Author: user

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – January 27, 2020

2020 is off to one heck of a start. Coronavirus, impeachment trials, airliner tragedy and now news of Kobe Bryant. There is no shortage of bad news to start the new year; however, for markets and investors, the focus on the future might offer a reprieve from the current storm clouds.

In this edition of the Roundup, we highlight some shining stars in the customer service department that are making things challenging for the bank-owned discount brokerage crowd. Of course, that’s not the only challenge facing Canadian banks and bank-owned brokerages, as we cover a financial services firm that’s flipping the script on bank-owned brokerages and likely touching off a wave of new competitive response from Canadian banks. As usual, we’ll close out with investor commentary from forums and on Twitter.

They Serve, They Score: Canadian Discount Brokerages Outshine Banks for Service

With commission rates for online brokerages in the US falling to zero, there is growing pressure on Canadian online brokerages to revisit commission pricing. Already, the past three months have seen two online brokerages in Canada drastically reduce their rates. It begs the question though, when rates fall, what else will DIY investors do to evaluate the experience at an online brokerage?

One important category – especially around RSP season – is service. With many DIY investors either inquiring about or actively going about opening and/or funding RSP accounts, volume at customer service touchpoints is much higher than it is at other points in the year. That said, there are limits to the patience of investors – even Canadian DIY investors – when it comes to having to politely wait their turn to speak to a customer service agent regarding their account.

This past week, financial analysis firm Surviscor, published their latest rankings on the service experience at banks and online brokerages in Canada, and it provided some startling results for the customer service component of these service providers.

Starting first with the good news: Qtrade Investor was ranked the best in terms of service for the fifth consecutive year of these rankings. This is an impressive feat, especially as many other online brokerages appear to be under resourcing this key driver of the service experience. Even more impressive, Qtrade scored 98% on their service assessment – a near perfect in terms of the evaluation criteria.

Another interesting observation from these rankings is that two of the top four firms in terms of service are online brokerages. Questrade, a popular discount brokerage, placed third in these rankings with a respectable score of 90% (Questrade tied for third place with First Calgary Financial). The closest big-bank owned online brokerage was RBC Direct Investing which ranked 8th, scoring 79%. Amazingly, online brokerage is outperforming the banking services providers when it comes to connecting with customers quickly and appropriately.

Drilling deeper into the results reveals even more fascinating clues to the current state of customer service at Canadian online brokerages. The following figure shows the scores of the discount brokerages that were assessed during this ranking period. Of the 14 firms that were assessed, the biggest takeaway when looking at the field as a whole is just how far apart service experiences can be. The rankings ranged from 98% (at Qtrade Investor) to 4% (at Canaccord Genuity Direct). In fact, only five brokerages managed to score above 50%, and even then, after the second place score of 90%, scores depleted rapidly.

What really stood out from these scores, however, was the transition from fifth place Interactive Brokers (62%) to sixth place National Bank Direct Brokerage (35%). When asked on Twitter about the steep drop-off, Surviscor explained that “The calculation is based on a firm’s performance versus industry peers. The lower % indicates that a firm has a tough time being a top 5 at any point and probably sits in the 60-80 hour response range. The high scores mean some downs at times but mostly ups which is acceptable.”

For Canadian DIY investors, the harsh reality is that expecting a speedy response from an online brokerage is more the exception than the rule.

In looking at the top two firms, and in particular their commission rates, the position that ‘you get what you pay for’ doesn’t really seem to account for the fact that Questrade is able to deliver a standard of customer service well above almost all other online brokerages even though their standard commission pricing is lower (on average). In other words, high commission prices don’t equate to better customer service.

Unlike an online platform or a commission price, however, customer service may not be a feature that many clients ever really need to turn to. This explains why, for example, on the JD Power Investor Satisfaction survey, customer service does not factor heavily into the overall score. That said, long wait times, ‘inaccessibility’ or the perception of slow service are things that can drive clients who experience them to look for new business elsewhere.

That these rankings are scored on a relative basis is doubly challenging for the entire field of online brokerages chasing Qtrade Investor’s service delivery model. Rankings such as these point out definitive leaders in this category of feature, so much so that service can be (and is) a key differentiator for Qtrade Investor. Further, service is not easy to change overnight, which means Qtrade Investor is likely to enjoy a decent shot at keeping their win-streak alive next year. At this point, only Questrade appears to be giving them a run for their money in the service category according to these rankings. And, unless online brokerages competing with the two Q-named firms don’t want to see customers start losing faith in the service capabilities of their online brokerage, these rankings are a great wake-up call for change. Let’s hope that call isn’t left waiting on hold for too long.

Wealthsimple’s Cheque-Mate to Canadian Banks

Up until 2020, the combination of online investing and personal banking was tidily summed up by the title ‘bank-owned brokerage.’ This year, however, it seems like we’re going to have to come up with both a new term as well as find out what happens when online investing gets into banking.

This past week, Wealthsimple took yet another dig at the traditional financial service providers in Canada by offering a high interest savings account (2.4%) that now has a card that you can spend directly from. This brings Wealthsimple one step closer to being a brokerage-owned bank – something that doesn’t yet exist in Canada or the formal vocabulary of the financial services conversation. And it is big news to be sure.

Not content with just rolling out a high interest rate, the new account from Wealthsimple, named “Cash,” is also going to have a pretty slick-looking card and bring a whole new level of aesthetic experience to the ultimately forgettable, plastic debit card. Made out of tungsten, this is the kind of insta-worthy object millennials can’t wait to get their hands (and phones) on, which means that the marketing snow ball is going to go full avalanche once this goes entirely live. 

A great case in point is from Robinhood in the US. The rollout of a high interest savings/chequing feature from Robinhood, paired with a very classy looking card, has shown to be a hit with younger audiences. For Wealthsimple, this foray into banking represents their strategy to simplify and democratize finance.

In addition to collecting interest and being able to make purchases with the card, here are some other features that sound remarkably familiar to what keeping your money with a bank could do:

  • Direct deposit
  • Bill pay
  • Interac e-transfers

It’s also compatible with Google Pay and Apple Pay, has no foreign exchange transaction fees, and will refund ATM fees.

So, even though Wealthsimple started out as a ‘robo-advisor’, it has clearly got bigger plans in mind to handle financial services well beyond investing.  At some point, there will be an integration with Wealthsimple Trade and Wealthsimple, however, with the fact that Wealthsimple is leading the charge of being able to do what the banks do except cheaper.

Really at this point, the most elegant way to summarize what’s about to happen is that this is likely going to be a ‘shut up and take my money’ moment.

Wealthsimple just took the market for their services from Canadians interested in investing, to Canadians interested in earning. What a seismic shift in messaging, and the fact they have labelled this as just the beginning begs the most sacred question of great marketing, which is what are they going to come up with next?

We’re staying tuned to find out.

Discount Brokerage Tweets of the Week

From the Forums

Model Material

Redditors weigh in on the yearly model investment portfolio check-in released by the popular blog, Canadian Couch Potato. Click here to learn about some important changes, the removal of an individual three-ETF option, the debates over discount brokerage choice, and much more.

Getting Ready for the Big Gain

A curious user asks fellow Redditors to venture a guess about what the next big, unexpected, “once in a lifetime” stock opportunity may be. Answers range from water to niche biomedical technology to mushrooms lead into lively discussions in this post.

Into the Close

That’s a wrap on the week that was. It’s tough to close out the Roundup and open the week with a loss. But, as all traders eventually come to know, losses are part of the journey. Still, some sting more than others.

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – January 20, 2020

There’s snow doubt about it, winter definitely showed up in Canada this past week. Of course, for those fortunate or wise enough to have been prepared, weathering the storm just seemed like just a matter of time.

Speaking of time, curling up by a cozy fire to read this edition of the Roundup is a great way to get up to speed on a few interesting developments that took place amidst all the wild weather this past week. To kick things off, we look at the latest (and long-awaited) update to a mobile app for one online brokerage. From there, we provide an update to the deals & promotions being offered by Canadian discount brokerages as a familiar cast member makes a re-appearance just in time for the RSP season. Also, the race to the top of the online brokerage mountain in the US is providing some interesting clues to online brokers here in Canada. Finally, we welcome back the comments and critiques from DIY investors on Twitter and in the forums.

Virtual Brokers Unveils New Mobile App

With more investors turning to their mobile devices for just about everything, having a strong mobile app experience for online brokerages is no longer becoming a ‘nice to have’ feature. In fact, with brokerages like Robinhood (in the US) and Wealthsimple Trade going ‘mobile first’ with their online investing experiences, there is little room for error for existing online brokerages when trying to retain clients.

After a long-awaited update, Virtual Brokers has begun rolling out their new mobile app for both iOS and Android. The new app, which replaces their existing Power Trader Mobile app couldn’t have come any sooner for many clients.  Power Trader Mobile, which has been around since 2013, managed just 2 stars out of 5 on both Google’s Play Store and the Apple App Store.

So, hopefully, with a new year there’s a new start to the mobile experience. Already the early reviews on the App Store paint a picture of a better experience. Although there are only 2 reviews, the score of 4.5 from what look to be beta testers, looks promising.

The features on the new mobile app enable users to trade stocks and mutual funds – including get stock quotes; view account and transaction details; review orders and positions; withdraw and deposit funds, as well as view basic charts.

The interface of the new app also appears to be much more modern looking and easier to navigate. Screen shots available on the App Store highlight a refreshed look and improved user experience.

Like the refresh of a website, the launch of a new trading platform isn’t going to generate a lot of news or waves for DIY investors. Yes, it is something that is probably going to be appreciated by the scores of patient clients who were waiting for something better but the current release of the mobile app by Virtual Brokers is not so much a game changer as it is something that brings them back into contention with other brokerages.

One of the bigger challenges facing Virtual Brokers in the highly competitive online brokerage space in Canada is to get online investors to pay attention to this and any new features they roll out. While the online brokerage rankings offer a great way to showcase Virtual Brokers to the readership of the Globe and Mail, there is a lot of ground to cover to compete against their traditional rivals, Questrade, and the bank-owned brokerages in terms of brands that investors will talk about or tune into. Features like a mobile app launch are important but to truly stand out, pricing and innovation are key elements that should take centre stage. 

