignoring what things are worth in today’s dollars. Why this is relevant, especially today, is that despite what is happening now – or perhaps because of it – stock markets are looking at a picture of the future world that is doing better (economically) than it is today. Here’s hoping it’s a better, more prosperous future, for those long overdue that prosperity.

In this edition of the Roundup, out of recognition of the protests against racism and social injustice in general, and the Black Lives Matter cause in particular, we will once again use our platform to provide a moment to educate and engage with a difficult but necessary conversation. From there, we’ll step back into the coverage of Canadian discount brokerages, and how one popular brokerage has the deals stage and spotlight all to themselves at the moment. As always, we’ll wrap up with chatter from DIY investors on Twitter and in the investor forums.

Supporting Change

Resolving difficult issues requires both commitment and resolve.

Taking a stand against the kinds of social injustices that led to the needless death of George Floyd and many others before him requires courage to raise your voice against racist actions and behaviour.

Even though the Weekly Roundup puts online brokerages and DIY investing in the spotlight, there’s no denying that the story that deserves the spotlight is this one.

In order to do our part to help effect change, we encourage readers to take a few minutes to watch a powerful interview with Jane Elliott, an educator who has been working with commitment and resolve to end racism in the United States.

 

Questrade Promotions Take Centre Stage

If there is one theme that 2020 has thrown at DIY investors and online brokerages, it is to be prepared for change. At the beginning of the year, very few people saw the COVID-19 pandemic unfolding the way it did. Fewer still could have predicted the market trajectory over the course of the pandemic – with stomach-turning volatility ultimately leading markets and certain stocks to be in record territory (high and low).

Since the massive stock market declines in March and throughout their subsequent recovery, a regular feature of the Roundup has been monitoring the impact of the surge in volume of trading and volatility to online brokerages. The net takeaway from data in both the US and Canada is that the business of being an online brokerage has never been better – at least from a revenue-generation standpoint. Account openings are at record levels, and with trading volumes up and commission-per-trade also still pushing almost $10 at most major Canadian online brokerages, the earnings for the past three months have likely been as healthy as they’ve been in almost a decade.

One area that hasn’t seen as much action, however, has been the deals and promotions from Canadian discount brokerages. In this month’s section, the biggest story for a change wasn’t what the newest deal was, it’s what it wasn’t.

BMO InvestorLine, one of Canada’s big-five bank-owned online brokerages, has had an active deal of some kind or another – whether cash-back or commission-free trade – for about as long as we’ve been tracking promotional offers. This month, however, on the heels of what was set to be another new offer to replace an expiring cash-back promotion, there was nothing.

Granted, BMO InvestorLine still has their referral promotion and their offer for transfer-fee coverage, but their absence from the new deals of the month is a notable change for the space and is, perhaps, a signal that strong demand by DIY investors for online trading accounts has forced online brokerages to either pause or delay launching promotions. Indeed, from the online brokerage’s point of view, when demand is so strong, incentive offers are less likely to determine whether or not a DIY investor will ultimately choose to open an account.

Interestingly, the withdrawal of BMO InvestorLine from the commission-free trade or cash-back promotion offer section this month means that Questrade is the sole provider of offers in the commission-free trade space – something that is almost unheard of in the history of tracking offers for DIY investors in Canada over the past decade.

How long other Canadian online brokerages enable Questrade to be the sole provider of a promotional offer is a real unknown. It is interesting to note that incentive offers provided by online brokerages are meant to attract the attention of DIY investors. As referenced in last week’s Roundup, the latest rankings on investor satisfaction by J.D. Power suggest that the differences between online brokerages in Canada continue to shrink. As such, what would prompt an online investor to try one brokerage over another might come down to something like a promotional offer. All things being about equal, the better deal appears to be part of the decision-making process and as a result, Questrade stands to be on the winning side of many of the “undecided” DIY investors.

