Discount Brokerage News – Page 20

Posted on May 11, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – May 11, 2018

Eventually spring was bound to show up. And, like the green shoots, flowers and sunshine, it’s a time for change and opportunity. Fortuitously, Canadian discount brokerages are also taking their cues from spring and rolling out some interesting new items for the season.

In this edition of the roundup we take a look at a big bank-owned online brokerage that decided it was time to jump back into the deals pool with a new spring offer. Next, we review a posh new service line for high net worth investors unveiled by one online brokerage which could signal a new front in the competition for DIY investor assets. From there, we get a sneak peek at the roll out of new features from a popular online brokerage. And, to round things out, we’ll review the latest tweets from DIY investors as well as some interesting conversations in the forums.

RBC Direct Investing Launches New Promotion

Even though there was a pullback in online brokerage deals action to start this month, it didn’t take too long for that to change – and in a big way. After a prolonged absence from the spotlight of the deals and promotion section, RBC Direct Investing made a splash by launching a new commission-free trade offer.

It isn’t just the timing of the offer that is bound to get the attention of DIY investors looking for an online investing account.

In addition to launching a new promotion at a time when many online brokerages have decided to take a breather from pitching deals, RBC’s new offer has a very low deposit threshold to qualify ($5,000), has a high number of commission-free trades (20) and the commission-free trades are good for one year from when the account opened. Further, the rebates for the commission charges incurred for these trades takes place within three days and not several months into the future.

All told, for any DIY investor curious about trying out RBC Direct Investing, the timing and incentive to do so are compelling.

Given the size and popularity of RBC Direct Investing, it will be very interesting to see how long their competitors decide to wait on the sidelines. The latest RBC Direct Investing promotion is scheduled to expire in June however there’s no guarantee that the offer won’t be extended – especially if it is popular and can bring in new clients or assets.

Based on our internal data, we note that the big bank-owned online brokerages (especially those with comparable fees) will likely want (or need) to consider how to respond in kind.

For the moment, however, RBC Direct Investing has packaged an offer that puts them atop the deals board for compelling value. And, if there’s one thing investors are always on the hunt for, it’s a good deal. Fortunately, now they know where to find one.

Desjardins Online Brokerage Rolls Out New Prestige Service Perks

At the upper end of the account size spectrum, Desjardins Online Brokerage unveiled new Prestige Service features to the front end of their website.

This new premium offering is geared towards DIY investors who have portfolios starting at $250,000 and higher, and comes in three tiers: Bronze (minimum $250,000), Silver (minimum $500,000) and Gold (minimum $1M).

The new tier, Bronze, offers some of the key features of the prestige experience, such as lower priced commissions on stock trades, transfer fee refunds and no fees for registered or inactive accounts.

Like other ‘premium’ plans at other online brokerages, such as BMO InvestorLine, RBC Direct Investing, Scotia iTRADE, or TD Direct investing, there are perks on pricing or rates.

What is particularly interesting for Desjardins clients of the Prestige program, however, are the perks to receive annual statements of capital gains and losses as well as the inclusion of exclusive client appreciation events.

With the race to gather more assets heating up, competition will inevitably turn to offering better and more compelling features to higher net worth clients.

Stay tuned as the latest offering by Desjardins will undoubtedly raise eyebrows with those trying to put together a premium experience for high net worth DIY investors.

TD Direct Investing Previews New Advanced Dashboard Features

Earlier this week, we spotted a tweet on the TD Direct Investing Twitter feed pointing to a webinar previewing new features that will be rolling out to the Advanced Dashboard trading platform.

The webinar offered a detailed look at the new features and walked through where the changes in the platform will occur (complete with sound effects!). As for when the new updates will roll out, the official line is the next few weeks.

One of the big (and cool) enhancements is the ability to use a ‘traditional’ order entry ticket to place trade orders or use an in-line editing view, which essentially looks and feels like entering an order from a spreadsheet table. So, rather than have to walk through orders one trade ticket at a time, users can have a full-view of multiple securities and quickly configure trades from there.

Other feature enhancements were geared towards decluttering or improving user experience (such as colour coding buy/sell buttons) or improving trading execution tools (such as order settings). Of course, one of the great (but possibly daunting) features is how customizable the workspace is.

Fortunately, very active investors are generally pretty motivated and self-directed when it comes to learning. As such, the walk-through webinar is helpful to orient users to the new features and how they can be used to get the most out of Advanced Dashboard. Especially useful was the Q&A section with webinar host Ryan Massad (of TD Direct Investing) which started at around the 32-minute mark.

Another interesting angle that was mentioned several times during the presentation, was that client feedback was an important driver for the feature enhancements. As part of an interview we did with TD Direct Investing last year, it was neat to learn how user feedback finds its way into the feature enhancement conversations and workflows. This new rollout appears to have been the result of that process and for TD Direct Investing clients, there are numerous paths to submit feedback.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Hunting for Deals

Are online investors hungry for a good deal when opening an online trading account? This week the answer was definitely. In this post, from RedFlagDeals.com, one user was looking for an online brokerage offering the best deal for opening an account and, on reddit in this post, a user was specifically interested in the best offer from Questrade. Spoiler alert, users were pointed to SparxTrading.com’s deals section for the answers to both.

Not So Simply the Best

The ongoing desire to find out which online brokerage in Canada is the best is starting to change. After extensively covering and monitoring the conversation on which discount brokerage is best, it was interesting to read this thread in reddit’s personal finance Canada subreddit in which the notion of a “best” brokerage didn’t matter as much as the “best brokerage for your needs.”

Into the Close

Stick a fork in this week, because it’s done. Yes, another cautiously optimistic week for investors is in the books but by now everyone is primed to be a little bit nervous when things seem ‘calm’. So, enjoy it while it lasts and for everyone fortunate enough to get some sunshine for Mother’s Day, be sure to share that sunshine with the moms in your life!

Posted on May 4, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – May 4, 2018

The old trading adage of sell in May and go away clearly did not apply to this week’s market activity. It’s still early enough in the month that anything can happen, however. With the announcement of the end of decades of hostilities between North and South Korea, it’s as good as any segue into the action taking place in the Canadian discount brokerage space.

In this edition of the roundup we check in on the latest updates from an important merger taking place among two online brokerages. Next, we’ll review the latest deals and promotions activity for the beginning of a new month. From there, we’ll take a look at what DIY investors were chatting about on Twitter and in the investor forums.

Credential Direct merger shows signs of progress

After the merger between Credential Direct, Qtrade Investor and NEI Investments to form Aviso Wealth was announced late last year, it wasn’t exactly clear how and when things would unfold. Earlier in April, however, we learned that the merger between the three firms was officially finalized and, as of this week, the Credential Direct website started to direct new and existing clients to the Qtrade Investor product.

As we mentioned in last week’s roundup, the Canadian online brokerage landscape has seen some major moves over the past several months. With acquisitions of Virtual Brokers and Jitneytrade by much larger wealth management firms, as well as this latest merger between Qtrade Investor and Credential Direct, the rest of the year for the Canadian discount brokerage landscape should shape up to be quite interesting. After years of recognition that there were simply too many online brokerages in Canada, the field appears to be narrowing. And, it is likely that there is still further consolidation to come as online brokerages wrestle with staying competitive and profitable at the same time.

While consolidation and removing of an online brokerage from the list of providers might reduce competition, the reality is that Credential Direct was primarily influential in Western Canada and in terms of market share, they were certainly on the small end. As a result, it is unlikely to tip the scales with either investors or among other industry competitors.

According to the Credential Direct website, there will be a transition period over which existing clients will get migrated over to Qtrade’s platform. The target appears to be this coming fall for that to be completed.

That said, it will be interesting to see how the rest of the Canadian online brokerage field responds to what will be a larger Qtrade Investor competitor. Aviso, the parent to Qtrade, will reports having a combined $55 billion in assets under management and over 500,000 clients collectively across the country, so other Canadian online brokerages will have a considerably larger organization to contend with.

It will also be interesting to see where, from a marketing perspective, the Qtrade Investor brand is going to push and what new resources it may have to push with. For example, could pricing or platform improvements be justified given the larger scale? With Credential Direct previously being active on social media, could this be the tipping point to enable Qtrade Investor to wade into the social waters?

For DIY investors, fewer choices may, in this case, provide stronger choices. Without having to allocate resources to competing regionally against Credential Direct, could Qtrade Investor now allocate those resources to better servicing their existing clients? Certainly, for Credential Direct clientele, there will be access to better pricing (in most cases), service and trading experiences.

While Qtrade is likely to become even more of a formidable opponent to the bank-owned online brokerage space, the lesson this merger and additional acquisitions have shown to be true, is that the playbook to surviving the online brokerage space in Canada requires scale. And, the race for new clients and their assets, is almost certainly going to become even more fierce as a result.

May-day Deals Update

The big story in this month’s deals and promotions section is the pullback in offers from Canada’s discount brokers.

After what was an abnormally busy start to 2018, things have definitely quieted down on the deals front with barely more than 20 advertised offers currently in play. Perhaps the greatest concern for DIY investors looking for a bonus to open an account is the general absence of offers in the cash back promotions section.

