Category: Discount Brokerage News

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Discount Brokerage Weekly Roundup – December 15, 2017

Any fans of Die Hard know that just because it’s Christmas time, doesn’t mean there isn’t room for action to happen. In the online trading space, this also happens to be the case as December has proven itself to be filled with excitement, setting the stage for a very eventful 2018.

In this edition of the roundup, we look at a major merger that took place that will undoubtedly pose a challenge to the big bank-owned online brokerages. Following that story, we continue to cover how cryptocurrency, in particular, bitcoin, trading is making its way into the online brokerage space in the US. As always, we’ll close out by looking at what DIY investors were chatting about on Twitter and in the investor forums.

Joining forces: Merger of Qtrade Investor and Credential Direct

The restructuring of the Canadian discount brokerage industry continues to play out in 2017. Earlier this year (in September) Virtual Brokers’ parent company, BBS Securities, was acquired by CI Financial Corp, a move that added significant resource to the Virtual Brokers brand. And now, this week, there was yet another major structural development in the Canadian online brokerage space with the announcement that Qtrade Investor and Credential Direct would be combining thanks to a massive merger deal between Qtrade Financial Inc, Credential Financial Inc and NEI Investments.

The combined entity, which will be known as Aviso Wealth, will have more than 500,000 clients and manage about $55 billion in assets. With that kind of size, Aviso Wealth will pose a serious challenge to the bank-owned wealth management space. And, in the online brokerage sector, it effectively provides two small players with the kind of resources needed to compete against much larger and better funded competitors.

One of the major drivers behind this transaction was Desjardins Group, who will be a 50% owner of Aviso Group (Desjardins acquired a minority stake in Qtrade Financial in 2013, eventually taking a majority stake), with the other 50% ownership split between the CUMIS Group Ltd and five provincial credit unions.

Bill Packham, CEO of Aviso Wealth explains the merger on BNN

On a fun side note, just over 4 years ago I had a sit down with the head of an online brokerage talking about what might happen with the industry. I speculated at the time that a merger between firms aligned with the credit union network would make sense. Fast forward to 2017 and it makes even more sense for online brokerages to consider creative ways to gain efficiencies of scale, in particular those brokerages that are servicing the credit union networks.

As we referenced in the 2017 online brokerage year in review, technology development is on the minds of leadership at all online brokerages. With falling commission prices and DIY investors demanding more technologically advanced features, scale or massive technological advantage seem to be the only ways in which online brokerages can realistically navigate the future of online investing.

For DIY investors, even though there will be ‘fewer’ online brokerages to choose from, the important difference is that there will now be a brokerage that can operate at significant scale. With scale can hopefully come efficiencies, which in turn, can result in better value for clients.

While the merger is expected to take some time to close (Q1 of 2018 is the target), there are some outstanding issues to resolve from a branding/marketing point of view

For example, Qtrade Investor is very well known for its continuous strong performance on the Globe and Mail online brokerage rankings, as well as in the Surviscor/Moneysense rankings. Changing names or brands at this point might remove them from years of credibility they’ve earned with online brokerage reviews. Credential Direct, by comparison, is less well known, and it would almost certainly make sense to fold the Credential Direct brand into the Qtrade Investor one. Of course, this is all speculative – an entirely new online brokerage entity could emerge to help bring brand recognition and generate excitement over this new merger.

Another interesting angle is what happens to the smaller discount brokerage players (e.g. Questrade) in a space where competitors are now much bigger?

For almost two decades, Questrade has managed to hold its own alongside other larger financial service providers, but with the latest move by Desjardins, Qtrade Investor and Credential Direct, there seems to be a case for Questrade to consider how they can bulk up to navigate the next chapter in online-based wealth management.

We’ll continue to monitor this evolving situation; however, it appears that 2017 was finally the year that the dynamics of the Canadian discount brokerage industry caught up with participants. Whether the larger firms can provide the same service levels at scale that they were able to do as smaller entities is going to be interesting to watch. Larger organizations are notorious for being more complex and thus, slower to respond to changes in the market. Now that Qtrade Investor and Credential Direct are teaming up, they will have to navigate the culture change and manage to strike the right balance between giving clients stability and innovation. Suffice to say, however, they’re no longer going to be considered a ‘small’ online brokerage.

Back to the futures: Interactive Brokers enables bitcoin shorting

Like any good trader knows, don’t fight the market. This past week, Interactive Brokers changed its position from bearish to bullish on enabling clients to short bitcoin futures.

Granted, the official position of the CEO and founder of Interactive Brokers, Thomas Peterffy, is that shorting bitcoin futures would be “suicidal” he nonetheless walked back the restriction for anyone brave (or foolish) enough to do so.

For the first week of bitcoin futures trading, however, it looks like Interactive Brokers benefited handsomely, with close to half of the trading volume being processed through IB. With the CME Group set to launch its own bitcoins futures trading next week, it looks like even more opportunities to trade bitcoin are about to open up.

As we mentioned in last week’s roundup, Interactive Brokers won’t be the only online brokerage in the arena as TD Ameritrade will also enable clients to trade bitcoin futures. For TD Ameritrade clients, the minimum account balance to trade bitcoin futures is $25,000, with margin requirements for trading through TD Ameritrade set at 44%. Margin requirements at Interactive Brokers are also steep. Outright margin for long positions set at 50% of the prior day’s lead month settlement price and short-sellers required to put up an eye-watering five times the value of their futures contract.

With all of the hype surrounding the increase in value of cryptocurrency, a recent post from the Ontario Securities Commission’s Get Smarter About Money site seems timely. Interestingly – but perhaps not surprisingly – in a recent poll they found that 29% of males aged 18-34 had some exposure to cryptocurrency. This is reminiscent of the stock day trading that took place during the dot-com bubble when a lot of young trading ‘geniuses’ were created.

For DIY investors, the rise in bitcoin and other cryptocurrencies has already prompted requests for Canadian online brokerages to start enabling trading of these instruments. Which Canadian online brokerage will be ‘first’ to allow trading in bitcoin/cryptocurrency? It’s difficult to say, however the lessons from what’s happening in the US are going to be instrumental in making the case for trading here in Canada.

Discount Brokerage Tweets of the Week

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

From the Forums

Beyond the limit

Transferring from one online brokerage to another should be a straight forward process – at least in theory. In practice, this post from reddit’s Personal Finance Canada section, shows how transferring a TFSA account left a negative balance in place and a whole lot of questions. It’s a good read for those considering making a change.

Leftovers

What happens when your balance is too low to trade but still high enough to incur a fee? One user encountered this situation with a low balance in their RSP investing account in this post on reddit’s Personal Finance Canada thread. Find out what (mostly) helpful suggestions were put forward by other readers.

Into the Close

That’s it for another week of action. With markets continuing to push higher and cryptocurrency doing the same, it’s safe to say the only red this Christmas season will be coming from those who are trying to short either of these. Have a great weekend and best of luck fighting the crowds for the last few shopping days before Christmas!

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Discount Brokerage Weekly Roundup – December 8, 2017

If there are two things dominating the headlines the past few weeks, it’s bitcoin (or cryptocurrency) and America. While Canadian DIY investors have a chance to peek around the corner to see what online brokerages have coming in 2018, we also wanted to review what US discount brokerages were up to to see what else might be coming down the pipeline soon.

So, for this edition of the roundup, we take a look state side to note moves this past week by two US online brokerages that could help shape what new trading features could be available to Canadian DIY investors. From there, we’ll provide a snapshot of the latest tweets by DIY investors about Canada’s discount brokerages and we’ll cap off the roundup with highlights from the forums.

Interactive Brokers Hitting its Stride

As part of our exclusive review of Canadian online brokerages in 2017, one of the biggest trends that stood out was that online brokers are locked in a technological arms race. One online brokerage in particular, however, stands out from its peers in the way in which it has built up its business by betting big on technology and automation to lower its operating costs (thereby passing along savings to clients).