New (Reappearing) Deal for RBC Direct Investing

As we tick closer to the RSP contribution deadline, there is yet another discount brokerage deal announcement crossing the wires. Making a reappearance to the deals and promotions section this month, and in time for the RSP season, is a familiar commission-free offer from one of the most popular online brokerages – RBC Direct Investing.

Their 25 commission-free trade offer is back. With trades that are good for up to one year, a minimum deposit of $5,000 to qualify and an expiry date well after the contribution deadline, there is a low hurdle to qualify for this promotion at this bank-owned online broker.

With the re-entry of RBC Direct Investing to the premiere tier of offers for DIY investors, the major bank-owned online brokers are now all offering something substantial this RSP season. In fact, there are really only a handful of online brokerages who don’t have a major offer in this category at this time – notably Virtual Brokers and HSBC InvestDirect. With the bigger or better-known providers now offering up something substantial, there is not going to be any better time for those on the sidelines to launch an offer that can compete with the other online providers.

Schwab Rallies Despite Earnings Miss

If there’s one thing that investors pay attention to when it comes to stocks, it’s earnings. And, generally when earnings don’t meet expectations, prices usually fall. Of course, when they don’t, there is always a pretty good reason behind the gravity-defying behaviour and often it comes back to a bet on something bigger on the horizon.

Such was the case for the largest online brokerage in the US (and planet), Charles Schwab, who reported quarterly earnings this past week. While the reported earnings per share fell short of estimates by a few pennies, the eye-popping numbers that also accompanied this earnings report demonstrates just how big of a juggernaut Schwab has become on the heels of their decision to go to zero-commission equity trading and to acquire their large rival TD Ameritrade.

One big stat to pay attention to in their latest earnings announcement was the drop of commission revenues of 58% (down to $86 million dollars US). Nonetheless, the bigger news is that client assets under management ballooned 24% higher in the year to cross the $4 trillion dollar (US) mark – a new record high for the online brokerage.

For the share price to rise by almost 3% to end the week is signal by investors that they’re looking at the future for this online brokerage with optimism. Indeed, the assets that continue to get accumulated by Schwab are a great reminder that sustainability for online brokerages is going to be linked either to scale, operational efficiency, or irresistible innovation. For Canadian online brokerages, it’s tough to point to any brokerages right now that are winning based on personality (although Wealthsimple is certainly putting on a clinic as far as marketing is concerned), so it’s either go big, go fast, or go home. And as far as the market’s concerned, it seems that go big is the winning option for now.

Discount Brokerage Tweets of the Week

From the Forums

Age-Old Tips

A user wonders if their plan of allocating “my age minus 10 to bonds” is considered wise and fellow Redditors weigh in on a potentially outdated, and overworked, practice. Read more here.

Lights, Camera, Class-Action

When it comes to being in the spotlight ahead of RSP season, the Canadian financial service industry invests quite a bit to be top of mind. In this Reddit post, however, there is a significant storm brewing in the form of a class-action lawsuit over the way mutual funds were recommended to investors.

Into the Close

That’s a wrap on another bumpy week in the markets. In spite of the of volley of news stories of various degrees of shocking, equity markets in the US are sloping higher than a Newfoundland snow drift and Canadian equity markets are also pushing to new heights. If there’s solace or good news to be found anywhere, right now it’s in market momentum. And a Superbowl featuring the 49ers and Chiefs.

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – January 13, 2020

Welcome to 2020! Lots has happened while the Weekly Roundup has been on hiatus, however much like the snow blanketing rooftops all across the country (including Vancouver), there’s lots of news to shovel through and remarkably a lot to look forward to for DIY investors this RSP season.

In this first edition of the Weekly Roundup in 2020, we highlight the biggest story so far of the new year, the launch of new deals for DIY investors. From there, we report on the latest commission price drop from a turf war in Quebec that might actually start spilling over into the rest of the Canadian online brokerage market. Also, we’ll cover a neat feature for DIY investor clients of one bank-owned online brokerage that will start a new kind of streaming war (that doesn’t feature a baby Yoda unfortunately). Alas to make room for some extra stories, we’ve sidelined the sardonic tweets and put investor forum commentary on ice, but they’ll be back next edition.

New Year, New Deals

What better way to start the new year than with news of big deals and promos for DIY investors eager to open an online investing account. This year, there appears to be quite the battle between bank-owned online brokerages.

With 9 cash back or free trade promotions for Canadian DIY investors to now choose from, this isn’t the highest number of offers we’ve seen in this category, however what does stand out is the number of bank-owned online brokers in the category as well as the type of offers in play.

The new month has already seen deals from BMO InvestorLine launch and as of publication of the Roundup, a new promotion from Qtrade Investor.

Most of Canada’s online brokers have come to market with cash back offers which suggests they mean business when it comes to getting the attention of DIY investors.

In particular, the battle between bank-owned brokerages CIBC Investor’s Edge, Scotia iTRADE, and BMO InvestorLine is a fierce one with the latest offer by BMO InvestorLine narrowly edging out competitor deals in each of the deposit tiers except for the $500,000 mark (at which point they’re tied with Scotia iTRADE).

For the non-bank-owned online brokerages as well as the smaller bank-owned online brokers, however, competing against the bigger players is going to be especially difficult. In the absence of blockbuster features (like the one that RBC Direct Investing rolled out at the end of 2019), the options for competing online brokerages are limited. Nonetheless, Qtrade Investor’s latest offer appears to hold its own in several deposit tier categories – and even is higher than the largest online brokerage in Canada, TD Direct Investing.

Of course, for those that are on the sidelines, there is always the ‘nuclear’ option of dropping commission prices substantially to get attention this RSP season. As we’ve witnessed already this year (in 2020) there is one online brokerage that has dropped commission rates lower AND offered up a commission-free trading bonus, so it is possible to do both, however the first challenge of getting on the radar of investors is a unique hurdle that less popular online brokerages have to overcome.

With the RSP contribution deadline now just a few more weeks away, it will be interesting to see if any online brokerages not currently offering up either a cash back or commission-free trade offer will step forward and what they will step forward with. It is highly likely that we will see more offers in the next few weeks so we’ll keep monitoring this increasingly active space.

Desjardins Online Brokerage Drops Commission Prices

Snow and temperatures aren’t the only things falling to start 2020, prices for online trading are also coming down. Even though it took a while for them to respond (they also may have been dealing with that whole data breach thing too), Desjardins Online Brokerage finally found a way to counter the incredible commission price drop launched last year by their crosstown rival National Bank Direct Brokerage.

To start, the standard commission for Desjardins Online Brokerage has been reduced from 9.95 per trade down to 6.95 per trade. Compared to National Bank Direct Brokerage, this works out to a slightly better deal since only National Bank clients receive the $6.95 per trade pricing. Standard pricing at National Bank Direct Brokerage is still $9.95 per trade.

For active investors, however, Desjardins Online Brokerage really dropped the gloves on National Bank Direct Brokerage by beating them the commission price for this lucrative customer. For active investors, defined at Desjardins Online Brokerage as those who trade at least 30 times per month, commission pricing has dropped to $0.75 per trade. At National Bank Direct Brokerage, the rate for active investors (defined as those who trade at least 100 times per quarter) is $0.95 per trade. Thus, on both the cost per trade as well as the hurdle to qualify, Desjardins Online Brokerage has come out ahead – at least for equities trading. For options trading, however, the required minimum charge for active investors at National Bank Direct Brokerage is $8.20 which is cheaper than the minimum charge at Desjardins Online Brokerage at $8.75.

For investors aged 30 or younger, National Bank Direct Brokerage still holds an edge over Desjardins Online Brokerage. NBDB offers younger investors a $4.95 per trade commission rate as well as 10 commission-free trades per year. By comparison, Desjardins Online Brokerage has their “Broker@ge 18-30” offer which has 5 commission free transactions (one time). Clearly, there is still some work to do for Desjardins Online Brokerage to catch up to National Bank Direct Brokerage for the younger investor segment. However, this latest series of price reductions by Desjardins Online Brokerage highlight another important storm brewing in the Canadian online brokerage space.

While it is an open secret that no major Canadian online brokerage wants to be the first to lower their commission rates to zero, the reality is that the price brawl between Quebec’s largest online brokers could spill over into other parts of Canada too. The price drops for active investors make sense as a starting point, since active investors will certainly be inclined to trade more volume but also subscribe to data packages and trading platforms as well as to dabble in options trading. Keeping these customers happy is crucial as they are the most savvy of what’s going on in the online brokerage world. Ultimately, however, it is a matter of time before mainstream investors get access to lower standard commission rates.

With Desjardins Online Brokerage lowering their active trading commission rates down to $0.75 per trade, the Canadian discount brokerage industry is plumbing new lows for commission rates (Wealthsimple Trade excluded). While the major Canadian online brokerages are still likely to take a wait and see approach, the smaller players are already flashing signs of what is needed to compete in a world where zero commission stock trading is a reality for millions of investors.

Lowering prices may not be fun for Canadian online brokers, but the price of leaving commission prices higher than everyone else seems like it’s going to be more costly in the long run.

RBC Direct Investing Gets Real

An investor is going to be only as good as the information they receive. When it comes to DIY investing, one of the biggest challenges investors face is finding convenient access to the prices of stocks they’re invested in and those they’re following. For most DIY investors, delayed quotes or ‘snap quotes’ (the kind you get from hitting refresh on your browser) were the norm unless you were prepared to pony up significant fees for streaming data.

Last month, however, RBC Direct Investing unveiled an incredibly valuable feature for DIY investors – streaming real-time quotes – at no additional cost and with no trade minimums required to access this feature for free.  Unlike most of their peer firms, streaming real time quotes are not part of the standard offering. Interestingly, as a shift has taken place in website formats to only display a minimum amount of information on websites, finding information on platforms and data has become a bit more challenging than it historically used to be. One possible reason for this is because “most” users aren’t really active traders and it would therefore be less of a prominent feature to talk about or make space for on a ‘minimalist’ design website. Nonetheless, a quick scan of other online brokerages shows that TD Direct Investing offers snap quotes as does Questrade, however the streaming option at both of these brokerages will cost extra. On top of providing free access to streaming quotes, one nice touch that cuts down on the amount of paperwork is that there aren’t any additional agreements that are required to be signed with the exchanges from which data is being pulled. This simply means it’s easier to get going for existing clients and potential new clients who wouldn’t really have wanted to go through the hassle of a feature they wouldn’t likely use.