Currently, BMO InvestorLine is the sole Canadian discount brokerage offering a cash back promotional offer – something that is very unusual considering how competitive the online brokerage space is to acquire new clientele.

All is not lost for investors looking for a cash back promotion, however. DIY investors can also access the Questrade referral offer posted in the deals section but aside from BMO’s offer, the only other way to access a cash back offer at the moment is via referral.

Currently there are three of these offers available from BMO InvestorLine, Questrade and Scotia iTrade. At this point, for new clients looking to open an online investing account, it pays to be extra nice to friends at these brokerages.

Fortunately, there is still the cornerstone offer for coverage of transfer fees available at most brokerages. So, for those looking to try a new provider, that door is certainly open.

Don’t expect the drought to last too long though. It is unlikely that BMO InvestorLine and Questrade will be left unchallenged in the cash back space, especially considering how popular these offers tend to be with folks opening a new account.

With marijuana legalization on the horizon, and the conversation on blockchain still simmering, there are a couple of possible catalysts in play to entice online investors back into the market. Finally, bank-owned brokerages aren’t usually so chivalrous when it comes to ceding market share, so there’s a business case to be made for at least another bank owned brokerage to step back onto the field while it is not so crowded.

We’ll continue monitoring the deals landscape for new movements, but for the time being, only a small number of brokerages are in the deals spotlight, which we’re guessing is totally fine by them.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

RESP-onding to requests

The Financial Wisdom Forum deserves credit for sharing the news that TD Direct Investing now offers BC residents access to the British Columbia Training and Education Savings Grant (BCTESG) (here is the reference link to TD).

Battle of the Q’s

Questrade or Qtrade? The question is now more pertinent than ever as the narrowing field of online brokerages (that are not bank-owned) casts a spotlight on these two firms. This post from Canadian Money Forum provides some interesting perspectives on both.

Into the close

That’s it for another week. With the world no longer on the brink of war and the economy powering along, even Elon Musk found things a bit…boring. Fortunately for him (and us) there’s plenty of other (cooler) things to be looking at heading into the weekend instead of stock charts. Have a great weekend and #Maythe4thbewithyou.

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

Discount Brokerage Weekly Roundup – April 27, 2018

For traders of Canadian securities listed on the TSX/TSX-V and Montreal Exchange, the weekend showed up a little earlier than anyone expected. With trading on these markets halted, it was an opportune time for the Toronto crowd to tune into the wizardry of the Toronto Raptors. Of course, online brokerages in Canada are used to throwing a few surprises at the DIY investing space and this week, some pleasant surprises came to market that spell interesting times for active traders.

In this edition of the roundup, we take a look at an acquisition deal that beefs up one online brokerage’s war chest and is part of a new and exciting chapter for Canadian online brokerages. From there we’ll review some interesting developments with a bank-owned online brokerage that’s turning its efforts to Western Canada. Also, we’ll report on a new active trader feature that offers an interesting approach to short-selling at one independent online brokerage. Speaking of surprise developments, this will be the final week we roll out tweets of the week in the current format – we’ll be switching things up and putting this feature on pause. Not on pause though will be chatter from DIY investors which will close out this edition of the roundup.

Jitneytrade to be acquired by Canaccord

After years of treading water, it appears the Canadian online brokerage market is now on the move. This week, a big name in Canadian wealth management, Canaccord Genuity, made a very interesting play by initiating an acquisition of Jitneytrade, a Canadian online brokerage that caters primarily to active traders.

The deal, which was announced by press release, will see Canaccord Genuity acquire both Jitneytrade as well as FinlogiK, the parent to Jitneytrade.

According to the press release Jitneytrade will continue to operate independently however the release also states that the acquisition “serves to support Canaccord Genuity’s mid-market share of equities trading and providing access to new areas of growth through accelerating its development of an enhanced fintech product offering.”

There’s certainly a hint in there that Canaccord, with its strong book of deals and deep client base, could present a genuine challenge to other Canadian online brokerages who cater to active trading clients – in particular options trading clients. Of course, there’s also the fact that through Jitneytrade, Canaccord clients may now be inclined to reconsider which online brokerage they want to actively invest with.

What makes this deal between Jitneytrade and Canaccord all the more interesting is that it is yet another example of smaller Canadian online brokerages integrating with larger financial services players in Canada.

In September 2017, for example, CI Financial announced that it was acquiring BBS Securities, parent to Virtual Brokers. And, in December of 2017, Qtrade Investor and Credential Direct announced they would be merging under the umbrella of wealth management firm Aviso.

Clearly the days of the smaller online brokerage players in Canada are numbered.

“Smaller” non-bank-owned online brokerages are now better capitalized to take on bank-owned online brokerages’ dominance of the wealth management space which should make things even more competitive for DIY investors going forward.

On a more speculative note, Questrade is now the only independent online brokerage to be standing on its own two feet – and given the recent activity in online brokerage space in Canada, one wonders if it too will become acquisition target.

National Bank Direct Brokerage looking west

Sometimes it’s the little things that actually turn out to be interesting signals of things to come in the online brokerage space in Canada.

This past week, a sponsorship by National Bank Direct Brokerage of a conference in Vancouver crossed our radar. Specifically National Bank Direct Brokerage is a sponsor of the “Investment in Innovation – GCFF Vancouver Conference” which caters to Vancouver’s Chinese investor community. Included in the conference are companies from a number of headline-making sectors, including blockchain, fintech, medical marijuana and more.

Event sponsorships for online brokerages have become increasingly rare, so it was telling that NBDB would be reaching out to this particular event. The combination of a number of small-cap companies as well as connecting with a critical mass of investors from the Chinese community is an interesting choice for a bank-owned online brokerage that is much better known in Quebec and Ontario and is likely a clear signal of greater intentions to explore how to make inroads in Western Canada, specifically in BC. It’ll be interesting to see how other brokerages with deeper footprints in BC respond and whether the critical mass of Chinese investors represents a compelling niche to stir up competition amongst Canadian online brokerages interested in connecting with this market demographic.

Questrade enhances short-selling experience

Based on an announcement made at the end of last week in Questrade’s community blog, enhancements to its IQ Edge trading platform that include an automated way to determine the cost of selling shares short took effect.

According to the feature announcement, the borrowing rate (and therefore cost) of short selling will be a floating one which will vary based on a security’s value, demand and available inventory. For traders interested in maintaining a short position, Questrade’s platform will be able to display what that carrying cost will look like as long as the trade is live.

When it comes to short-selling, one of the recurring comments from active traders is the challenge obtaining securities – however with this new program in place there might be an interesting mechanism for Questrade to monetize interest in short-selling and/or moderate the availability of shares to short.

Discount Brokerage Tweets of the Week

After just about three years and close to 150 weekly stories of DIY investor reactions on Twitter, this is the last edition of the tweets of the week in the current format. Our platform provider as acquired by Adobe and as a result the platform that we used to curate and deliver these tweets has been decommissioned.

We’re hoping we can continue to bring interesting insights about the online brokerage space to you from Twitter and are looking forward to being able to start publishing this segment again soon.

Mentioned this week were CIBC Investor’s Edge, Questrade, Scotia iTRADE, and TD Direct Investing.

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Fine Print

For DIY investors contemplating being an active investor, there’s an important set of requirements you ought to be aware of. In this post, from RedFlagDeals.com’s investing thread, one user points out the fine print at a big online brokerage that shows how vulnerable traders can be when it comes trading on margin.

Pay for Parking

When it comes to parking cash in an online investing account, there’s a limited number of choices for safely growing your investment. In this post from reddit’s personal finance thread, one user gets an interesting reply to a question about low fee options.

Into the Close

With this week now in the books, it’s one that Canadians and Torontonians won’t soon forget. Another week and another terrible tragedy. To the victims, their families and loved ones as well as to all Canadians impacted by the horrendous van attack that took place in Toronto, the SparxTrading team offers our deepest condolences.

Cartoon for April 24. #HumboldtStrong #humboltbroncos #TorontoAttack #TorontoStrong #TorontoMapleLeafs #Toronto pic.twitter.com/vc5oJ0VqwN

— Michael de Adder (@deAdder) April 24, 2018

Posted on April 20, 2018 by user — 1 Comment

Discount Brokerage Weekly Roundup – April 20, 2018

For many sports fans, playoffs are the time of year when things get really exciting. Fortunately, sports fans aren’t the only ones being treated to contests as DIY investors and online brokerages have contests of their own making headlines. Of course some games take longer than others to win and require some creativity to get ahead (amirite Westworld fans?).

In this edition of the weekly roundup, we look at the return of a popular online trading competition that one Canadian online brokerage is putting up big prize money for. Next, we take a look at some recent earnings from a popular online brokerage and what an earnings call revealed about DIY investor sentiment in Q1 as well as some hints to how the online brokerage space is poised to change this year. As usual we’ll be taking the pulse of DIY investors on Twitter and in the investor forums, so be sure to check out what folks were talking about this week.

