Discount Brokerage News – Page 18

Posted on September 28, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – September 28, 2018

While most traders would agree that the stock market is volatile, the news cycle makes it seem like the stock market is as level as a prairie highway. From Teslas to testimony to tariffs, this past week has given traders a lot to ponder, however when it comes to markets, fundamentals continue to drive the bus.

This edition of the roundup shines a spotlight on action here in the Canadian discount brokerage space, starting first with the latest cash-back offering to come from an online brokerage. From there, and in sharp contrast to the news, we highlight one online brokerage who is successfully using Twitter as a force for good with a recent investor education session. As always, we’ll serve up the latest (and unhappy yet again) tweets from DIY investors as well as a pair of interesting forum posts.

CIBC Investor’s Edge Launches New Deal

This week saw the launch of a new cash-back promotional offer for DIY investors by CIBC Investor’s Edge. There are a couple of important reasons why this offer is noteworthy, one of which is that it comes with a customized SparxTrading.com promo code, Sparx18. More on that in just a moment.

In terms of the offer itself, this deal is a tiered cash-back promotion consisting of three deposit/reward levels which are structured as follows:

Deposits of between $25,000 and $49,999 are eligible for $100 cash back
Deposits of between $50,000 and $99,999 are eligible for $200 cash back; and
Deposits of $100,000+ can receive up to $400 cash back.

This offer is available through March 24^th, 2019, however cash back payments are timed around when accounts are funded.

According to the deal terms and conditions, the cash back reward will be deposited on the week of March 24, 2019, for transfers received by December 31, 2018; transfers received after December 31, 2018, but before May 1, 2019, will receive cash back on the week of July 1, 2019.

Another important feature of this offer is that it is available to new and existing clients who use the exclusive promo code: Sparx18. For new clients, the promo code can be used for this deal when opening an account online. Existing clients can get in touch directly with Investor’s Edge by requesting a call and be eligible for this offer by mentioning the Sparx offer.

As the leading source for Canadian online brokerage offers in Canada, we’re thrilled SparxTrading.com was tapped as the go-to source for the launch of this new cash-back promotion. Of course, the real win is for Canadian DIY investors who can now access another cash-back offer – a promo type that is especially popular. This brings the number of cash-back promotions from a bank-owned brokerage to two (the other being from BMO InvestorLine).

With so few other Canadian brokerages currently offering cash back promotions, CIBC Investor’s Edge will undoubtedly stand out on the deals and promotions list, more so because of the dollar amounts that are part of the offer itself. And, while a lot can still happen between now and the closing date of this deal after the RSP contribution deadline, this latest move by CIBC Investor’s Edge shows they’re ramping up for a very active fall and winter.

BMO Wealth Back on Social Media

While Twitter might be the first place folks go for breaking news or weighing in on celebrities, entertainment or pop culture, BMO InvestorLine and SmartFolio are starting to demonstrate just how effective a platform Twitter can be for boosting awareness of and engagement with personal finance conversations.

This past week, BMO ran another one of its popular Twitter chats with media personality, Lena Almeida (@Listen2Lena) to discuss topics related to personal finance and investing.

Like the Twitter chats done with BMO in the past, this most recent session followed a familiar format. For starters, the session was about an hour long and members from BMO’s wealth management team were on hand to help answer questions that audience members had. Also making a reappearance, cash prizes. There was $600 to be won which was comprised of two $50 gift cards and one grand prize of $500 at the end of the session.

As for the questions themselves, there were five questions that were asked and answered during the session:

Emergency Fund, Major Purchase (i.e. dream vacation, home etc.) or Retirement… what are you saving for?
To those who have identified what their saving goals are, are you investing your savings?
Do you ever feel overwhelmed by all the options when it comes to investing your savings?
1. Fact or fiction? A TFSA is just a fancy name for a plain old savings account
2. Fact or fiction? Savings can wait when “life” happens
What is your biggest takeaway from tonight’s chat?

There was clearly a theme of talking about savings, what those savings can be used for and naturally, how to grow those savings with different investment products. It was especially interesting and useful to see how Lena answered the questions as well, something that added a definite sense of authenticity to the conversation and offered examples of someone sharing their experiences but also a genuine manner in which encourage others to participate by sharing their stories and questions.

BMO Twitter Chat 09-25 – Curated tweets by SparxTrading

What is especially interesting about these Twitter chats is that BMO and their team have managed to create a content experience online that is both educational and engaging, which is especially tough to do with most personal finance content (let alone on Twitter). By turning this into an hour-long conversation about financial goals, throwing in some cash prizes, interesting personal finance facts, copious amounts of GIFs and working with some Twitter influencers, BMO’s wealth management team has found a creative way to reach the right audience.

For other online brokerages, there is clearly a challenge to rival firms like BMO (InvestorLine) by doing something similar. For BMO’s competitors, getting it right will likely not be quick nor painless. That BMO has enjoyed a considerable head start means that the other online brokerages will be playing catchup for some time. Even more significant though is that even though it was for a brief window, these chats show that Twitter isn’t only for breaking news or controversy, it can be used to create opportunities to connect and learn.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – 09-28-2018 – Curated tweets by SparxTrading

From the Forums

Newbie Investor

One new investor asked a simple yet useful question in this thread from Reddit’s Personal Finance Canada. Interested in growth funds, the forum user was wondering how to choose the best performing ETFs for investing, including market cap and fees. Click here to read what advice was offered.

Step to the Beat

Timing the market is no easy feat, however with a TFSA timing does matter. Read what DIY investors on reddit had to say with regards to timing, influence of outside parties and what the consequences could look like when it comes to cashing out a TFSA mutual funds.

Into the Close

If there’s one thing this week had plenty of, it was controversy. Fortunately, in the midst of the controversy, there were also moments of extraordinary courage.

As the eyes of the national media in the US – and Canada – turned to unfolding drama in the US Supreme Court nominations, the bravery displayed by multiple victims of abuse to tell their stories to the world has been inspiring. If anything, the events of the past few days have shown that individuals can effect change and that heroes come in all stripes. More than anything, however, as we head into another weekend, the week’s events underscore the importance of being compassionate and courageous.

Finally, on a personal note, one year ago, almost to the day, I found myself confronting my own personal tragedy of the loss of my daughter. I have witnessed and been moved by the good that exists in a sometimes crazy world. I wanted to dedicate this roundup in particular to the memory of my daughter, and also to those who have been so kind and compassionate in my darkest hours. There is goodness in this world, and I am hopeful that we can all find it within ourselves to help spread that sentiment to those who need it the most. Have a wonderful weekend!

Posted on September 21, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – September 21, 2018

Fall is officially here but for investors, leaves are green and weed stocks are doing quite the opposite of falling. Ironically, the lead up to legalization of recreational marijuana is also having a ripple effect in the online brokerage space. Once again, the fervor of investing in a hot story is causing all kinds of excitement and mayhem for online investors. Of course, big stories start out as small ones, and in the case of online brokerages north and south of the border, there are some very interesting stories brewing that could create a very different kind of story around legalities of online trading activities.

In this dark and stormy night edition of the roundup, we take an appropriately themed X-Files approach to piecing together a number of interesting signals from the US marketplace that hint of some unusual forces at work in the online investing space. Closer to home, we’ll look at the controversial wave of lawsuits hitting online brokerages for real fees charged for phantom advice. Finally, we’ll round out the week with some rather unhappy tweets and interesting forum questions from DIY investors.

Hustle & Flow

Whether it’s NAFTA, President Trump or any number of other headlines coming out of the US, there’s no denying the influence that the US is having on Canadian news recently. For DIY investors, however, the US is an especially interesting space to watch when it comes to online brokerages and what the real cost is to commission-free trading.

Although this story is a tad convoluted, one of the important starting points that has emerged over the past two weeks has been related to order routing, specifically within the context of ‘fair play’ for retail investors.

While order routing and trade execution may seem esoteric to many investors content with just hitting buy and sell, the vast machinery of order execution that became the plot to Flash Boys is much more important than most retail investors know.

Depending on who you talk to, the presence of high frequency traders in the market could be a story about investors not getting the best price when executing a trade or about ensuring markets are liquid and bid/ask spreads are as narrow as possible. Over the past two weeks, however, we’ve noted several ‘blips’ in what has been a quiet story, which could be laying the groundwork for something more substantial to surface in the not too distant future. What does all that mean exactly?

Consider that last week, one of the most popular (especially with active traders) publicly traded online brokerages in the US, Interactive Brokers, decided to pull up stakes on where it was listed.

Interactive Brokers officially announced that, as of October 5^th, they will no longer be listed on Nasdaq but have instead chosen to be the first to list on the two-year-old stock exchange, IEX. If the name doesn’t ring a bell (pun intended) they are best known as the trading exchange that was founded in 2012 by Brad Katsuyama, and profiled in the 2014 book Flash Boys.

Ordinarily, a company choosing to change where it’s listing resides is not particularly noteworthy. In this case, however, Interactive Brokers choosing to list on IEX is potentially relevant for online brokerages for a number of reasons.

First, it puts Interactive Brokers in a tactical spotlight. As the first – and only (for now) – listing on the IEX, Interactive Brokers has given itself a tactical marketing advantage. Instead of being a small fish in a big pond on either the NYSE or NASDAQ, they are a big (and the only) fish in a small pond.

Secondarily, Interactive Brokers is aligning themselves with the notion of ‘fairness’, specifically, treating their customers fairly. From the fact they pay out high interest on cash balances over $100,000 to the fact that they have aggressively low commission rates, Interactive Brokers isn’t just about offering value, they’re also flashing that they believe in something – fair and orderly markets. Perhaps the biggest point of ‘fairness’ is that Interactive Brokers does not sell its customers’ order flow.

That last point is particularly relevant in maneuvering around competitors like Robinhood, and now, JP Morgan, who are offering retail investors zero commission stock trading. Recently Robinhood telegraphed to the markets that they are contemplating a run at going public. In doing so, the level of disclosure about how and where they make their money has been put under greater scrutiny, and, as it turns out, they have some explaining to do when it comes to client order flow.