Of course for Canadian DIY investors, the upside here is that while RBC Direct Investing’s commission prices are still at the standard levels, there is certainly more value to be gained with these features now in place. It is unlikely that the ultra-active investors or day traders will need or want to sign on to RBC Direct Investing for this kind of feature, but for moderately active or curious passive investors, this is certainly a ‘nice to have’ feature that can provide additional context on investing opportunities.

Certainly, features that improve the ability of investors to make better-informed decisions are welcomed. Of course, it is equally important for any investors who now have more convenient access to the flashing numbers and colours that accompany real-time information to exercise caution and discipline when pursuing a trading opportunity.

Into the Close

That’s a wrap on the reboot to the Weekly Roundup. There’s lots of action taking place for investors to digest to start the new year. A heads up to investors in Vancouver to check out the annual Vancouver Resources Investment Conference for a look at mining-related investment opportunities as well as for some fun investor content. Stay warm out there and for those contemplating account openings, this is the time of year to go shopping for a bargain. Good luck and have a profitable start to 2020!

Posted on by — Leave a comment

Discount Brokerage Deals & Promotions – January 2020

*Update Jan. 21* It’s a new year, a new decade and what better way to ring it all in than with some new discount brokerage deals for online investors looking to find a new home for their hard-earned investment dollars. The past year was a time of significant change in the online brokerage space – most notably in the US – but also in Canada as the field of online brokerages continued to evolve along with investor preferences for DIY investing.

Fortunately, deals and promotions for Canadian online investors remain healthy at the start of the new year and this being the busiest stretch in the year for online brokerages, there aren’t that many brokerages that will be sitting on the sidelines for too long. If the “RSP season” rush wasn’t enough of a motivating factor, TD Direct Investing launching a new offer would certainly change the priority for other brokerages. As the largest online brokerage in Canada, TD Direct Investing has a lot of folks paying attention to when promotions take place, and their latest offer (described below) is sure to get some of their peers to act ahead of the RSP contribution deadline.

With a few offers also set to expire in early January, the month will undoubtedly provide some surprises and it will be worth tuning in through the month to see what surfaces. Of course, if there are any promotions that would benefit other DIY investors, feel free to let us know in the comments below.

Expired Deals

*Update: Jan. 21 – Desjardins Online Brokerage’s 1% commission credit promotion came to an end earlier this month.  Not to worry, however, as several other brokerages are also offering new clients commission-free deals at the moment. Scroll down to our tables below to find other similar promos currently available.*

The start of another year is often the chance to start anew. Of course, that means being ready to say goodbye to the things that no longer fit for a new future. Case in point is one of the longest standing offers in the discount brokerage deals & promotions section – the commission discount from Jitneytrade. This offer is finally being retired as Jitneytrade has been acquired by Canaccord Genuity and the online trading service is now known as CG Direct.

Another notable name in the online brokerage space also bid adieu to their commission-free promotion in mid-December. RBC Direct Investing’s 25 commission-free trades deal expired last month. With a minimum deposit threshold of $5,000 it was one of the more accessible offers from a bank-owned online brokerage.

Extended Deals

*Update: Jan. 21 – Those who missed BMO InvestorLine’s Refer-a-Friend promotion can rejoice, because the brokerage has extended this deal for an additional year. The referral promo benefits both the referrer and referee, providing a cash back incentive for both parties, and expires on January 5, 2021. See table below for additional details.*

While there were some deals that didn’t make the leap from 2019 to 2020, it was great to see two different offers from Questrade find their way into the new year. Questrade’s five commission-free trades, a staple offer for low balance account openings, has now been extended out to the end of 2020 as has their active trader program promotion.

New Deals

*Update: Jan. 14 – Qtrade Investor has launched a new tiered cash back offer for DIY investors. Investors who open and fund a new Qtrade account with at least $25,000 in new assets by March 31, 2020 and may be eligible to receive a cash credit ranging from $75 up to $2,000. Individuals who contribute more than $1,000 through pre-authorized contributions by December 31, 2020 may also be eligible to receive an extra $50. See table below for more details.*

*Update: Jan 8 – With RSP contribution season now in full swing, BMO InvestorLine has launched a new tiered cash back offer that is set to compete aggressively against its bank-owned online brokerage peers. BMO InvestorLine’s new offer ranges from $250 cash back for deposits of $50,000 to $2,000 cash back for deposits of $1M or more. See table below for more details. *

Of course, the biggest deal news of 2020 (so far) is the launch TD Direct Investing’s latest tiered cash back offer. With five deposit tiers ranging from $15,000 to $500,000 or more, this cash back promotion is a tactical deal for TD Direct Investing and shows it has carefully weighed which segments of investors it wants to appeal to the most. The lowest tier, which requires a minimum deposit of $15,000, is in and of itself a unique tier compared to other brokerages that have either $10,000 or $25,000 as cutoff points for deposits. At the $15,000 level TD Direct Investing is offering up the most generous cash back amount at $100. In fact, for deposits ranging between $15,000 and $50,000, TD Direct Investing has the highest cash back bonus. Also, for deposits of $500,000 to $1M, TD Direct Investing’s offer of $1,000 cash back is tied with Scotia iTRADE as being the highest cash back bonus. One important note, which is found in the deal terms and conditions, is that in order to qualify for the cash back bonus, at least one commission-generating trade needs to be made by June 30th 2020. See table below for more information and link to terms & conditions.

Interestingly, there was another promotion that surfaced last month from National Bank Direct Brokerage who is offering 20 commission-free trades for users that submit their information via the Hardbacon app website. The free trades are valid for up to 12 months and apply to the first 20 trades on stocks, options and ETFs. Of particular interest, there also appears to be a commission discount from the standard commission of $6.95 per trade to $4.95 per trade for the duration of the offer once the free trades have been used up. See table below for more details.


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

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
Scotia iTrade Open and fund a new Scotia iTrade account to be eligible for up to $1,500 in cash back and $6.99 commission pricing, or up to 500 free equity trades. The amount of cashback and free trades are dependent on the funding of your account. Take a look at the offer details link for further information. $5,000 Cash + discounted commissions, or free trades. $6.99 trades available until June 30, 2020; Cash or commission rebate for free trades available until July 31, 2020. iTrade Offer Details February 29, 2020
Open a new RBC Direct Investing account by March 27th and you may be eligible for 25 commission-free equity and ETF trades. You must deposit or transfer $5,000 in your account by May 8th, 2020 to be able to use this promotion. Make sure that the offer code MFTC2 is applied during account opening. As always, be sure to take a look at the terms and conditions for further details. $5,000 25 commission-free trades 1 year Commission-Free Offer Details March 27, 2020
Open and fund a qualifying new or existing account at TD Direct Investing with at least A) $15,000; B) $25,000; C) $100,000; D) $250,000 or E) $500,000 or more and you may be eligible to receive a cash back reward up to A) $100; B) $200; C) $300; D) $500 or E) $1,000. Use promo code RSPCash20 when applying online. Be sure to read full terms and conditions. A) $15,000 B) $25,000 C) $100,000 D) $250,000 E) $500,000 A) $100 B) $200 C) $300 D) $500 E) $1,000 Cash back will be deposited by Aug. 16, 2020. TD Direct Investing Promotion February 29, 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
When you transfer funds from another account into a CIBC Investor’s Edge account with assets worth at least A) $25,000; B) $50,000; C) $100,000, you may be eligible to receive A) $100; B) $200; or C) $400 in cash back. A) $25,000 B) $50,000 C) 100,000+ A) $100 B) $200 C) $400 Cash back will be deposited between May 18 – September 17, 2020. CIBC Cash Back Offer Details March 4, 2020
Open and fund a new Qtrade account with at least A) $25,000; B) $50,000 C) $100,00; D) $500,000; E) $1M or D) $2M+ in new assets by March 31, 2020 and you may be eligible to receive a cash bonus of A) $75; B) $150; C) $400; D) $800; E) $1,500 or F) $2,000. Individuals who contribute more than $1,000 through pre-authorized contributions by December 31, 2020 may also be eligible to receive an extra $50. Use promo code QTRADECASH at sign up to qualify. Be sure to read full terms and conditions for more details. A) $25,000 B) $50,000 C) $100,000 D) $500,000 E) $1M F) $2M+ A) $75 B) $175 C) $400 D) $800 E) $1,500 F) $2,000 The cash award will be credited to your cash/margin account in the week of October 30, 2020. Qtrade Investor Q1 2020 Cash Back Offer March 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 October 12, 2020 BMO InvestorLine Cash Back Offer Details March 3, 2020

Expired Offers
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 DisnatTransfer 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 January 8, 2020
Last Updated: Jan. 16, 2020 14:16 PT

Referral Promotions

Company Brief Description Minimum Deposit Amount Incentive Structure Time Limit to Use Commission/Cash Offer Deposit Details Link Deadline
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 2, 2020
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
You can send an invitation link from your Interactive Brokers profile to friends or business contacts for a chance to receive up to $200 reward for each successful referral. The referee needs to maintain $10,000 or more in their account. Please read the full terms and conditions. $10,000 Your can get 30% of the commission generated by each referred account for up to $200.00. Referred clients must maintain at least $10,000 or USD equivalent in their account. 1 year from the account opening date. Interactive Brokers Referral Program 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: Jan. 21, 2020 11:12 PT

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: Jan. 16, 2020 14:45 PT

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: Jan. 2, 2020 16:30 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. $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: Jan. 16, 2020 14:55 PT
Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – December 16, 2019

Heading into mid-December, there are clearly lots of numbers being thrown about. The number of shopping days left until Christmas, the countdown to the end of the year, and the exact deadline for trades to be counted for inclusion in 2019. To add to the pile, there are also numbers to consider that measure the online brokerage industry in Canada – which for some folks is like getting an early Christmas present.