A closer inspection of the comments on social media, in particular Twitter, also highlights the frequency with which Questrade is mentioned as a viable option for DIY investors contemplating which online broker to choose. Thus, competitors to Questrade will be challenged to educate consumers and/or provide a much stronger user experience in order to compete against Questrade on a feature-for-feature basis. Judging by the latest J.D. Power investor satisfaction results, in which Questrade was crowned the top online brokerage in this regard, other Canadian brokerages have their work cut out for them. Not only do promotional offers by online brokerages make sense for simply attracting undecided clients to try out a particular provider, but they also offer a way to shift the value perception in what is a very competitive market without having to undertake a massive technology project or feature release.

In short, it seems like the calculus favours Canadian online brokerages coming to market with deals in the not-too-distant future, and it also seems like until that happens, Questrade will have carved out a market-leading position in the deals-and-promotions space. Given that there are no challengers to them for commission-free trades, then it is safe to say at this point, theirs are the best (and only) online brokerage commission-free deals at this time. So, for Questrade, on top of the recent achievement of best online brokerage from J.D. Power, they are putting even more distance between themselves and the rest of the Canadian online brokerage pack. While large bank-owned brokers may be able to rely on the strength of the banking brand, that will only work to a point. For other brokerages, however, the message is fairly clear: invest heavily either in improving the client experience or in attractive incentives, otherwise it will be incredibly difficult to get the attention of investors without spending a lot to do so.

Discount Brokerage Tweets of the Week

 

From the Forums

DIY or Bust

A Redditor looking to venture into truly DIY investing turns to the forum for insights from fellow forum users in this post. Responses range from suggestions on TFSA contributions to guidance on which online brokerage might best suit them.

Minimizing Risk of Transfer

In this post, a forum user ponders whether in the midst of COVID-19 is a good time to transfer their portfolio. Fellow Redditors weigh in on the myth of timing the market and point to the bigger picture in investing.

Into the Close

That’s a wrap on another edition of the roundup. Markets continue to push higher, and even though the economic news is not as bad as it originally was predicted to be, there are growing warnings by notable investment-industry personalities (including the founder of Interactive Brokers) that prices are starting to become detached from underlying value. In other words, the market appears to be overbought. At a certain level, markets will reach a tipping point; however, in the near term, DIY investors and online brokerages are setting their sights as high as Elon Musk. Here’s hoping that the market-trading autopilots are prepped for the bumpy ride ahead.

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Discount Brokerage Deals & Promotions – June 2020

Just like that, it is now June. The past few months have simultaneously felt like the slowest yet fastest months ever, and it is safe to say that the first half of 2020 has been rather tumultuous.

However, for every bad news story we have heard or read about, there are countless good ones that have emerged. With the second half of the year commencing, and as we inch closer toward the summer season, it is our hope that the world becomes filled with more rays of sunshine – both literal and metaphorical.

In the markets, online brokerages have experienced unprecedented levels of interest, despite market volatility, as new and old investors flock to either open new accounts or increase their trading volumes. With these historic levels of investor interest, Canadian discount brokerages have focused their efforts on servicing clients and have chosen to maintain the same, familiar discount offerings throughout June.

In terms of promotional changes, the biggest news is that BMO InvestorLine is putting their long standing tradition of running a promotion on hold. As such, their cash back deal which is set to expire at the start of this month, will not be replaced by another. That leaves Questrade with a very enviable position in the promotional spotlight (for the time being).

As always, Sparx Trading will add new updates as they appear throughout the month, so be sure to check back regularly.

Expired Deals

BMO InvestorLine is bidding adieu to their cash back promotion. This deal is set to expire at the end of the day on the 1st of June.

Extended Deals

No extended deals to report at this time.

New Deals

No new deals to report at this time.

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
  6. Offers for Young Investors

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
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, 2020
Open and fund a new qualifying account with at least $25,000 and you may qualify for one month of unlimited commission-free trades and up to one month free of an advanced data package. Use promo code ADVANTAGE14 when opening a new account. Be sure to read terms and conditions for full details. $25,000 commission-free trades for 1 month + 1 month of advanced data. 1 month Active Trader Program December 31, 2020
BMO InvestorLine Open a new qualifying account at BMO InvestorLine with new assets worth at least A) $50,000; B) $100,000; C) $250,000; D) $500,000 or E) $1M+, and you may be eligible to receive a cash back reward of up to A) $250; B) $450; C) $800; D) $1,000 or E) $2,000. Use promo code SPARXCASH when registering to qualify. Be sure to read full terms and conditions. A) $50,000 B) $100,000 C) $250,000 D) $500,000 E) $1M+ A) $250 B) $450 C) $800 D) $1,000 E) $2,000 Cash back will be deposited week of December 14, 2020 BMO InvestorLine Cash Back Offer Details June 1, 2020