The specific issue about Robinhood was recently laid out in detail in an interesting Seeking Alpha article that described how Robinhood has been selling client order flow to high-frequency trading firms and doing so at a much higher price than others who do so. All of a sudden the altruistic and democratizing notion of ‘free trading’ that Robinhood espouses comes back down to the physics of their business and the reality that they have to figure out how to make money (not from commissions).

While peers of Interactive Brokers in the US benefit handsomely from the revenue generated from selling order flow, there is something that doesn’t feel entirely right about online brokerages directing trading volumes to exchanges based on payment for order flow. The lingering question is whether or not a routed order is getting the “best price” and anyone who’s read Flash Boys will know, the answer is probably not.

There was another important development this month coming out of the US online brokerage space in which a class action status for a lawsuit against TD Ameritrade was granted claiming that selling the order flow impaired the ability of getting clients to get the best trade execution. While the scope of the class action covers clients of TD Ameritrade between September 2011 and September 2014, it nonetheless establishes a precedent that selling order flow can be characterized as harming clients. The major implication of this lawsuit, should it be successful, is that selling of order flow could cease altogether in which case the “zero commission” trading model would have to find some other way to replace the revenue. For TD Ameritrade that might not be difficult to do, but for zero-commission firms like Robinhood, it could be a real setback to growth.

Taken together, Interactive Brokers listing publicly on the nascent stock exchange IEX seems like some well-calculated chess. Their presence on IEX will be difficult to ignore for the foreseeable future (so bonus marketing points) and they will also have the title of the first listing on this new exchange, whose mandate is to build a fair market for all. Furthermore, with possible regulatory consequences for selling order flow to HFTs creating headwinds for their competitors, Interactive Brokers is well positioned to not be negatively impacted by either the fines or the bad publicity that would accompany such a lawsuit.

Finally, it also sets up an interesting scenario for zero-commission stock trading from firms such as Robinhood who would be walking a dangerous tight-rope by selling order flow. Interactive Brokers does have low costs and so now the pressure to drop commission costs appears to have abated.

The sustainability of online trading and how low prices can go for commissions is still a moving target. In order for online brokerages to be around for any appreciable amount of time, they have to find a way to be profitable. Interactive Brokers has gotten creative and demonstrated that you can’t stand still for very long in the online brokerage space. It’s now up to their peers to respond decisively and in a way that can keep their book of business healthy. And as for the new zero-commission players, they may have to take the very uncool step of ‘unbundling’ and charging for other services or features related to having an online brokerage account.

Full Court Press

If there’s one place where you’ll find most of Canada’s online brokerages mentioned in one breath, it’s usually in a comparison website. This week, however, there was one more place in which a significant number of online brokerages were referenced, a class-action lawsuit.

Canada’s online brokerages were in the crosshairs of regulators, investors and the media in a firestorm story that continues to gather steam and focuses on online brokerages charging trailing commissions on certain mutual funds even though these commissions are technically compensation for advisors – something that can’t really happen at an order-execution-only online brokerage.

Although this is not a new story, this week it found new life with wide coverage in the Canadian media, including and especially CBC News’ consumer advocacy show, Go Public as the scope of legal action by Ontario law firm Siskinds LLP and Bates Barristers PC widened to include CIBC and their family of mutual funds.

This brings the total number of big banks hit with a class action lawsuit to three: TD, Scotiabank and CIBC. But, the scope doesn’t seem to stop there.

According to the Insurance & Investment Journal, the lawyers leading the action “would like to speak with individuals who held or hold Renaissance mutual funds (which are part of the CIBC mutual fund family) or Series A mutual funds of other mutual fund families through a discount broker.” This is perhaps a signal that other online brokerages could find themselves included in this legal action.

The stakes in this legal battle are already incredibly high – with regulators already weighing in, media picking up the story and consumers who are genuinely incensed. The financial cost is also material – with each of the three class action lawsuits thus far valued at $200M a piece.

Not everyone is on side with piling on the online brokerages or their big bank parents, however. Rob Carrick, a personal finance columnist at the Globe and Mail and one of the most influential voices for DIY investors in Canadian media, took the position (back in April when the first lawsuit was proposed) that when it comes to investing online, it’s buyer beware. His perspective appears to be that if you are signing up for a DIY investor account, you should at least know or understand the basic differences between mutual funds. That said, with more than $25B of the reported $30B (i.e. 83%) in assets at online brokerages in mutual funds that bundle an advice fee within them, it’s safe to say that many of the consumers purchasing mutual funds through their online brokerage don’t know what they’re paying for.

While the actual courts will determine the direction of this legal case, the court of public opinion is already in session. The CBC article alone received 500 comments at the time of publishing the Roundup, which is a phenomenal number of comments on a personal finance issue. Suffice it to say, this story is only going to get bigger before it gets better.

Spotted on Social Media

Shifting gears to something lighter, celebrations continued at BMO InvestorLine this past week as [employees at all levels] marked the milestone of 30 years as a Canadian online brokerage. The BMO InvestorLine crew were spotted on social media at an event at the Rec Room in downtown Toronto.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – 09-21-2018 – Curated tweets by SparxTrading

From the Forums

Safety in Numbers

Trading on a newly opened TFSA account can naturally raise concerns about whether or not you’re doing it right. Read what advice others gave one reddit user here with regards to net value, and timing trades.

Way to Grow

This thread in Reddit’s Personal Finance Canada generated an interesting conversation about VGRO, its benchmark and the ways in which a DIY investor can choose to invest.

Into the Close

That’s a wrap for yet another unbe-leaf-able trading week. It’s been a literal whirlwind day for many folks in Ontario and Quebec and we hope all our readers are staying safe and dry this weekend. Enjoy what you can of the break, next week may be even wilder.

Posted on September 14, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – September 14, 2018

There’s no doubt that when big weather events happen, people pay attention. With announcements of feature releases and new offers at Canadian and US online brokerages happening at a greater frequency and intensity, it appears as if a significant storm of activity is brewing into the tail end of 2018.

In this edition of the roundup we take a look at some very big moves being telegraphed by one of Canada’s largest online brokerages and what that means for all the players on the online brokerage field heading into 2019. Next, we review the latest Canadian online brokerage rankings from a popular rating agency and unpack a surprising turn of events in the industry this past year. As always, we’ll close out the roundup with a healthy dose of tweets and forum posts from Canadian DIY investors.

Let’s get digital: TD Direct Investing continues to invest in digitization of wealth management

This past week, one of Canada’s largest online brokerages, TD Direct Investing, announced that they are planning to launch some bold digital initiatives in 2019. In doing so, TD’s online brokerage arm has doled out a healthy dose of market moving news that is bound to get the attention of DIY investors and competitors across the online trading spectrum. In a space where most of the moves are incremental, TD Direct Investing’s latest announcement feels more like a step change in the industry rather than just another small step forward.

In a week peppered with interesting stories and developments about discount brokerages, there are a number of reasons why TD Direct Investing’s announcement, which was published on September 12^th, was exceptionally interesting and relevant to the online brokerage space in Canada.

The first and undeniably the most important was what the news release said.

The content of the release laid out a vision for the digital wealth management experience that TD Direct Investing clients can expect to see unfold in 2019. Included in that digital experience is the mention of digital wealth planning tools in the early part of the year as well as TD’s own robo-advisor platform that will also include TD’s own ETFs which is set to launch in the latter portion of next year.

While we don’t want to gloss over the enormity of what it means to the online brokerage space in Canada to have robo-advice hit this kind of scale, there are so many angles to this move that for this roundup, we’ll focus on some of the important details that are also worth mentioning. As this story continues to unfold, we’ll be exploring more of what the details of the services will include, especially what a “complete, end-to-end digital investing experience” refers to.

Aside from the release of new features, another very important angle to the news release this week is that TD Direct Investing is announcing what their intentions are for some very ambitious projects. The story here is that like most other online brokerages, TD Direct Investing has historically played their cards very close to their vest. That they would not only announce multiple technology features but also put even a general timeline on those features going live signals their confidence in those programs hitting the launch windows and it signals that TD might be taking a different approach on sharing what’s in the TDDI workshop.

As technology companies are well aware of, a little bit of prelaunch buzz is what gets people curious and excited to see what actually rolls out. Historically, however, services or features in development at Canada’s discount brokerages tended not to get much of a spotlight, let alone a news release and a coordinated social media publication. So, it is clear that something has shifted with regards to ‘sharing’ information relating to development of new features.

On that note, it was particularly interesting to see a senior executive at BMO Wealth Management ‘like’ a post made by the President of TD Direct Investing (Paul Clark) about the launch of these new services on LinkedIn.

Perhaps this move by TD Direct Investing is signaling a shift in identity from being a “financial services” firm towards more of a technology firm, thus fitting more naturally into a ‘fintech’ way of operating.

A third important implication of this news release is the fact that the technology stack TD Direct Investing is choosing to integrate into their own technology stack appears to be future-proofing to some degree.

The technology provider TD Direct Investing announced they’d be working with, Hydrogen Technology Corporation, a platform that enables APIs to be developed as well as blockchain connectivity/support and uses AI/machine learning to garner insights on client behaviour. That very potent combination of technologies means TD Direct Investing can learn more about their clients’ financial services needs and, with the breadth of services under the TD umbrella, find a way to connect the right product to the right people at the right time – at least that appears to be the plan.

For clients, it means a feature-rich platform with analytics and a user experience suited for younger investors who are particular about the look, feel and function of technology platforms.

Of course, then there’s the option in the future to readily connect to blockchain-powered financial instruments, something that might come to market sooner than anyone can really predict. As such, TD Direct Investing appears to have an edge in equipping themselves with a technology layer geared towards ensuring they can connect to the technologies of tomorrow with the WebBroker interface.

Aside from the abovementioned key points, there are still numerous implications and interesting angles to this announcement.

Without question, TD Direct Investing’s latest move is a big deal and will command the attention of the rest of the Canadian online brokerage market. And, it seems like TD Direct Investing’s competitors will have their work cut out for them.