In this edition of the Roundup, we take a deep dive into the latest online brokerage rankings to be released ahead of the end of 2019, and look at the impact that big changes in definitions can have on how investors ultimately decide which online brokerage is best. After that heavy dose of numbers, we’ve layered on some interesting comments and reactions from DIY investors in the forums and from Twitter to close things out.

2019 Online Brokerage Rankings: Focus on Experience over Price

Just in time for the end of 2019, there was a fresh round of online brokerage rankings for DIY investors to review as they do their financial planning for the year ahead. The annual Canadian discount brokerage rankings from financial services analysis firm, Surviscor, were released this past week and featured some interesting results on the pool of Canadian brokerages.

For DIY investors, rankings and ratings from third party agencies help to provide insights into what the client experience is like at particular Canadian online brokers. In Canada, there are three primary rankings that investors typically turn to – the Globe and Mail’s annual online brokerage rankings, the Online Self-Directed Discount Brokerage Rankings by Surviscor, and the J.D. Power & Associates Self-Directed Investor Satisfaction Study.

Expectedly, each of these rankings and ratings measures different aspects of the online brokerage segment and provides a rating based on their respective view of what separates the best online brokerages in Canada from their peers. For DIY investors, this translates into a somewhat muddled experience where different rankings and ratings provide different perspectives on the question: “which online brokerage is best?”

It is against that backdrop that the most recent iteration of Surviscor’s Canadian discount brokerage review offers some fascinating insights and also provides important lessons for DIY investors relying on rankings for researching online brokerage accounts. In particular, because of significant changes to how they have defined their Canadian online brokerage review in 2019 and what the resulting effects are for interpreting the rankings, it is important for DIY investors to look more carefully at the latest Surviscor rankings to understand how those changes impact potentially important decisions around choosing an online broker.

Starting with Definitions

An important but easy to overlook detail about the difference between the 2019 Surviscor rankings and the 2018 rankings is seen in the respective press releases associated with the rankings data release. In the 2019 rankings news release, it states:

“Surviscor’s proprietary scorCard methodology measures over 3,600 objective usage-related criteria questions over six independent categories, each weighted according to industry importance through direct feedback with industry firms.”

However in the 2018 news release, the following was stated:

“Surviscor’s proprietary scorCard methodology measures over 4,000 objective usage-related criteria questions and reviews each firm by 9 independent categories, each weighted according to industry importance through direct feedback with industry firms.”

Thus, the first important difference appears to be a change in the number of criteria and in the number of categories that are being used to assess Canadian online brokerages in 2019.

As seen in the table below, the categories that did not make it into the 2019 assessment were related to service experience, mobile experience, transactional experience, and cost of services. This selection of categories substantially changes the way in which an online brokerage is evaluated as a whole – shifting the focus to certain components of the experience.

2018 Categories 2019 Categories
Initial Experience Initial Experience
Service Experience X
Mobile Experience X
User Experience User Experience
Account Experience Account Experience
Market Analysis Experience Market Analysis Experience
Transactional Experience X
Investing and Planning Experience Investing and Planning Experience
Cost of Services X

Another important qualifier to the 2019 Surviscor rankings is that these rankings are purposefully attempting to measure the overall “self-directed online brokerage experience” for desktop users. The rationale for the significant change to this year’s study was to focus “on the pure online usability experience to better determine the best online/desktop platform for Canadians.”

Diving into Numbers

Those important contextual points considered, this year’s ranking saw Qtrade Investor still manage to retain its position atop Surviscor’s rankings for the fourth consecutive year. While this is a laudable feat in such a competitive field, it is noteworthy to see that this year the gap between first and second place (TD Direct Investing) came down to one percentage point – a gap that has never been that narrow in the four consecutive years that Qtrade Investor has topped these rankings. Rounding out the top three this year was Scotia iTRADE, a bank-owned online brokerage which has traditionally had a strong showing in these rankings and is back on the podium in 2019 after having placed fourth in last years assessment.

When transactional, service, mobile, and cost data are removed from the evaluation criteria, the 2019 online brokerage rankings paint an interesting perspective of the field of DIY trading service providers. Immediately, the relative advantage that “low-commission pricing” provides is removed in the 2019 rankings.

Three of the four lowest cost online brokerages occupy the lowest three positions when it comes to the “online brokerage experience”: CIBC Investor’s Edge (ranked 10th), National Bank Direct Brokerage (ranked 11th) and Interactive Brokers Canada (ranked 12th).

Clearly, it is important for DIY investors to note that the “best online brokerage” doesn’t necessarily translate into the lowest cost online brokerage nor the “best value,” since commission prices appear to be heavily factored out.

Even with most online brokerages now charging standard commission pricing in the sub-$10 per trade range, events in the US online brokerage space as well as recent moves by brokerages such as Wealthsimple Trade (which was not featured) and National Bank Direct Brokerage point to a significant enough gap in pricing that DIY investors could still see merit in switching brokerages to realize savings on commissions. In other words, DIY investors are still price sensitive when shopping for online brokerages.

The performance of the Canadian online brokerage field in 2019 as measured by the Surviscor rankings is interesting in and of itself. Removing price factors as well as mobile and service features, however, introduces a substantial degree of variability in the scoring when comparing results year over year, and paints the picture of an industry that – other than the excluded factors – is generally getting it right when it comes to “online brokerage experience” for DIY investors.

One of the first interesting characterizations was noted by Surviscor in their press release as a “surge” in performance by TD Direct Investing moving up three ranking positions from fifth place in 2018 to second in 2019. We took the extra step of crunching the numbers on the gainers and decliners for 2019 compared to 2018 to highlight the magnitude of performance difference. Indeed, TD Direct Investing did “surge” a remarkable 22 percentage points from 69% in 2018 to 91% in 2019.

That said, a positional shift (or surge) also took place with two other firms: Desjardins Online Brokerage and HSBC Invest Direct. The latter of these was particularly interesting given the historically poor performance shown by HSBC InvestDirect on the Surviscor ratings since 2016 where it has either been second last or last. Using the new criteria for measurement in 2019, this suggests that the combination of pricing, transaction, mobile experience and service were actually dragging these firms down in terms of performance on the Surviscor rankings.

Two other firms saw double digit percentage point improvements compared to 2018: Scotia iTRADE (+16 percentage points) and Virtual Brokers (+17 percentage points). Despite these sizable gains, however, their respective rankings only improved one position, with Scotia iTRADE climbing to third place this year and Virtual Brokers rising to seventh place.

Interestingly, there were three firms that saw percentage improvements but did not see any change in their rankings: Qtrade Investor (remained in first), RBC Direct Investing (remained in sixth), and CIBC Investor’s Edge (remained in 10th).

Perhaps the biggest curiousity from this year’s rankings comes not with the advancers, but in the decliners category.

There were four firms that saw position rankings slip, however, in three of those four brokerages, there were actually increases in the percentage scores compared to 2018. This underscores a broader takeaway from the results of this year’s online brokerage rankings, which is that the quality of online brokerage experience appears to be significantly better this year at almost all brokerages. The one exception according to these results is Interactive Brokers, which plunged from seventh place in 2018 to twelfth in 2019.

Removing the factors related to price, mobile experience, transaction experience, and service experience appears to have a significant impact on the comparability of results year over year.

Compared to previous years, the year over year volatility in rankings and percentage points seen from 2018 to 2019 is significantly higher. The standard deviation in scoring in 2018 vs 2017 was 1.97 whereas in 2019 compared to 2018, this worked out to be 7.62 or almost a factor of four (3.87x) difference.

Why that is relevant to note, however, is that in comparing rankings from one year to the next, it is also important to understand that those rankings are not measuring the same set of attributes. And, it is on that particular point of year over year comparability of rankings that consumers and DIY investors need to take the streaks and the ranking shifts with a grain of salt.

To put the impact of the measurement changes in perspective, in 2018, only one firm (Qtrade Investor) scored better than 79% for overall experience whereas in 2019 there were six – or half the firms analyzed – that scored above 79%. Since 2019 to 2018 is not a true apples-to-apples comparison, however, the shift in ranking positions year over year has to be heavily qualified, as does the consecutive nature of a particular ranking. While it is true that Qtrade Investor is first overall (again), why they are first is materially different.

The Takeaway for DIY Investors

For DIY investors shopping around for online brokerages, rankings and ratings are generally a go-to resource to better understand what kind of brokerage experience can be expected. That said, it is important to note that online brokerage rankings and ratings are not static, nor do they measure the same things between rankings.

As such, while an accolade such as being named “best online brokerage” by a particular rating firm is certainly something online brokerages can be proud of, for consumers it is crucial to ask more questions about the nature of what’s being measured. In other words, definitions matter as much as the results.

In the case of the 2019 Surviscor online brokerage rankings, the focus has shifted away from a number of previously important components to focus on the desktop user experience.

The fascinating implication of this analysis, however, is that the differentiators for almost half the brokerages are on the factors that were excluded. That is to say, with so many brokerages scoring 80% or better on “experience” features, this evaluation shows the brokerages have very similar (and reasonably good) platforms and will have to differentiate themselves on other features.

The real answer (if there is one) is how these experience factors combine with the separated-out factors like mobile experience, price, and service. Strategically, Surviscor will be launching a comprehensive “Digital Brokerage Experience award” in 2020 that combines the multiple assessments into one evaluation. The challenge for DIY investors, however, is making sense of the different ranking performances and the inevitable confusion from multiple online brokerages rightfully claiming that they are the “best online brokerage.”

Discount Brokerage Tweets of the Week

From the Forums

Cast a Wide Net Worth

Following the loss of their preferred finance tracking tool, one DIY investor wants to know how others keep tabs on their net worth and investments. Read on for tools and tips provided by fellow forum users.

Singled Out

A DIY investor has questions about how to go about investing in a single US stock as a Canadian. See what advice other Redditors provided.

Into the Close

That’s a wrap on this edition of the Weekly Roundup. We’re going to be putting the Roundup on park for the remainder of 2019, so this is the official sign off for the year (unless some kind soul in the online brokerage world decides to take commissions to zero just before the end of the year). While we’ll be monitoring developments and reporting on deals updates (and potentially groundbreaking news), we’ll otherwise be in the workshop until 2020.  On behalf of the SparxTrading team, we’d like to thank the loyal Weekly Roundup (marathoners) readers for tuning in, and wish you all the best for the holiday season, and the New Year! Stay safe and profitable!