Biggest Winner Competition is Back

Just in time for the playoff season (and perhaps the end of season), the Biggest Winner competition from Horizons ETFs and National Bank Direct Brokerage is back. Fun fact, Horizons ETFs also is the exclusive ETF sponsor of the Toronto Raptors.

Officially kicking off on May 7^th, this popular contest features healthy cash prizes for top performing participants. The grand prize is $7,500 while the runner up prize is $2,500. There are also six weekly prizes of $500 each which will keep things exciting from week to week over the course of the challenge.

Contestants will have a fantasy balance of $100,000 to start off with and can only trade Canadian ETFs trading on the TSX. The contest runs between May 7^th and June 15^thso the ‘buy and hold’ strategies may not fare as well as those who take a more active approach.

Of course, with market volatility levels being as high as they are, this could make for a very interesting competition – especially given the performance of leveraged ETFs in these conditions.

To keep things interesting, the competition does have some important limits. For example, the maximum allocation of a portfolio in any one ETF is 25% and investors will be charged fantasy commissions at the rate of $9.95 per trade. Also, the maximum limit of trades over the competition is 5,000 which is still a pretty high bar for scalp traders. Of course, it’s fairly onerous to generate that many orders manually but trader types are known to be competitive, so someone just might be able to max out.

Another fun fact, the sponsor of the competition, National Bank Direct Brokerage, actually allows for totally commission free trading (with some conditions) of Canadian and American ETFs, so in this case, reality has an edge over the fantasy world.

For DIY investors looking to have a little fun and learn about investing, this is a great way to do both. And, who knows, it might be possible to win big with a volatile market and lots of ways to play it.

Volatility Rules for Interactive Brokers in Q1

There’s an old farmer’s saying that goes ‘make hay while the sun shines.’ For many investors, the stock market volatility over the start of 2018 has been anything but sunny, however like anything in the markets, there’s always another side to the story. In this case that other side is that with all of this volatility, traders in the US have come back into the market in a big way.

This past week, US online brokerage Interactive Brokers held their quarterly conference call to review and discuss the results from Q1 of 2018. As with most conference calls, there were certainly more than a few nuggets of information that showed how the online brokerage business in faring for Interactive Brokers, but more importantly, where they are looking to next for opportunities and what this means for both investors and Interactive Brokers’ competition.

First things first, the numbers. Compared to the same quarter last year, Interactive Brokers crushed it when it came to revenue, earnings and trading metrics. Suffice it to say that with year over year growth in accounts of 27% (to 517,000), growth in customer equity of 33% (to $129B) and pretax income for brokerage this quarter was 291 million, up 57%. Importantly, both trading commissions and net interest revenue were significant contributors to earnings and the rise in interest rates helped to bolster earnings.

In addition to the strong numbers, there were two other noteworthy observations from the conference call.

First, there appears to be an interesting marketing strategy that looks to be directed to shareholders or stock watchers to become clients of Interactive Brokers. It is something we noted in previous roundup, but the direct nature of pointing out the benefits to being a shareholder as well as a client mean that Interactive Brokers is tapping into an already attentive audience to mobilize more clients.

A second, and perhaps most interesting observation is that Interactive Brokers continues to move towards offering traditional banking services in an effort to encourage clients to bring more assets into Interactive Brokers. Not only did they launch a trading-account-linked Mastercard, they also offer interest on cash balances (over $100,000) of 1.19% which is huge for people who like to keep their powder dry. The biggest reveal in the conference call, however, was when CEO and founder, Thomas Peterffy mentioned that Interactive Brokers would soon be rolling out a direct deposit (through payroll) feature and the ability to pay bills from a client’s trading account. This last feature is significant because it is a direct play on the convenience of having access to trading funds to do everyday financial management without having to transfer money to another institution.

Based on their latest numbers, the combination of Interactive Brokers’ efforts to chase profits but also to mitigate risks has helped them skate through an exceptionally volatile quarter with lots of profits to show for it.

In a world moving quickly towards technologies that are seeking to disintermediate, being an online brokerage is a tricky proposition. To succeed in the online brokerage market of the future, firms will require scale and critical mass – otherwise as Peterffy astutely remarked – other brokerages will turn to Interactive Brokers to handle the order execution and technology while those firms focus on client service and acquisition.

The latest financial results for Interactive Brokers show that the writing is on the wall for all online brokerages – and for the broader financial services sector – that pulling ahead of the pack requires technology and a trading experience that gets clients excited. Interactive Brokers has demonstrated that it can do that while passing on savings to clients, which in turn results in their pockets getting pretty full in the process.

Discount Brokerage Tweets of the Week

An interesting mix of tweets this week. There were the regular client service and technical difficulty tweets, but there were also some interesting hints dropped by Questrade on future features and some great coverage of a financial literacy event (also featuring Questrade). Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Feed Up

Before opening an online brokerage, it’s important to understand how much it will cost to trade there. Unfortunately, for one eager beaver, the FOMO of getting into a hot sector won out over reading through the details of trading costs. This post from reddit’s Personal Finance Canada thread shows how one Scotia iTRADE user is looking for a way to minimize fees on the way out.

The drop on DRIPs

Maintaining healthy skepticism is important to surviving the investing world long term. So, one thoughtful forum user in this post from the RedFlagDeals Investing thread posed a question about the downside to using DRIP investing at Questrade. The responses offered a variety of interesting perspectives.

Into the Close

Seeing that it’s 4/20, it only seems appropriate to end the week on a high note (ba-dum-tsh). Yes there were many green puns today but with recreational marijuana legalization just around the corner here in Canada, investors were also weighing in on prospects for this sector. Of course, once all the smoke finally clears on Friday, there’s a whole weekend of hoping and cheering to get to. Good luck Raptors (and even the Leafs) – it’s a great weekend to get on a roll. Ok I’ll stop. Have a great weekend!!

Posted on April 13, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – April 13, 2018

Friday the 13^th seems like an unlucky date for those in the path of a spring-time ice storm (sorry Toronto!) and for others, well, the search for ice is really just to keep drinks cold. Yes, this edition of the roundup is coming to you from the sunny and warm beaches of Huatulco, Mexico where the struggle to stay cool is real.

In this edition of the roundup, we thought we’d do something a little different. With so much happening in the online brokerage space already in 2018 (and because I am in Mexico while writing this roundup) this was a great opportunity to pause and reflect on some of the biggest stories and emerging trends that shaped the first quarter of 2018. Below are four of the biggest and most interesting things that have happened so far in Canada’s online brokerage space.

Outages & outrage kick off the new year

Many Canadian online brokerages faced a perfect storm at the outset of 2018. Caught up in the groundswell of interest in cryptocurrencies and marijuana stocks, DIY investors were definitely in a risk-on mood to kick off the year.

As a result, trading activity surged beyond the capacity of many of Canada’s (and some of the US’s) largest online brokerages’ systems to handle the order flow.

On an “ordinary” trading day, outages to DIY investors are annoying and occasionally tempers flare, but, when the bulls were stampeding, sidelined DIY investors were left seeing red when their platforms weren’t able to connect or trade on their online brokerage’s network.

For the better part of January, outages at Canadian online brokerages made headlines with major news outlets, including BNN, with Canada’s large bank-owned online brokerages such as TD Direct Investing and RBC Direct Investing in the crosshairs.

Royal Bank customers are complaining about intermittent issues with online banking and brokerage services. https://t.co/vgmn11Dv6q

— CBC Marketplace (@cbcmarketplace) January 4, 2018

A consequence of trading platform outages was that DIY investors had to turn to customer service phone lines and Twitter channels to either execute trades or to find out what was going on. The result: wait times on the phone surged – stretching to hours in some cases before calls were being answered.

The tough lesson for DIY investors caught in the mix was that regardless of online brokerage size, online trading is not without risks, including the risk of being disconnected.

While a few online brokerages managed to NOT make headlines by maintaining business as usual, this scenario was a wake-up call for Canadian online brokerages on the business case for properly resourcing both online trading capacity and failover systems on phone channels.

Here’s a list of editions of the weekly roundup that outages & wait times made headlines in:

Online brokerages battle it out with promotions during RSP season

If you think RSP season is a myth, think again. Just like flu season, interest in RSP-related information, and accounts, starts to climb in November and peaks in the first 60 days of the new year.

Google search trends for RRSP’s in Canada over the past five years

While chicken soup offers paired with RRSP deals are likely not coming anytime soon, this year, DIY investors were being wooed by an incredibly high volume of offers, ranging from cash back to commission-free trading. Specifically, this year’s crop of cash back offers stood out as bank-owned brokerages stepped up their use of this promotional offer and smaller non-bank owned players also were prepared to ante up.

Highly savvy investors who typically look to open accounts across providers to access features unique to each and to diversify where their money is parked, were provided with an especially unique scenario this year. Specifically, by splitting up where deposits were made, DIY investors could enjoy substantially higher cash back bonuses than putting all of their assets with one brokerage.

Canadian discount brokerages reviewing the deals & promotions landscape will likely also see that incentive offers are yet another ‘battleground’ that’s opened up and that smaller players looking to win market share will make strides by raising the stakes with cash bonus offers.

