And just like that, October is upon us. Changing leaves, falling temperatures, and costumes are now part of the normal routine; however, this year it seems like this month (and those coming after it) are going to be filled with new features and deals from Canadian online brokerages.
In this week’s Roundup, we catch up on the latest activity in the deals and promotions section, and highlight how commission-free trading is starting to shape the kinds of promotions we’re seeing emerge from online brokerages heading into RSP season. From there, we review the rocky start to QuestMobile, the new trading app experience launched by Questrade and the lessons to be learned from rolling out a new platform. With all of the commentary on the Questrade story, forum chatter was paused for this week (not to worry, there’s plenty to dig into) but will return again next week.
Tricks and Treats: DIY Investor Deals Update
October is often associated with treats and for Canadian self-directed investors, it seems like this month is shaping up to be especially treat-worthy.
The start of a new month is a great time to check in on deals and promotions being offered by Canadian online brokerages, and this month did not disappoint. With two big names, RBC Direct Investing and Qtrade Direct Investing, electing to extend commission-free trade offers and another bank-owned online brokerage, HSBC InvestDirect, launching a commission-free trade offer, there was a clearly a trend towards leaning into commission-free trading.
This year more than any other, promotions and incentive offers are going to play an important role in swaying online investor opinion – and loyalty.
Since the seismic shift in the Canadian online brokerage landscape from National Bank Direct Brokerage and Desjardins Online Brokerage offering commission-free trading (on equities and ETFs), there’s no doubt that other Canadian online brokerages are discussing how they might position themselves in a commission-free trading world.
While none of Canada’s online brokers are in a hurry to go commission-free, there is also a sense that this might be the last year in which commission rates can stay where they currently are. As such, commission-free trade promotions offer a middle ground for existing players to entice new clients while they configure themselves for a commission drop. In both the commission-free offers from Qtrade Direct Investing and RBC Direct Investing, the timeframe to use up a healthy number of commission-free trades (50 apiece) ranges from several months to two years, respectively. In terms of RBC Direct Investing, it is the longest that we’ve seen a commission-free trading offer stretch out to, a signal that the need to do so has clearly come.
A subtle but important maneuver we have also observed is the movement of expiry dates of the promotions themselves.
While extending offers is nothing new (Desjardins Online Brokerage famously kept extending their commission-free deal for a few years), the duration of recent deals seems to be a bit shorter than in years past. Wealthsimple Trade, for example, has been using shorter time frames than their competitors, and with the latest offer from RBC Direct Investing, the extension of the promotion expiry date was only for an additional month. Historically, promotional offers would last for several months; however, the tide has clearly shifted given everything that has happened this year.
Looking across the online brokerage landscape, it’s almost a given that big-bank online brokerages that don’t have a big deal will have to come to market with something enticing. Cash-back offers are hard to come by these days, which is why BMO InvestorLine currently stands alone in this category – especially when compared with its bank-owned brokerage peers. That said, long-duration commission-free trades seem to make the most sense for “occasional” investors who would enjoy the peace of mind that for the next year or two, there is a low likelihood of them needing to pay much (or anything) for equity or ETF trades. It would certainly sway investors away from opening a “test” account at zero-commission brokerage and instead open a new account or deposit new funds into an existing account.
The fact that we’ve already seen two big deal extensions and a new offer come to market at the beginning of October is a clear signal that online brokerages in Canada are gearing up for a busy RSP season battle.
Promotions offer a strategic option to online brokerages that aren’t ready to drop commission prices just yet. And, even at online brokerages that offer commission-free trading, such as Wealthsimple Trade, promotional offers still play an important role in capturing new client interest. Whichever route that brokerages take this fall, Canadian self-directed investors are in for a treat.
A (Cautionary) Tale of Two Screens: Questrade’s New Layout Generates Mixed Reviews
If there’s one big theme to 2021, it’s been new features and offerings from Canadian online brokerages. This past week, Questrade was the latest online brokerage to launch a new (and long-awaited) mobile trading experience.
Our new mobile app, QuestMobile, has arrived! 🎉— Questrade (@Questrade) September 27, 2021
We’re excited to bring you an easy-to-use mobile investing experience with many new features and a clean, straightforward design.
Now available on the Google Play & Apple app stores. pic.twitter.com/NPlkeEuVMR
Unfortunately, it didn’t quite go as intended.
The launch of a new website or app experience is something that wouldn’t ordinarily generate a lot of discussion or coverage. So, in that regard, this roll out was unusual in the degree to which many online investors did not like what they saw.
In fact, on the Questrade reddit thread, we collected (and read through) no fewer than 20 different threads complaining about the changes to trading experience. Twitter and other online investor forums also had a similar set of responses. For reference, here are some of the comments regarding QuestMobile on Questrade’s reddit:
There is definitely a lot to unpack in reading through the investor comments and reactions to the new interface. Through some detective work, it is evident that online investors seemed to take issue with the fact that the desktop and mobile experiences were rendered in the exact same way, something that clearly didn’t sit well with desktop users.
