Category: Discount Brokerage News

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Discount Brokerage Weekly Roundup – February 10, 2017

Did someone say rally? While the Trump news cycle is on full blast, a funny thing has been happening in financial markets in the US and Canada – they’ve been going up. Despite the many sounds of alarm that are being rung by newscasters and analysts everywhere, the fact that financial markets are rallying in spite of it means that investors are clamoring to get into markets, at least for now.

For Canadian discount brokerages, the past week also showcased some very interesting maneuvering. In this week’s roundup, we’ll take a look at one major online brokerage that is banking on international opportunities. Next we take a look at another bank-owned brokerage that is sending one its platforms into early retirement. From there we’ll take a quick scan of what DIY investors had to say on Twitter and round out with a look at chatter in the investor forums.

World Denomination

CIBC Investor’s Edge now appears to have some very grand global ambitions. One of Canada’s big bank-owned discount brokerages took a very bold step with their latest feature: the ability for clients to be able to hold not just US dollars but six other foreign currencies as well. On the list of foreign currencies are Euros, British Pounds, Swiss Francs, Australian Dollars, Japanese Yen and New Zealand Dollars, all of which can be held in both non-registered and registered accounts (except for RESPs).

CIBC Investor's Edge introduces USD trading account
Screenshot from CIBC Investor’s Edge

In a year in which equity markets are sure to be impacted by uncertainty, there are many who are looking to foreign currencies for trading opportunities, so the timing of this new set of features is, for some investors, spot on.

By all accounts (pun intended), this is a major score for CIBC Investor’s Edge and their clients.

Starting first with the fact that adding the ability to settle trades in US dollars in a registered account means that there are no more messy conversion fees to deal with (unless you want to of course). In addition, clients can also receive dividends, interest and other distributions in US dollars – something not all bank-owned brokerages offer the ability to do.

While CIBC Investor’s Edge may not be the only bank-owned brokerage to work in multiple currencies (HSBC InvestDirect enables trades to settle in foreign currencies but does require conversions), they are the only major Canadian bank-owned brokerage to enable clients hold the currency itself in a registered or non-registered account. So, not only can individuals have a USD RRSP, they can also have cash in one of the six other currencies in a registered (or non-registered) account also.

This latest move by CIBC Investor’s Edge will certainly get the attention of their bank-owned brokerage competitors as well as independent brokerages, most of whom do not offer currencies other than USD to be held in a registered (or non-registered) account. So, in terms of differentiation, this definitely hits the mark.

Another reason why this move is bound to make a splash is because there are no extra fees associated with the multi-currency account – again not something other Canadian brokerages are offering for free.

Over the next few weeks there will almost certainly be more chatter and clarity that emerges as savvy DIY investors digest how to take advantage of the volatility in the US markets as well as in markets across the world. In the meantime, there are a few questions that are bound to arise now that CIBC Investor’s Edge is wading into the world of multi-currency accounts, such as whether the minimum amount to waive administration (or account maintenance) fees being charged on the account would be in the currency of the account (i.e. 25,000 euros to waive administration fees in a registered account) or the Canadian equivalent.

Of greater intrigue, however, is that if multi-currency accounts are a reality, does this then set the stage for CIBC Investor’s Edge to open up more formally to international trading? A speculator can certainly wish.

Screened Out

Retirement is on the minds of lots of folks at this time of year and for many it’s still a long time away. But, for Scotia iTRADE iPad app retirement is right around the corner.

After announcing in late 2016 that the iPad app would be discontinued some time in early 2017, this past week on social media Scotia iTRADE broke the news to a disheartened user the app’s days are quite numbered.

To @MomtoNikoP’s point – it’s hard to believe that the app itself has been around for about 4 years already. Unfortunately for technology, that is quite a long time.

Of course, in dealing with older technologies or deciding how best to adapt to changing needs of clients, online brokerages have to continuously wrestle with just where to allocate their technology resources. Sadly for the tablet app, it didn’t make the cut.

While there is appeal to using a tablet, perhaps this move by Scotia iTRADE is a signal of the realities of DIY investor behaviour. One of the most important benefits of trading or researching stocks on a tablet is screen real-estate. Rather than having to squint, pinch and zoom, researching charts or reading quarterly reports is easier on the eyes on a tablet than on most smartphones. The catch is, however, most people have smartphones and would rather use those devices than tote around or hold up a bulky tablet.

Also from a user experience point of view, investors ‘on the go’ that want to monitor, and even execute, transactions can work with data in small tables and can probably get away with using a smartphone. If you’re likely to be at a place where you can use a tablet, there’s a good chance you can probably use a laptop. Also, laptops are now lighter and more powerful than they’ve ever been, so for the DIY investor that needs a bigger screen, the ability to use a keyboard and a mouse make relying on the tablet a hard sell.