At the very least, DIY investors will be willing to look at what’s being offered, especially if the headline numbers are big.

Discount brokerage deals and promotions were another big story last quarter so here is a list of weekly roundups in which deals and promos were referenced and analyzed:

Rankings and Ratings Roundup

After much anticipation, the Globe and Mail’s annual online brokerage rankings were published in mid-February.

As the most popular and highly sought out rankings of Canada’s online brokerages, the 19^th edition of the assessment did not disappoint with some new comparison features and inclusion of Interactive Brokers Canada. Qtrade Investor walked away with top honours in the Globe’s rankings and of the top five, three were non-bank owned brokerages.

Of course, once these rankings were published, and perhaps even in anticipation of them, the marketing departments at Canada’s online brokerages were busy listing off the various ratings, rankings or accolades that position each respective brokerage as ‘the best’ at one feature or another.

In our roundup on March 9^th we featured 8 online brokerages who had listed off awards or recognition that claimed each brokerage was the best at something if not the best online brokerage outright.

Not too long afterwards, our roundup on March 30^th featured a deep dive on Interactive Brokers’ win of the Barron’s annual online brokerage rankings in the US. Despite the victory taking place in the US, Canadian online brokerages should pay attention to since interactive brokers Canada offers most of the trading technology and analysis tools as the US version does.

In fact, the high ranking in the Globe and Mail’s assessment, the top finish in the Barron’s ratings and the much more visible advertising presence here in Canada (which we noted here on February 23^rd) suggests that Interactive Brokers is going to be getting and generating more attention in 2018.

For DIY investor’s the tip here is to read the fine print on the date of the award because we noted several instances where awards from previous years were being used to justify being characterized as ‘the best.’

BMO breaking through on social media & digital

When it comes to social media and investing online, only one of Canada’s bank-owned wealth management arms successfully managed to execute on an effective social media-based influencer campaign in Q1 of 2018. BMO Wealth Management (parent to BMO InvestorLine) and BMO SmartFolio were able to generate a highly engaged, interactive online Twitter chats on investing online.

The countdown is on! T-minus 30 minutes until another #InvestSmart Twitter Chat, co-hosted by @Listen2Lena. Prizes to be won: you won’t want to miss it! 🙂 pic.twitter.com/1vct0TmnEN

— BMO (@BMO) March 6, 2018

The Q&A format did well as did the session thanks in part to the fact that the host of the Twitter chat was Lena Almeida. In January, BMO SmartFolio’s session on investing online helped spark a lively conversation on topics related to investing online. Fast forward a few weeks to March 5th, and BMO Wealth Management was on Twitter with an #InvestSmart session in support of International Women’s Day.

Just prior to the end of Q1, BMO InvestorLine also rolled out a new homepage which was a significant iteration to its previous design.

Screenshots of previous BMO InvestorLine website homepage (left) and new BMO InvestorLine website homepage (right).

Although we covered this new site in more detail in last week’s roundup (here), the latest moves by BMO InvestorLine online showcase that they are not standing still when it comes to embracing digital channels to better connect with DIY investors.

*full disclosure: Sparx Publishing Group Inc. the parent company to SparxTrading.com, may receive affiliate or referral bonuses for individuals signing up to BMO InvestorLine or BMO SmartFolio services via SparxTrading.com, however no compensation from BMO InvestorLine or BMO SmartFolio was received for writing this article.

Discount Brokerage Tweets of the Week

Interesting chatter as usual, with technical issues and client service challenges prompting the majority of Twitter comments. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

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Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Making moves

How easy is it to switch online brokerages? This post, from reddit’s personal finance Canada thread, highlights one user’s question about transferring from TD Direct Investing to Questrade and offers insights into timing and costs.

Tips on RESPs

DIY investing usually means a lot of research to figure out how to maximize the return on investment. When it comes to savings vehicles, like the RESP, however, there’s lots to consider. In this post, also from reddit’s personal finance Canada thread, users weigh in to help one expecting parent navigate the tricky world of investing for their child’s education.

Into the Close

As we head into another weekend, we wanted to take a moment to extend our deepest condolences and heartfelt sympathies to the teammates, families, friends and communities who tragically lost loved ones in the heartbreaking Humboldt Broncos bus accident.

Posted on April 6, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – April 6, 2018

Welcome to April 2018, where the invisible hand has taken to typing away tweets to move markets. The power of digital platforms and the importance of making deals coincidentally happen to be two important themes that Canadian online brokerages are also picking up on, although in a far less blustery manner.

In this edition of the roundup, we take a look at the bullish indicators to come out of the latest online brokerage promotions numbers. From there, we take a deep dive into one bank-owned brokerage’s timely refresh of a website which could be a savvy move to attract active investors seeking to participate in market volatility. And, speaking of volatility, there were some very intriguing tweets from DIY investors about what’s happening in the discount brokerage space as well as some great posts on the investor forums.

Deals Update

Despite the turmoil and uncertainty in the stock market, the Canadian discount brokerage deal offers continue to look bullish for DIY investors.

The latest snapshot of deals for new online investing accounts is now live and this month’s action saw two online brokerages extend offers that were set to expire at the end of March as well as the release of a rare cash back and commission-free trade offer.

Starting first with the extensions, HSBC InvestDirect and Desjardins Online Brokerage both pushed the deadline for their offers out to April 30^th and May 31^st respectively. What is especially interesting about the HSBC InvestDirect renewal is that it is a cash back offer and now one of only two cash-back offers (the other is from BMO InvestorLine) that DIY investors can choose from that is not part of a refer-a-friend program. Given the attention DIY investor deal hunters place on cash back offers, the absence of competition in this offer segment works out well for both bank-owned online brokers.

The other bullish indicator was the latest offer from BMO InvestorLine, which went live shortly after the roll out of their new front-end website. This latest offer is a rare cash back AND commission-free equity trade promotion that combines a tiered cash bonus and up to 20 commission-free equity trades, which are good for up to two months. Conveniently, this kind of offer doesn’t force users to choose between either a cash bonus or commission free trade, which is nice, and the cash offer itself is fairly competitive alongside the current cash offers. Also interesting to observe was the minimum deposit amount to qualify for the promotion is $50,000, which is lower than the typical threshold of $100K+.

Once again, it appears that transfer fee promotions have stepped back into the lead as the most common offer available at just about every Canadian online brokerage. As we noted last month, Qtrade Investor now sits atop this list since they lowered their deposit threshold to $15,000 from the common watermark of $25,000. It will be interesting to see which online brokerage decides to match this offer – especially Credential Direct and/or Desjardins Online Brokerage as they move through the process of merging together with Qtrade Investor.

The only deal that didn’t make it through to the end of March was the discounted trading commission offer from Virtual Brokers. Not known for staying on the promotions sidelines for too long, Virtual Brokers may already be cooking something up for the not too distant future.

In fact, we’ll be watching to see what unfolds in April. As stock market turmoil heats up, online brokerages may have to turn to some very creative offers and incentives to encourage investors to open an online investing account rather than sitting out the Twitter storm and market volatility.

BMO InvestorLine Rolls Out New Website

The reality for brands to be online today requires staying fresh to stay interesting. For financial service providers, this presents a unique challenge.

On the one hand, financial services rely heavily on conveying trust, reliability and consistency and as a result, keeping changes to a minimum. On the other, considerations such as user experience and design elements are being considered as metrics of trust now more than ever before in the organization and delivery of online brokerage websites.

Screenshot of new website for BMO InvestorLine

It is against this backdrop, as well as an ongoing evolution in digital strategy, that BMO InvestorLine’s recent website refresh highlights some important trends in design and communicates some key stakeholders BMO InvestorLine is looking to reach.

Although there is lots to dive into, three of the most interesting components of the website refresh fit neatly into the following categories: personas, perks and platforms.

Fair warning, talking about website design might seem overly technical, but when competition between providers is so close, this refresh serves as an example that small changes can make a big difference in how easily users find information and how useful it is when they find it.

Personas

One of the more noticeable changes on the new BMO InvestorLine website is the space dedicated to investor ‘personas’ – or depictions of typical kinds investors. While personas are not new, it is interesting to see the variation in how they’re used. In a refresh that Credential Direct undertook last year, for example, personas were an important part of how the content on the website connected more meaningfully with website visitors.

With BMO InvestorLine’s new layout, these personas feature prominently and use an interesting combination of pictures of individuals as well as text to explain the features/benefits of the category of investor each persona is meant to represent. For example, in terms of writing style, the language used more directly addresses the reader or an approximation of the reader’s investing experience level (e.g. ‘you’ve got the basics and now want more insights…”). It is a subtle thing but as mentioned earlier, it also helps to connect a little more directly with a reader.

Screenshot of investor persona types described by BMO InvestorLine

Another interesting visual element is how DIY investors are portrayed.

Historically, investors have typically been portrayed as older men, however the choices of imagery selected here clearly communicate that DIY investors are more diverse. This trend towards greater diversity and inclusivity is not unique to BMO InvestorLine but reflective of a larger trend in financial services providers doing a more effective job of representing the diverse nature of the Canadian population.