Expired Offers

Last Updated: May. 31, 2020 16:20PT

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 B) $10,000 C) $25,000 D) $50,000 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
If you (an existing Qtrade Investor client) refer a new client to Qtrade Investor and they open an account with at least $1,000 the referrer and the referee may both be eligible to receive $25 cash. See terms and conditions for full details. $1,000 $25 cash back (for both referrer and referee) Cash deposited at the end of the month in which referee’s account funded Refer A Friend to Qtrade Investor none
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $5,000 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. $5,000 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 January 5, 2021

Expired Offers

Last Updated: May 31, 2020 16:44PT

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 n/a Transfer Fee Promo none
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $200 in transfer fees. $200 $15,000 Transfer Fee Rebate Details none
Transfer $15,000 or more into a new HSBC InvestDirect account and you may be eligible to have up to $152.55 in transfer fees covered. $152.55 $15,000 Confirmed via email contact with HSBC InvestDirect Rep. Contact client service for more information. none
Transfer $15,000 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 $15,000 Transfer Fee Rebate 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 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 Transfer Fee Promo Contact client service for more information (1-800-465-5463). none
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
BMO InvestorLine Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account and you may be eligible to have transfer fees covered up to $200. Contact client service for more details. $200 Contact client service for more information Contact client service for more information (1-888-776-6886) none

Expired Offers

Disnat Desjardins Online Brokerage is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $10,000 into a Desjardins Online Brokerage account. You’ll have to call 1-866-873-7103 and mention promo code DisnatTransfer. See details link for more info. $150 $10,000 Disnat 1% Commission Credit Promo January 8, 2020
Last Updated: May. 31, 2020 16:35PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Submit your information via the Hardbacon website to be referred to National Bank Direct Brokerage. Open and fund a qualifying account and you may receive up to 20 commission-free trades and discounted trading commissions. Be sure to read full terms and conditions. n/a Hardbacon Free Trade Promo none
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: May 30, 2020 16:39PT

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. $1,000 1st month no management fees KDKFNBBC None Questrade Portfolio IQ Promo Offer
Cash Back Open and fund a new or existing SmartFolio account with at least $1,000 and you could receive 0.5% cash back up to $1000. Use promo code PROMO1000 when opening a new account. See terms and conditions for full details. This offer can be combined with the refer-a-friend promotion. $1,000 0.5% cash back to a maximum of $1000. PROMO1000 January 2, 2020 SmartFolio Cash Back Promo
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. $1,000 1 year no management fees STSF April 30, 2019 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. $1,000 $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: May. 31, 2020 16:40PT

Offers for Young Investors

Brokerage Offer Type Eligible Age Range / Client Segment Offer Description Min. Deposit Expiry Date Link
Student Pricing Clients with CIBC Smart™ Account for students $5.95 per trade and zero annual account fees not required None CIBC Student Pricing
Broker@ge 18-30 18-30 years old investors Benefits: * 5 free transactions (Minimum deposit of $1,000 required) * No inactivity fees * No asset minimum to maintain for free registered accounts * Exclusive events * Disnat Mobile App $1,000 None Broker@ge 18-30
Offers for professionals & Students Students in selected fields of study Professionals and students in the below fields can benefit from a reduced pricing structure: * Engineering students * Legal, accounting and business students * Healthcare students * Health sciences students * Nursing students Benefits: * $5.95 commission on equities * $0 commission on ETFs * $0 annual administration fee not required None NBDB Student Pricing
Young investor pricing 18-30 years old investors Benefits: * $7.75 commissions for stock and ETF trades * No account minimums * No quarterly admin fees min. $50 a month through pre-authorized contributions. None Young Investor Pricing
Waiver of account maintenance fee Clients who have RBC Student account, currently or in the past 5 years. The Maintenance Fee ($25 per quarter) is waived, regardless of the account balance. not required None Zero Account Management Fee
Young Investors Offer Clients below 26 years old Low activity account administration fee and the RSP account administration fee are waived. not required None Young Investors Offer
Zero Account Administration Fee Clients below 26 years old The account administration fee ($24.95 per quarter) is waived. not required None $0 Account Administration Fee
Last Updated: May 31, 2020 16:45PT
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Discount Brokerage Weekly Roundup – June 1, 2020