According to an article published in the Globe and Mail this week, TD has invested $125 million into its WebBroker trading platform in preparation for new trading features and capabilities. By comparison, the acquisition of the entirety of BBS Securities (including subsidiary Virtual Brokers) last year by CI Financial (coincidentally another client of Hydrogen Technology Corp) cost about $38 million. Simply put, smaller online brokerages or those without deep technology budgets or talented tech teams are up against a formidable competitor in TD Direct Investing.

Prudently, TD Direct Investing has mentioned that these changes will take place in phases and, since approximate timetables have been given, there is enough slack and wiggle room to accommodate the surprise delays that inevitably accompany any technology project. Even so, there is little doubt that this move by TD Direct Investing, regardless of what the final products looks or functions like, will have competitors scrambling to mobilize and DIY investors (clients especially) eager to take TD Direct Investing’s new digital platforms for a test drive.

BMO InvestorLine Ranked #1 by J.D. Power for 2018

With 2018 heading into its final stretch, the annual discount brokerage “rankings season” starts to kick things up a notch. This past week, J.D. Power released the results of their latest rankings of Canadian discount brokers (based on investor satisfaction) with BMO InvestorLine coming out on top of the field in terms of investor satisfaction.

While the Investor Satisfaction study provides a snapshot in the current year of how the field of online brokerages compare to one another, we’ve been tracking results from this survey data since 2013 and as such, this year’s results present a very interesting picture both in terms of 2018 as well as how 2018 compares to previous years.

Included in this year’s rankings are 8 of Canada’s most popular online brokerages:

Curiously, neither Qtrade Investor nor HSBC InvestDirect made it into the published rankings for this year, something that has not happened since 2014. Also not present were Virtual Brokers or Interactive Brokers, neither of whom have made it into the published results.

The big story for the 2018 online brokerage rankings from J.D. Power is the relative underperformance of Canada’s online brokerages compared to previous years. In fact, this year’s average score of 723 is the lowest since we’ve measured, beating out 2013’s score of 724 and clearly snaps an uptrend that was in place since 2015.

To unpack why that might be the case, there are also some additional observations worth noting.

First, two firms that have consistently battled for podium finishes over the past five years, National Bank Direct Brokerage and Desjardins Online Brokerage, finished uncharacteristically lower than “usual”. Granted, Desjardins Online did tie for second place this year, however, when looking at both of these firms’ average scores since 2013, Desjardins Online Brokerage and National Bank Direct Brokerage are virtually tied at 752 and 753 points respectively. Most years one or both of these firms have handily beat their competitors and their average scores far outpace just about everyone else except BMO InvestorLine, whose 6-year average score ranks third overall at 746.

Digging a little deeper into the numbers, the standard deviation of those scores, a measure of how variable those scores have been over that time period, reveals that BMO InvestorLine is actually one of the most consistent firms in terms of investor satisfaction scores with a standard deviation of 13 points. TD Direct Investing, who was ranked second last in 2018, was also tied with BMO InvestorLine in terms of volatility of investor satisfaction scores over that same timeframe. The firm with the highest variation in satisfaction scores over the same period was Qtrade Investor (28 points) because of their strong uptick in 2017 followed by Desjardins Online Brokerage (24 points).

As such, even though BMO InvestorLine’s investor satisfaction scores decreased compared to last year, they were, on a relative basis, higher than their peers in 2018. Finishing behind BMO InvestorLine this year were CIBC Investor’s Edge and Desjardins Online Brokerage. And, at the other end of the list, Scotia iTRADE finished last in terms of investor satisfaction with a score of 717.

Another interesting trend with regards to the performance of online brokerages in terms of investor satisfaction is that the range between the highest and lowest scores continues to narrow. In 2013 and 2014, for example, the range between the top and bottom scores was 64 points however in 2018 that range has compressed to just 22 points.

As was referenced in the roundup a couple of weeks ago for the Kiplinger rankings of US online brokerages, for Canadian online brokerages it appears that on the whole, the differences between online brokerages is diminishing – in this case when it comes to investors being satisfied with the full set of attributes measured.

For Canada’s online brokerages, the message is pretty clear: there needs to be strong differentiators in place to prevent them from becoming viewed as a ‘commoditized’ service. In other words, there needs to be greater emphasis on what makes being a client of one online brokerage feel more ‘special’ (read: valuable) than another.

To BMO InvestorLine’s credit, their consistency has paid off. With relatively strong investor satisfaction scores in the past, in a year when the competition stumbled, and investor satisfaction waned, their current mix of services still holds currency with their clients. At least for 2018, slow and steady has won the race.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – 09-14-2018 – Curated tweets by SparxTrading

From the Forums

Function Over Form

With so many online brokerages out there these days, it can be tricky to keep up with who offers which feature and who doesn’t. In the end, getting a user from A to B reliably appears to be the driving force. This forum thread from reddit’s Personal Finance Canada section highlighted the mobile experiences between CIBC Investor’s Edge and TD Direct Investing. See what interesting feedback others had to offer.

A Head Start

From robo-advisors, to couch potatoes to plain old mutual funds, choices for ‘passive’ investing are easier than ever, which, ironically might make choosing more challenging. One young investor looking to grow their TFSA asked about these options in this post in reddit’s Personal Finance Canada forum. The questions were met with a wealth of knowledge and advice on navigating student loan repayments, interest fees as well as useful information on robo-advisors and ETF fees. Worth a read.

Into the Close

That’s a wrap on another wild week inside and outside of the markets. Optimistically, there’s lots to look forward to heading into the weekend, including news that there will be the first ever Space tourist and, of course, that NFL football is back. Wherever your adventures boldly take you, we hope you have a great weekend.

Posted on September 7, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – September 7, 2018

Even though it was technically a short week, it most certainly didn’t feel that way for anyone watching or reporting the news. While none of the online brokerages have pulled many of the stunts on Twitter that this past week has provided, they are doing their fair share of generating headlines, buzz and making a splash online.

In this edition of the roundup, we ring in September with an overview of some very interesting deals and promotions activity from Canadian discount brokerages as well as a look at new areas where brokerages are battling for DIY investors. From there we’ll take a deep dive into a major overhaul of a popular online brokerage’s website, including some interesting design and content strategy choices. As always, we’ll take a tour of what DIY investors and online brokers were up to on Twitter and close out with chatter from the investor forums.

Deals and Promotions Heat Up September

After a quiet start last month, deals and promotions activity at Canada’s discount brokerages has picked up considerably as we enter September. While this month usually signals a return to the markets and heightened trading activity, this year there’s something different brewing, and it’s not a pumpkin spice latté.

Instead, through the month of August and coming out of the gate in September, there’s been a noticeable uptick in discount brokerage deals activity. We’ve seen a new battle ground emerge in the area of referral promotions (more on that in a moment) as well as an online brokerage which typically sits on the sidelines jump back into the deals pool. In addition, there have been references to additional offers which may be coming this month. For DIY investors, it seems to suggest interesting opportunities might be available when shopping around for an online brokerage account.

This heightened level of promotions activity points to what will likely be a fierce contest for DIY investor assets over the coming months. Historically, deals and promotions activity tends to ramp up through October and November in anticipation of “RSP season” – a point in the calendar year in which many DIY investors turn intention into action by opening new accounts. The fact that such drastic moves are being made by online brokerages so early suggests competitive forces at play.

One of the biggest stories in the discount brokerage deals and promotions space this September is BMO InvestorLine’s reduction in the threshold to qualify for their refer-a-friend promo. Specifically, InvestorLine has lowered the threshold to qualify for the referral promotion from $50,000 down to $5,000 while still retaining the $50 cash back for both referrer and referee. This move makes their offer now more accessible than Scotia iTRADE, the only other bank-owned online brokerage to offer a referral promotion.

While it is not clear exactly why BMO InvestorLine chose this point in time to lower their qualifying threshold so substantially, the combination of Wealthsimple Trade launching for Canadian DIY investors and the entry of Qtrade Investor into the referral promotion sandbox are both very recent developments that would, understandably, prompt BMO InvestorLine to shift tactics to account for these competitive forces. Of course, frequent observers of the deals and promotions space would also have noticed that BMO InvestorLine also chose to extend their cash back offer through to the end of September, a sign that perhaps something a bit bigger and bolder is on the drawing board for the fall season.

In terms of strategy, referral promotions for discount brokerages are an interesting battleground.

On the surface, that more online brokerages don’t have them in place is a head scratcher. After all, one of the most influential and least expensive sources of new clients are the family and friends of existing, delighted clients. That said, getting a referral program off the ground and functioning properly, is easier said than done. Competing demands for limited technology resources means that even if the technology exists to manage this initiative, it still requires oversight, management and maintenance – something that invariably requires resources. So, one natural limitation to other online brokerages simply rolling out a referral program is that ‘buy in’ has to be there and business case made, which is why Qtrade Investor jumping into the referral promotion segment is such a big deal and why BMO InvestorLine’s latest move creates even more of a challenge to other brokerages to either match this promotion or leave BMO InvestorLine unchallenged.

With two big announcements in the referral promotions category within a month, however, this appears to be fertile ground for competition. These actions will not go unnoticed by other brokerages and will likely be a catalyst for those discount brokerages on the fence about deploying a referral program of their own to find an effective counter offer.

It is also worth mentioning that time is of the essence for Canadian discount brokerages looking to launch any kind of splashy promotion. Wealthsimple Trade is still not yet widely available which means that nimble online brokerages have a window with which to retain existing and/or attract new customers via some kind of big promotion.

After Wealthsimple Trade does step onto the field, however, it will be interesting to see whether they tackle referral bonuses or promotions altogether. While we’ll just have to wait and see, there’s already evidence they’re willing to leverage referrals.

As one of Canada’s leading fintech firms, Wealthsimple (parent to Wealthsimple Trade) is using a clever strategy of referrals to boost awareness of and interest in Wealthsimple Trade via it’s “waiting list” structure. Anyone wanting early access to their new platform can jump ahead in the line by simply referring more people to sign up. Not only is Wealthsimple Trade (and the parent brand) already active with affiliate programming but they are showing they’re already leveraging it in creative ways.