Further, the pictures chosen are of individuals staring into the camera and smiling – not reading a screen or doing some other stereotypical “investing” activity. This was an interesting and powerful choice as it psychologically connects viewers with the person in the image, and communicates safety and satisfaction (as opposed to communicating, “this is what investors look like when they’re investing”).

Perks

Another interesting angle on the new page is how promotional offers as well as “perks” are featured.

BMO InvestorLine is one of a handful of Canadian online brokerages that consistently puts forward promotional offers (see below for more on the new InvestorLine promotion) throughout the year, so promotions are an important part of the brand offering.

Also intriguing was the positioning of added features as “perks”. This is somewhat rare as other online brokerages generally don’t refer to the features associated with either increased trading activity or larger account sizes as perks (or if they do, it’s certainly more muted), but labeling these features in this way enhances the feeling of receiving a bonus. It may be a small change but it is an important one as it makes the idea of getting something seem a bit more special. And, after all, who doesn’t like ‘perks’?

Platforms

A third interesting feature on the new BMO InvestorLine website is the increased prominence of their active trading platform, BMO Market Pro.

Screenshot of active trader platform offering (BMO MarketPro).

This trading platform offers an enhanced trading experience with charting tools, alerts, streaming data, order entry and watchlists. Active traders might be interested to know that the bar to qualify for access to Market Pro is 30 trades per quarter or at least $250,000 in assets with BMO InvestorLine. Interestingly, while the threshold to qualify for this advanced platform (30 trades per quarter) is standard at peer bank-owned brokerages, BMO Market Pro also includes level 2 streaming quotes for TSX-Venture-listed stocks. This data stream generally costs extra (between $25 to $50/mo) on active/advanced platforms (e.g. Scotia iTRADE and TD Direct Investing charge for this) so having it included is a plus for active investors interested in trading small cap stocks.

The competition between online brokerages extends beyond just pricing and features. As the latest refresh from BMO InvestorLine’s website shows, it also is now in the digital experience arena. Ultimately for the site to be a step forward, it needs to improve how quickly individuals locate the information online that they are looking for.

When looking at the ‘big picture’, the new website shows an interesting shift toward highlighting the ‘platform’ and ‘tools’ offered by InvestorLine, as well as feature-rich offerings like the Market Pro platform and 5-star program. Is it a coincidence that with the market volatility picking up, the messaging is turning more to trading rather than buy-and-hold? Perhaps. But for BMO InvestorLine, it’s certainly good timing to be broadcasting their active trader features.

For DIY investors comparing online brokerages, the key takeaways from this website refresh are that BMO InvestorLine is not standing still when it comes to staying current with online experiences – a metric that is increasingly becoming the standard by which brokerages are going to be judged on. Also, there appears to be a greater emphasis on letting the active traders out there know that BMO InvestorLine has a feature set that they might find worthy of a test-drive.

Discount Brokerage Tweets of the Week

There were a number of interesting tweets from DIY investors this week. Among the items people were talking about (beyond technical difficulties) were revisions to terms of service, new features with yahoo and money disappearing from an account (not from trading). Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

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Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Insight-er Trading

Every so often when an online investor turns to the internet for help, there’s a great resource that emerges. In this post from the reddit Personal Finance Canada thread, one user was experiencing some frustration getting an RDSP setup properly. Fortunately, there was a happy ending and an incredibly thoughtful post that helped walk through the experience of setting up a self-directed RDSP at TD Direct Investing.

Ticked Tax

When it comes to getting documents ready for tax filing, nothing gets DIY investors agitated like delays in receiving tax forms. In this post, from reddit’s Personal Finance Canada thread, we spotted a few users waiting for Questrade forms to filter in.

Into the Close

That’s a wrap for this week. While the traders playing volatility had a fun week, there were lots of moments that made it feel like Friday could come fast enough. Of course, there’s probably a soundtrack on Spotify available for those traders out there trying to get out in front of the hot mess that is the news cycle. Wherever the weekend takes you, hopefully it is filled with better news than what’s trending online! In the meantime, here’s a little something to end the week on a fun note.

Posted on March 30, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – March 30, 2018

What better way to cap off March and segue into Easter than with the talk of goodies and mythical bunnies bearing gifts? For Canadian DIY investors hunting for new and exciting features it seems like the best place to look at the moment is further south where all kinds of interesting trader treats are already being released.

In this Good Friday edition of the roundup, we kick things off with a closer look at the latest US online brokerage rankings, specifically with an eye towards interesting findings and cool feature trends. From there we’ll buzz over to a rebrand at one online brokerage that is preparing itself for the next chapter in its storied history. As usual, we’ll cap off the roundup with chatter from Twitter as well as in the investor forums.

Interactive Brokers crowned best online brokerage in the US

Although the recent news cycle south of the border makes Canadians less envious of living in America, trading in America continues to evoke a sense of envy with Canadian DIY investors – and for good reason.

Just over a week ago, Barron’s published their latest rankings of 19 online brokers in the US and found that Interactive Brokers provided online investors with the best overall online experience.

As with all rankings, it’s important to understand what the criteria mean and how the assessment is conducted, and thankfully Barron’s does a great job of providing the details of the online brokerage ranking in a way that none of the Canadian broker rankings do. Specifically, Barron’s actually enables readers to download an excel spreadsheet that contains the details of how the scores were derived.

Before getting too far into the weeds, it’s useful to point out that Barrons’ latest online brokerage rankings assessed brokerages based on the following categories:

Trading Experience & Tech
Usability
Mobile
Range of Offerings
Research Amenities
Portfolio Analysis and Reports
Customer Service, Education, Security
Costs

That Interactive Brokers topped the field of US online brokerages when it comes to costs is perhaps not that surprising. In fact, in looking at the spreadsheet drill down for the margin rates and commission cost per trade, Interactive Brokers stands out as a considerably cheaper option than many of its peers.

What was potentially more surprising was the degree to which Interactive Brokers was able to score highly on the other categories that comprised the online brokerage rankings. Over the past two years or so, it has become increasingly more noticeable that Interactive Brokers has been making additional efforts to go beyond their active trader roots and expand the support, services, products and educational content for online investors. The latest rankings from Barron’s, however, demonstrate just how well Interactive Brokers has managed to do so in the US.

Following Interactive Brokers in first place, the brokerages in second (Fidelity), third (TD Ameritrade) and fourth (Charles Schwab) were all separated by 0.8 points, a sign that it is a very close race between the top four online brokerages in the US. That said, the graph shows that it isn’t really until after 10^th place (Lightspeed Trading) that rankings scores drop off substantially. Firms at the bottom end of the rankings certainly have their work cut out for them, however, as it is clear that this is a very dynamic space.

From a Canadian perspective, it is also interesting to note how small the DIY investor market is here in Canada relative to the US and whether there are too many brokerages in Canada fighting for too small a market share. Barrons’ latest ranking covers 19 online brokerages in the US (with some notable omissions like Robinhood) however that is only slightly more than the 14 online brokerages currently here in Canada, soon to be 13 (or 12) once the Qtrade Financial and Credential Direct merger takes place. Ironically, despite the conditions favouring far more competition here in Canada between discount brokerages, it appears we’re innovating far slower than in the US.

In digging into the actual spreadsheets of the brokerage rankings, there were a few interesting trends noted that might be on the horizon (or just wishful thinking) for Canadian investors. For example, one of the categories that showed up in this year’s detailed ranking breakdown was whether an online brokerage offered cryptocurrency trading.

Already there were 8 online brokerages in the US that had come connectivity to cryptocurrency trading data or trading enabled. Interestingly, Charles Schwab was the only brokerage in the top five ranked online brokers that didn’t offer some kind of connectivity to trade cryptocurrency (e.g. Bitcoin futures).

Other features that we noted that were far ahead of what’s available to Canadian DIY investors included integration with smart home devices, such as Amazon’s Echo. Five online brokerage firms already have this integration deployed or are actively working to do so. Similarly, chatbots on social media are another feature that appears to be growing in popularity with online brokerage providers.

Another interesting observation of the results was the position that Tastyworks ranked in (8^th), an amazing feat considering that it was just shy of edging long-time brokerage E*Trade and that Tastyworks has not been around nearly as long. Whether Tastyworks can sustain its growth and challenge better-funded incumbents remains to be seen, but the fact that they’re already scoring as highly as they are means whatever is resonating with investors.

Finally, another feature that casts a very unfavourable light on Canadian online brokerages is the speed with which online brokerages in the US are able to onboard and enable clients to begin trading. Wait times range from almost zero to four days in the US, with the many firms enabling same day trading and account opening.

The US is certainly a faster moving market when it comes to feature development and deployment than Canada is. Nonetheless, it is interesting to note that the Canadian online brokerages looking to make a splash here would be wise to pay attention to some of the abovementioned features.

For the moment, Canadian DIY investors have to content themselves with peering over the fence to see how the other side trades.

To Bee or not to Bee: Desjardins Online Brokerage gets a logo refresh

On the marketing front, Desjardins Online Brokerage updated its corporate logo to bring it in alignment with the parent Desjardins who also updated their storied logo.