Interactive Brokers, parent company to Interactive Brokers Canada, released its monthly performance metrics at the outset of December and according to the numbers, they are having an exceptionally good year. Let’s have a quick look at some of the key numbers on a year over year basis:

  • 795 thousand Daily Average Revenue Trades (DARTs): 9% higher year/year
  • Client equity of $121.6B: 44% higher than prior year
  • 474 thousand client accounts: 25% higher than prior year

For greater clarity, a presentation given earlier this week at the Goldman Sachs US Financial Services Conference illustrates just how dominant Interactive Brokers has become in the US online investing market space:

Why this matters for other online brokerages – and perhaps for traditional financial service providers – is that Interactive Brokers has shown a consistent ability to make its technology work and to keep costs for traders so low that it is a natural contender for DIY investors – especially active ones. As such, their foray into traditional ‘banking’ services could signal the natural evolution of integrated financial services that might encroach on more than just the online investing space here in Canada.

While it’s difficult to extrapolate a straight line into the future, the performance of Interactive Brokers over the past year seems to signal that years of creating a technology driven culture positions them well to compete in the modern-day footrace to become an outstanding online brokerage, especially from the trade execution side.

For Canadian DIY investors, Interactive Brokers Canada is one of two online brokerages that might offer a conduit for innovative services in the online brokerage space in America to migrate north. The other, TD Direct Investing, may look to import ideas developed by TD Ameritrade into the Canadian space.

In either case, however, Interactive Brokers has made a compelling business case for other online brokerages to invest in automation and operational efficiency, and to do so at an accelerated pace.

Interactive Brokers, as well as online brokerage Robinhood, in the US have both demonstrated commission pricing can continue to come down. Another very compelling slide from the Interactive Brokers presentation deck shows how much lower Interactive Brokers’ commissions are for equity and, in particular options trading, relative to their US peers even after a significant commission price cut by the group of online brokerages earlier this year.

The bottom line for Canadian discount brokerages is to figure out how to offer their services faster and less expensively because Interactive Brokers Canada is likely to continue to attract more mainstream attention.

After the addition of RSP and TFSA accounts to Interactive Brokers Canada and the regular feedback from DIY investors to include Interactive Brokers Canada in the highly popular Globe and Mail online brokerage rankings, the combination of low pricing and popularity with DIY investors (at least the most active ones), might bode well for bringing Interactive Brokers Canada into the spotlight alongside the dozen or so other online brokerages regularly included in the review.

Interactive Brokers’ latest trading metrics and recent investor presentation paint a very interesting picture of how they continue to grow market share with active DIY investors – a highly prized segment in the online brokerage market.

Whether IB can disrupt the Canadian marketplace to the same degree that they have in the US remains to be seen, however the combination of global ambition, high degree of popularity with active DIY investors and a major emphasis on technology suggests Interactive Brokers Canada may find itself in the spotlight sooner than their peers would hope.

TD Ameritrade Betting on Bitcoin

One of the most intriguing things about the capital markets is that when there are buyers, there are inevitably people motivated to figure how to sell. Case in point: bitcoin.

The beyond-meteoric rise in the digital currency this year has continued to gain international attention, and likely drawn the interest of traders everywhere to figure out whether or not this would be a worthwhile risk to take on to trade.

And, while many folks (including the founder and CEO of Interactive Brokers) have warned against enabling futures trading of bitcoin, the green light has been given and one online brokerage in the US, TD Ameritrade, appears to be the first to move into the space to enable clients to trade these instruments.

It will be interesting to follow what happens with Bitcoin and in particular the institutions that enable trading of futures of Bitcoin. The fact that online brokerages in the US are now gearing up to participate in the trading of Bitcoin derivatives is, perhaps, a signal that a new product line will be coming soon to online brokerages that have traditionally dealt in equities and options.

We’re definitely keen to monitor this development starting on Sunday and naturally to see how Canadian online brokerages try to keep pace with investor interest (or fever) to participate in the cryptocurrency trading that is gripping the world.

Discount Brokerage Tweets of the Week

There was no shortage of heat coming from Twitter this past week as several Canadian online brokerages faced more than a few unhappy campers when outages and long phone line wait times drove DIY investors online to complain.  Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

It’s not easy getting green

Comparing one of Canada’s largest online brokerages (TD Direct Investing) with one of social media’s most popular online brokerages (Questrade) turned up some interesting posts this past week in the DIY investor forums. In this post, from reddit’s Personal Finance Canada thread, one user was looking to get the most mileage on saving fees and asked for the pros and cons of choosing a passive investing strategy at each of the two ‘green’ online brokerages.

Party in the TFSA

While that Miley Cyrus reference is upbeat and generally capture how investors perceive TFSAs, perhaps another song – Wrecking Ball might also describe the downside of TFSA. In this post from reddit’s Personal Finance Canada section, one user gets enlightened on the pluses and minuses of a TFSA when asking about a good online brokerage for TFSAs.

Into the Close

That’s a wrap on this edition of the roundup. This weekend will be a tense one as all eyes will be on what happens next with cryptocurrency. Of course, for a change of pace from fantasy money, there’s also fantasy football playoffs that have started. Best of luck on whichever screens you’re on!

 

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Discount Brokerage Weekly Roundup – December 1, 2017

Even though 2017 is in the final stretch, it appears there’s still quite a bit of activity in the Canadian online brokerage space. From awards to new deals crossing the wire, the last few weeks of the year will probably have a few more surprises to offer DIY investors.

In this week’s (shortened-because-it’s-coming-from-Mexico) roundup, we take a look at the latest ratings of online brokerage mobile experiences and what trends are emerging as brokerages race to improve trading on the go. From there, we’ll take a look at the latest crop of deals and promotions to cross the wire. As always we’ll track and close up this edition of the roundup with conversation of DIY investors on Twitter and what they were saying about Canada’s online brokerages this past week.

BMO InvestorLine sets the pace on mobile

This past week, the latest edition of the Surviscor mobile discount brokerage scorCard was released and BMO InvestorLine was crowned as Canada’s top discount brokerage for mobile customer experience.

For the second consecutive time in the survey’s history, BMO InvestorLine finished atop of 11 Canadian online brokerages reviewed for their mobile customer experience with a score of 76% (out of 100). Questrade (66%) and Qtrade Investor (61%) were ranked second and third respectively. In the previous set of mobile brokerage rankings, two out the top three online brokerages were bank-owned brokerages however in 2017, BMO InvestorLine stood out as the only bank-owned brokerage in the top three.

In addition to being ranked first overall in 2017, BMO InvestorLine also received four category honours, including the top scores in the “Getting Connected,” “Market Intelligence,” “Account Services” and “Mobile Transactions” categories.

 

Surviscor’s mobile brokerage assessment was first launched in 2015 and evaluates online brokerages using both Apple and Android mobile devices. The categories that the mobile brokerage analysis measures are:

  • Getting connected
  • Mobile usability
  • Account support
  • Market intelligence
  • Mobile transactions
  • Mobile resources

Glen Lacoste from Surviscor appeared on BNN (see video here) to provide his perspective on the latest set of online brokerage mobile experience results and noted that while most bank-owned online brokerages appear to be doing well on the banking side of their mobile applications, the DIY investing tools and resources are lagging.

Digital enhancements have been a big focal point for all of Canada’s online brokerages and it appears that the trend towards improving online experiences will only continue to strengthen.

In our exclusive look back on 2017,  Silvio Stroescu, President of BMO InvestorLine, highlighted several digital milestones that BMO InvestorLine achieved in 2017 and how “getting better at getting better” defines the new normal for financial services providers who want to come out ahead. While other online brokerages are also making strides to improve the innovation cycle, the latest recognition by Surviscor indicates that BMO InvestorLine is still the online brokerage setting the pace in Canada when it comes to overall mobile experience.

December deals and promotions update

Markets and cryptocurrencies aren’t the only reasons for DIY investors to be excited heading into the end of 2017. For anyone looking to open a new online investing account, whether it’s an RRSP, TFSA or margin trading account, there’s something for everyone.

As all seasoned traders know, higher prices lead to higher prices – at least for some stretch of time.  For all DIY investors, however, there seems to be an additional rule when shopping for online brokerages which is online brokerage deals lead to more online brokerage deals.

This month’s promotional landscape is a great example of that. The deals count heading into December is now at a very healthy 25, with a noteworthy comeback in the cash back and discounted commission price category of deals.

And, as investors continue to get excited about the crytopcurrency/blockchain and marijuana legalization stories, companies will almost inevitably come to the public markets in these sectors which in turn, will draw investors interested in capitalizing on these stories into the market.