In the battle for Canadian DIY investors’ attention and share of wallet, the lineup of fall deals is sure to bring a few more twists and turns and some very interesting marketing campaigns. The bottom line for DIY investors, though, is that online trading is about to get much cheaper, more accessible and much more interesting to shop for an account.

Questrade’s New Website is Seriously Chill

This past week, Questrade unveiled a new and improved version of their website. While new website refreshes don’t typically make the kind of splashy headline they once did, the launch is nonetheless an important milestone for the company and reflects a sensitivity to their target demographic as well as a clear shift in the notion of what “investors” look like.

So…have you noticed the difference? 🙂

Last night we revamped our website giving it a total makeover. The new intuitive, modern, and easy-to-use site is here to empower you to invest better. Check it out and be sure to let us know if you have questions https://t.co/YOUVJ5merA. pic.twitter.com/EWYyBTCqym

— Questrade (@Questrade) September 5, 2018

Overall the new website looks and feels more contemporary and built for an Instagram generation. The imagery is more prominent and features a very millennial trope of people ‘living their best lives’ which stands in stark contrast to the extreme emotion that characterized previous versions of the website or the “tough questions” campaign that featured bold text statements.

While there is no avocado toast, there is a notable colour palette of green and white that would make for an insta-worthy post. Ironically, Instagram isn’t really part of the Questrade Wealth Management brand directly (it is part of their careers section though) which is in stark contrast to Wealthsimple which has embraced that channel as part of their social media ecosystem to connect with investors.

To Questrade’s credit, and perhaps picking up on themes from the release of other online investing websites launched not too long ago (such as Credential Direct and Qtrade Investor) Questrade chose to have visually appealing imagery, minimal text and much more room for visitors to focus on something interesting visually as well as important key message. While it is not ‘outstanding’ the important point is that it doesn’t stand out for the wrong reasons.

Another very interesting feature of the imagery choices on the new website is that many of the individuals in the photos skew young. There are almost no images of “seniors” nor of traditional corporate settings but rather young people or young families “living” life. It’s generally difficult to create an emotional experience (especially a positive one) with regards to financial services and it is especially difficult to do so while looking original and authentic. We’ve all seen far too many stock photos of what “finance” looks like, so kudos to the people choosing images for Questrade’s new website.

It is also worth mentioning that “who” an investor looks like has also been given careful consideration. Questrade has made sure to include a more balanced view of women as investors, a welcome evolution from finance/investing websites that, for many years, defined investing in a visual sense, as ‘men only’. Again, Questrade is not unique in this regard and even on their new site there is some room to improve, but they are trending in the right direction when it comes to inclusivity and broadening the definition of what an investor could or should look like.

While website changes are increasingly now the norm, Questrade’s recent website overhaul is a significant visual and design departure from their previous websites, a likely reflection of their own evolution as a wealth management firm and not just an online brokerage.

The changes to the new website haven’t just been visual, however. Structurally, the new website also includes testimonials from (presumably) Questrade clients who’ve said nice things about the brand which also takes its cues from other online brokerages doing something similar.

A curious feature of the new website is that the big ‘content’ sections of the previous website have been moved or removed entirely.

For example, the Questrade community is no longer available (at least on the public facing site) which means that previous content such as newsletters and forum posts are not visible. Also no longer accessible is the Questrade blog as the message below indicated when clicking on a Google link for it. Instead of these sections, users are directed to the ‘resources & support’ section of the new website.

It appears Questrade has moved their educational content into a “support” section and while there are articles about investing topics, navigating this content requires users to click on ‘related’ articles or use the search field rather than being able to access the topics in a more categorical format. For users who browse by topic or who don’t know what they don’t know (and thus don’t know what to search), this structure actually makes it more challenging to consume information and ‘learn’ about investing.

Speaking of content, it also looks like Questrade has started to push out content on social media channels related to investing. Recent posts on Questrade’s Facebook and Twitter feature an informative graphic containing an investment term, something that other online brokerages have also successfully used as part of their social media content mix (such as Interactive Brokers, and once upon a time, Scotia iTRADE).

Admittedly, this was supposed to be a much shorter piece on Questrade’s new website. Responsive websites that render well across multiple screens are now the standard rather than an exception; clean minimalist design that uses generous whitespace and bold imagery is a design choice clearly aimed at reaching and resonating with younger, more visually-inclined users. These are no longer big, innovative leaps.

That said, the fact that many of the changes to the online brokerage space (zero-commission trading notwithstanding) we have observed are evolutionary rather than revolutionary, speaks to a new trend of sorts: zeroing in on the details. In much the same way that the highly competitive world of Formula One racing separates success from failure by minutia of design, so too will changes to the digital experience of online brokerages – including their websites. Going forward, the details will matter more than they have before.

Even with the ingredients of what goes into a contemporary website well telegraphed, how well those elements come together ultimately determines the end user’s experience and Questrade’s new website is the product of a lot of thought and design savvy.

While there are some very intriguing changes around the removal of a blog, forums section and other content items, the ultimate result of Questrade’s redesigned website is that it reflects their ability to be contemporary from a design point of view. This new website has helped to visually reshape the narrative of Questrade from just a ‘direct investing’ firm towards being a holistic wealth management firm that is along for the ride as their clients ‘lead their best life.’

BMO InvestorLine Turns 30

While the parent to BMO InvestorLine is clipping along at a healthy 200 years old, BMO InvestorLine itself is still a spry 30 year-old. We spotted this great image on Twitter that was a great throwback to when ‘mobile trading’ made its debut at InvestorLine. Congratulations to BMO InvestorLine on hitting this milestone. As with any great milestone birthday, there will hopefully be lots of reasons to celebrate (especially for DIY investors)!

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – 09-07-2018 – Curated tweets by SparxTrading

From the Forums

No Room with Some Views

TFSAs can be tricky business, especially so when you overcontribute. A user in this reddit thread ran into some issues with overcontributing to their TFSA while also experiencing a large loss. Read what options others offered in the shape of damage control including factoring in fees and transfer of funds.

Slow Your Roll

Of the many reasons why Wealthsimple Trade could siphon away business from online brokerages, this reddit post provides a compelling view of consumer sentiment on the new service (especially since it hasn’t even launched yet). In this post, one user thinks that taking the DIY route required going to a popular online brokerage however other readers were quick to weigh in on other options, including staying put with Wealthsimple.

Into the Close

That’s a wrap on another week. Just because it’s Friday, doesn’t necessarily equate to relaxation ahead. Political firestorms seem to be ever present – including in the launch to the new NFL football season. If you haven’t already seen it or heard of it, Nike and Colin Kaepernick are making all kinds of waves. There was a very interesting stat shared by Robinhood (the online brokerage) about the impact of Nike’s move – as well as on their stock. In case you haven’t seen the video, it’s worth a watch below. And, on that note, whatever you find yourself dreaming about this weekend, hopefully it’s bold and exciting!

Posted on August 31, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 31, 2018

If there’s one thing that markets are built for, it’s speculation. Whether or not NAFTA negotiations turn in Canada’s favour or against, the reality is that nobody on either side of the negotiating table is standing still and neither are their respective markets. As the gatekeepers to being able to invest in all of the speculative fervor, online brokerages on either side of the border are showing that they too need to keep moving, and fast, to keep up with the pace of change.

Oftentimes it’s a bigger development that makes the cut for the weekly roundup, however this week there is something interesting afoot, specifically lots of little things. The big story this week seems to be that there are lots of little stories – incremental movements – that appear to indicate online brokerages are positioning for a very busy and eventful final stretch to 2018. There’s quite a bit to unpack, so let’s dive in.

Getting in Some Downtime

One of the biggest stories we’ve been tracking in 2018 is the merger between rivals Qtrade Investor and Credential Direct. While there have been a few signals across the year that this change was coming, there has been a firm deadline telegraphed as to when that official cutover date will be. Specifically, a bulletin posted on the Canadian Securities Exchange website on August 29^th indicates that Qtrade Securities Inc. will cease its status as a dealer effective September 7^th and a new entity, Credential Qtrade Securities Inc. will commence under the broker code, wait for it, 088.

Of course, another interesting sign that things are publicly moving forward is that both the Qtrade Investor website and the Credential Direct website displayed messages that their sites are unavailable over the Labour Day long weekend. So, while lots of folks might be out enjoying the festivities of a long weekend, there’s no doubt that technical teams and executives at the new parent firm Aviso Wealth will be having a long weekend of sorts ensuring that the transition of systems goes smoothly.

A Close Call

Determining which online brokerage is best is incredibly challenging at the best of times, however with ultra-competitive pricing, loads of features and ever-improving user experience, the differences between discount brokerages aren’t nearly so clear anymore. This past week, US online brokerages were put under the microscope by Kiplinger, which released their latest US online brokerage rankings for 2018.

While TD Ameritrade came out on top, the rankings indicate just how close the top four US online brokerages were to each other, a point which seems to validate the observation about how competitive firms have become. What was very interesting to note, however, is that the bulk of what contributed to the top firms’ scores was not commission pricing. In fact, of all of the categories investigated, commissions and fees was the weakest category among TD Ameritrade, Charles Schwab, Fidelity and E*Trade. Perhaps that bodes well for online brokerages in the looming fee battle.

It was also interesting to note how small the field of online brokerages ranked was relative to the possible options out there. The notable absences of Robinhood or Interactive Brokers could have been interesting to stack up against other brokers especially in the user experience (UX) and pricing categories respectively. It might have also highlighted the fact that while pricing and even UX are big draws for firms like Robinhood, features like tools or advisory service are places where well-established online brokers have a leg up.

Finally, another interesting tidbit from this article was the mention that lesser-well-known US online brokerage Firsttrade has also dropped their commission fees for trading ETFs and stocks down to zero, a move that comes on the heels of JP Morgan’s announcement last week.

Commission-free is the Place to Be

As a segue from the move by Firsttrade mentioned above, there is clearly a shift taking place in the online brokerage industry as a result of a massive announcement by JP Morgan launching zero commission trading via their You Invest platform.