This modern incarnation of the logo retains elements of the previous iteration, such as the green colour and the honeycomb hexagon however this logo does not have the stylized bee drawing in the centre of the logo. Also updated was the typeface, with sans serif font replacing the previous version which had serifs.

While it certainly isn’t market moving news, the story behind the logo change reflects that Desjardins is moving in response to the market and readying itself for the next, digital chapter in its story.

Discount Brokerage Tweets of the Week

Overall a bit of a quiet week on Twitter aside from the usual mixture of sneers and jeers. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

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Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Tax Talk

At this time of year DIY investors are diligently working to compile trading statements and calculate the tax implications for their trades. Ironically, managing the required paperwork is itself taxing.

In this post (on TD Direct Investing) and this post (about BMO InvestorLine) it is interesting to see how some DIY investors are managing the business of keeping their transactions in order.

Short and not sweet

Playing in the investor forum sandbox can sometimes be a place for some tough love. This post, from reddit’s Personal Finance Canada thread highlights one investor’s curiousity about selling puts and a response received to proceed with caution.

Into the Close

Whether you were short the week or long the weekend, on behalf of everyone here at SparxTrading.com, we wanted to wish you a safe and ‘hoppy’ Easter! Remember be on the lookout for pranksters this weekend!

Posted on March 23, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – March 23, 2018

Now that spring has sprung, it’s time to dive right into the next season head first. For online brokerages, after RRSP season comes tax return season. Judging by the response so far to the next busiest time of the year after RSPs, it seems like most Canadian discount brokerages are now shifting gears to figure out their next moves.

We kick off this edition of the roundup with a review of the deals and promotions scheduled to expire at the end of the month. From there we highlight some interesting email newsletters from a pair of online brokerages that prove that e-mail can still hold its own in a social media world. Next, we profile an important strategy document released by one of Canada’s regulators that maps out how to better protect senior investors. Finally, we close out the roundup with a review of the buzz on Twitter and in the DIY investor forums.

Deals Melting Away

The end of March is just around the corner. And, while it signals a positive sign for warmer weather, it won’t only be snow that’s melting away. At the end of March, there are three discount brokerage promotions that are set to expire as well as one from BMO InvestorLine at the beginning of April. Desjardins Online Brokerage did have their commission-free trade credit offer set to expire at the end of March however it has been extended out to May 31^st.

That will take the total number of advertised offers down to 19 if there are no replacement offers planned.

Here’s a list of deals that are set to expire at the end of March:

HSBC InvestDirect Cash Bonus & Transfer Fee Coverage (expires March 30)
Virtual Brokers Discounted Commissions (expires March 31)
BMO InvestorLine Cash Bonus & Transfer Fee Coverage (offer expires April 1)

Interestingly, our internal data reveal that online investors are very interested in offers from Canada’s bank-owned online brokerages. The two bank-owned online brokerages with current offers that are attracting attention from visitors are BMO InvestorLine and National Bank Direct Brokerage.

We’ll be watching to see what, if any, offers are replaced or extended heading into April.

It’s a good sign for DIY investors that Desjardins Online Brokerage has already extended their signature commission-free trade offer through to the end of May and, based on the data from early 2018, there’s a good chance that more extensions and new offers will not be far behind next month.

Trade the News-letter

Interactive Brokers Mines Shareholders for Clients

This week there were two interesting email newsletters from online brokerages that proved email marketing is still a viable method of reaching out to online investors, even in a world cluttered by social media feeds and fragmented sources of information.

The first interesting development was observed in a shareholder letter/newsletter from Interactive Brokers in which a letter from founder and CEO, Thomas Peterffy, provided some unique insight into why Interactive Brokers sought to go public.

According to the letter, Peterffy stated “We went public to raise our profile and as an adjunct to our marketing efforts, in the hope of gaining more customers who would help us become better at servicing them.” It does take quite a bit of effort and consumes resources to go public as well as maintain a listing – reasons perhaps why some of Canada’s non-bank-owned brokerages never saw the need to follow suit. What was particularly noteworthy about this e-mail, however is the direct appeal to become a client before considering to be a shareholder – which is a particularly bold move and perhaps very savvy marketing move.

Source: Excerpt from Interactive Brokers shareholder letter

For all sorts of reasons, the ability to reach out to shareholders is a clever marketing tactic that appeals, likely, to individuals who invest, who know the brand, who are willing to read the notice and who stand to benefit themselves if they also become clients. In terms of marketing and sales, this is a huge coup since the cost of trying to reach, let alone convert, online investors in the US market is quite high. So, not only did Interactive Brokers benefit from being able to raise their profile by being in public markets as a publicly traded firm, this also enabled them the opportunity to market directly to shareholders – many of whom would be ideal target clients and users of their service.

And, whatever Interactive Brokers is doing, seems to be paying off as they were also just crowned the best online brokerage in the US by Barron’s annual ranking of US online brokers.

As with all developments in the US online brokerage space, we often wonder whether something similar could happen with an online brokerage here in Canada.

Could an independent online brokerage like Questrade, for example, simultaneously tap the public markets by going public themselves and open up an entirely new and low-cost marketing channel by advertising directly to shareholders?

Whether or not they need or could efficiently deploy any capital raised from public markets is a separate question altogether, but the benefit of the capital would certainly help fund the scale required to compete against larger peers. And, if Interactive Brokers is any indicator, being public has enabled them to transparently showcase their success quarter after quarter which is the kind of marketing that investors of all stripes can get behind.

Scotia iTRADE Pushes Education

Also spotted in our inboxes this week was a newsletter from Scotia iTRADE which highlighted their shift to focusing more attention on their help/support and educational resources. In the world of DIY investor education, we typically break things down into two major categories of investor education, so it has been interesting to observe Scotia iTRADE build resource and capacity in the ‘education’ space.

The first type of ‘education’ is product orientation, which, simply put, helps clients understand how to use the tools, platforms and features of a particular online brokerage’s service offering. The second category is information about investing itself. So, this latter category refers to topics such as technical analysis, how ETFs or options trading might work etc.

In last week’s roundup, we mentioned that there has been a shift in the way DIY investor education has been delivered by Canada’s online brokerages. In many respects, there’s been a pullback in the resources online brokerages are allocating to orientation and education, and the kind of resources now available are typically video recordings or documents rather than live help sessions or in-person seminars.

As such, it was interesting to see Scotia iTRADE’s latest newsletter on investor education as it is a clear signal that unlike many of their peers, they are continuing to invest in marketing their educational offering as a cornerstone feature to their brand.

In both instances with Interactive Brokers and Scotia iTRADE, it’s clear that email communication with clients is still very much alive and well as a channel to choose from however (and this applies to social media too) being consistent and reliable with producing this content isn’t easy. Scotia iTRADE is making strides in the right direction when it comes to marketing itself and highlighting some of their key differentiators. For their existing clients, this is an important thing to do to keep clients from peering over the fence at what other brokerages are doing. More interesting for Scotia iTRADE, however, is for those clients who do have additional accounts elsewhere to see how competent and interesting Scotia iTRADE might be at delivering updates and talking about feature enhancements.

Strategy for Senior Investors

This past week, the Ontario Securities Commission published its Seniors Strategy (OSC Staff Notice 11-779) that outlines the securities regulator’s vision for evolving the regulatory landscape to better service a growing segment of the Ontario (and Canadian) population – older adults.

The strategy document is fairly comprehensive in its approach, drawing on extensive research of literature and best practices from countries around the world, as well as from research conducted in Canada on the financial profile of older and aging Canadians and by consulting with many experts and seniors advocacy groups. The result of this work is a lengthy but important document that will help to inform the approach of securities regulators and the financial services sector in Canada in doing more to provide important safeguards for older investors.

Some of the concrete steps recommended in this report include:

Requiring that registered firms and their representatives make reasonable efforts to obtain the name and contact information for a client’s trusted contact person if there’s a concern about a client’s behaviour or transactions in a client’s account;
Enabling registered firms and their representatives to place a temporary hold on disbursements from a client’s account.
Enhancing outreach activities to provide tools and resources for older investors, their families and caregivers who support them.

Importantly the report recognized that labels such as ‘seniors’ aren’t reflective of a homogeneous set of attributes and there is a lot of complexity that accompanies the intersection of aging and financial well-being.

It was an interesting week for this report to get published as this week also saw the publication of a somewhat scathing report from the Financial Consumer Agency of Canada (FCAC) regarding the lack of sufficient controls at Canada’s biggest banks to ensure clients are getting their best interests served ahead of the banks that the front line employees represent.

This is especially important given some of the data published in the report, in particular that:

“Low financial knowledge makes the roles of registered firms and their representatives even more important to helping older Canadians meet their financial goals. Investing As We Age found that a majority of investors aged 65 and older work with at least one registered firm; research has also found that registered firms and their representatives have a significant influence on their clients’ investment choices, and that investors working with a registered firm place significant trust and confidence in that firm and its representatives.” P17

For Canada’s online brokerages, it is an interesting prospect to consider how they can more effectively and appropriately consider serving older adult clients.