The net result should line up for a very exciting December/January for DIY investors. As Canadian online brokerages prepare for the RRSP contribution deadline, those brokerages currently not offering a promotion (especially a cash back or discounted commission promotion) are likely to launch one.

Stay tuned in our deals/promotions section for what will undoubtedly be a fun finish to 2018.

Discount Brokerage Tweets of the Week

 

Into the Close

That’s a wrap on this week’s action. Being Friday and with the US markets heading into some very interesting turbulence, hopefully there will be a chance to relax – unless, of course, you happen to be on Twitter or watching any cryptocurrencies, in which case, buckle up. Have a great (and potentially profitable) weekend!

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Discount Brokerage Weekly Roundup – November 24, 2017

It’s black Friday which means deal hunters are out in full force online and in the stores looking for a great bargain. For DIY investors, looking for a deal in the markets or even looking for a deal when opening an online trading account got a little easier as yet another Canadian online brokerage joined the deals pool this week.

We’ll keep things light and easy for this week’s roundup with a quick check in on the latest online brokerage deal to cross the wires followed by a roundup of the DIY investor education events that are taking place heading into the end of 2017. As usual, we’ll also serve up a generous helping of DIY investor chatter from Twitter and interesting conversations from the DIY investor forums.

Virtual Brokers launches new promotional pricing offer

Just in time for the Black Friday offers, this week Virtual Brokers stepped back into the spotlight with a new promotional commission price offer.

Trade commissions are now being offered at $4.99 per trade for two months, with a maximum of 15 trades per month at the discounted pricing. According to the terms and conditions of the deal, the full commission will be charged at the time of trade execution and then a reimbursement will be offered after June 30th, 2018 provided eligibility conditions are met.

With the addition of the Virtual Brokers offer, this puts the active advertised deal count we’ve spotted at 25 and is a signal that the 2018 RRSP season will be off to a heated start. Also of interest, the cash back and commission-free trade promotion category is regaining ground lost in 2017 as competition between Canadian discount brokerages heats up.

Click the following link to see the latest discount brokerage deals/promotions info for November.

Investor Education Events on the Horizon

Heading into the end of the year, there are still a couple of investor education events for DIY investors that are worth tuning into or attending in person. We’ve flagged a few that might be of particular interest for getting some perspective on how to trade the markets heading into 2018 as well as a pair of sessions that are focused on every trader’s least favourite (but nonetheless very important) topic: taxes.

Here’s a quick rundown:

What’s Your Investor Personality – Larry Berman – Nov. 25th; Dec. 2nd

Larry Berman will be making an appearance in Vancouver on November 25th as part of the cross-country tour he has been on since mid-October. Vancouver is the second last stop with the final show taking place in Toronto on December 2nd.

On the docket for the presentation in Vancouver is a discussion by BMO ETFs to debunk some of the common misconceptions about ETFs. Following this presentation, Larry Berman will discuss the role that psychology plays in influencing investor behaviour and how some simple ETF strategies can be applied to assist investors with their own investment biases.

For more information on the remaining segments of the tour, click here.

Online Free Trading Workshop  – Ziad Jasani – Dec. 2nd

Ziad Jasani of the Independent Investor Institute is holding a webinar on December 2nd to assess market risks and opportunities heading into the end of 2017. Topics to be covered include: global equity markets; macro assets as well as short and long-term trading and allocation strategies. Click here for more information (just wait about 5 seconds for the registration window to pop up).

Tax-Effective Estate Planning – CIBC Investor’s Edge – Dec. 13th

Over the past several months, we’ve observed an uptick in the number of investor education events being held by CIBC Investor’s Edge. The next webinar coming around the corner is by the ever-popular Jamie Golombek, managing director, tax & estate planning with CIBC and it focuses on steps that individuals can take with regards to estate planning, with a focus on minimizing taxes upon death.

For more information or to register for this event, click here.

Proposals for the Taxation of Private Corporations and Tax Planning Strategies – TD Direct Investing (Montreal) – Dec. 13th

TD Direct Investing has geared down the number of events it’s holding heading to the end of the year, however there was one even in Montreal that caught our attention. Specifically, it is a session will dive into recent proposed tax changes by the Federal Government and how they may impact business owners. For more information on this session, click here.

In case you missed it: 2017 Online Brokerage Year in Review

In case you missed last week’s edition of the weekly roundup where we announced that the 2017 Canadian Online Brokerage Review and 2018 Preview was live, we highly encourage you to read through it.

With responses from 9 of Canada’s most popular online brokerages, this series offers a unique and fascinating overview of what Canada’s online brokerages were up to in 2017 as well as what many of them have in store for DIY investors for 2018.

To view the responses from participating online brokerages, click any of the links below:

Discount Brokerage Tweets of the Week

The temperature outside may be falling but DIY investors turned up the heat on Twitter to report everything from glitches in account opening to platform outages and more. The news wasn’t all bad, however, as there were some bright notes included in this week’s selection. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

RESP Questions

When it comes to navigating RESP options for Canadian DIY investors, things can get a little complicated – especially when mixing in provincial bonuses and the additional options that are now available beyond online brokerages (e.g. robo-advisors). In this post from RedFlagDeals.com’s investing forum, one user from Quebec is looking for a little perspective on choosing between TD Direct Investing, Questrade’s self-directed account or Portfolio IQ.

Avoiding RRSP Fees

For DIY investors, every penny counts. When it comes to having to pay fees to access your own money, however, getting dinged for that access doesn’t typically go over well. In this post, from reddit’s personal finance Canada thread, it was interesting to see the responses one DIY investor received when asking about getting around withdrawal fees from an RRSP.

Into the Close

That’s a wrap on this week’s roundup. With US stock markets closed for Thanksgiving, things were a bit quieter than usual for some. Fortunately, there was lots of hype for Black Friday and sales galore to take advantage of across the weekend and into Cyber Monday. Of course, for anyone dipping into cryptocurrency trading right now, the madness of Black Friday seems pretty tame. Have a great weekend and best of luck hunting for great bargains in the stores and online or just kicking back and relaxing!

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Discount Brokerage Weekly Roundup – November 17, 2017

If we didn’t need any more reminders that we’re hurtling towards the future faster and more furious than ever, we nonetheless got not one but two this week with Elon Musk’s mindblowing new Tesla semi-truck and updated roadster. What, you might be asking, does this have to do with Canadian discount brokerages? Well, simply put, Tesla’s re-imagining of the trucking industry is a reminder that no industry is safe from disruption by technology, and that includes the online trading industry.

In this edition of the roundup, we look at the recently published and highly-anticipated year in review series as told by the Canadian online brokerages themselves. From there, we’ll review the latest discount brokerage deal to cross the wires as well as some interesting opinions by one online brokerage CEO on the perils of bitcoin trading. Finally, we wrap up with the results of our scans of social media and the DIY investor forums for investor chatter.

2017: A look back on a very eventful year

Earlier this week we published our highly anticipated Canadian online brokerage ‘year in review and preview to 2018.’ This series, which featured participation from leaders from 9 of Canada’s online brokerages, provides a unique window into the performance and priorities for each firm in 2017 as well as a sneak peek into what DIY investors can expect for 2018.

We were genuinely excited by the responses and participation from Canada’s online brokerages. Not only did they chronicle some of the major milestones and accomplishments for 2017, we also were able to see some trends emerging across the responses we received, and have summarized several of them below.

One of the first and clearest trends that emerged across Canada’s online brokerages for 2017 was being able to harness web and trading technology and, in turn, improve user experience.

As financial services firms, Canada’s online brokerages face similar challenges that other financial service providers do in that they require constant responsiveness to changes in technology and consumer technology preferences. This past week, for example, there was news that BMO has created a voice-enable service that pairs with Amazon’s Alexa and also that RBC is field testing a robo-advisor.

Of course, as features and services evolve, online brokerages may be able to deliver more value to DIY investors without increasing commission pricing. The fierce competition among Canada’s discount brokerages mean that everyone is vigilant about enhancing perceived value to their clients by using technology. This past year, for example, saw firms such as National Bank Direct Brokerage drop commission fees on all ETFs or other firms, such as RBC Direct Investing and Credential Direct, launch personal-finance focused content to their clients.