A recent article in Investment Executive which featured comments made by credit rating agency Moody’s, reiterated what many observers of the online brokerage industry also believe, that the impact of reducing commissions is going to have a material impact on the revenues of some online brokers more than others. Also, not everyone is sold on the value of commission-free trading for DIY investors either as this piece from CNBC highlights.

Taking the example of what may transpire in the US, it is not that hard to envision similar concerns for Canadian online brokerages who will be put to the test to see how much lower their commissions and cost structure can go before they tap out of the DIY investing space altogether.

On a side note, Robinhood online brokerage announced this week that they will be offering commission-free trading access to 250 global stocks via trading in American Depository Receipts (ADRs). Select firms such as Nintendo, Adidas, BMW and even Canadian firms will now be available.

We will continue to keep a close eye on what’s unfolding in the commission-free trading space. Until this approach to online investing becomes the norm, there’s a good chance it’s going to occupy the spotlight and entice investors to kick the tires on trading commission-free. For a quick catchup, since we reported on the Wealthsimple Trade announcement, we’ve seen the number of folks in the waiting list climb to almost 60 thousand, which for many Canadian online brokerages, represents a lot of existing clients interested in trying out the competition. Stay tuned.

Options trading updates and pricing at CIBC Investor’s Edge

Options trading recently got a little easier at CIBC Investor’s Edge. Clients of Investor’s Edge can now trade options via CIBC’s Mobile Wealth app, with the functionality of options trading available on the full site.

Pricing for options trading continues to remain the same at $6.95 + $1.25 per option contract at the standard price while active traders (>150 trades per quarter) can expect to pay $4.95 + $1.25 per option contract. Interestingly, we noted that the Globe and Mail’s Rob Carrick reported that there may be a lower standard commission pricing of $5.95 per trade coming this fall as part of a promotional offer.

Taken together, the latest moves by CIBC Investor’s Edge are, like many other brokerages, signaling that accessibility to trading platforms and better pricing might offset the costs of staying competitive by enabling trades to be researched and executed more conveniently.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

The Great Debate

Bank owned brokerage or non-bank-owned brokerage – when it comes to DIY investing and putting your hard-earned investment dollars to work somewhere, the question of where still generates heated discussion. In this thread from Canadian Money Forum, the debate over whether to transition out of Questrade and where to go generated a lot of interesting perspective.

Returns to Sender

Leaving money on the table is a perennial curiousity for many investors. One new investor in this reddit thread wondered whether their investment gains could have been better off/could be better off with a lower fee provider. There’s some interesting math as well as a few noteworthy mentions of providers who cater to less active investors.

Into the Close

There were a lot of investors closing out the week on a high note (thanks to the spike in activity for cannabis stocks). Now that the long weekend has officially arrived, hopefully there’s a chance to kick back and enjoy the last few days of summer. Whether you’re out picking summer fruits, fantasy football picks or moving over servers and websites for DIY investors, have a safe and enjoyable long weekend!

Posted on August 24, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 24, 2018

Where there’s smoke, there’s fire. There’s certainly been no shortage of smoke as fires rage across the country, however, in the online brokerage space, it appears that commissions are definitely smoldering and set to touch off a fire sale in the coming months.

In this week’s roundup, we take a look at a major US-based financial services provider that just went all in on zero-commission trading fees. From there, we provide a quick scan of some small but interesting developments in the Canadian discount brokerage space that crossed our radar in the week. As always, we close out the roundup with interesting chatter from DIY investors in forums and on Twitter.

J.P. Morgan Drives Trading Commissions Down to Zero

Just when you thought that things couldn’t get any wilder in the battle for DIY investors, this past week yet another financial services provider has decided that trading commissions should be a thing of the past.

Unlike last week’s announcement by Wealthsimple Trade to drop online trading commission fees to zero here in Canada, when J.P. Morgan announced this past week that they too would be deploying commission-free trading in US, the publicly traded online brokerages swiftly lost a collective $5.5B in market cap.

J.P. Morgan’s new platform, called “You Invest” offers users 100 free trades in the first year and those who retain at least $15,000 receive 100 free trades per year thereafter. Higher net worth clients are eligible to receive unlimited commission-free trading. Those with less than $15,000 or who use up their commission-free trades will be charged $2.95 per trade, which is about half price of where commissions are generally at the big US online brokerages. In a nutshell, pricing for trading online in the US is set to get much cheaper.

The latest move by J.P. Morgan is bound to redraw the map on online brokerage pricing in the US.

JP Morgan, late to mobile trading, eyes a splash with its new app from CNBC.

On the zero-commission trading side, Robinhood, which up until now enjoyed no competition with commission-free stock trading, is bound to have to get even more creative to build its brand and attract new clients at the blistering pace it has been doing so. With a player that has the size, reputation and reach J.P. Morgan does, Robinhood is facing quite the opponent.

At the other end of the spectrum, the larger online brokerages in the US such as Schwab, TD Ameritrade and E*Trade Financial are also bracing themselves for the inevitable price drop. Interestingly enough, while trading commissions are important, firms such as Schwab and Ameritrade may be better positioned to contend with a ‘zero-commission’ player because they have diversified their revenue streams so that they are not exclusively reliant on trading commission fees. And, for firms like Interactive Brokers, whose fees are already quite low, the impact may not be as drastic.

The conversation surrounding J.P. Morgan’s latest move certainly mirrors many of the same points being made here in Canada regarding Wealthsimple Trade. One of the biggest challenges to the ‘free trading’ platforms is that they have to learn to accommodate and support the active and somewhat active trader. In the case of J.P. Morgan, offering up 100 commission-free trades per year is a signal that they’re interested in the ‘occasional’ or passive investor, however even this tier of investor expects a feature set that helps to navigate the maze of data surrounding stocks and trading.

Investors who are heavily reliant on advanced or sophisticated trading platform features and order types, for example, may take an interest in the zero-commission pricing but will likely not see the same kind of value in a poor or limited trading experience. Free might not be good enough of a value without alerts, watchlists, stop orders and more. What that implies is that there will undoubtedly be a looming battle over user experience and innovation that will come to dominate how DIY investors on both sides of the border assess what makes a ‘good’ choice for an online broker.

Another crucial component to the zero-commission conversation right now is that the right tools and resources need to be made accessible for DIY investors to actually execute trades and generate order flow. If not, there are going to be lots of zombie accounts sitting with idle deposits. For Wealthsimple, there is already a solution to put idle cash to work. For online brokerages, however, they may have to adopt Interactive Brokers’ approach and simply offer to pay interest on cash balances. Of course, building the right content tools and screeners is much easier said than done. Figuring out how to deliver financial content to an audience that is primarily mobile-first will require reimagining how to address a topic like personal finance in a way that is entertaining, accessible and ultimately value added.

Finally, it is important to note that commission price is one of several ways in which online brokerages derive revenue. If trading commissions go down, perhaps other fees will likely rise to offset the drop, or perhaps online brokerages will choose to ‘unbundle’ their service the way that airline carriers or cable providers have, so that DIY investors can tailor what they pay according to what they use. Of course, this also portends the dreaded baggage fee equivalent – let’s hope it doesn’t come to that.

Clearly, commission-free trading is quickly becoming a new force for online brokerages to have to contend with. That said, investors will have to pay in some way shape or form for the ‘free’ trade. Whether it’s through execution efficiency, currency conversion, margin lending, data platforms or any of the host of other charges, it’s important to ask what the “catch” might be, as there almost certainly is one.

Stay tuned as not only are there Canadian online brokerages who will be mounting a challenge to Wealthsimple Trade, but there are now also likely US online brokerages who’ll be figuring out how best to price a response to zero-commission online trading.

Lightning Roundup

Like a good summer salad, here’s a quick and refreshing medley of online brokerage and investing stories that also crossed our radar this (and last) week.

National Bank Direct Brokerage Pushing Benefits

In a highly competitive landscape, loyalty is becoming an ever more valuable commodity among online brokerages. Earlier this month we noted that National Bank Direct Brokerage had posted their “Distinctive Benefits” offer to their home page. Along with cross-town rivals Desjardins Online Brokerage who have also deployed a similar program, other online brokerages (especially bank-owned brokerages) have programs in place for higher net worth DIY investors. What’s changing is that we might start to see more of those programs find their way into the spotlight.

Interesting Offers for Younger Investors

This week there was also an interesting article from the Globe and Mail’s Rob Carrick talking about low-cost online investing services. In particular, it appears that there is a reference to an upcoming (yet to be published) offer by CIBC Investor’s Edge which will lower commissions on ETF trades to $5.95 for post-secondary students, as well as waive administration fees on ‘small’ registered and non-registered accounts.

Also revealing in this article was information on RBC’s digital advice/robo-advisor offering, RBC InvestEase, which is waiving management fees (on the first $10,000) for individuals who sign up for a new account by the end of October.

Scotia iTRADE Moving Quietly with USD Accounts

After a very quiet rollout of their new USD registered account offering, clients of Scotia iTRADE received notice via email that Scotia iTRADE has, in fact, gone live with the USD registered account feature. While we expect there to be much louder and more prominent advertising to come, it looks like coverage on this feature is happening at a very measured pace.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Post Before You Leap

There was still lots of chatter this week from forum participants about Wealthsimple. One debt-free user started a discussion on which type of platform he should use to begin his investing journey. Read what others had to say in this Personal Finance Canada reddit thread here.

Mutually Funded

This post from reddit’s Personal Finance Canada Section, offered a number of interesting insights for a young DIY investor who wants to convert their parents’ mutual funds to an e-series. Worth a read for some good, plain language clarification on making the switch.

Into the Close

That’s a wrap on another week. Regardless of what’s happening in politics north or south of the border, markets are powering higher. Seems like the market has more bull than…well you know who. Speaking of good runs, it’s fantasy football season yet again, so if you’re looking to pick even more portfolios, this is prime time to do so. Regardless, with only a few more days left in August and summer nearing the ‘end zone’ be sure to enjoy it and have a wonderful weekend!