For starters, understanding that clients have differing needs means that the attributes of a clients will factor more prominently into how services are delivered and potentially what kinds of products or services individuals may have sent to them (e.g. via marketing emails). Additionally, how materials are prepared, the user experience in the online platforms, the statements and account performance summaries and potentially even the stock screeners, picks and trades that individuals can execute (or allow to be executed on their behalf) could see changes made based, in part, on the findings and recommendations from this study. Could ‘safety’ settings, for example, be in place on stock screeners or cautionary labels be put in place that would apply specifically to older investors?

For DIY investors, the strongest recommendation still continues to be caveat emptor when it comes to choosing an online brokerage. While some folks take the position that there isn’t that big of a difference between online brokerages to entail worrying over which one is the best, the data show that the ‘right’ brokerage is one that meets an investor’s needs rather than one that tries to sell a client on features they do not.

As such, an important step in the DIY investor journey is to determine what those needs are prior to signing up for an account. The forum post below provides an interesting example of this for one DIY investor looking to switch online brokers. For observers, the difference between online brokerages might not be important today, however as this report outlines, as needs change, it is important to be with a service provider that can keep up and keep the client in mind.

Discount Brokerage Tweets of the Week

With tax season now upon us, there was an uptick in tweets about getting accounts and documentation in order. Mentioned this week by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

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Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Market Order

Many investors firmly believe that buying the basket of stocks listed on major indices, such the S&P 500, is an easier approach than trying to pick individual stocks. Of course, picking individual brokerages might not be as easy. One way to figure out which one discount brokerage to choose when attempting this strategy is to crowdsource. This post, from reddit’s Personal Finance Canada thread, highlights several discount brokerages online investors use to keep fees low when buying the market.

Investor Scorned

There are threads about choosing an online brokerage, and then there are threads about choosing an online brokerage. This post, from the Financial Wisdom Forum, offers a fascinating look at how experienced and knowledgeable DIY investors undertake the process of moving brokerages. There’s actually so much information in this post that it is well worth the time to read. It’s especially informative to see that even long-time service providers can fumble the ball to the point that a client wants to try something different.

Into the Close

So, with all that’s going on in the news and markets now trying to price in a number of different, challenging scenarios, Friday really couldn’t come fast enough. That said, there’s really no rhyme or reason for the Trump media train to stop or slow down. It is already turning into another incendiary weekend so don’t forget to ignore the doom and gloom and try to enjoy the weekend. Spring is here after all.

Posted on March 16, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – March 16, 2018

March Madness is here. Whether that means trying to entertain kids who are off school, figuring out brackets and odds, or making sense of any given news day, keeping up with all of what’s going on and still having time to invest is no easy feat. For those in the online brokerage space – as well as those in the robo-advisor space, finding products and services that fit into the busy realities of everyday investors is key to keeping clients happy.

In this edition of the roundup, we take a look at some interesting stats about online investors and how the wealth management space is evolving to respond to the realities of today’s investor. Next, we put the spotlight on a quiet trend that has emerged around online investor education at several bank-owned brokerages. As usual we’ll also take a look at the DIY investor conversation online on Twitter as well as in the investor forums.

And the Survey Says….

Every so often, one of the major online brokerages or financial institutions in Canada takes the pulse of the investor segment to gauge perceptions about investing topics. Earlier this week, BMO’s SmartFolio published some of the results of a study it commissioned in November of 2017 which asked adult Canadians how they felt about investing online.

The survey results painted an interesting portrait of the overall perception of investing online in 2018 and how those attitudes and perceptions varied according to the age cohort the respondents belonged to, namely: Baby Boomer, Generation Xer and Millennials.

One interesting set of data points revealed that nearly half (46%) of those surveyed felt intimidated by having to make investment decisions, almost two thirds stated they need to learn more about investing (60%) and just over one third (38%) don’t feel they have enough time to invest. Certainly, this combination of perceptions underscores the importance of the decisions that people make with their investment capital, as well as the associated anxiety and hesitation that accompany putting money into harm’s way in order to earn a return. In other words, many Canadians believe investing is hard and it matters if you don’t get it right.

Aside from the ‘investor belief’ insights that the survey uncovered, there were two additional stats that provide insights into product experience and what online investors are seeking out.

First, when measuring the satisfaction of the investment choices made by digital advisors, there was a notable gap between what Baby Boomers felt satisfied with compared to Millennials or Gen X’ers.

According to the survey, only 33% of Baby Boomers felt satisfied with the recommendations that were made by a digital advisor compared to 79% of Millennials and 76% of Gen X’ers who felt satisfied. The natural question that arises is why that would be the case? What is it about the investment choices that were made for Baby Boomers that just don’t resonate with the majority of those investors?

Another interesting statistic revealed by this survey was the extent to which different demographic groups are seeking out tools to help them “invest smarter.”

According to the survey, 38% of Baby Boomers are seeking out tools to help them “invest smarter” while 58% of Gen X’ers are looking for those tools and 67% of Millennials are seeking out these tools. The survey highlights an inverse relationship between age and the desire to seek out tools to ‘invest smarter’ which is a curious finding. Part of the answer may lie in what exactly constitutes being able to “invest smarter.”

Interpreted one way, it could imply that individuals are looking for above market returns. Considering that trading/investing can be a zero-sum game, it doesn’t seem likely that everyone will achieve market beating-performance. Based on the inverse relationship with age shown in the desire to invest smarter, perhaps older individuals have enough experience in the markets or have different expectations of how investing can/does work such that they know ‘tools’ are likely going to provide modest returns.

Another point of view might be that the individuals may always be on the lookout for tools to improve the investing experience and that might improve the performance of their portfolio. Again, the age factor is interesting because it might imply that older individuals are either less motivated to find those tools or they believe they already have such tools and therefore don’t need to seek them out.

As the digital advice/robo advisor landscape continues to evolve, it will be interesting to watch how services like BMO SmartFolio translate the insights gained from these surveys and turn them into features and services for online investors.

An interesting interview this week on BNN also highlights how the digital advice space is maturing.

Specifically, it appears that digital advice or robo-advisor portfolios can be used not only by consumers themselves but in a hybrid fashion by advisors who work with clients to provide advice but who also utilize the robo platform to help automate the operational side of managing clients and delivering consistent service to multiple clients.

The big picture on the survey results point to perennial issues when it comes to investing, generally that DIY or online investors could use more confidence, experience and perhaps time when evaluating investment opportunities. While many investors may opt to go the DIY route to learn about investing, there’s clearly a need for individuals who help others navigate investment decisions.

Despite the presence of DIY services, the challenge for robo-advisors and wealth managers in general, it seems, is to provide consumers with the confidence that by spending their money in the form of fees, they are actually going to receive the benefit of confident, competent and convenient service – and that a particular provider is better than a very long list of competitors.

Investor education: The quiet evolution

Investor education from Canada’s online brokerages has certainly changed over the past four years. Gone is the rush to hold multi-city seminars and trumpet investor educational resources as a cornerstone of the online brokerage offering. Instead, in 2018, many online brokerages have either pared back their investor education offering or moved to an ‘on demand’ model that uses webinars or video content. Moreover, what used to be free and widely available has shifted behind the login screen to be a ‘client perk’ rather than a marketing hook.

While this has happened industry wide, it has been most prominent at the bank-owned online brokerages over the past few months where we’ve noted some quiet upgrades to the investor education sections.

One of the most recent we noted was from Scotia iTRADE which reorganized its educational content and offers an easier to navigate experience for content based on what activity investors are interested in learning about. Scotia iTRADE’s YouTube channel also has an easy to access archive of educational content, including webinars on topics related to trading and investing.

Another bank-owned online brokerage that has quietly been enhancing its educational content has been CIBC Investor’s Edge.

Their “knowledge bank” is a mixture of webinar topics as well as insights on economic outlooks, as well as tax and financial planning. In fact, coming up next week is a session on tax tips featuring Jamie Golombek that DIY investors may want to tune into.

Perhaps the most elaborate example of the shift in deliver of investor education content is from TD Direct Investing. Although they do continue to offer webinars and the occasional seminar, the big focus for DIY investor topics is the MoneyTalk Investing site by TD which has an extensive selection of personal finance information, including investing, videos and content for investors to consume on a regular basis.

With tax season now upon us, it will be interesting to see if any additional helpful video/webinar content starts to filter out to DIY investors.

Seasonal content aside, there has been a noticeable pullback in the amount of ‘investor education’ being provided by Canadian discount brokerages and there is a clear divide between online brokerages who are providing investor education content to audiences for free (perhaps as part of a marketing strategy) and those that are restricting that content to existing clients only.

Discount Brokerage Tweets of the Week

Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Transfers Gone Wild

Every so often something comes along that is a genuine surprise. This post, from the Canadian Investor thread on reddit, is a fascinating story about how one online brokerage client ended up with $600K (in cash and securities) that was accidentally transferred into their account and the chain of events that happened next. Definitely worth a read when considering switching brokerages.

Cross Border Math

Keeping track of costs and transactions is important when investing online. In this post, one user executed a limit order but found the price they ended up paying was higher than what they had set. Fortunately, some helpful forum users helped break down the math that showed how buying across currencies requires some extra math to ensure everything adds up.