For anyone watching any kind of news or social media, it is difficult to fully process what is unfolding in cities around the world. With so many of us in Canada and around the world still under restrictions to stay close to home, the window to the outside world has become a digital one. Despite even greater access to technology and almost limitless amounts of information, collectively we are struggling to make sense of something so senseless.

So, although we will run this edition of the Roundup, the most important story, the one that needs to be heard, will be first. Take a moment to watch it, hear it, and let it sink in. From there we will take a pause, catch our breath, and do our best to continue to move forward. Keep reading for a deep dive into the latest Canadian online brokerage rankings and what they reveal about the state of the industry, including what it needs to get right with the next generation of DIY investors. Finally, we close out with chatter from DIY investors on Twitter and in the financial forums.

George Floyd

Latest Online Brokerage Rankings Show Room for Improvement

If there’s one thing that’s synonymous with the end of the school year, it’s report cards. For Canadian discount brokers, the grades are in from a noteworthy financial services research firm and it’s clear that for many of them, improvement is needed.

Though seemingly straightforward on the surface, online brokerage reviews and rankings are challenging endeavours. So much about rating online brokers depends on how the rankings are defined and what is actually being measured, which is why it is often hard to compare different online brokerage rankings. They simply measure different things about the Canadian discount brokerage industry.

This past week, the financial services research unit of J.D. Power released their annual evaluation of the Canadian online brokerage industry with their Self-Directed Investor Satisfaction Study. Though the name and the study have changed slightly over the 12 years this evaluation has taken place, at its core, it continues to measure “investor satisfaction” and uses that to determine which Canadian discount broker is “best.”

Before diving into this year’s results, it’s worth mentioning a few points about the study itself, to better contextualize what it does (and does not) measure.

The first and probably most important factor to note is that the Investor Satisfaction Study measures just that: investor satisfaction. In this study, investor satisfaction is comprised of seven components:

  1. Account information
  2. Commissions and fees
  3. Firm interaction
  4. Information resources
  5. Investment performance
  6. Problem resolution
  7. Product or service offering

Given that investor satisfaction is somewhat of an abstract concept, it is useful to have these categories in place to help structure how to think about the ultimate question when it comes to any client experience: were clients satisfied with the product or not?

Of course, while it would be nice to get a simple “yes” or “no” answer, the reality is that these are complex concepts and there are things that brokerages do differently, perhaps better or worse than others. Further, how investors interpret things like “customer experience” may be highly subjective and as such make it a challenge to measure. Nonetheless, the scale that the Investor Satisfaction Study is built on is a numerical one that scores all brokerages out of a maximum possible 1,000 points.

With that context in mind, it was interesting to see what the 2020 version of the study uncovered in terms of Canadian DIY investor perspective. More interesting, however, was the comparison of this year’s results to the previous year’s, as it uncovers important differences and shifts in the industry that have taken place since the last time this study was conducted.

At a high level, one of the first things that stands out about the 2020 results is the drop in average investor satisfaction compared to the 2019 study. The average for the industry this year was 717, but last year it was 726 – a sign that the industry did worse when it came to investor satisfaction.

Averages, however, only convey part of the picture. What was also interesting to take note of is that the spread between scores narrowed.

Last year the difference between the best ranked online brokerage (with a score of 753) and the lowest ranked brokerage (with a score of 698) was 55 points. This year, that range dropped to 33. In fact, with the exception of 2019, since 2013 and 2014 (where the range was 64 points) the spread between “the best” and “the worst” in terms of investor satisfaction had been decreasing.