Posted on August 17, 2018December 31, 2021 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 17, 2018

When it rains, it pours. Amirite Toronto? And, for many of Canada’s online brokerages located in Toronto and across the country, the commission party just got rained on. Hard.

In this edition of the roundup we take a look at some earthshattering developments in the Canadian discount brokerage space, as a robo-advisor flips the script to start offering commission-free online trading. Though it’s a hard act to follow, from there we’ll highlight a new promotion from an online brokerage that crossed our radar this week and as always, we’ll cap off the roundup with lots of chatter on social media and in the forums from DIY investors.

Wealthsimple Trade launches commission-free online trading

This week, and likely for weeks and months to come, the big story in the Canadian discount brokerage space is that robo-advisor Wealthsimple has now entered the DIY investing space by announcing they’ll be offering up a self-directed online trading service called Wealthsimple Trade which offers zero-commission fees for trades.

Make no mistake, this is a massive step change in an industry that has been making incremental moves to improve, evolve and adapt over the past several years.

Ever since early 2014, when RBC Direct Investing dropped its standard commission fee down to $9.95 per trade and triggered a wave of competitors to do the same, the major players in the online brokerage space in Canada have been in a staring contest to see who would blink first at lowering commission fees.

Since then, there has been the occasional flare up that commission pricing would continue to decline.

CIBC Investor’s Edge, for example, lowered their standard commission fees under $7 to $6.95 in October 2014 and, as recently as late 2017, HSBC InvestDirect lowered their standard commission fee to $6.88 per trade flat. Remarkably, there are those that have stood their ground against lowering standard commissions. Scotia iTRADE, for example, has been defiantly hanging onto standard commission pricing at $24.99 (or more) per trade.

Of course, while Canadian online brokerages were cautiously circling one another, the seeds for zero-commission trading were being sown and nurtured by startup US online brokerage, Robinhood.

In 2013 Robinhood shot to fame for introducing commission-free trading and doing so in a mobile-first environment. It was in that moment that the seeds were sown for much lower commission prices to cross the border. In fact, as Robinhood announced global expansion part of its strategy in 2015, the flicker of hope for younger, cost-conscious and design-savvy investors has been that Robinhood – or something like it – would come to Canada.

Even though zero-commission trading for standard commission fees still hadn’t surfaced here in Canada, a few Canadian online brokerages have been toying with the idea of zero commission trading for some time.

National Bank Direct Brokerage, for example, launched commission-free ETF trading as a standard option after a few rounds of testing as far back as 2013 as part of a limited time promotion. Virtual Brokers introduced the commission-free trade program in early 2016 but in this case, individuals had to be tied to a costly data platform plan. There have also been finite sets of commission-free ETFs at several brokerages including Qtrade Investor, Virtual Brokers and Scotia iTRADE that DIY investors could turn to.

So, while there might have been drawing boards and hypothetical scenarios about who would lower commissions to zero and when it would happen, it’s safe to say that nobody really saw it coming from Wealthsimple and this quickly. The challenge to Canadian online brokerages, however, goes beyond just zero-commission trading and the instant attention it garners.

With what looks to be a streamlined trading interface, a mobile-first design and adoption strategy and some very savvy marketing (demonstrated to work from Robinhood’s launch) it’s no surprise that, as of the time of publication of this roundup, there are over 35K users on a waiting list to get access to an account and many actively promoting this new feature to get bumped to the front of the wait-list.

screenshot from Wealthsimple Trade waitlist

The specific initial offer from Wealthsimple Trade looks to include a subset of features which will undoubtedly appeal to somewhat less active investors. According to Wealthsimple, included at the launch of the new platform are:

Unlimited commission-free trades
No account minimums
Over 8,000 Canadian and U.S. stocks and ETFs available to trade
Up to $1,000 available to trade right away
Instant execution of trades
Watchlist feature to monitor stocks without buying
Market and limit orders
Availability on iOS and Android
Personal (cash) accounts

For Canadian online brokerages to effectively compete with Wealthsimple, not only do they have to be able to do so on pricing, but they have to do so on user experience, design, ease of use, engagement and technical agility. Consider the following statement from Wealthsimple’s official press release:

“Wealthsimple Trade was built in eight weeks by a small team of Wealthsimple designers and developers, using Wealthsimple’s public API.”

Depending on how much of Wealthsimple Trade was built in this unbelievably short period, the pace of pulling together this product was astonishingly fast.

There is also one other, potentially more potent factor that Canadian brokerages have to contend with.

Whether or not they saw the writing on the wall, whether or not they have been mobilizing to compete on a product or service level, what Canadian online brokerages must now contend with is a financial services provider that people are excited and curious about.

And, for those skeptics who aren’t buying into the “fintech” hype, here’s a fact that perhaps puts this into perspective.

Several of Canada’s largest banks are decades if not well-over one hundred years old. Individually, one of the biggest selling features, the one they could ‘bank’ on is that they’ve lasted. That kind of stability has been the hallmark of a sales pitch and why so many investors trust banks with their money.

Even so, Wealthsimple, a company that started just over four years ago has now earned over 100K accounts (and has close to 40K folks waiting to become customers) and manages $2.5B in wealth. Let that sink in for a moment. People are trusting a digital, four-year-old company with their life savings and banking on them being around to handle their future wealth needs.

Of course, in spite of the excitement that the prospect of zero-commission trading brings, the biggest test – and perhaps opportunity for Canada’s online brokerages – is to see if Wealthsimple Trade lives up to the hype.

It’s one thing to pitch a “hands off” kind of investing experience and to get it right but DIY investors are very much “hands on” clients. Their needs are often more complicated than the set it and forget it crowd. They tend to want to see how a trade is doing, obsessively so, and as a result connectivity will be huge. Also, charting, research and filtering tools are going to play a significant role for investors who are genuinely interested in following companies or investment themes they’re passionate about and helping them discover opportunities. So, despite a zero-commission trade, DIY investors have to be mindful – and perhaps skeptical – that the platform and trading experience holds up under various market conditions. There is also the convenience factor, inertia and the fact that the incumbents are well-resourced and will not simply take the introduction of a new competitor lying down.

Without question, this week marks a major milestone in the story of DIY investing in Canada. After multiple attempts by online brokerages to launch their own digital advice (robo-advisor) services, it looks like Wealthsimple has swung the pendulum back like a wrecking ball.

Although the app is still in beta and will be rolled out in such a way to build as much buzz, the prospect of zero-commission trading is real and coming. With Wealthsimple’s announcement, DIY investors are curious, and will no doubt wonder what Wealthsimple has in store next.

For Canada’s online brokerages, however, it is pretty clear on what has to happen next.

HSBC InvestDirect Summer Promotion

For this week’s roundup, coming after the Wealthsimple story is a hard act to follow, however several online brokerages are going to have to get used to doing it.

This week, the discount brokerage deals and promotions activity heated up with an unlikely player pushing their summer promotion live to their website. HSBC InvestDirect’s summer promotion crossed our radar this week and it offers new customers the chance to get up to 30 commission-free trades which are good for up to 60 days. Unlike many other online brokerage promotions, there is no minimum deposit to qualify for this deal, so individual investors looking for a bank-owned online brokerage with low commission fees will find a little more incentive here to consider HSBC InvestDirect. The promotion, whose official start date was July 16^th, is set to run until September 28^th, 2018. Check out the discount brokerage deals and promotions section for more details.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Everyone’s Talking about Wealthsimple Trade

This week across various forums, Wealthsimple Trade was in spotlight. With DIY investors weighing in on the merits, drawbacks and what this new service could mean to DIY investing and online brokerages in Canada, it’s entertaining reading for anyone watching this new entrant into the online brokerage space make a very big splash. Here are a few forum threads with opinions and perspectives on the Wealthsimple Trade launch:

Reddit Personal Finance Canada – Wealthsimple Trade – $0 commission trading

RedFlagDeals.com – WealthSimple Trade with $0 min and $0 commission (Early Access)

Financial Wisdom Forum – Wealthsimple Trade

Canadian Money Forum – Wealthsimple 0 fee trading

Into the Close

Hard to believe but that’s a wrap on another wild week. Even the volatile weather seemed tame compared to politics in the headlines and the fact that Canadian inflation rate was reported at 3%. If you’re fortunate to be out and about enjoying the sunshine or just trying to stay dry this weekend, enjoy what downtime you can – there’s plenty of news to trade around and even more volatility forecasted for the weather, and for markets. Have a great weekend!

Posted on August 10, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 10, 2018

For many Canadians, it was a short week, however for many investors in Tesla, it was a tough week to be short. Even though social media has been less likely to move markets, this past week showed that what gets said in the space of a tweet can still make a difference. Fittingly, this also happened to be the case for a couple of online brokerages making waves on social media.

In this week’s roundup, we take a look at one Canadian online brokerage who, amidst the trade tariffs, found a way to lower the barrier to trading with the US. Next, we peek across the border at another online brokerage who is showing that lowering fees increases the attention that investors are willing to pay. As always, we’ll serve up a healthy dose of investor chatter from the DIY investor forums and tweets from this week.

Scotia iTRADE Quietly Rolls Out USD Registered Accounts

Even though there might be trade tariffs, when it comes to trading stocks, the barriers for DIY investors at Scotia iTRADE just got lower.

Earlier this week, Canadian discount brokerage Scotia iTRADE quietly rolled out USD enabled registered accounts for RRSPs, TFSAs, RRIFs, LIRAs and LRSPs. And, even though Scotia iTRADE hasn’t yet made any official announcement on social media about it, clients nonetheless took to Twitter to weigh in on the new feature.

Interestingly, on the Scotia iTRADE website, there was (at the time of writing) an information page about the new feature however the pricing page/table still showed the US Friendly RRSP pricing, so it is unclear if this program will continue to exist alongside the new USD accounts or if it is going to be phased out for RRSPs.

On balance, this was a good move by Scotia iTRADE and now leaves HSBC InvestDirect as the only major Canadian online brokerage that does not offer the USD registered accounts.