So, while there are users of tablet-specific apps that might relish in being able to go seamlessly from device to device, the latest move by Scotia iTRADE shows that tablet-specific apps might end up getting the swipe left as most DIY investors choose between either laptop, desktop or smartphone.

Discount Brokerage Tweets of the Week

This week some DIY investors found themselves having to sort through technology glitches – and ultimately let people know about it on Twitter. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing & Virtual Brokers.

From the Forums

Deals in Motion

For the deal hunters among us, this latest thread on Red Flag Deals throws some love our way and also shows that there are more than just the advertised offers we have listed in our discount brokerage deals section – there are sometimes targeted offers in play too.

DRIP by DRIP

Dividend reinvestment plans (aka DRIPs) are a popular strategy for many investors to build wealth over the long term. In this post, also from Red Flag Deals, one investor was learning some important lessons on how dividends get issued and reinvested in the wild.

Into the Close

That’s a wrap on another crazy week. For those on top of this rally, there’s definitely a reason to cheer heading into the end of the week. Of course, how long to hold on for is anybody’s guess at this point – to quote a famous frog, ‘it’s not easy being green’. Have a great weekend and stay warm!

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Discount Brokerage Weekly Roundup – February 3, 2017

It’s hard to believe a whole month has gone by in 2017. With the news cycle dominated by the ever unpredictable movements of the US president, speculation is as rampant as ever. For Canadian online brokerages, however, getting attention is far more difficult than just sending out a tweet at odd hours. Nonetheless they’re still finding a way to make some headlines.

This week there’s lots on the docket. First we take a look at some ‘yuge’ news to come out of the deals arena, as one online brokerage definitely went ‘bigly’ on the incentive offers for RRSP season. From there, we’ll cover the headlines made by two online brokers and their respective awards for service and price that were announced this past week. In keeping with the influence of the US on the news cycle, one online brokerage caused a ‘tremendous’ stir by repealing and replacing their standard commission rates with something much lower. And, as is usual fare, we’ll take a look at what DIY investors were chatting about on Twitter and in the investor forums.

New Deals & Promotions

It’s a new month and while winter still might be here (amiright Vancouver?), February’s deals and promotions at Canadian discount brokerages are red hot.

At the outset of February, Virtual Brokers made a very big splash by launching four deals at the beginning of the month, including the mind-boggling $10,000 commission-rebate offer that dwarfs anything put forward by other Canadian brokerages in recent memory. After factoring in the deals that were retired and the inclusion of credit card points related special offers, there are now at least 30 incentive offers from Canadian brokerages.

Looking back on January, there were six brokerages that announced offers, primarily timed around the RRSP season. While most were commission rebate offers, there were also a pair of cash back incentives and even a couple of credit card points offers for good measure.

Despite almost all brokerages offering some type of offer, there was one notable exception – Interactive Brokers. Perhaps because they already enjoy having significant appeal to the trader community, Interactive Brokers doesn’t need to work as hard to attract this highly prized category of the DIY investor market. Even so, with no shortage of other Canadian brokerages who are willing to try and get a share of those in the market for an online trading account, Interactive Brokers may want to reconsider their approach here in Canada in order to give them more visibility in a very crowded space.

Virtual Brokers, thanks to the launch of its recent flurry of deals now leads Canadian brokerages with 6 offers followed by Questrade and Desjardins Online Brokerage, each of whom has four. Even though Virtual Brokers saw some turnover, it’s clear they’re doubling down efforts heading into the RRSP deadline, with promotions and marketing ramping up significantly.

In terms of the deals themselves, transfer fee coverage remains a staple at almost all discount brokerages, followed by the commission-credit and cash back category. The least popular category, interestingly, remains the referral bonus with only three brokerages having an advertised program in place.

For DIY investors looking at opening an online trading account, be it for an RSP account, a TFSA or just another trading account to put in that income tax refund, this year competition amongst brokerages means a great selection of offers. And while a deal may not be the only reason to select a brokerage, the market has clearly shown that it can be the make or break factor in such a competitive race.

Accolades for Service & Pricing

For a pair of Canadian online brokerages, February is off to a great start.

At what is the busiest time of the year for Canadian discount brokerages, financial services research firm Surviscor released the results of two assessments of the Canadian online brokerage industry.

The first, an analysis of customer service quality known as the ‘Service Level Assessment Review’ found that Qtrade Investor handily outperformed its competitors, both bank-owned and independent, in terms of response times to client service inquiries.

With a score of 96% Qtrade Investor was more than 15 percentage points ahead of the second place Desjardins Online Brokerage (81%) and third place Scotia iTRADE (79%).  This assessment used 170 ‘mystery shopper’ service enquiries per firm and measured how quickly each firm responded as well as a number of other items including accuracy of response and whether a firm met its own response guidelines.