Another important theme that emerged from the responses from Canada’s online brokerages about 2017 was that the trading experience is being fine-tuned across the board.

There are surprisingly many moving parts to the investing/trading process and the entire cycle from how trades are placed to managing and monitoring the status of open orders to keeping track of the documentation associated with an online trading account has seen improvements. BMO InvestorLine, for example, made accessing tax documentation smoother and both Questrade and TD Direct Investing improved the options trading capabilities for clients interested in these products.

In addition to the look back on 2017, several online brokerages provided a glimpse of what’s in store for DIY investors in 2018.

As we reported last week, Qtrade Investor actually published information on many of the enhancements they have planned or have just deployed, including removing account deposit minimums and new features for tracking contributions to registered accounts. However, they are not alone.

Other online brokerages, such as NBDB and TD Direct Investing are forecasting improvements to account opening processes, while on the active trader side of the spectrum, firms such as Interactive Brokers Canada and TD Direct Investing have upgrades planned to account and trade management planned for the near future.

Check out the full list of online brokerages in the year in review article here or by clicking one of the links below.

Scotia iTRADE deals in

Just in time for the Black Friday rush, one more Canadian online brokerage has released its own cash-back offer. This week, Scotia iTRADE rejoined the discount brokerage deals and promotions pool in a significant way by launching their latest offer: a tiered pre-paid Visa card for opening a new account.

Source: Screenshot from Scotia iTRADE website

As with previous promotions, this is a tiered offer that provides a cash back amount in line with the amount of assets deposited. Qualifying deposits start at $25,000 which will land a $50 pre-paid gift card and go up to $1200 for deposits of $1,000,000 or more. Check out the deals section for more details..

Interactive Brokers founder warns of Bitcoin Futures

The new world of online trading has expanded to include cryptocurrency. While still highly controversial, there have been recent developments that show signs that cryptocurrency trading is going mainstream – including the clearing of futures of bitcoin.

This past week, the founder and CEO of Interactive Brokers, Thomas Peterffy, took the bold step of issuing a stern warning to regulators and financial market participants about the potential systemic risk of clearing trades of bitcoin futures.

The ‘father of high-speed trading’ just put bitcoin on blast from CNBC.

One especially interesting nugget that he provided in the interview was that Interactive Brokers would be open to enabling clients trade bitcoin and even possibly bitcoin futures through the appropriate venue. The key takeaway, however, is that there needs to be a separation between bitcoin futures clearing organizations and organizations that also clear regulated securities.

Check out the interview he gave on CNBC above and read the notice he placed in the Wall Street Journal – it definitely helps put some the recent enthusiasm in bitcoin into perspective.

Discount Brokerage Tweets of the Week

From outages to wait times, most of this week’s tweets provide an interesting look into what happens when things go off the rails at Canadian online brokerages. Of course, there are a handful of positive ones in the bunch too. Mentioned by Canadian DIY investors were BMO Investorline, CIBC Investor‘s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Mini e-Series

TD Direct Investing’s e-Series funds are undoubtedly a hit with DIY investors. In this post from reddit’s personal finance Canada section, one reader was curious about how to optimize participating in the e-Series but minimizing the banking costs. Worth a read.

Starting Young

One of the great things about being young in 2018, aside from Snapchat and high-speed internet, is that many online brokerages have pricing or pricing breaks for younger investors. Find out what tips this young investor on reddit’s personal finance Canada section received when inquiring about the best online brokerage for young investors.

Into the Close

With all this talk of fantastical electric vehicles, it seems fitting to celebrate the weekend by recharging for the week ahead. Of course, traders will almost inevitably be looking for ways to ‘buy low’ for the upcoming Black Friday, so best of luck hunting deals inside of and outside of the stock (or cryptocurrency) market. Have a great weekend!

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Discount Brokerage Weekly Roundup – November 10, 2017

For all the madness that’s been driving the world of cryptocurrencies higher, this past week seems to have introduced the first stumble in quite some time. In the stock market, there was also a stumble of sorts, perhaps the sign that expectations were out of sync with actual results. In either case, the lesson the markets always come back to is real results – which is something Canadian online brokerages are focusing more intently on heading into the end of the year.

In this week’s roundup, we take a look at some of the latest features launched by one online brokerage which will be sure to get the attention of other Canadian discount brokerages as well as DIY investors. From there we take an interesting snapshot of the latest events and developments in the online brokerage space as seen from social media. As usual, there’s also a lot of DIY investor commentary to be had in the discount brokerage tweets of the week and chatter from Canadian investing forums.

Getting more for less

Heading into the end of the year, the activity level at Canadian discount brokerages is showing no signs of slowing down.

This past week, some very important changes were rolled out at Qtrade Investor, one of Canada’s remaining non-bank-owned online brokerages, and a usual top ranking online broker in the Globe and Mail discount brokerage rankings.

The first, and arguably most salient improvements for DIY investors, is the removal of certain fees and fee thresholds. Qtrade Investor has now removed a quarterly administration fee (of $100) so long as individuals set up a recurring electronic transfer of at least $100 per month. In addition, Qtrade Investor has also removed the minimum deposit requirement (of $1,000) to open a new account.

These latest improvements are in line with recent enhancements to the online account opening process in that they also help to streamline account opening, especially for younger investors (most likely to have more modest portfolios).

As a bonus to dividend investors, Qtrade Investor has also updated its dividend reinvestment plan interface to make it easier to identify stocks that are eligible for DRIPs.

On a technical note, there are additional features which have been announced including a handy registered account centre that makes it easier to track contributions and withdrawals as well as additional portfolio tracking tools.

The full list of improvements and new features are available here. Also, be on the lookout next week for the release of exclusive features/content from Qtrade Investor as part of the SparxTrading.com online brokerage year in review series.

Spotted on Social Media

There are certainly tough gigs, however crawling through social media for content is not one of them. While it did take some restraint to avoid trending hashtags, listicles and the never ending …., we did manage to pull some interesting social media posts from or about Canadian online brokerages.

Options Education Day Toronto

This past week there were photos posted from the Toronto edition of Options Education Day which took place on November 4th. This was the last and largest of four events held across Canada and, interestingly enough, was the only one in which pictures were posted to social media. Both National Bank Direct Brokerage and Interactive Brokers Canada were sponsors of this event.

Spotted on the National Bank Direct Brokerage LinkedIn page was a snapshot of NBDB reps ready to field questions about options trading.

 

Also from the day were pictures from the Montreal Exchange’s Twitter feed which included shots of a very busy looking Interactive Brokers Canada table.

Social Finance Forum

Also spotted on Twitter this past week was a tweet from Scotia iTRADE announcing their participation in the 2017 Social Finance Forum in Toronto.

 

The tweets and coverage on social media from this forum were interesting for a number of reasons.

First, it was definitely interesting to see the number of firms and individuals who are active in the social finance space. The tie-in for Scotia iTRADE is in line with initiatives they launched earlier this year on socially responsible investing.

Another notable observation is that investors were in attendance and sought out this conference as a way to put their investment dollars behind projects that hold meaning to them. As the picture below shows, this conference offered one investor an idea of where to invest in a TFSA.

It will be interesting to monitor the trend towards socially responsible investing to see if other Canadian online brokerages not only start deploying these investment tools and options to their clients, but also to monitor whether they also start to show up in a more visible fashion on social media and at events like the Social Finance Forum in the future.

Online brokerages meetup in Montreal

Last month, online brokerages from across North America and across the globe converged in Montreal for the online brokerage summit. Produced by Trading Central/Recognia, this annual event taps into industry participants and commentators to take a snapshot of the state of the industry as well as where the trends are for DIY investors.

Spotted recently on the Trading Central LinkedIn feed was an interesting and insightful blog piece written by Mike Foy, from J.D. Power and Associates North American Wealth Management Practice, on some of the emerging trends and ‘disruptors’ in the online brokerage marketplace.

Discount Brokerage Tweets of the Week

Technical issues and customer service woes made their way onto Twitter this past week across the board. Mentioned in this week’s tweets were CIBC Investor’s Edge, Credential Direct, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing, and Virtual Brokers.

From the Forums

Going international

As the world becomes increasingly interconnected, there’s also an increasing interest in looking further abroad for trading opportunities. In this post from reddit’s Personal Finance Canada subreddit, there was an interesting commentary on the realities for Canadian DIY investors looking for online brokerages that let you trade international markets.