The relative quiet nature of the new feature roll out is surely not going to last too long.

Whether the new account type is part of a bigger strategy (perhaps a new online promotion or deal) remains to be seen but for those who like to place bets, the odds that Scotia iTRADE will stay mum about the feature are slim to none.

What does this mean for other Canadian online brokerages?

For the moment, it’s difficult to gauge whether Scotia iTRADE will take this opportunity to update its pricing on its registered accounts, however assuming they do not, other online brokerages – including bank-owned online brokerages – can counter Scotia iTRADE’s new launch with a less expensive cross-border experience. The administration fees and activity level threshold for deposits under $25,000 make Scotia iTRADE a tough choice for price sensitive DIY investors.

For Scotia iTRADE, the challenge will be to demonstrate the value of their offering to DIY investors. Standard commission pricing concerns aside, the competition has been moving aggressively in the areas of content development, new features and pricing drops on ETFs, so while the move to deploy USD registered accounts is welcome, it is by no means industry-leading.

As ‘innovation’ becomes the new benchmark by which online brokerages are going to be judged (especially when being considered alongside ‘fintech’ companies such as robo-advisors), the strategy of playing catchup is, ironically, not going to be enough to keep up.

Qtrade Investor Launches Refer-a-Friend

So much for the summer being quiet on the deals & promotions front. In what is an interesting sign of their digital coming of age, Qtrade Investor, one of Canada’s most popular online brokerages, rolled out a new refer-a-friend program that offers up $25 to both the referrer and referee.

There are a number of reasons why this such a modest cash back offer is such a big deal, however we’ll focus on two main reasons why this matters.

The first is that this new promotion enables them to monetize further their noteworthy client satisfaction. Qtrade Investor’s strength in client service can hopefully now bear fruit in terms of bringing in referral business. Unlike many other online brokerages in Canada, Qtrade Investor can lay claim to topping the Globe and Mail’s online brokerage ranking and so there’s definitely a stronger incentive for people to give Qtrade Investor a shot. The fact that a minimum deposit of $1,000 is required to benefit from this offer is also going to make it hard to ignore – especially with younger investors.

A second reason this kind of promotion coming to market matters is because it pits Qtrade Investor against a smaller pool of competitors, such as Questrade, BMO InvestorLine and Scotia iTRADE who also have referral offers. The combination of launching a deal in a category that has relatively few competitors, putting out a deal that investors are likely to tune into and controlling what they spend on acquiring a new client means that Qtrade Investor hits the trifecta of getting attention and new businesses at a competitive price.

Of course, the big upshot for DIY investors is that if a brokerage like Qtrade Investor is prepared to step into the refer-a-friend market, it’s going to challenge other Canadian discount to figure out how to respond.

Can’t Fight that Fee-ling Anymore

What a difference an ‘r’ makes – and yes, we know pirates would agree on that point. Nonetheless, when fee turns into ‘free’ one thing is for certain, people pay attention. As a counterpoint to the story above about Scotia iTRADE, a US-based online brokerage that we don’t talk too much about – Fidelity – crossed our radar by announcing a drop in account fees for brokerage accounts to zero (alongside a much more widely publicized drop of administration fees of mutual funds to zero).

Regular readers of the Weekly Roundup will note that Robinhood is typically the online brokerage that has become synonymous with free trading accounts. This latest move by Fidelity to drop the associated administrative fees, however, is definitely a shot across the bow at both the big players – such as Schwab or Ameritrade – who have administrative fees for managing an account and the small ones too, like Robinhood – who don’t have the scale or brand recognition Fidelity carries.

As with all big developments in the US online brokerage space, the natural question for Canadian DIY investors or observers of the space here in Canada is ‘could it happen here?’ and in this particular instance it is a very fascinating question.

What might happen if an online brokerage dropped the maintenance and administration fees of an account to zero with NO minimum balance requirements?

First, it would probably get the attention of the deal-seeking crowd and the math suggests that low(er) balance investors who want to park their assets somewhere and don’t want to get dinged on fees would find a very compelling online brokerage. In other words, there is a good chance that any online brokerage in Canada who chose to lower the administrative fees on an account down to zero would get the attention of a very vocal group of DIY investors.

Second, if this was a move done by a bank-owned brokerage, for example, it would almost certainly accelerate a reduction in the number of online brokerages in Canada, likely one of the smaller or less popular online brokerages. This would be especially true if other large online brokerages followed suit.

The fact that there is an online brokerage in the US offering commission free trading, and now one offering drastically reduced account fees and lower barriers to entry, means that DIY investors are starting to see that a ‘better’ world exists when it comes to DIY investing.

So, even if we don’t have the drastically low pricing that US online investors can enjoy, the existence of these accounts forces Canadian online brokerages to work that much harder to explain where the money is going to for online brokerage commissions and service fees.

What online brokerages in Canada need to figure out is how much they are prepared to spend in marketing dollars to convince their clients it’s a good idea to keep their fees and pricing high.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Taxing Decision for a Day Trader

With so many “tax free” accounts here in Canada, the prospect of day trading is appealing to many who either don’t fully appreciate the true business-like nature of day trading or who haven’t yet read the fine print on account types. Either way, this post from reddit’s personal finance Canada section from one DIY investor contemplating day trading via TD Direct Investing likely has a bit more homework to do, especially considering some of the answers that ensued.

Make or Break

For many online investors, ETFs and the move to managing money other than in a mutual fund continues to grow in popularity. For one investor in this reddit post, the question on whether hanging around in a mutual fund or jumping ship came down to what the receiving institution would be willing to pony up – an indication that, along with the numbers, sometimes the deals matter.

Into the Close

On top of the weather, it looks like markets are once again heating up. The best advice it seems is to ‘stay cool’ so however you choose to do so for the weekend, here’s hoping that you enjoy the weather and the time off in style. Have a great weekend!

Posted on August 3, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 3, 2018

It was a big week for big apples. For the iconic technology firm, there were 1 trillion reasons to celebrate. For the New York Mets, there were probably 1 trillion reasons to explain what went so terribly wrong. Nonetheless, when it comes to comparing apples to apples, we’ve picked a few discount brokerages from the bunch to do some interesting analysis with.

In this edition of the roundup, we take a look at the latest crop of deals from Canada’s discount brokerages as a new month kicks off. From there, we launch into some big picture analysis – first with a continuing thread about content and how one online brokerage appears to be pulling back on it for the moment. Next, we look at some interesting numbers from a US online broker that signals a shift towards the next big revenue drivers for online investing. As usual we’ll cap off the roundup with a look at tweets from DIY investors and what’s making waves in the investor forums.

New Month, New Deals – Sort of

2018 continues to fly by as August – along with the summer weather – is now upon us. With the nicer weather, this is generally the window in which the online brokerages take the opportunity to enjoy said good weather, which might explain the leisurely pace of this month’s discount brokerage deals and promotions activity heading into the new month.

Aside from a one-month extension by Desjardins Online Brokerage of their standing commission credit offer, the deals pool remained steady with no new offers being advertised and no deals expiring heading into the new month. In July, National Bank Direct Brokerage’s offer expired early on in the month leaving 5 brokerages on the field with commission-free trades or cash back offers.

Even though things are relatively quiet at the moment, behind the scenes Canadian discount brokerages appear to be gearing up for a busy fall season. Another detail suggests that brokerages are lining up more activity for September, namely that there are two offers that are also timed to expire at the end of August and the beginning of September.

The cash-back offer from Scotia iTRADE, for example, is scheduled to expire at the end of August which could be convenient point to launch a new offer. Also, BMO InvestorLine has their current cash back offer set to expire in the first week of September, and if history is any indicator, there is likely something being planned to replace it.

So, for any DIY investor looking for a deal when opening an online trading account, the good news is that there are still a handful of interesting cash back or commission-free trade offers to choose from.

For deposit levels between $1,000 and $50,000, Questrade has both a cash back option as well as a commission-free trade offer to choose from. Also, Desjardins Online Brokerage’s offer is applicable for deposits of at least $10,000. Above $50,000, BMO InvestorLine’s cash back offer becomes an option as well as the cash back referral offer from Questrade, however at deposit levels of $100,000+, BMO InvestorLine currently has the highest cash back offer.

Overall, the competitive landscape for Canadian online brokerages, and online investing in general, is shifting, which means deals and promotions are likely to tread water.

With consolidation of Qtrade Investor and Credential Direct still taking place and the absence of a catalyst for pricing pressure or promotional efforts in the DIY trading space itself, Canadian brokerages are, at least for the moment, on cruise control. In all likelihood, brokerages are keeping their marketing budget powder dry for the upcoming fall and winter where the battle for DIY investor deposits and trading activity is sure to be fierce.

Questrade Gears Down on Content

The digital age provides the ability to connect some interesting dots. In keeping with a theme of the past two roundups, we continue to take a look at the evolving nature of content delivery across Canadian discount brokerages and this week turn the spotlight on Questrade.

Over the past two weeks, we noted that Questrade’s blog has started to show signs of activity after being dormant for some time. Now, a blog post or two doesn’t usually signal a trend nor is it the kind of thing that generally makes “news” however the bigger picture here is that content production – specifically content geared towards DIY investors – is something that has historically been a fixture at Questrade. The story here isn’t so much what is happening, but rather, what isn’t.

It is unusual to see a shortage of content activity from Questrade simply because historically they have been active and frequent in this particular endeavour.

We started down this rabbit hole by looking at the Questrade blog which, including the post this week, has a total of 18 posts. The first available post appeared on May 25^th, 2017.

The graph above shows the timeline of post activity on the Questrade blog, which appeared somewhat regularly at the outset with the average time between posts between May 25^th and October 10^th working out to about a post every 11.5 days. The minimum time between posts in that range was 5 days while the maximum was 34.

After October 2017, however, things shifted and the next post took 62 days (at which point there were two posts) followed by the next post after that which took 135 days. Incidentally, a little digging on LinkedIn revealed (perhaps coincidentally) that was the same point in time that Questrade’s manager of content and social media landed a new role at RateHub; another member of the content team went off to RBC in December as well.