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – December 9, 2019

With the holiday season just a few short weeks away, gifts and presents are top of mind for many folks. Fortunately for Canadian DIY investors, there are some early presents that have arrived courtesy of some of the newest online brokerages in Canada – and the timing couldn’t be better.

In this edition of the Roundup, we keep things all Canadian (for a change) with a look at the newest online brokerage to roll out in Canada – including the challenges and opportunities they face in a crowded field. From there we’ll review the latest feature being rolled out by another relatively new online brokerage, and how their newest feature can be both a blessing and a curse. As usual, we serve up some interesting chatter from DIY investors on Twitter and in the investing forums.

CG Direct Rolls Out as Canada’s Newest Online Brokerage

This past week, an important and long-awaited shift took place in the Canadian online brokerage space. Jitneytrade, the online brokerage in Canada that is heavily focused on the active trader, and which was acquired in 2018 by Canaccord Genuity, officially wound down their website and transitioned to the new online brokerage segment at Canaccord called CG Direct.

In keeping with the acquisition trend in the Canadian online brokerage space, the smaller independent discount brokerages such as Virtual Brokers, Qtrade Investor, and Credential Direct have been snapped up by larger wealth management players. In the case of Virtual Brokers, it was CI Financial and for Qtrade Investor and Credential Direct, it was Desjardins. And, although the figures related to these transactions weren’t made available, the deal for Jitneytrade was, and came in at $14.8M in June 2018.

The key takeaway: independent online brokerages in and of themselves are not sufficiently profitable to be commercially sustainable in Canada. They need to be part of a spectrum of wealth or financial management services in order to have a chance of competing in the ultra-crowded online investing segment.

So, what would possess Canaccord to wade into a very crowded online brokerage space in Canada? Like most deals, it’s likely driven by ROI.

According to Canaccord’s FY 2019 annual report, the acquisition “serves to support the Company’s mid-market growth strategy by enhancing its market share of equities trading and providing access to new areas of growth through accelerating its development of an enhanced fintech product offering.”

What a positive return looks like for Canaccord is not just growth in revenues from commissions but also a deepening of relationship with their existing (and wealthy) managed wealth client base. With the acquisition of an online brokerage, no longer does Canaccord have to step aside while their private wealth clients who want to “dabble” on their own take assets to another firm or online broker. Instead, Canaccord can now keep those clients “in the tent” and create a stronger case for bringing assets located elsewhere into Canaccord.

Of course, growing assets from within is only one facet of the ROI picture. Another component to the possible return on this purchase will be the extent to which they can win new clients. In this regard, things are going to be considerably more difficult for Canaccord to successfully execute on.

While Jitneytrade may be a name more familiar to professional traders, among most retail investors it is not. This creates two distinct challenges: one is carrying over the Jitneytrade “brand” to the active trader segment, and the second is translating the Canaccord brand into something retail investors believe is compelling.

In the case of the first challenge, retaining existing Jitneytrade clients under a new banner of CG Direct will likely not be too difficult assuming service and pricing stay relatively close to where they were pre-merger. Interestingly, digging into the details of the deal, there was a category of the transaction labelled “intangible assets” which was valued at $1.9M, which specifically related to the value of customer relationships. Indeed, the ultra-active and professional trader segment is a high-touch client, which simply means that while pricing is key, relationships matter (a lot). Going forward under a new banner of CG Direct, growing the brand among the active trader community will now require selling the merits of CG Direct as the destination for active traders. It will have to compete directly with Interactive Brokers in this regard.

The second challenge will clearly be attracting business in the retail investor segment in an already crowded discount brokerage field.

With a new brand, there are inherent hurdles to clear (such as: Who is this firm? Can they be trusted?) and out of the gate, there are already some clear stumbling blocks to winning the attention battle for CG Direct. Perhaps the biggest challenge will be the “differentiator” among the other players.

For new entrants to the Canadian online brokerage space, pricing is one of the biggest drivers of attention among DIY investors. The pricing for CG Direct – at least for the equity commissions – is at the industry standard $9.99 per trade (plus any ECN fees), which pits it against the larger online brokerage competitors. When it comes to options, though, pricing is a bit more competitive (or even better) than most of the online brokerage peers. CG Direct will be charging $1.00 per options contract with a minimum commission of $10.

On the technology front, the retail web-based trading platform for CG Direct, called DirectFolio, will be up against incredibly tough competition. While the core business of an online brokerage is order execution, the “standard” offering for most online brokerages when it comes to platform is to deliver a relatively feature rich experience. As an extension of that, the current website and digital experience of CG Direct is not the kind of wave-making experience that something like Wealthsimple Trade has been.  In particular, there is a sense that CG Direct is a “desktop” brand versus a “mobile” one, suggesting that the pace of growth in the retail investor segment is going to be limited by the ability of CG Direct to appeal to the newer, tech-savvier generation of investor who all the competitors are working very, very hard to attract.

When an online brokerage can focus its identity on a segment – e.g. if CG Direct were purely for active traders – it becomes easier for consumers to understand what CG Direct does and when the right time would be to engage them as an online brokerage. In this case, however, with CG Direct going after two segments of the market, it will be an uphill battle to structure communications to be appealing to both.

One component of the story that we have not yet dove into is the potential for robo-advisory services to also emerge from this transaction. In addition to Jitneytrade, Canaccord acquired Finlogik – a company also started by the founder of Jitneytrade. The Finlogik side of the deal also brings with it the software platform that could be used for the deeper push into the digital wealth management experience (e.g. robo-advice) and the web-based trading platform for the self-directed investor.

Ironically, as online brokerages, their core business comes down to execution. In this case, success of the CG Direct brand will undoubtedly come down to execution on the value proposition and brand promise.

For active investors and traders, this means CG Direct needs to continue to execute well on the “bespoke” pricing and service experience that Jitneytrade was known to offer. And, in wading into ultra-competitive waters on the retail investor side, delivering on the value that online investors expect from a discount brokerage (pricing, platform, ease of use, service, resources, etc.) will be crucial if the online brokerage arm of Canaccord is going to be more than a retention tool for existing clients.

Wealthsimple Trade Transfers Now Active

The journey of a thousand miles begins with a single step. In the road to bringing even lower commission costs to Canadian DIY investors, Wealthsimple Trade has been slowly moving forward on its plans to be a genuine competitor to other Canadian online brokerages. This past week, the social media feeds for Wealthsimple Trade highlighted another important step that the zero-commission brokerage has taken to make it easier to do business with them: enable account transfers.

DIY investors can now request a transfer of their eligible registered and/or registered accounts to Wealthsimple trade. Among the accounts users can transfer over to Wealthsimple Trade are TFSAs, RRSPs and non-registered accounts.

As an added bonus, if the amounts being transferred over are greater than $5,000, then Wealthsimple Trade is willing to cover the transfer fee that the existing brokerage will likely charge on the way out.

There is still no way to directly transfer between Wealthsimple and Wealthsimple Trade, however the fact that it is now possible to go from one institution directly into Wealthsimple Trade without having to sell a portfolio into cash first is a big plus for DIY investors who want to take a dive into the zero-commission experience.

For other online brokerages, even though the changes that are taking place at Wealthsimple Trade are still small enough not to be too concerning, the ability to have investors transfer funds and securities away from their brokerage is one which undoubtedly raises some eyebrows.

The addition of account transfer capability was undoubtedly an important feature to get rolling just before RSP season ramps up to full speed, however, this particular feature is not without its risks.

Unlike many of its peers, Wealthsimple Trade (and its parent, Wealthsimple) have made significant strides to redefine user experience in the financial and wealth management space. Their websites, apps and even content are very much the envy of other wealth management firms and as such, the Wealthsimple brand has earned a substantial degree of goodwill with consumers, in particular millennials.

Of course, aesthetics aside, when it comes to people and their money, emotions inevitably factor in and expectations around reliability, stability and speed are also crucial. Why this matters in the context of account transfers is because unlike account opening (which can be completed in minutes online) the account transfer process can take anywhere from two to four weeks (and in many cases, even longer). This pits the ultra-fast, low-friction experience and promise of Wealthsimple Trade against the realities of the financial network between online brokerages in Canada today. And, for anyone who reads the financial forums and tweets about online brokerages on a regular basis, it’s clear that account transfers make up a unique category of frustration among DIY investors.

So, as widely anticipated as this feature is for Wealthsimple Trade, it is almost one of those “be careful what you wish for” situations as well.

Not only is the risk (based on ample evidence from other DIY investors’ brokerage transfer experiences) of mistakes incredibly high, the consequence and subsequent optics of delays that stretch into the weeks and months are terrible. If Wealthsimple Trade manages to generate enough interest, they could be the victims of their own success when it comes to having too much volume of transfer activity taking place, which would also strain their internal resources. Add to that the very high likelihood that their target client is on social media in some way shape or form, and the magnitude of the mistake or delay – even if it is not on Wealthsimple’s end – would be outsized relative to their peer firms.

When it comes to trading and markets, timing is really everything. In the case of Wealthsimple Trade’s new transfer capabilities, it may be a question of investors waiting and seeing as to whether or not the two to four week window is realistic or if it is something even longer. If there’s one thing worse than paying bad fees, it’s enduring the uncertainty of exactly who has your entire nest egg while it’s being moved. Trading markets is fun, trading brokerages – at least from what is written about online – not so much.

Discount Brokerage Tweets of the Week

From the Forums

No Time for Bonds

A DIY investor questions the advantages of bonds over HISAs. Fellow forum users weigh in, providing insight on situations in which each type of investment would prevail. Read more here.

Slow and Steady Wins the Race

A 45-year-old, self-employed Redditor wants to start investing and turns to the forums for guidance on where to begin. Read the advice that fellow forum users gave this new DIY investor here.