The compression of this range seems to suggest that DIY investors are finding the experience increasingly similar between Canadian online brokerages, a signal that commoditization is taking hold and that online brokerages are not doing nearly enough to differentiate or out-innovate one another.

Nowhere is this more evident in the 2020 results than in how close the top four online brokerages were from one another.

The difference between first (Questrade) and second place (BMO InvestorLine) was five points, and the difference between second (BMO InvestorLine), third (Desjardins Online Brokerage), and fourth place (National Bank Direct Brokerage) was each one point, respectively.

As poorly as the Canadian discount brokerage industry as a whole performed relative to 2019, however, there was one exception. National Bank Direct Brokerage was the only discount brokerage to see a surge in investor satisfaction scores, rising 31 points from 2019 to 2020, and moving from last place in 2019 to fourth place in 2020.

Despite dropping four points on a year-over-year basis, Questrade managed to rise in the rankings from third place last year to take top honours in 2020 with a score of 736. At the other end of the spectrum, Scotia iTRADE ranked last this year, falling to a score of 703.

One online brokerage that stands out as having a significant shift downward is CIBC Investor’s Edge. This popular low-cost online brokerage fell 40 points compared to last year and slipped from a second-place finish to a seventh.

Importantly, not all Canadian online brokers were measured or reported publicly. Popular brands such as Qtrade Investor, Virtual Brokers (soon to be CI Direct Investing), Interactive Brokers, and HSBC InvestDirect did not have data published about their level of investor satisfaction in this year’s results.

So, what’s driving the decrease in investor satisfaction among Canadian DIY investors? One of the biggest areas where Canadian discount brokerages appear to be struggling is website stability and accessibility.

Somewhat shockingly, 46% of DIY investors reporting an issue with an online brokerage chalk it up to a problem with the website, and 29% of investors surveyed were unable to access their online brokerage website at least once during the prior 12 months.

It is difficult to determine how representative the sampling of this survey is for all DIY investors across Canada, but these numbers are concerning, considering that investors put their nest eggs or significant savings in the hands of online brokerages. These results, however, do help to validate the scores of complaints DIY investors have logged on Twitter about Canadian online brokerage websites going down during trading sessions. And, keep in mind, these survey figures were generated prior to the COVID-19-induced market meltdown, which saw unprecedented surges in trading volume and account sign-ups.

Not being able to access a trading account when you’d like to is frustrating enough; however, not being able to do so when market opportunities open up – that certainly leaves an impression.

Perhaps the most intriguing number reported in the online brokerage rankings was that 26% of millennials (or younger) indicated that website inaccessibility has got them thinking about switching brokerages. That’s a huge number in an extremely hard-to-win-over segment.

The rankings from J.D. Power highlight that the Canadian online brokerage space will increasingly face a challenge to escape becoming commoditized. In these latest investor satisfaction metrics, what ultimately separates one online brokerage from another is becoming harder to distinguish.

Perhaps ominously, the relatively slow pace of innovation in this online service leaves the industry exposed to possible disruption by a provider able to deliver the technology piece with greater reliability and at a lower price. This is certainly the case in the US, in which an online brokerage was able to grow to an extraordinary size while lowering the price of commissions to zero.

With so many online brokerages facing technology challenges even when investors weren’t stampeding into and out of markets, the past several weeks have uncovered the limits of customer service and client experience capabilities at many online brokers. And while the news certainly isn’t all bad at Canadian brokerages, the scores show that investors expect online brokers should be doing better.

Discount Brokerage Tweets of the Week

From the Forums

Going All Out

A forum user contemplates breaking from their investment plan and selling everything to avoid the stress of a turbulent market in this post. Fellow DIY investors weigh in by sharing their approaches and thoughts on the temperament it takes to invest.

Where’s the Wealth?

In this post, a Redditor inquires about how illiquid wealth works, and fellow forum users outline the imprecise nature of such wealth and offer helpful analogies.

Into the Close

It almost goes without saying that the start of this new month will begin on uncertain footing. There are many events taking place with very little visibility as to exactly how they will unfold. However, of the things that can be controlled, here’s hoping that readers remember to find ways to be kind, stay informed, and find the courage to dream for and change the world for the better, one action at a time.