But the blog wasn’t the only content section to slow down.

We also saw Twitter activity from July 2017 to July 2018 slow down considerably. Not including tweets about service-related issues, there were approximately 27 tweets in July 2017 compared to 6 in 2018. The tweets last year were largely of personal finance topics whereas this year they seemed to be focused on holidays and media mentions. To be fair, however, Questrade is actively responding to client service issues on Twitter, making it one of the standout online brokerages in this regard. Nonetheless, the change in publishing pace was noticeable.

Finally, the client notifications and new feature developments published to Questrade’s other blog/content space, the Exchange, has also not seen an update since April and no self-direct investing customer notice has been published since February.

What does this all mean and why does this matter?

For starters, while Questrade has seen their content publication slow down, other online brokerages, including and especially several bank-owned online brokerages have ramped up their investor content programs considerably.

This means that the “value” that information and content represents to investors, notably to clients, is somehow absent or muted. On a relative basis, competitor brokerages are pulling ahead of Questrade in terms of compelling content.

Another reason why this is important is because one of the increasingly important metrics for any technology company will be perceived innovation.

Those on the outside looking in will be asking and looking for “what’s new” as a reason to pay attention to a particular brokerage. If an online brokerage appears to be standing still – even if they are doing work behind the scenes – DIY investors won’t have a reason to tune in, which is sure to make some folks at Questrade more than a little discontent.

Interactive Brokers Steering Towards Growth

Sometimes taking a step back and looking at the big picture reveals some fascinating trends. As with the beginning of every month, Interactive Brokers released their trading metrics and, as with every month they’ve reported these metrics (since 2008) they’ve seen growth across a number of important metrics, including and especially the number of accounts. In fact, the growth in new accounts on a month/month basis in July was an enviable 40%.

Despite all of these very healthy metrics, one of the interesting data points that has been trending downwards since 2008 has been the cleared average daily average revenue trades (DARTs) per account (the number trades made by each account). It is perhaps no surprise or cause for concern that the latest figure of 314 is less than half of what it was in 2008 (842) considering that number of accounts has increased ten-fold over that same amount of time – and all of the revenue drivers to go with that.

What is interesting about that shift, however is that it signals, in all likelihood, that fewer trades are being made. This might be a result of a combination of factors such as lower volatility in the market and/or less active traders being drawn into the client mix of Interactive Brokers than has traditionally been the case.

While it may not be ‘news’ to anyone in the industry, it does reinforce that active traders are a valuable segment of the market. They are also just a small fraction of the “investor” pool. Even so, active traders are only going to be really active and attracted to trading when there is volatility and movement in the market.

As a result, being niche is not enough. Online brokerages will need to build scale to survive a lower volatility environment and perhaps ask themselves the tough question as to where online investing – especially at the active segment – is heading in the near to intermediate future?

Perhaps the clearest hint on the direction of active trading is the capitulation by Interactive Brokers to exit the market-making business with the sale of the Timber Hill side of their business. If the pros can’t make money actively trading the market, it begs the question, who can?

The moves being made by Interactive Brokers in both their international expansion as well as the introduction of a credit card, higher interest payments on account balances, lower fees for trading commissions and features such as payroll deposit capability signal that even active trading has its limits when driving profitability at an online brokerage. Revenue from interest/lending appears to be the next revenue-generating chapter as do fees for services – such as managed wealth in the form of robo-advisors.

For Canadian discount brokerages, especially those seeking out active traders, the trend revealed by Interactive Brokers is certainly worth considering. What this also likely might signal is that online brokerages here in Canada may start to shift their user experience efforts towards less active investors who can bring with them considerable investable assets. Funnily enough, that seems close to the same group robo-advisors are also looking to capture.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Safe Keeping

When it comes to online investing, online security is top of mind for many DIY investors. Questrade was in the spotlight in a couple of interesting threads on reddit – the first directly referencing two factor authentication (2FA) being mentioned as being ‘in testing’ and the other which focused on the fine print of the Questrade security guarantee. Worth a read for those interested in security-related features.

Into the Close

That’s a wrap for another week. With a long weekend for Canadian investors now on deck, it’s a great time to enjoy and gear down until the ‘fun’ begins again on Monday courtesy of the action stateside. Have a safe and happy long weekend and in the meantime here’s an awe-inspiring look at ways other folks are getting out and enjoying themselves!

Posted on July 27, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 27, 2018

Summer is in full effect. And, as is typically the case, it’s the time of year when folks work a little harder to tone up or bulk up for the beach. Interestingly enough, it looks like Canadian online brokerages are also taking the summer to get themselves into top form for the months ahead.

In this edition of the roundup, we stay with the summer vibes and keep things brief and easy. We kick off the roundup with an article about one online brokerage taking a measured approach to competing by using content effectively. Next, we dive into the chatter from DIY investors on social media and what investors were talking about in the forums.

CIBC ramps up new digital content

In last week’s roundup, we took a look at how online investor education is evolving at Canadian online brokerages and, in particular, how online content is becoming a key area for online brokerages to differentiate themselves with as well as to deliver value to their clients. And, even though TD Direct Investing is a major force in the space, their bank-owned competitors are not standing still when it comes to content development.

This week we spotted two interesting content pieces on the CIBC Investor’s Edge website which further validate the observations noted in last week’s roundup about the importance of delivering good content.

The first small but still noteworthy development is the release of the latest edition of the CIBC Investor’s Edge newsletter. Long time clients and regular readers of the newsletter will have noticed the changes in format to the newsletter, which were initially rolled out in 2016, as well as to the design of the Investor’s Edge newsletter.

What is especially interesting about this summer edition of their newsletter, however, is that offers interesting content related to investing that is a bit more focused on what DIY investors might be able to use in understanding different investing strategies. Notably, articles in this newsletter focus on options trading basics as well as on momentum investing. Also interesting is the inclusion of a tax planning component that is often overlooked for DIY investors when it comes to ‘educational’ content, other than AT tax time.

Screenshot of CIBC Investor’s Edge website (taken 2018-07-27).

From a content perspective, this investor newsletter is quite well done – short enough to be digestible, but long enough to provide some helpful information. The biggest draw of the newsletter, however, is that it is accessible to non-CIBC Investor’s Edge clients. In this respect among its bank-owned peers, CIBC Investor’s Edge is relatively unique.

CIBC Investor’s Edge produces and publishes a newsletter for DIY investors that is available on the front end of their website (and also happens to be a part of a well curated section of educational/informative materials called the ‘knowledge bank’). This is not what most of their competitors do and as a result, enables Investor’s Edge to compete using educational content in a way that other brokerages aren’t doing.

Another content element that caught our attention was the publishing of an upcoming webinar on RESPs that will be taking place in September. There are two interesting features of this webinar. The first is that it is being offered in English (on September 5th) and in French (on September 20). French language webinars are rarely found outside of typically French-focused online brokerages (Desjardins Online Brokerage or National Bank Direct Brokerage) or occasionally TD Direct Investing.

The second interesting observation is that the timing of the presentation is lined up with the ‘back to school’ point in the calendar as well as the month (September) with one of the highest rates of births in the calendar, which means that the topic is timely to be raising.

Overall, it appears that going beyond the content machine that is TD Direct Investing, there are signs among other online brokerages that there are opportunities to compete effectively and deliver value to DIY investors in the form of value-added content. CIBC Investor’s Edge has shown that it is possible to put together a strong content offering at a reduced pace but still do it well. The next hurdle for Investor’s Edge to overcome is to let DIY investors know these features exist.

Lightening Roundup

Here are a few small but potentially important items that crossed our radar this week.

TD Direct Investing continues to invest in growth

Earlier this week, the Globe and Mail published an article about TD’s plans to boost its wealth management business by hiring about 200 financial advisers to come on board next year. Buried in that article was an interesting reference to ongoing projects and possible features. The first noteworthy mention on the direct investing side was that TD has invested $125M into revamping mobile trading functions and, most importantly, have set the stage for digital/robo-advice. Another interesting reference was to TD having the appetite to acquire more new clients in the wealth management division, which will undoubtedly get people talking about who TD Direct Investing might consider partnering with or acquiring outright.

Good content on personal finance

Finding good content on the internet, especially those seeking out information on Canadian markets, is generally a challenge. Fortunately there are a handful of reliable and engaging sources from which to do so. Check out this podcast from Canadian Couch Potato which offers an interesting perspective from the Globe and Mail’s Rob Carrick on the landscape for DIY investors in Canada and how he has managed to keep his own personal finance content relevant to changing populations of investors.

Speculation on E*Trade Financial merger

Earlier this week, an interesting article surfaced that looked at the likelihood of TD Ameritrade as being the most likely suitor to acquire E*Trade. While it is all speculative at this point, it is an interesting story to watch unfold because it sets up the business case for a deal being done with E*Trade.

The move in the US may also provide a hint of what’s to come here in Canada. Questrade, like E*Trade, is an established player in a market that has seen substantial merger and acquisitions activity. While the price has to be right, for Canadian DIY investors, the possibility that Questrade ends up being acquired by a larger online brokerage is not as far-fetched of an outcome.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Keeping Costs in Check

When it comes to online investing – especially for active investors – trading costs (such as commission) are important to consider. In this interesting post from reddit’s Personal Finance Canada section, one user is trying to ascertain the difference between Interactive Brokers and a different platform to get started.

Slow to Move

While ETFs might be popular with investors, they may not be as popular as they could be. In this post from reddit’s Personal Finance Canada thread, one user sparks an interesting conversation around adoption of ETFs by Canadian investors.

Into the Close

What an end to another crazy week. For Facebook shareholders, it’s been a rough ride and the prospect of having a couple of days to reflect on what went wrong there is undoubtedly welcomed. Of course, in spite of the crazy headlines and stranger-than-fiction stories coming out in the news, markets continue to march upwards. Enjoy the trend while it lasts. Wherever your adventures take you for the weekend, have fun (hopefully in the sun) and make the most of the good weather – as there is undoubtedly a storm brewing on the horizon for DIY investors.