Into the Close

That does it for another week. Next week should be another wild week as interest rates in the US are set to creep higher and, of course, there will be no shortage of funny business in the oval office. Fortunately, even if your portfolio didn’t end the week in the green you can still celebrate St. Patrick’s Day and continue the hunt for that elusive pot of gold next week! Best of luck with your brackets and little leprechauns! Have a great weekend!

Posted on March 9, 2018 by user — Leave a comment

Discount Brokerage Weekly Roundup – March 9, 2018

From real war to trade war, what are either good for? Attention apparently. As provinces and countries trade barbs, online brokerages battling one another have turned to toasting rather than roasting.

It was a very full week for Canada’s discount brokerages so there’s lots to get to in this week’s roundup. First, we dive in with a look at the response to the Globe and Mail online brokerage rankings and how Canada’s online brokers have cleverly found ways to shine a light on their perceived strengths. From there we’ll take a quick look at several important developments that took place this week, including the celebration of International Women’s Day and the possible ramp up to online account openings at one of Canada’s largest online brokers. Also on deck this week is an interview we spotted with an online brokerage CEO. As usual we’ll round out the week with a look at DIY investor tweets as well as comments from the investor forums.

Rank & File

One of the greatest boxers of all times, Muhammad Ali, said ‘it ain’t bragging if you can back it up’. While Ali was certainly no stranger to clever marketing, marketing teams at Canadian online brokerages are no light weights either when it comes to trumpeting their achievements.

Following the release of the Globe and Mail’s Canadian online brokerage rankings, several Canadian discount brokerages have ramped up their marketing efforts, highlighting in particular their status as the best Canadian online brokerage. So, how can everyone be Canada’s best online brokerage?

The short answer is that there are enough different measurements of online brokerages that savvy marketing teams can cherry pick which specific category strength best suits their objectives. Below is a compilation of the online brokerage websites and some display ads that we reviewed this week that had some element of claiming to be ‘the best’ online brokerage in Canada.

Discount Brokerage	Website	Source of Ranking
BMO InvestorLine	2017 Best Mobile Customer Experience	Surviscor, Nov. 2017
CIBC Investor’s Edge	MoneySense ranks us #1 in Fees and Commissions	Moneysense (powered by Surviscor), Jun. 2017
Desjardins Online Brokerage	“Highest in investor satisfaction with self-directed brokerage firms” in Canada according to J.D. Power	J.D. Power & Associates, Sep. 2017
National Bank Direct Brokerage	A study conducted by Surviscor has concluded that we offer the most competitive pricing among direct brokerage firms	Surviscor (date not specified)
Qtrade Investor	The Globe and Mail’s best online broker in Canada 2018	Globe and Mail, Feb. 2018
Questrade	Canada’s leading non-bank online brokerage	Not specified
Scotia iTRADE	Top Bank-Owned Firm 19^th annual review of Canada’s online brokerages by Rob Carrick of The Globe and Mail	Globe and Mail, Feb. 2018
Virtual Brokers	Virtual Brokers takes the #1 spot again in the 18^th Annual Globe and Mail Online Brokerage Ranking of 2016	Globe and Mail, Dec. 2016

As readers will note from the table above, there are at least 8 online brokerages who are making the claim to be the best in some fashion, which brings us back to a topic that we’ve covered extensively at SparxTrading.com – how does one really define what makes an online brokerage the best?

On the front end of an online brokerage’s website, however, recognition awards look great. And, while the details of those awards may not be fully explained or revealed, some DIY investors who may quickly glance at the messaging might consider it enough to see that something has been won even if that award might be out of date.

For example, Virtual Brokers’ website still has the material stating that it came in first in the Globe and Mail ratings from 2016, but does not mention the 2017/18 rankings at all. Conversely, Qtrade Investor has the current rankings specified in the titling and even includes a version of the full Globe and Mail article.

Of course, while text can be highly specific, it is even more interesting to compare the ‘best online brokerage’ award communication visually.

Take the example of a very well-designed graphic for Scotia iTRADE which appeared on their website this past week. The artwork simply states “Top Bank-Owned Firm” and the 19^th Annual Online Broker Ranking however it actually doesn’t specify the source. So, while it looks official, it is not an actual seal issued by the Globe and Mail the way that Surviscor or J.D. Power might award a seal.

By comparison, the badge used on CIBC Investor’s Edge website for the MoneySense rankings has a very visible #1 Best Online Brokerages but doesn’t specify that it’s for pricing – that comes later in the text. Interestingly, because CIBC Investor’s Edge and Questrade were both tied for the ‘best pricing’ recognition, Questrade could verbatim claim the same thing.

For DIY investors the takeaway remains: it is important to understand how the results of online brokerage rankings are measured and what they are actually measuring. Clearly, online brokerages are keen on showcasing results and recognition when they do well – and for some brokerages this might be easier to do than others. Nonetheless consumers need to be mindful of looking at the online brokerage provider’s marketing language closely. Ultimately, brands that make bold promises set expectations high and, as a result, they have to back up the hype with follow through.

Financial Firms Celebrate International Women’s Day

This week, International Women’s Day was recognized the world over and a much-needed spotlight was shone on the progress achieved for equality and challenges that still lie ahead. Encouragingly, recognition and participation in this event continues to grow.

To mark the occasion many Canadian financial service firms put together customized content that spoke to the experiences of women in business as well as delivered perspectives on investing. A couple of noteworthy pieces came from BMO as well as from RBC.

BMO had a few items in place for International Women’s Day. Earlier in the week, BMO Wealth Management along with media personality Lena Almeida (@Listen2Lena) teamed up once again for another Twitter session on investing. This session was specifically geared towards highlighting issues and perspectives related to women and investing. As with the sessions previous, this was a very informative and insightful hour-long session that enabled lots of discussion (and featured lots of gifs) on some very interesting questions. We’ve pulled the questions and answers for those who missed it.

BMO #InvestSmart Chat – March 5, 2018

In another piece by BMO, which was shared via Twitter, Joanna Rotenberg, Group Head of Wealth Management shared her perspectives on International Women’s Day and where the challenges and opportunities exist for women in a professional setting.

Joanna Rotenberg shares her thoughts on the importance of #IWD2018 and an important lesson she learned early in her career. #BMOforWomen pic.twitter.com/uscr6VNZrs

— BMO Harris Bank (@BMOHarrisBank) March 8, 2018

As part of their Inspired Investor content series, RBC Direct Investing also compiled a very interesting collection of perspectives on investing by women investors.

Having women share their own experiences and impressions of investing first-hand provides a powerful and hopefully engaging way in which to make investing – and DIY investing – more accessible to women.

Read the full article here.

Interview with Questrade’s CEO

This past week, CEO of Questrade appeared on a podcast by Kornel Szrejber of BuildWealthCanada.ca to discuss the world of investing online and where Questrade fits into the Canadian landscape of investment service providers. It was an interesting interview with a broad range of topics covered, however of particular interest to DIY investing followers, was Kholodenko’s perspectives on the competitiveness of the Canadian discount brokerage market. At about the 13-minute mark, he provides his view that competition between Canadian online brokerages is incredibly fierce and that all firms, including Questrade, will be continuously tested to deliver great trading experiences.

TD Direct Investing Rolls Out Online Account Opening

It looks like news of the online account opening feature at TD Direct Investing is starting to percolate. After a bumpy start to 2018, TD Direct Investing appears to be prepping for a larger spotlight to be cast on its online account opening feature.

This week we spotted an article on the TD newsroom site that linked to a sponsored post from a personal finance blogger, David Carlson, who caters specifically to millennials on primarily US-focused content. Carlson’s article provided a walk-through of the account opening process and highlighted some of the noteworthy features, the most important one being the speed with which signups for a TD Direct Investing account can now happen online.

Stay tuned on this story as online account opening will no doubt be an important feature for 2018 that will be the focus of several online brokerages who do not already have this in place yet.

Discount Brokerage Tweets of the Week

Tweets from DIY investors were an interesting mix of technical and user issues as well as a handful of compliments. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing.

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Off to a Balanced Start

Passive investing is very popular with many Canadian investors. It is also a major selling point for robo-advisors. This post, from reddit’s Canadian Investor thread highlights a possible threat to robo-advisors and opportunity for online brokerages who can deliver a ‘robo’ like performance to clients without having them switch.

On the Record

Now that tax time is here, there inevitably questions about when forms and documentation arrive. This interesting post from one online investor highlights the timing that TFSA contributions may take to show up in the CRA’s system. As a result, it is a good reminder that part of the reality of online investing entails keeping organized records.

Into the Close

That’s a wrap on another week. Somehow it seems like sanity is going to prevail, with the pharma-bro getting his comeuppance, diplomacy resurfacing and the Cleveland Browns getting a capable quarter back. Of course, things are still stormy in the weather, the White House and between Alberta and BC so there’s still no shortage of drama to tune into this weekend – just a shortage of an hour. Wherever you happen to find yourself, have a great weekend and don’t forget to “spring forward”!