Into the Close

That’s a wrap on another eventful week. Fortunately this week there was lots taking place in the Canadian online brokerage space. Just like the shopping habits of many consumers, the online brokerage space still might have a few last-minute surprises left before the end of 2019. With a new decade just around the corner, some new discount brokerages starting to make waves here in Canada, there’s lots for DIY investors to look forward to in 2020. To anyone braving the malls to shop, hats off to you and wishing you lots of great parking karma!

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – December 2, 2019

Sandwiched between Black Friday and Cyber Monday, the beginning of December is undoubtedly synonymous with big savings and big deals. This year, there are definitely both in the world of online brokerages here in Canada and in the US.

In this edition of the Weekly Roundup, we review the latest deals activity to cross the wire at the outset of December and explore some interesting trends for the end of 2019 and early 2020. From there, we peer into the fog of online brokerage war as the massive news of the Schwab / Ameritrade deal continues to send shockwaves of uncertainty through the online investing industry. For a great change of pace, we’ve also got the ever popular DIY investor tweets as well as chatter from investors in the forums.

December Deals & Promotions Update

It’s a new month and that means another chance to revisit the discount brokerage deals and promotions scoreboard to see what’s new for the month as well as what trends are emerging for promotions from Canada’s online brokerages.

There’s a slight bit of irony to the fact that the end of financial literacy month (November) coincides with both Black Friday and Cyber Monday, since the former is all about learning how to manage money wisely and the latter are all about getting consumers to open up their wallets with the promise of deep discounts. In the world of online investing, the irony extends just a tad further, with “discount brokerages” now cutting commission rates to zero (at least in the US) in the hopes of seeing more trading activity take place.

Before going too far into the trends or strategies that we see unfolding, the good news is that the deals and promotions activity heading into December is upbeat (at least for DIY investors).

Despite there being no online brokerage launching a deal on December 1st, there are currently 24 offers available to DIY investors and the brokerages currently offering deals represent some of the most popular choices in the space.

Kicking off December, most of the big five bank-owned online brokerages, with the exception of TD Direct Investing, have either commission-free trade offers or cash back promos currently in the market. This offers considerable value for DIY investors to choose from and is dominating what investors are looking at on SparxTrading.com.

That said, we’re expecting some volatility and turbulence over the typically quiet holiday period because of the spacing out of expiry dates on some of the current offers.

RBC Direct Investing, one of the bigger players in the online brokerage space behind TD Direct Investing, has their commission-free offering currently scheduled to expire on December 13th. BMO InvestorLine’s seasonal offer is set to expire at the beginning of January 2020 and both Scotia iTRADE and CIBC Investor’s Edge have deals set to expire close to the end of February or beginning of March – which coincides with the RSP contribution deadline of March 2, 2020. So, even though the beginning of the month may be relatively quiet, there’s a good chance that there will be more activity as the month progresses or as soon as the new year hits.

One big development in the online brokerage space that is likely going to impact the way in which deals and promotions unfold in the new year is the move to zero-commission trading in the US.

In Canada, the wave of zero-commission trading has yet to fully take hold and between now and the time that it does, the go-to place for online brokerages to get the attention of value-conscious investors is going to be with deals and promotions.

Knowing what’s at stake in terms of having to lower commission prices to zero entirely, the better option for online brokerages is to start dishing out bigger and more valuable incentives to attract new clients (or more accurately, more assets) and more importantly, to retain clients (and their assets).

We’re already seeing that online brokerages are starting to get more creative with what they’re offering.

Scotia iTRADE, for example, launched a new promotion at the end of November which combined both a cash back promotion with a discount in standard commission fee down to $6.99 per trade. That same promo also offered the option to choose commission-free trades instead of cash back. And, to boot, this is a tiered offer that ranges from deposits as low as $5,000 all the way up to deposits of at least $5M. This is by far one of the most comprehensive offerings in terms of choice and targets. By contrast, BMO InvestorLine’s tiered offer is focused on cash back and for higher deposit levels only.

For brokerages other than the big-five bank-owned online brokerages, the mix of already low commission prices and convenience-appeal of a bank suggest that there has to be a mixture of bold thinking and savvy marketing to navigate the choppy waters for their brands going forward. There are likely to be firms that will try to tread water with middle of the road promotional offers, however, it is clear that to stand out from the big bank online brokerages, one strategic area to do that is with promotional offers.

It almost goes without saying but the commission rate drops or promotional offers alone are not going to be enough to keep clients, the service and value experience has to also measure up otherwise customers will choose a provider who gets the details and little things that are important to online investors right. That said, unless there’s something to get attention away from the behemoth and ultimately familiar banks, investors will likely default to the fastest and easiest option this holiday season.

Certainty Begets Uncertainty

They say when it rains, it pours. It seems like a fitting description for the online brokerage space in the US this past week (and for the past 8 weeks) which saw perhaps the biggest repercussion of the zero-commission fee move unfold.

Last week, we reported that Schwab was rumoured to be in talks to buy out TD Ameritrade, and this past week the announcement was made official. Schwab announced that it would be purchasing TD Ameritrade in an all stock deal valued at $26B USD. With the stroke of a pen, two of the US’s largest online brokerages combined forces to create a super online brokerage with almost $5T (trillion) USD in assets under management (AUM).

The question that everyone is asking is naturally where things go from here? In particular where things go for E*TRADE Financial, which for a long time was viewed as the most likely candidate to be acquired. Though just speculation, the case for takeover of E*TRADE seems to still be viable. There are still entities large enough to take on acquiring an online brokerage (including competitors like Fidelity or even Goldman Sachs) however, even a private equity deal in which the business pieces were sold off to different parties could make sense given the value of the different business lines operated by E*TRADE.

In addition, this past week the online brokerage credited with accelerating the move towards zero commissions, Robinhood, quietly withdrew their application for bank status, putting their cash management plans in limbo. Curiously, despite this about-face, there are still images for debit cards on the homepage of the website, suggesting either that they’re slow to update their site (not likely) or that there will be cash management coming but through a partnership with an existing financial institution – potentially similar to what Google is orchestrating in its partnership with Citibank to create their “Cache” program.

Sufficed to say, it has been a whirlwind of activity into the end of the year. Judging by the degree of uncertainty still surrounding the acquisition of Ameritrade by Schwab, the fallout for brands like E*TRADE and Robinhood, and the new world in which online investor preferences are going to shift to focus on the other value drivers of the online investing activity flow.

The big question to DIY investors is “so what?” In particular, for Canadian DIY investors there is clearly an undercurrent of consumer demand for the same kind of pricing in Canada that online investors in the US receive. On Twitter as well as in financial investing forums, Canadian investors are calling for rates to drop to zero for commissions – the premise being if the US online brokerages (as in ALL of the US online brokerages) can go to zero, why can’t Canadian brokerages? It’s a fair question and not one that Canadian online brokerages can answer well just yet, with one exception – Wealthsimple Trade.

Perhaps the only thing that is clear at this point is that there is a great deal of uncertainty looking forward in the online brokerage industry. The fun part of that uncertainty is that it leaves room for speculation.

The one thing that analysts can hang their hats on as far as value is the assets that individual investors bring with them and what that, in turn, can be converted into as far as revenue for the financial services firm. Looked at in this light, financial services firms rely on having large pools of users to achieve the scale required to be sustainable. That also means that technology platforms, such as all of the members of the FAANG stocks, are likely competitors for the traditional financial services firms. For that reason, our best guess for the path forward for the large (and especially not so large) financial services firms will be becoming exceptionally interesting and helpful in the financial management of everyday investors. Anything less, and there’s going to be a cheaper and faster alternative provider for it.

Discount Brokerage Tweets of the Week

From the Forums

One Hit Wonder

After switching jobs at 40, this Redditor’s pension payout was put into a LIRA. Worried about the future of the economy, this forum user seeks advice on how to proceed with their pension. Read the responses of fellow Redditors here.

Mad Max

Having already invested in a HISA and GIC, a DIY investor is considering using their TFSA to invest in index funds to get the best returns. Redditors weigh in on this financial situation and provide guidance on the best ways to use a TFSA effectively.

Into the Close

Fitting heading into the holiday season that that’s a wrap on another edition of the Roundup. With Cyber Monday now upon us, there are clearly deal hunters on the prowl and by all accounts this year was a strong one for shopping activity. Savvy DIY investors also know that this is the most wonderful time of the year for bargains on under-performing stocks (*cough cough cannabis and energy*). So, while there’s more than enough uncertainty to go around these days, don’t lose sight of the opportunity it creates. Happy deal hunting!

Posted on by — Leave a comment

Discount Brokerage Deals & Promotions, December 2019

With Black Friday and Cyber Monday landing so close to the beginning of December, deal hunting is going to be top of mind for DIY investors heading into the final month of the year. Fortunately, there are deals to be had with a number of cash back and commission-free trade promotions going on to round out the final month of 2019.

Of course, like many offers taking place in the lead up to Christmas, there is a time limit to take advantage of them.

December looks to be an interesting month for deals activity because there are offers – such as the RBC Direct Investing commission-free offer – which are scheduled to expire just before the middle of the month. Questrade has a pair of longstanding offers which are set to expire at the end of the month too.

In addition to promotions that are scheduled to end in December, there are also competitive dynamics at work which might make it more likely for other brokerages to step up with an offer sooner rather than later. The addition of Scotia iTRADE and their commission-free trades or cash back offer to the deals pool last month basically sets the stage for more offers to come to market.

Given everything that’s happened in the US market with commission-free stock trading, Canadian DIY investors are anxiously awaiting the same to happen here in Canada with the mainstream online brokers. While it is unlikely to go to zero across the industry soon, price drops are in the forecast.

Looking ahead at the promotions picture, the reality is that it is more competitive than ever before in the Canadian online brokerage space so to win consumers. Online brokerages have to get even more creative (and they are starting to) and the fastest way to get on the radar of value-conscious DIY investors is through promotional offers. By that measure, we’re expecting to see brokerages roll out some interesting promos into the end of 2019 or into early 2020.

Those brokerages that are still on the sidelines in terms of offers won’t be there much longer. With RRSP season just around the corner and additional room for TFSA contributions coming at the beginning of the year, it will be an equally limited time offer to get the attention of DIY investors.

We’ll be keeping a close eye on the deals space but if you find an offer that would be great for other DIY investors to know about, let us know in the comments.