Limit(ed) orders

Record keeping is something that is very important for DIY investors to get right. Nonetheless it would be nice if online brokerages could figure out a way to make this easier. This post, also from reddit’s Personal Finance Canada thread, highlights the limitations encountered with one bank-owned online brokerage in trying to access historical trading data.

Into the close

That’s a wrap for this week’s roundup. Wherever the weekend takes you, we hope it’s a safe and enjoyable one. Of course, we also hope and encourage everyone to take some time over the weekend to remember and pay tribute to the brave women and men who made the ultimate sacrifice defending our freedom.

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Discount Brokerage Weekly Roundup – November 3, 2017

…Aaand we’re back. Now that November is here, it’s not only fireplaces and furnaces that are heating up, but also the action at Canadian discount brokerages. Specifically, the promotional activity is starting to ramp up and it looks like the gloves may be coming off to end 2017.

In this edition of the weekly roundup, we take a look at the latest deals and promos to go live from Canadian online brokerages and one of the biggest trends we’ve spotted that might make life pretty interesting for DIY investors and other online brokerages alike. From there we take a look at an interesting series about to launch from SparxTrading.com in the next few weeks and follow up with a very unique interview we found of the CEO of one of Canada’s independent online brokerage’s. As always, we’ll take a look at what DIY investors were chatting about on Twitter and in the DIY investor forums.

New Month, New Deals

While we probably won’t see another Black Friday or Cyber Monday style promotion for online trading accounts, the reality is that as RRSP season gets closer, we expect to see more incentive offers come to market, especially from online brokerages that typically sit on the sidelines for most of the year.

Fortunately, by the first Friday in November, there are already two new discount brokerage deals to kick off the month.

First out of the gate was BMO InvestorLine, who launched a new cash back promotion to replace their previous promotion that expired at the end of October.

This new offer has three different cash back levels based on the amount deposited. Cash back amounts range from $50 to $300 depending on the amount deposited. Interestingly, the minimum deposit to qualify for the current BMO InvestorLine cash back promotion is $50,000, which is typically lower than the $100,000 qualifying deposit level from past promotions.

Also noteworthy is that the cash back amounts can be combined with the referral bonus offer ($50 cash). So, new clients can receive a cash back promotion plus the amount from the referral bonus.

Another cash back offer to hit the market this week was from CIBC Investor’s Edge. This is another tiered offer with cash back amounts ranging from $100 (for deposits of $25,000 to $49,999) to $400 (for transfers of $100,000 or more). There is an important detail to this offer which is that accounts eligible for this promo are RRSP or TFSA accounts.

Currently, BMO InvestorLine and CIBC Investor’s Edge are the only major online brokerages offering a standalone cash back offer. All the other cash back offers have to be accessed through the referral offers, and even then, only three online brokerages (BMO InvestorLine, Questrade and Scotia iTRADE) have these cash back referral programs in place.

The bigger trend, it appears, is for Canadian online brokerages to be encouraging switching from competitor firms.

Almost all of Canada’s online brokerages have switching fee coverage offers. BMO InvestorLine offers the most coverage ($200) for transfer fees, however the deposit amount required for that transfer coverage is $200,000. By comparison, RBC Direct Investing and HSBC InvestDirect require at least $15,000 to cover transfer fees.

Interestingly, Desjardins Online Brokerage’s current promotion is geared towards attracting DIY investors from other online brokerages. Their 1% commission-credit campaign was recently updated with and extended deadline (through to January 31st) and has also revised the promotion code with a greater emphasis on the transfer aspect of the promotion. Similarly, the latest promotion from CIBC Investor’s Edge also appears to put greater emphasis on transferring an existing account from another institution.

For DIY investors, this kind of promotion is a signal that discount brokerages are becoming more assertive in pushing for assets, especially those from other brokerages. It should, in theory, push other online brokerages to step up their efforts to a) retain clients but also b) onboard new clients. As a result, we expect November will have additional new offers come online, and all DIY investors will want to keep an ear to the ground for what Canadian brokerages are offering.

Year in Review

It’s hard to believe the year is almost over but with just 7 more weeks until Christmas, the lights, decorations and holiday tunes will be hard to miss.

To get into the giving spirt, exclusively for readers of SparxTrading.com, we’ve got a special present of our own lined up: a collection of reviews and perspectives provided by Canadian online brokerages on the year that was.

While there might still be a few more surprises coming before the year is out, it will nonetheless be a great opportunity to hear what Canada’s online brokerages have to say about their milestones for the year as well as what DIY investors can expect in 2018. Stay tuned as these will start rolling out in the next two weeks!

Questrade CEO Provides Perspective on Investing

Every so often an interesting nugget crosses our radar. Although we didn’t report this last week, we came across an interesting interview by blogger Jessica Moorhouse with CEO and founder of Questrade Edward Kholodenko.

Now, for any veteran investor in the markets and especially anyone doing investing in early stage companies or mining/exploration stocks, one of the key indicators to use in deciding whether to invest in a company is to look at the management and leadership. In the case of choosing an online brokerage, it is a challenge to get a very candid view of the leadership to understand what their vision is of the brand and what direction they are taking the firm in, so this video interview helps to shed some light on Questrade’s story through that of its founder.

Within Canada, Questrade is unique in that sense because they are still an independent brokerage and because their CEO isn’t camera shy. In this almost 30-minute interview, there’s a lot of ground that gets covered – including the story behind how Questrade got started. More interesting, however, is the entrepreneurial approach that Kholodenko has taken in founding Questrade, a theme that seems to have characterized its growth path since its launch. From the time that Questrade launched as a discount brokerage in Canada, they have since broadened their reach into ETFs, market making and managed wealth services, including the robo-advisor space.

Perhaps as a result of constantly evolving their technology offering in the financial services space, Questrade was recently invited to participate on a team to improve delivery of financial services technology in Ontario.

Of course, technology companies are not without growing pains. At discount brokerages in Canada, big and small, technology hiccups occur – and Questrade has had their fair share over the years. Any scan of the discount brokerage tweets of the week show that momentary interruptions in service, especially during market hours, get the attention of active (and typically vocal) investors. Nevertheless, the challenge to evolve and innovate is always there, so this interview offers a unique window into this online brokerage and especially the perspective of its CEO on DIY investing, robo-advisors and more.

Discount Brokerage Tweets of the Week

There were glitches galore across the board this past week. Find out what DIY investors were chatting about. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing, and Virtual Brokers.

From the Forums

Friends & Family Feud

Referral programs at DIY brokerages are interesting approaches to acquire new clients. While there are a handful of programs in Canada, one of the most popular is Questrade’s. In this (very long) post from reddit’s personal finance Canada thread, one user provides a very interesting window into their experience with the referral program and all important “fine print” that is so important to read through.

DIY vs Robo

With investors now becoming more familiar with robo-advisors as a choice in the wealth management mix, there’s a natural question as to whether or not DIY investing is better or worse than robo-advisors. In this post from reddit’s personal finance Canada forum, it was interesting to read responses comparing the Canadian Couch Potato vs Wealthsimple.

Into the Close

That’s a wrap on another week. Daylight savings ends this weekend so there’s at least one more hour before market open on Monday. With lots of sports on the docket for the weekend, there’s certainly an extra hour to enjoy it all. Of course, now that winter has started to show up (amirite Vancouver?) in some places, the warm glow of a computer screen or LED TV is pretty tempting. Have a great weekend!

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Discount Brokerage Weekly Roundup – October 20, 2017

So, the weekly roundup is back online. Unfortunate circumstances caused us to have to pause the roundup, but like any good trader, we’ve dusted ourselves off and are back in the saddle. And, now that we’re here, it’s time to catch up on quite a lot big news that’s happened in just a few short weeks.

In this edition of the we take a look at one bank-owned brokerage that has recently dropped their standard commission rates to a new low, potentially setting the stage for yet another wave of commission price drops. From there we’ll highlight some new features launched by several Canadian brokerages in a lightning roundup. Also, to get caught up on the conversations by DIY investors on Twitter we’ll be publishing the discount brokerage tweets of the week for the weeks the roundup has been on pause.