While the new QuestMobile experience was designed around keeping things simple and easy to navigate, the biggest ask for users of the desktop experience was how to revert back to the way things were.
Unlike other rollouts of new platforms we’ve seen over the years, it wasn’t just the case that things were unfamiliar either, it was that information that users on desktop were used to seeing was no longer there. Information such as bid/ask spreads or watchlists were not part of the “new” default view. To find those features, users had to navigate to and install Questrade Edge, a separate platform that was what desktop users were used to seeing.
As feedback from the new rollout started to emerge, the responses from Questrade on reddit and social media seemed to reflect an understanding that something had not gone according to plan. Though it was clear they were aiming to simplify things, the reality is that many online investors were confused by the move.
The fact that Questrade now has two mobile apps, Questrade Edge and QuestMobile, is also a source of confusion (or choice) for users. What will need to emerge over the coming weeks is a clarification to existing clients as well as to prospective ones, as to the differences between the platforms.
The reality of the QuestMobile app, however, is that despite the issues and reactions mentioned in regards to the “desktop” experience, mobile users of the new app were generally positive on new layout and experience. On Google Play and on the Apple App Store, for example, ratings for the new app were relatively high (compared to the other Questrade mobile app), a sign that although not perfect, it was resonating with clients who tried it out.
It is also important to note that in addition to the “basic” overview of trading online, Questrade has also telegraphed that they are working on a new mobile app experience tailored for active traders as well.
As mentioned above, there is clearly a lot to unpack. For a few years now, Questrade has signaled to online investors that a new mobile trading experience was on its way. And, granted, while it took quite some time to arrive, it is clear that they have taken design cues from competitors like Wealthsimple Trade to try and simplify how trading information is presented in a mobile-first experience while also enabling a simplified navigation experience as well. The new QuestMobile is lighter than its Questrade Edge counterpart, for better or worse.
Although it is unclear when or if Questrade will adopt the commission-free trading model that peer firms in the online brokerage space have, it does seem like the QuestMobile trading experience hints at a path for lower cost online investing to happen. By effectively unbundling features from their current platform experience into a “lite” and “full featured” combination, it seems like Questrade could create two different pricing structures around those features. This is all speculative, of course. However, Wealthsimple Trade has shown that they are willing (and able) to charge users for a more premium experience, as has Robinhood in the US, so the precedent is established for zero-commission online brokerages to charge for specific features.
After 20 years in the online brokerage space, Questrade has learned a few things about handling missteps. One can go back to their decision to charge inactivity fees in 2012, for example, in which they had faced a similar firestorm from clients who were not happy with the move. Eventually, they phased them in anyway and then as market forces shifted, they phased them out.
Granted, there is now a renewed interest in trading online and there are even more channels to which investors can turn for information about online investing. So, the stakes for getting things wrong now are certainly higher than they were almost a decade ago. And yet, as was the case in 2012, Questrade is adapting to the times.
The new QuestMobile app was developed for a simpler use case for investing online and it is precisely because it has fewer features than what existing clients were used to that they voiced their discontent. But, those existing clients represent a different use case than potential new clients, in particular those who are not “active traders.” Individuals who are contemplating switching from other online brokerages, including Wealthsimple Trade, who are looking for a simple-to-use interface will find exactly that on the new QuestMobile platform. And, it seems with a bit of work on the communications front, making it easier to find and take advantage of the Questrade Edge interface can help with supporting more complex investing/trading needs – at least until the “active trader” version of QuestMobile gets released.
If there are any lessons for other online brokerages to glean from this roll out, it’s clear that giving existing users a clear way to opt out of a new platform is key to managing the transition between old and new interfaces. BMO InvestorLine did an especially good job of this in the roll out of their new online trading experience. Although the switch to a “new” platform experience took quite some time, users had the ability to toggle between the “old” and “new” and it is clearly stated in multiple places that users were able to do that.
Another important lesson to draw from the QuestMobile experience is the difference between mobile and desktop interfaces. Going “mobile first” doesn’t mean that mobile UI/UX translates well into desktop. They clearly do not map onto one another 1:1, which is something many of the responses pointed out.
Finally, it turns out that one of Questrade’s greatest strengths, the ability to reach self-directed investors on social media and in forums, is not without its risks. Building those strong communities online has helped propel Questrade’s growth. But as the reddit threads, investor forums and Twitter comments have shown, in 2021, online investors also on those channels are also much more willing to be vocal about what they don’t like. If there seems to be consensus across forums and social media that something needs to change with the QuestMobile experience, Questrade would be wise to pay attention.
From the Forums
With all of the forum chatter from this week, it seemed appropriate to cap coverage of investor commentary. Forum chatter will return again next week.
Into the Close
That’s a wrap on another week. It was an important week on many fronts – Canada marked the first National Day of Truth and Reconciliation and at Sparx Publishing Group, we also launched our first edition of Make The World Better Magazine. We know there is a lot of news that can be sad and disheartening; however, there is also a lot of great work being done by individuals and organizations who are out there trying to make a positive difference in the world, which is exactly what we wanted to feature.