Expired Deals

No expired deals.

Extended Deals

No extended deals to report at this time.

New Deals

There were no new deals to report at the beginning of December however there was a deal that came to market at the tail end of November from Scotia iTRADE. The latest promotion from this popular bank-owned online brokerage is sure to raise some eyebrows from competitors as it offers a potent combination of cash back and discount standard commission pricing or commission-free equity trades. To boot, iTRADE has also made this a multi-tiered offer that ranges from entry level investor/portfolio to high net worth portfolio, so there’s something for just about every stripe of investor here. With iTRADE now in the mix, the list of bank-owned online brokerages without an offer is becoming smaller than the list of bank-owned brokerages with an offer.

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

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, 2019
Scotia iTrade Open and fund a new Scotia iTrade account to be eligible for up to $1,500 in cash back and $6.99 commission pricing, or up to 500 free equity trades. The amount of cashback and free trades are dependent on the funding of your account. Take a look at the offer details link for further information. $5,000 Cash + discounted commissions, or free trades. $6.99 trades available until June 30, 2020; Cash or commission rebate for free trades available until July 31, 2020. iTrade Offer Details February 29, 2020
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 DisnatTransfer 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 none
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, 2019
When you transfer funds from another account into a CIBC Investor’s Edge account with assets worth at least A) $25,000; B) $50,000; C) $100,000, you may be eligible to receive A) $100; B) $200; or C) $400 in cash back. A) $25,000 B) $50,000 C) 100,000+ A) $100 B) $200 C) $400 Cash back will be deposited between May 18 – September 17, 2020. CIBC Cash Back Offer Details March 4, 2020
BMO InvestorLine Open a new qualifying account at BMO InvestorLine with new assets worth at least A) $250,000; B) $500,000; C) $2M or D) $5M+, and you may be eligible to a cash back reward of up to A) $400; B) $800; C) $2,000 or D) $5,000. Use promo code SPARXCASH when registering to qualify. Be sure to read full terms and conditions. A) $250,000 B) $500,000 C) $2M D) $5M+ A) $400 B) $800 C) $2,000 D) $5,000 Cash back will be deposited week of Aug. 17, 2020 BMO InvestorLine Cash Back Offer Details January 6, 2020

Expired Offers
Open a new RBC Direct Investing account by December 13th and you may be eligible for 25 commission-free equity and ETF trades. You must deposit or transfer $5,000 in your account by February 14th, 2020 to be able to use this promotion. Make sure that the offer code MCFT1 is applied if you wish to qualify for this deal. As always, be sure to take a look at the terms and conditions for further details. $5,000 25 commission-free trades 1 year Commission-Free Offer Details December 13, 2019
Last Updated: Dec. 20, 2019 15:35 PT

Referral Promotions

Company Brief Description Minimum Deposit Amount Incentive Structure Time Limit to Use Commission/Cash Offer Deposit Details Link Deadline
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 2, 2020
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

Expired Offers
Last Updated: Nov. 29, 2019 13:39 PT

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 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
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 $50,000 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 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
Last Updated: Nov. 29, 2019 13:37 PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
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: Nov. 29, 2019 13:38 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. $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: Nov. 29, 2019 13:38 PT
Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – November 25, 2019

Black Friday is just around the corner and with just about everyone looking for a bargain, it will be a fine balance to keep things profitable in the face of so many deals. For DIY investors, the good news is that deals keep rolling in and even for online brokerages, there seems to be some interest in making an important purchase.

In this edition of the Roundup, we dive into the latest deal from a bank-owned online brokerage that highlights just how competitive things are getting heading into the end of the year. Of course, the competitive landscape here in Canada pales in comparison to the US where another mega-story is unfolding between the largest players on the online brokerage field. After a decent helping of news, we’ve got just the right amount of extra topping with chatter from Twitter and the investor forums to dig into.

Scotia iTRADE Latest Offers Come Out Swinging

With November quickly drawing to a close, the one thing that Canadian discount brokerages are seeing more of (other than requests to drop their commission prices to zero) is investors hunting for places to open up online trading accounts – in particular TFSAs and RRSPs.

This past week we took note of yet another online brokerage who is jumping back into the deals hot tub. Scotia iTRADE, one of Canada’s big 5 bank-owned online brokerages, stepped forward with a promotion that combines a lowered standard commission price of $6.99 with either a cash back or commission-free trade option.

Building on the momentum from their campaign in the summer featuring a number of social media influencers, it appears that the mass market version of that offer has substantially more tiers and as such, Scotia iTRADE is marketing to multiple investors with this offer.

Scotia iTRADE’s latest promotion consists of 8 deposit tiers, starting with a remarkably low entry point of $5,000 and going all the way up to $1M+. In doing so, Scotia iTRADE has positioned its offer against two of its bank-owned competitors that also have cash back offers, namely CIBC Investor’s Edge and BMO InvestorLine. The table below, which we first wrote about earlier this month, shows an updated view of exactly where the different tiers for Scotia iTRADE’s latest promotion stack up against its peers.

For non-referral offers, Scotia iTRADE actually has the best cash back promotion going for deposits ranging from $5,000 to $24,999. Specifically, it has cash back offerings of $25 and $50 (respectively) as well as a combined drop of commission prices (albeit temporarily until June 2020) to $6.99 per trade. This puts the commission price for Scotia iTRADE’s promotional period very close to the standard pricing for CIBC Investor’s Edge, at $6.95. Scotia iTRADE’s platform and associated features, commission-free ETF selection, and experience in technology could overall, arguably, make it of greater value than the difference of $0.04 per trade (at least over the short term).

For deposits ranging from $25,000 to $249,999, Scotia iTRADE’s cash back offering is on par with CIBC Investor’s Edge. The differentiating factors, therefore, make it debatable as to which bank-owned discount brokerage offers the better value.

For active investors, or those investors that favour ETFs, the decision will likely tilt towards Scotia iTRADE and for more price sensitive investors, CIBC Investor’s Edge might win out because of their commission pricing (and the fact that $6.95 is their standard price, not a promotional one).

Where things start to get interesting is at the higher tier of deposits – specifically deposits greater than $250,000.

Alongside Scotia iTRADE the only other Canadian online brokerage with a cash back promotion for DIY investors at this deposit tier is BMO InvestorLine – another bank-owned online brokerage. For that reason, it is impressive to see that Scotia iTRADE is offering 88% more in cash back for deposits at $250,000 and 25% more for deposits at $500,000. Clearly Scotia iTRADE is trying to send a message to BMO InvestorLine that it is going to fight aggressively for clients at these deposit levels. Because BMO InvestorLine’s deposit tiers don’t include a direct offer at $1M, it means that Scotia iTRADE’s offer of $1,500 is almost 88% greater than the $800 a client would receive from going to InvestorLine.

At these high deposit levels ($1M+), it may seem trivial to be talking about the relatively small amount of cash back offered relative to the deposit itself, however when it comes to competing offers from bank-owned online brokerages, getting almost twice the level of cash back (and access to commission-free ETFs and lower per-trade commission pricing for a limited time), the value proposition is too hard to simply ignore.

Of course, there’s a whole other category that the latest Scotia iTRADE promotion also competes against, which is commission-free trades. In this category of promotion, there are three other primary competitors, Desjardins Online Brokerage, Questrade and RBC Direct Investing.

When it comes to something like a commission-free trade offer, however, there are a few more moving parts for investors to calculate to determine the true value. For example, what the standard commission pricing is and how long the free trades are “good for” are two important factors DIY investors should consider when evaluating a commission-free deal.

Another element that some investors find important is to distinguish between commission-free credits and commission-free rebates. In the case of the former, investors are not charged at the point the trade is made (or if they are, the trade commission is refunded immediately) and in the case of the latter, the commissions for the trade are charged to the client but are be reimbursed at a later date so long as the stipulations of the commission-free trade offer are adhered to for the promotional period.

The multiple moving parts, and the tangibility of cash back mean that commission-free trades are typically less appealing than their cash back counterparts.

In the case of commission-free trade offers, however, Scotia iTRADE is definitely offering up more commission-free trades than other Canadian discount brokerages for deposits over $25,000. Beneath that threshold, however, there is a lot more competition for Scotia iTRADE.

The primary competitor – RBC Direct Investing – is offering up 25 commission-free trades which are good to use for up to a year for a minimum deposit of $5,000. At that same deposit tier, Scotia iTRADE’s commission-free trade option ponies up 10 commission-free trades which are valid for 90 days. For deposits less than $5,000, Questrade has full share of the promotions field, with several commission-free trade offers in play, the best of which offers up 60 days to take advantage of the commission-free status.

Drilling down into the latest offer from Scotia iTRADE shows that the competition between bank-owned online brokerages in Canada is heating up. The end game for the Canadian discount brokerage space is about scale – and for DIY investors who have assets to invest, there is clearly room to negotiate. With iTRADE now in the mix, most of Canada’s bank-owned brokerages are “in market” with compelling offers for at least some segments of investors. This ups the ante and the pressure on any remaining brokerages without ANY offers to step in quickly.

As in the stock market, timing is everything. While there are benefits to seeing what everyone else is doing with respect to pricing, any brokerage waiting too long is going to risk being out in the cold when it comes to attracting clients and assets while investing is top of mind.

Market Hints at Schwab Acquiring TD Ameritrade

If it seems like the US online brokerage market has been in the news and been a topic of conversation in the Weekly Roundup since October, that is because it has. The tsunami of news about online brokerage commissions in the US going to zero took on even more life this past week, with chatter that the largest online brokerage, Schwab, looking to take over rival TD Ameritrade for a projected sum of $26 billion (USD).

Suffice to say that this combination of brokerages was not among the top of the list of forecasted scenarios. There was much more hype and focus on E*Trade as a takeover target than Ameritrade. Even so, contemplating a merger between two of the biggest online brokerages in the US paints a distinctly bipolar picture for the industry as a whole. The winners – both Schwab and Ameritrade – can be seen by the rise in the stock price upon the market learning of this potential deal. The clear losers, at least according to the market, E*Trade and Interactive Brokers.