HSBC InvestDirect Drops Trading Commission Prices

If there was any doubt about a price war among Canadian discount brokerages, that doubt was all but erased earlier this month as HSBC InvestDirect dropped their standard commission pricing from $9.88 down to $6.88 just two years after lowering them from $28.88. The days of the standard commission rates at $9.95/$9.99 are numbered.

With this latest round of pricing cuts, HSBC InvestDirect has now become the lowest cost Canadian bank-owned online brokerage for both standard commissions and, as of November 6th, also for active traders. Active trader pricing is slated to drop to $4.88 per trade for individuals who execute 150 or more trades per quarter.

This latest move by HSBC InvestDirect displaces CIBC Investor’s Edge as the lowest cost bank-owned online brokerage (CIBC Investor’s Edge charges $6.95 per trade) and will soon displace Scotia iTRADE’s active trader pricing ($4.99).

The range for standard commission prices for standard equity trades at Canadian bank-owned brokerages now stands between $6.88 (HSBC InvestDirect) and $24.99+ (Scotia iTRADE), an almost 4-fold difference; even the difference between $6.88 and the current industry standard of about $10 appears to be substantial.

Perhaps the most surprising (or potentially unsurprising) outcome of this price drop is the lack of chatter online about this move.

HSBC InvestDirect is typically not as active with respect to marketing or advertising relative to other Canadian online brokerages. That, however, may soon change as their new pricing structure can garner instant attention and relevance for price-sensitive DIY investors.

Bank-owned brokerages outside of the big 5, such as National Bank Direct Brokerage with their commission-free ETF program and now HSBC InvestDirect are aggressively looking at winning marketshare through discounted pricing.

As word of this pricing drop will inevitably start to spread, and if HSBC InvestDirect should deploy an advertising campaign to let people know this is their new pricing structure, it’s safe to say that at least one of the larger players is going to have to respond in kind by lowering their rates – if not to match the $6.88 benchmark then to definitely go further. And, unlike National Bank Direct Brokerage’s focus on ETFs and relative concentration in Quebec, HSBC InvestDirect has a very strong presence in Western Canada, particularly BC, which could push directly against Qtrade Investor and Credential Direct – and of course TD Direct Investing – for marketshare.

One of the biggest challenges to HSBC InvestDirect, however, will be competing on a digital basis with other Canadian online brokerages.

From website user experience, content development/strategy, investor education, platform offerings, trading experience – in particular on mobile, there remain multiple areas in which other Canadian online brokerages have been investing in significantly over the past few years. As these feature sets come to be viewed as “standard” offerings, the value of lower-priced trading commissions will be offset by how convenient and stable the trading and account management experience is.

In the interim, it will be very interesting to watch what other bank-owned brokerages do in order to respond. Perhaps the easiest and most likely option for most online brokerages is to turn to a very compelling incentive offer (aka promotions). Whatever the case, DIY investors in Canada are bound to benefit which is great news.

New Feature Lightning Round

Disnat Classic Launches Streaming Quotes

Clients of Disnat Classic (a product of Desjardins Online Brokerage) which typically are considered to be the ‘investor’ rather than ‘trader’, now have access to a feature that can help monitor key investments in real time.

The Disnat Classic platform now enables up to 10 securities to be tracked in real-time with streaming quotes. For those who execute fewer than 10 trades per month (note the commission cost at Disnat Classic is $9.95 per trade) the data cost for TSX-only quotes is $30/month while those wanting TSX-V real-time quotes as well will be paying $55/month.

From a cost/benefit perspective the data cost for the number of symbols to monitor is quite high relative to other platform and data options available to DIY investors. Typically, browser based watchlists can track between 20 to 50 or more symbols in real-time so it is important to consider the need for real-time monitoring on a platform traditionally targeted towards less active investors.

That said, it is an interesting signal that enhancements to the platform experience for ‘investors’ are now available to edge them, albeit modestly, towards to the functionality used by traders.

Qtrade Investor Speeds Up Account Opening

Remarkably, in an industry (online trading) that relies on technology to the extent that it does and brands itself as technologically forward-thinking, the onboarding process at many online brokerages is still significantly dependent on manual, physical steps – all of which result in the process of opening an online brokerage account taking time measured in minutes and in some cases, days.

Some brokerages still require having to print out, sign and mail documents; others require visiting a branch in person while others now enable sign ups to take place entirely online.

It is against this backdrop that Qtrade Investor’s recent launch of online applications stands out as an important development for Canadian online brokerages.

The process to open an online brokerage account via the web at Qtrade Investor is advertised to take 10 minutes – which is significantly faster than at most other online brokerages and definitely quicker than what it would take to go the print/send method.

We haven’t yet done a full walk through of the sign-up process so real-world results may vary. And, as seasoned DIY investors know, opening an account is just the first step in being able to get up and running; accounts also need to be approved and funded – both of which can add time to the setup process.

That said, the key takeaway for DIY investors is that Qtrade Investor is working harder to make getting started with online trading simpler and significantly faster – something younger investors will no doubt demand from any online brokerage. The advertised account opening time is more in line with a robo-advisor than a traditional online broker, again, likely a factor that considers the younger investor’s notion of what’s acceptable in terms of ‘waiting period’.

Stay tuned for more details on this feature as it is poised to be an important feature if it can live up to the benchmark claim of being able to open an online trading account online in about 10 minutes.

Discount Brokerage Tweets of the Week

There’s quite the backlog of Twitter comments from Canadian DIY investors. Good thing the internet never forgets. Here’s a rundown of what was said over the past four weeks:

Week ending September 29th 2017

Week ending October 6th 2017

Week ending October 13th 2017

Week ending October 20th 2017

Into the Close

That’s a wrap on this week’s roundup. We’ve got some very interesting content coming over the next several weeks so continue to tune into SparxTrading or follow us on Twitter for updates on what’s coming around the corner.

To the loyal readers who have been waiting for the roundup’s return – we thank you for your patience and are looking forward to returning to our regularly scheduled program of keeping you up to date on the latest and most interesting developments in the Canadian online brokerage space.

Have a wonderful weekend!

 

 

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Discount Brokerage Weekly Roundup – September 22, 2017

With the first day of fall arriving this week, it’s unbe”leaf”able how fast time flies. And while the news was busy reporting world leaders trading insults, stock market charts show that the investing world continues to be busy trading shares, as trends continue moving up and to the right. Curiously, charts tracking performance of Canadian online brokerages are hard to come by but fortunately we’ve put together something special for this edition of the roundup that looks at the trends in online brokerage performance.

This week, we take a deep dive into the latest Canadian online brokerage rankings from J.D. Power and crunch some numbers to uncover how Canada’s discount brokerages are keeping pace with changing investor needs. From there we’ll take a quick peek at what’s been happening on social media and what investors are talking about on the forums.

Rankings show Canadian DIY investors are happier than ever with online brokerages – sort of

The latest results from the 9th iteration of J.D. Power’s Canadian self-directed investor satisfaction study were published last week and paint an interesting, somewhat paradoxical, picture of the world in 2017 for DIY investors and Canadian discount brokerages.

On the one hand, the insights from a survey of over 2600 DIY investors surveyed in May and June of this year indicated that more than half of respondents indicated there is a “current or imminent need for full-service advice” suggesting that that online brokerages “have significant assets at risk of attrition if they are not able to meet this need.” Simply put, it looks like lots of DIY investors may be seeking to not DIY so much anymore.

Of course, why that insight is so interesting is because scores for DIY investor satisfaction with Canadian online brokerages have, at least for the past five years that we checked, not ever been this high on the J.D. Power rankings study. Top online brokerage this year, Desjardins Online Brokerage, managed to achieve a rating of 785 (out of 1,000), a score well above the highs achieved by Canadian brokerages since 2013. So what gives?

This was one a few curiousities that led us to take a step back to see what a long-term analysis of these annual survey results would reveal. After all, DIY investors looking for an online brokerage do so hopefully never having to look to change to another brokerage. The notion that maybe preferences or needs of investors are changing, especially when considering millennials, prompted us to look back on previous rankings for some additional context on these latest figures.

Canadian discount brokerage rankings, for the most part, present an annual snapshot into the opinions of investors or online brokerage researchers. While it does offer a ‘current’ view, one shortcoming of presenting data in this way is that it becomes tricky to establish what the track record is for a particular brokerage is over time. In the case of J.D. Power’s latest rankings, asking, for example, how consistent an online brokerage is at satisfying clients, might offer additional depth for someone looking for a longer term relationship with their online brokerage.

