Q&A With Hamish Khamisa of SparxTrading.com
What is a big story for DIY investing in 2020 that caught your attention?
The flood of new investors jumping into stock market trading has been THE online investing story of 2020.
For Canadian online brokerages, the impact of such large numbers of individuals looking to open new accounts tested numerous technical and service delivery systems.
Some of those tests showed gaps, such as in customer service channels where wait times became incredulously long; other tests, such as online account opening for those brokerages offering that feature, demonstrated that digitization made a huge difference in satisfying online investors’ urgency to get started as quickly as possible.
What are the trends that you noticed among Canadian online brokerages in 2020?
It almost seems ironic to say so, but a significant portion of the trends that emerged in 2020 reflected the challenges online brokerages in Canada face with scaling as “digital” businesses.
With trading outages occurring multiple times throughout the year at various online brokerages, or customer service wait times regularly stretching into hours, many of these issues trace back their roots to underspending in scalability.
So, at a minimum, one of the biggest trends to emerge among online brokerages has (hopefully) been a discussion of the kinds of systems (in particular, technology) and processes that can support increased activity and rapid changes in capacity. It’s not something users would necessarily see on the front end, but it is clearly visible when trading systems fail during market hours.
Many investors entered the markets for the first time (or came back after being on the sidelines) in 2020.
a. What features should they be looking out for from their online brokerage in 2021?
If 2020 was a mad dash to get into the markets, 2021 will likely bring with it the consequences of lots of trading activity.
DIY investors will be taking a closer look at the fees they have been paying for trading, potentially dealing with the realities of tax consequences and the user experience around managing an online investing account.
b. What can online brokerages do to improve the experience for this group of investors in 2021 and beyond?
Online brokerages, therefore, can and should be considering improving their educational resources to promote better understanding on how different features work and how best to make use of those features when investing online.
User experience is a hot topic with online brokerages. What are Canadian online brokerages getting right and what are they missing the mark on when it comes to interacting with their services?
With so many new investors now on board, ease of use should be a clear focal point for many online brokerages in their strategy and planning for their different touchpoints. Thinking about what “easy to use” means for different categories of clients will be an important determinant of success within each of these segments. There must be a better balance between the needs of newer investors and those of existing or older investors across the service experience.
You also hear from a lot of online investors. What are one or two important topics that came up often with that group (especially in 2020)?
One of the most consistent reasons that clients of online brokerages were up in arms in 2020 related to platform stability and outages, especially during market hours. Clearly, DIY investors have set their expectations very high when it comes to continuity of access, but even more so when commission pricing becomes part of what individuals believe they are paying a premium for.
You have covered online brokerages in Canada for a long time. How would you characterize their pace of change and innovation in 2020? Do you think things will accelerate in 2021? What might contribute to them changing?
Philosophically, most online brokerages in Canada are driven by “evolution” rather than “revolution,” so change and innovation are usually very measured. That said, newer entrants have adopted a more “fintech” approach of “move fast, break things,” where change and innovation are their very reason for being (e.g. democratizing finance).
It is unlikely, despite the macro picture around the online brokerage world, that Canadian online brokerages will shift their stance on measured change. They are, however, slowly becoming more comfortable with talking about the things they’re working on, which should provide greater visibility on innovations taking place at these firms.
SparxTrading.com is an influential resource for online investors to consult as part of their research. Can you provide a comment on the strengths and limitations?
We collect and report on the context of the landscape quite extensively. If it happens at an online brokerage in Canada, there’s a good chance we’ll cover it and be able to offer deep context. We compile data and research to make it convenient to assess an online brokerage before proceeding with a decision to select one.
That said, we offer a lot of information – which is also one limitation of our approach. Individuals who want to be told which brokerage to choose would likely start and end their research with rankings data.
About Hamish Khamisa
The founder and president at Sparx Publishing Group, Hamish has an eclectic background spanning artificial intelligence, biochemistry, financial markets and healthcare (to name a few). Fluent in the language of ideas, inspiration and insight, Hamish welcomes the challenge that every new content project brings. Currently Coquitlam, British Columbia is home, where Hamish enjoys his time as a boundless source of puns for his wife and son.