It might be safe to say that Interactive Brokers didn’t see this magnitude of impact erupting when they chose to launch their commission-free trading platform, IBKR Lite, which is seen as being the tipping point that led the online brokerage industry as a whole in the US to decide to go to zero-commission pricing.

Among the pivotal questions – will this deal go through? And assuming it does, what does that then mean for rivals like Interactive Brokers and E*Trade? What about the new entrants? The Robinhoods of the world will be left competing against a brokerage the size and scale of the combined entity that might be Schwab and Ameritrade (aka Schwameritrade?).

If there are any clues as to what this means for other brokerages, it might be derived from Schwab’s reporting of their account growth since going commission-free. Schwab reportedly gained 142,000 new client accounts and blew the doors off their previous new account growth numbers (and likely that of their competitors). Clearly the calculus on commission-free trading accounts has paid off for Schwab.

Despite the still-fluid state of the US online brokerage landscape, Canadian market observers are trying to get a proxy on whether or not what is happening in the US will play out in the same way here in Canada.

It’s all just speculation at this point, but the lessons learned from the US online brokerage space points to there likely being little to no appetite for Canadian online brokerages to rush to zero. The benefit of letting the US online brokerage market go first is that players here can take a “wait and see” approach as to how online investing can be profitable with lower commission revenues in place.

Secondly, if it wasn’t clear before, it is now abundantly clear that scale matters when it comes to online investing and wealth management more broadly.

The only remaining independent (i.e. non-bank or non-big financial partner owned) online brokerage in Canada is Questrade. Its scale and technology stack – in particular its trading platform, make it an interesting possible fit for a very small number of bank-owned brokerages who are lagging behind the biggest player, TD Direct Investing, in terms of platform and user experience. Nonetheless, when it comes to choices for massive growth in the Canadian online brokerage provider space, there aren’t many places where it is possible; unless providers exit the space or merge (or are acquired).

The possible merger between Schwab and TD Ameritrade will still have to face a great deal of scrutiny from market and anti-trust regulators. The test of whether this will ultimately have beneficial or harmful effect for the marketplace is still an open question considering how much of the market of wealth management these two firms would influence or control. Even so, there are definite hints of further consolidation to come in the US and perhaps one day here in the Canadian online brokerage space.

In a world where lower commissions are a reality, there has to be greater scale or volume to keep things profitable otherwise the notion of a lower price making investing more accessible will actually have the opposite effect. Heading into Black Friday it seems that when it comes to low commission prices, investors should be careful of what they wish for.

Discount Brokerage Tweets of the Week

From the Forums

Keeping it Real

A Redditor questions the appeal of real estate investments over index funds. Fellow forum users provide insight, discussing the pros and cons of real estate as an investment.

Won is the Luckiest Number?

A DIY investor seeks advice for creating his own portfolio and wonders if a one-and-done, or all-in-one, ETF can help him save on fees and get better returns. Forum users weigh in with the advantages of these types of investments in this post.

 

Into the Close

That’s a wrap on another edition of the Roundup. Shopping is clearly in the air, with strong retail sales in Canada tied to economic strength, Tesla rolling out a new Cybertruck – the new Musk-have toy for Christmas, and Black Friday coming around the corner. DIY investors love a good bargain, so this week, more than most, it pays to do your homework. Happy hunting!

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – November 18, 2019

After what’s seemed like an epic storm of information and discount brokerage news, there finally appears to be an eye of calm. Even in the midst of the calm, however, there are still swirls of activity that point to even more turbulence in the future.

In this edition of the Roundup, the future is in focus with a couple of unfolding trends making news this past week. Up first is a story about the convergence of tech and finance and how the landscape of personal financial management is set to transform yet again. Next, we look at another online brokerage in the US contemplating a move into – wait for it – sports betting. As always, we’ve got a great selection of comments and commentary from DIY investors on Twitter and in the investor forums.

Checking for Competition

With the dust settling on the online brokerage melee in the US, it’s becoming increasingly clear that the line between technology company and financial services firm is getting very blurry. One of the recurring themes we’ve noted in the online brokerage space is that order execution alone isn’t going to be the primary driver for revenues or sustainability, rather, the road forward is going to rely on diversification.

The recent wave of commission fee drops in the US among the biggest online brokerages, also masked the fact that many other smaller players also stepped forward into commission-free stock trading world, most notably, the payment processor Square, which is run by the CEO of Twitter.

In addition to commission-free stock trading, Square is also launching fractional share trading (something that Schwab also announced it would be opening up to its customers) and with that announcement, the moat around the world of stock trading appears to have been effectively breached.

Why that matters is because the barrier to leap from providing one type of financial solution (e.g. transaction processing) to another is entirely surmountable with the right mix of technology and resource. Which brings us to the big announcement this past week that is surely making waves among financial services providers.

This past week, there were multiple news stories citing that Google is apparently going to launch into the world of providing checking accounts (in conjunction with Capital One) starting in 2020. While this is not the first of the major technology names to jump into the financial services realm (Apple did so with their consumer credit card in partnership with Goldman Sachs and Amazon has discussed launching checking accounts as well), Google is a formidable competitor in the space.

Clearly, as currency and money become increasingly digitized, the tech giants have a natural advantage to harness their expertise and move into the world of finance.  As the commission fee wars in the US have readily shown, being an intermediary is becoming a highly challenging role to play without the scale and technology to keep pace. In the case of Google entering the world of personal finance with a checking account, they have both the scale and the resources to rattle a few cages.

Of course, just because Google moves into a space, doesn’t necessarily guarantee it’s success (Google Hangouts anyone?) however it should be sufficiently concerning to the financial services world as a whole to see a large technology company move into something so ubiquitous as a checking account. On the (very big) assumption that Google is able to succeed, it is not hard to envision them moving into other corners of personal financial wealth management that could benefit from greater automation or integration with other technology.

In Canada, there was another big story brewing (not related to Don Cherry) that saw an online brokerage here make the initial moves to launch into banking too.

Questrade, the poster child for the “non-bank-owned” online brokerage is, ironically, now reportedly working on setting up their own banking arm. This past week, there was a reference to a news story of Questrade applying to federal banking regulators to launch a Schedule 1 bank, known as Quest Bank (in English) and Banque Quest (in French).

There is no firm timeline published at the moment, however, the first steps in creating their own banking division are underway. And, while there is already chatter on the investor forums about this possible development and what it will take for Questrade to successfully compete against its larger and better known rivals, there are significant hurdles still to clear for it to gain traction.

Like Google, or Amazon, or Facebook, Questrade is banking on having an installed user base that they can cross market to. The playbook is a familiar one for clients of E*Trade Financial or Interactive Brokers or even Robinhood, where there is some element of a traditional banking feature that is now available to DIY investors via their online brokerage.

Stepping back, it’s also evident that an online brokerage banking is not an original concept, given that banks also do online brokerage. So, in what is essentially a race to the middle – the prized combination of being great at financial service and great at technology – is what firms on either end of the fin-tech spectrum have to get right.

To be fair, banks are not taking the onslaught of competition from technology firms lying down. Groups like “RBC Ventures” demonstrate how financial giants are leaning into the innovation ecosystem by acquiring and incubating promising technology firms. While Google has a substantial head start on creating a portfolio of helpful “apps” to keep users inside of their own network, RBC Ventures appears to be attempting to build an impressive portfolio of everyday useful apps or services that could be offered to the general public and pass along perks to RBC customers.

In fact, RBC was reportedly aiming to win 500,000 banking clients from the RBC Venture program within five years.

Undoubtedly the winds of change are starting to blow in the financial services space yet again. Another big tech player wading into finance and a Canadian online brokerage wading into banking means that distinguishing service providers is going to be increasingly difficult. For DIY investors, the challenge will be untangling who offers the best set of features at the best price. Tied into that assessment is who will make finance the most accessible and easiest to manage on their platform.

Gambling on Betting

It’s sometimes fascinating how worlds collide. The world of wealth management, historically, was one in which continuity, certainty and conservatism were the hallmarks of success. Gambling, casinos and sports betting were almost antithetical to the world of investing.

Fast forward to 2019, and the other side of a crypto-bubble; a commission fee battle and relentless automation mean that the world of wealth management is willing to entertain “creative” approaches to generating new interest and revenue.

This past week there was an interesting story that crossed our radar about one of the largest online brokerages in the US, TD Ameritrade, exploring a venture into sports betting. If this sounds a) unbelievable and b) similar to what Interactive Brokers has done, both of the above are true.

Although nothing has been confirmed in terms of a specific offering, Chief Information Officer of TD Ameritrade, Vijay Sankaran,  has confirmed that they are exploring the possibility of entering the realm of sports betting. Few details were provided and though this is very much in the exploratory stage, the fact that a second major online brokerage in the US is looking to tap into the sports betting world might signal an emerging trend.

Quote from Business Insider article

In July of this year, Interactive Brokers announced the launch of their simulated sports betting program which lets participants play with virtual money to try to pick a winning portfolio. The upside for participants in this program: up to $1000 in commission credits towards an Interactive Brokers trading account. Interactive Brokers has positioned the interactive and simulated sports betting platform as a learning tool and a way to generate new leads for the online broker. The rationale is that those who are successful at betting on sports would likely be competent investors or traders.

While sports betting may not appeal to the vast majority of investors, the investment by at least one major online brokerage in a whole platform and now the exploration of a second online brokerage in the space is a decent indicator that brokerages are open to finding new sources of revenue, even if they have to roll the dice (pun intended) with who they reach out to.

Discount Brokerage Tweets of the Week

From the Forums

Too Soon?  

A Redditor in their mid-20s is looking to invest for the first time and is considering a TFSA. Fellow forum users provide advice, recommending adequate research and risk assessment.

An Uncommon Family Heirloom

After discovering preferred shares in their family’s portfolio, a Redditor asked for information on how they work. Forum users engage in a discussion about what preferred shares are and how one should move forward with them.

Into the Close

That’s a wrap on another week of activity. With Christmas just over a month away, it looks like there’s only a few more weeks left for major developments for discount brokerages to announce. We’ve got our ear to the ground for the remainder of November and December as we still expect some more exciting developments to unfold before the year is done. Until then, good luck staying focused on the news that matters.