As such, we decided to put J.D. Power’s 2017 discount brokerage rankings into context by comparing results from the past five years’ (from 2013 to 2017 inclusive) worth of scores. And, to borrow from a buzzfeed style reference, what we found was very cool.

Now, before going down the data rabbit hole, we should mention that like investor preferences, the investor satisfaction study has also evolved over time – so take the year to year comparison with a grain of salt. Nonetheless, the rationale for comparing year over year results is based on the assumption that investor satisfaction (however it may be defined) is important as an end point.

To keep things simple, we’ve identified three things about the trends in the online brokerage data going back to 2013 that can add a lot of context for anyone thinking about opening an online brokerage account or even anyone thinking of jumping ship to another online brokerage.

Insight 1: Satisfaction is on the rise

The first very interesting insight is that the scores among Canadian online brokerages on the J.D. Power investor satisfaction study are improving for the Canadian industry as a whole.

This uptrend in satisfaction levels may be a reflection of the efforts put in by these brokerages to improve the customer experience overall, or (less likely) the lowering of standards by consumers as to what they’re going to get from an online brokerage. Based on efforts by big Canadian banks, for example, there have been numerous resources allocated to improving their image and client experience, in branches and online and it appears to be paying off.

Looked at another way, the good news is that Canadian DIY investors are more satisfied with their online brokerages than at any point in the previous five years. In fact, the firm that put in the lowest score in terms of investor satisfaction in 2017 (Questrade) scored 752 out of 1,000. To put that into context, in 2016 there were only two out of 10 firms with scores higher than 752 – BMO InvestorLine (762) and Desjardins Online Brokerage (774).

At the top end of the scale, Desjardins Online Brokerage, with a score of 785, earned a score higher than any other in the past five years and was followed closely by Qtrade Investor (778) which also scored higher than any other brokerage in the study over the past five years.

Insight 2: Brokerages are becoming more alike

Averages, however, don’t tell the whole story. Another very interesting observation is that the range between the top and bottom companies is narrowing. As the chart below suggests, scores for most Canadian online brokerages are converging making harder to distinguish between Canadian online brokerages.

Numerically the range between the highest and lowest reported scores fell from a high of 64 in 2013 and 2014 down to 33, a decline of almost 50%.

It will be interesting to see how online brokerages in Canada can differentiate themselves enough or create enough perceived value to encourage DIY investors to move assets from one firm to another. One way would certainly be through promotions. Another, however, as National Bank Direct Brokerage has demonstrated, suggests something bolder would be required. The J.D. Power survey of DIY investors was performed between May and June of this year, far in advance of the announcement that all ETFs at NBDB would be able to be traded commission-free. Even so, pricing is just one of a handful of factors that determine the scoring of the investor satisfaction study, so it will be interesting to see what happens in 2018.

Insight 3: Consistency counts

Finally, the third very interesting set of insights emerged by taking a long-term view of the Canadian online brokerage ranking data. If it sounds a bit math-y it is, but stick with it as it does provide some neat data.

We expected that firms that would be the most “predictable” or consistent, would have lower variation in satisfaction scores from one year to the next. We measured this by looking at the overall average of scores, and more importantly, at the standard deviation, or variability in the scores across time. Also, we expected that, if an online brokerage is doing a good job of keeping up with investor needs and preferences as measured by the investor satisfaction study criteria, then the scores should also be high.

So, in a nutshell, if the investor satisfaction scores are consistent and high that would make a strong case that the online brokerage is doing a consistently good job of satisfying its clients.

*note: gradients are applied to each column for improved visibility of high or low scores for each year; colours for standard deviation are reversed so low values are in green while high values are in red.

After crunching the numbers back to 2013, National Bank Direct Brokerage emerged as the best combination of strong satisfaction scores and low variation (standard deviation) from year to year. That is certainly a counterpoint to the drop they experienced in 2017 and it highlights the big picture that additional data can provide.

Another very consistent (albeit not as high scoring) firm was TD Direct Investing, which put in a close to average performance every year but whose clients also rated them as such. While it might not seem to be headline worthy, the reality is when it comes to business and investing, predictability is worth something.

It is also worth mentioning BMO InvestorLine in the long-term analysis as they also usually achieved better than average satisfaction scores with better than average consistency and so even though they have not won ‘top prize’ this year, data shows that they are a reliable choice to keep pace with investor needs.

At the other end of the consistency spectrum, firms with higher volatility in satisfaction scores also stood out, but not necessarily in a bad way. 2017 appears as a turnaround year for a pair of firms that have historically underperformed their peers in the investor satisfaction ranking.

The most evident change in performance was with Qtrade Investor, whose track record of scoring below average (going back to 2013) was handily shattered this year as they put in the second highest score (778). Interestingly, Desjardins Online Brokerage owns a significant stake of Qtrade Investor so the connection between these two online brokerages finishing at the top of the ranking may have something to do with these two firms comparing notes. Last week, there was also a piece in the Globe and Mail by Rob Carrick that provided additional context to Qtrade Investor’s strong performance in the Globe and Mail ranking of online brokerages vis a vis the J.D. Power rankings.

The other online brokerage that may be having a turnaround year is Scotia iTRADE. This year’s ranking was the first of the past five years in which Scotia iTRADE managed to score higher than average (albeit by two points). The fact that this was so different than years past is a signal that investor satisfaction with this discount brokerage was more positive in 2017 and is worth watching as they continue to roll out interesting initiatives (such as their social responsible investing tool).

As this analysis shows, there is something to be said for consistency. Unfortunately for many investors, innovation is about change and change comes with risks, so it is a double-edged sword when choosing an online brokerage that isn’t a trail-blazer or choosing one that is.

Even though how investor satisfaction is measured may change over time, everyone can agree that satisfied clients are generally a good thing. Taking the long-view on the most recent set of online brokerage rankings enables consumers to distinguish between who might be having had a unusually good (or bad) year, and who usually has good or bad year(s) when it comes to keeping clients satisfied.

Interestingly, the additional data from this year’s survey shows that providing access to advice, including robo-advice, as well as improving mobile trading experience (and user experience generally) might be areas for Canadian brokerages look to next to put more effort. The good news for DIY investors, however, is that it looks like much of what customers are saying about their online brokerages is good and that (hopefully) expectations of what makes an above average experience have been raised.

Discount Brokerage Tweets of the Week

Taking a peek under the hood at Canadian discount brokerage customer service this week. Mentioned by Canadian DIY investors were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Making a switch

The grass may be greener for one online investor looking to move to the big green brokerage. In this post on reddit’s personal finance Canada section, one user asks for some more information about making the switch to TD Direct Investing.

North of the wall

In this post from reddit’s personal finance Canada subreddit, an online investor with a US trading account looks to Canadian DIY investors for suggestions on an online brokerage that is ETF friendly.

Into the Close

Congratulations for making it through a marathon roundup. We kicked things off with a corny pun so here are many more to close out on. Have a great weekend and enjoy a few well-deserved, corny laughs.

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Discount Brokerage Weekly Roundup – September 15, 2017

Let’s see, this week’s headlines were dominated by the launch of the iPhone X, a massive data breach at a credit agency (Equifax), North Korea firing missiles over Japan, and a few record highs in the US markets. For DIY investors, it seems tricky to keep calm but the tale of the tape is not pricing in the end of the world, but rather more earnings ahead. Of course figuring what to tune into or tune out is part of learning the ropes for any investor.

In this week’s roundup we take a snapshot of the latest content offerings by Canadian discount brokerages to see which online brokerages are making strides in the production of content that investors want and will engage with in this multi-channel world. From there, we look at some upcoming investor-focused events that might also provide some clues as to some of the moves being made by Canadian online brokerages across the country. As always, we’ll take a look at what DIY investors were saying on Twitter and highlight some very interesting developments we stumbled across in the investment forums.

Homemade content

It might have taken some time, but a handful of Canadian online brokerages have gradually been improving their in-house content offering. While there are still several brokerages offering investor education, it seems that another content strategy, namely financial market research and commentary, has emerged as a type of content that DIY investors are keen to tune into.

It is against this backdrop that the activities of a few brokerages this past week offered an interesting cross section of where online brokerage generated content happens to be and which online brokerages are creating their own content for DIY investors. Specifically, it appears that bank-owned online brokerages are doing the most work in this area, with different brokerages trying out different approaches.

Earlier this week, CIBC Investor’s Edge provided an ever-popular economic update featuring one its own economists, Andrew Grantham. This webinar presentation (which was just under an hour long) offered a very high level view of recent economic developments as well as trends and forces impacting markets and where the data appears to be pointing to opportunities for investors. Given the heightened level of controversy with the US political situation, many investors are unsure of what the economic ramifications will be of the U.S.’s actions, hence the additional popularity of economist presentations. That said, this presentation covered quite a bit ground, touching on topics ranging from interest rates to NAFTA to housing and more which means lots for investors to think about and digest when making investing decisions.

In contrast to the lecture style format of a webinar, TD Direct Investing has been investing in a bigger budget production called Money Talk. This production with professional video content and hosting is on par with business television news and the scope of topics covers the spectrum of personal finance and business news. This past week, their episode on technology investing with Bill Priest from Epoch Investment Partners was particularly insightful with a great balance of explanation on valuation of technology companies and investments as well as ideas and perspectives on where opportunities may lie in this fast moving space. Among Canadian online brokerages, TD Direct Investing (via TD) is almost certainly investing the most in terms of content generation with a long list of videos available on their website MoneyTalk.

Turning to user generated content, in particular social media, BMO InvestorLine once again took to Twitter alongside online personal finance commentators and a social media influencer (Lena Almeida – @Listen2Lena) to talk about investing. In this case, the Twitter chat was about TFSAs. It was a timely discussion as data from Statistics Canada earlier in the week highlighted that 62.5% of Canadian households contributed to at least one of three major types of registered savings accounts in 2015.

Among the questions asked were:

  1. Have you gotten started with a Tax-Free Savings Account?
  2. What kind of investments can you hold in a TFSA?
  3. How is a TFSA different from an RRSP?
  4. What are your questions about TFSAs
  5. What are you saving for?

This was a highly interactive session with a quick quiz type format as to what can or cannot go into a TFSA. To add some extra incentive to participate, there was a draw for $500 in prizes which caught the attention of more than a handful of Twitter users.

The use of Twitter and social media to connect with investors is something that appears to be gaining in popularity with Canadian online brokerages. Scotia iTRADE, for example, still has their #mymakeithappen social media campaign, which is tied to their website in which people share personal finance stories in exchange for a chance to win an Apple Watch Series 2.

Now more than a month into the contest, it is interesting to note that while more stories are being published to their campaign page on the Scotia iTRADE website, on Twitter, the hashtag hasn’t generated the same kind of visible participation as the #InvestSmart campaign from BMO. Admittedly, these are two very different formats of content, however, perhaps the cash offering from BMO was more salient for social media users than the Apple watch.

The biggest takeaway from the above mentioned list of digital content activities online is that the bank-owned brokerages are outpacing the independent and smaller online brokerages when it comes to social media presence. The smaller brokerages, who were previously more active on social channels, are allowing some of the larger players the opportunity to gain mindshare in the ‘innovative’ category. Whether it is in long form copy, social media or on video, smaller players are being quickly displaced by the work being done by some of the larger brands which means that DIY investors looking for content on investing or investor education, will likely be drawn to the bank-owned brokerages’ content channels or online contests while swiping or surfing online.

Interesting Events

Extraordinary Future (Vancouver)

There are a couple of interesting events for DIY investors coming up in the next week (and beyond) that offer some opportunities to learn about markets and offer up investing ideas.

The first is the Extraordinary Future conference happening in Vancouver on September 20th. This conference is a great opportunity to learn about the hottest technologies currently making waves with investors and technology companies.

Topics such as cryptocurrency and blockchain, virtual and augmented reality technologies, health technology, artificial intelligence and more will be discussed. Like most investment conferences, there will also be exhibition booths and some conference swag.

The conference itself is produced by Cambridge House International which many West Coast-based investors will recognize from the Vancouver Resource Investment Conference that happens every January and Toronto investors may recognize from the Cantech Investment Conference that takes place in Toronto.

Co-sponsored by the Canadian Securities Exchange, this event is definitely worth checking out for anyone curious about companies active in these areas as well as what thought leaders have to say about being able to invest in such new fields. Unlike some previous investment conferences, there is a cost to this conference (about $47 + tax) however it is possible to save 25% on admission with the code CSE25.

For more information on the show or to register, click here.

Options Education Day (Across Canada)

The annual Options Education Day events are poised to kick off in Vancouver and Calgary this weekend. Hosted by the Montreal Exchange, these sessions offer DIY investors a day-long intensive series of lessons on the world of options trading. With content catered specifically towards beginner or intermediate investors, these are usually great for both those who are just starting out or for those who are looking for more sophisticated approaches to trading options.

This year, there are three events taking place in September: Vancouver (September 16th), Calgary (September 17th), Montreal (September 23rd) and the final even in November in Toronto (November 4th).

Aside from the educational aspect of the day, which is great for DIY investors, what is also interesting about the Options Education Day is the sponsorship and participation of Canadian discount brokerages, who have a natural interest in connecting with DIY investors who trade options.

This year, as opposed to years past, we noted that fewer online brokerages are actually participating as sponsors in this event. It is particularly noteworthy to see and comment on which brokerages are sponsoring and in what locations, to see what that might suggest about who particular online brokerages might be targeting and which markets they might be most interested in.

Comparing sponsorships across regions, it appears that National Bank Direct Brokerage has committed the most in sponsorship (so far) by participating in all the cities in which the Options Education Days take place.

Sponsorship in Options Education Day City
Discount Brokerage Vancouver Calgary Montreal Toronto
National Bank Direct Brokerage X X X X
Desjardins Online Brokerage X
Interactive Brokers X X

Interestingly, Montreal appears to be the city which attracted the most discount brokerage sponsorship (three) suggesting there are some specific dynamics at play in the Montreal market to draw three online brokerages.

One obvious reason is because all three online brokerage sponsors have their respective headquarters in this city (the same city as the Montreal Exchange), so travel is not an additional expense to prevent participation. Another interesting observation is the tight competition between Desjardins Online Brokerage and National Bank Direct Brokerage – especially in Quebec – which might have been a driver for Desjardins to have a presence at this event.

Curiously, Toronto doesn’t yet have more than two online brokerages who’ve signed up to sponsor this event. With travel not really being an issue for several brokerages who are headquartered in Toronto, and given the size of the Toronto market, it is definitely interesting to see Interactive Brokers reach to sponsor the event in Toronto while other locally headquartered brokerages sit it out.

Perhaps the sponsorship list may change closer to the event (since Toronto’s Option Education Day is in November) but it might be a signal that Interactive Brokers is tactically going after the active options trader segment in key locations. Given Interactive Brokers Canada pricing structure, it is going to be very challenging for other online brokerages to beat them on execution price for options trading. The fact that there is only one other online brokerage present in Toronto on that day (NBDB) leaves plenty of room on the field for Interactive Brokers to shine in one of the largest markets for DIY investors in Canada.

Discount Brokerage Tweets of the Week

There was a mix of big and small news items across the board this 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.

From the Forums

Making a splash

Even on a quiet week in the forums, there was still some rather eventful news. Specifically, it looks like someone with the TD Direct Investing handle has joined reddit this week and contributed to the Personal Finance Canada subreddit. This is an important development because, up until this point, Questrade was largely uncontested as the only Canadian online brokerage fielding inquiries and responding to questions on reddit. Here is the post that TD chimed in on.

Build a Bot

Even in a world where robo-advisors exist, there are still folks who are just DIY’ers by nature. It was fascinating, therefore, to stumble across one user’s creation on reddit in which they’ve essentially created a DIY robo-advisor tool for everyone – free of charge that can be compatible with Questrade. Now, there are likely many many many caveats about using something like this, but as a proof of concept, it is pretty neat to see a community of DIY’ers who have some programming and investment understanding come together to build something like this.

Into the Close

So, the only thing left to say about this week is TGIF (not to be confused with TIFF). This is the last official weekend of the summer of 2017 so make the most of it if while you can! Have a great weekend!