While Qtrade Investor’s strong customer service scores are in keeping with its history of strong performance in this category, it was also interesting to note just how far apart Canadian online brokerages were in terms of their scores on this assessment.

For example, the difference between the top rated Qtrade Investor (who scored 96%) and bottom rated Laurentian Bank Discount Brokerage (who scored 4%) is almost unbelievably wide. Even so, the number of firms (9) who scored less than or equal to 50% was also staggering, especially because it contained four major bank-owned online brokerages as well as firms such as Questrade (who scored 15%) who have demonstrated a strength in responding to clients across social media channels and far flung places such as reddit.

Without knowing the exact scoring methodology or how the results were gathered, however, it is difficult to put the numerical values into context and as such, while these figures likely do measure some component of the online customer service enquiry process, they should also be taken with caution.

The second Surviscor assessment which was announced was this week  was for the ‘Cost of Services’ award given to Virtual Brokers.  While the press release about this reward was published by Virtual Brokers, it was interesting to note that this particular survey simulated the cost of trading by looking at over 13,000 trades across brokerages and found that Virtual Brokers came out on top.

Further details about this survey or its methodology were not available so the results should be treated with caution however it is clear that as competition between brokerages heats up, awards and recognition for areas of strength are going to be increasingly a part of the marketing and advertising strategies of all Canadian brokerages who receive them.

Major US Online Brokerage Cuts Commissions

What a difference two dollars can make. Charles Schwab, one of the largest online brokerages in US with almost $3 trillion in assets, announced this week that they were lowering commission prices down to $6.95 per trade from $8.95. In doing so, Schwab caused a massive sell off in the stock prices of other publicly traded online brokerages such as E*Trade Financial and TD Ameritrade as markets anticipate that these firms will likely have to follow suit and lower commission prices (and therefore revenues) to compete.

The latest move is an interesting case study for industry observers as Schwab’s business model has evolved in the low interest rate, low volatility environment to rely on managed wealth fees as a significant source of revenue rather than trading commissions. Currently less than 11% of net revenues are from trading.

In the Canadian online brokerage landscape, this move might inspire a large enough player (such as a bank-owned brokerage) that has both a strong managed wealth business as well as an online brokerage component to disrupt the market as a whole with a commission price drop from the $9.95 standard.

Internal data from SparxTrading.com already indicate that for CIBC Investor’s Edge, there has been a dramatic shift investor interest away from higher cost alternatives because of CIBC’s commission price cut to a standard commission of $6.95.

The fallout from the latest move by Schwab will be interesting to monitor, in particular because it puts tremendous pressure on firms such as E*Trade Financial and TD Ameritrade to respond. Additionally, it could very well signal to Canadian firms that yet another round of commission-lowering is on the horizon, especially if the largest players at the table decide like their US counterparts, to aggressively gain market share.

Discount Brokerage Tweets of the Week

Lots of chatter on Twitter this week – there’s good, bad and even a little ugly. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing & Virtual Brokers.

From the Forums

Glitch Happens

This past week, a user on reddit posted a notice of a technical outage on Questrade’s platform. It was an interesting thread insofar as the author seemed to entertain switching because of a glitch however other users chimed in to provide alternate perspectives.

Platform for Trading

A familiar question comes from this recent post from reddit’s personal finance Canada section with a user looking for a trading platform/brokerage to trade ETFs. Worth a read for those in a similar boat.

Into the Close

That’s a wrap on yet another crazy week. Fortunately for football fans, the big game takes place this Sunday which might offer just a little sanctuary from the political football that keeps getting tossed around. For those who don’t really care much for football, here is a little something that will hopefully send you into the weekend on an entertaining note.

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Discount Brokerage Weekly Roundup – January 27, 2017

Sometimes change is good. Sometimes it’s not. Either way for discount brokerages in Canada and the US, change, and more specifically the ability to navigate change, appears to be what will separate the winners from the rest of the crowd.

In this week’s roundup we take a look at the latest digital shift from one of Canada’s largest online brokerages to see how they’re changing elements to keep looking fresh. From there, we take a look at the details from two recent US online brokerage conference calls with a specific eye as to what online brokerages are working on for the future. As usual, we’ll wrap up the roundup with a look at what investors were talking about on social media as well as in the investing forums.

TD Direct Investing Website Gets Refresh

In more ways than one, the new reality for online investors and those that service them is dealing with change. As online brokerages increasingly evolve into technology companies, the need to be agile and responsive is greater than ever before. Their platforms need to keep up with the times, as do all of their websites, social media feeds, mobile apps and so on. More than just the technology, online brokerages also have to keep up with what an online investor looks like – not just those already in the markets, but those who are looking to get in too.

Over the past three years, there has been a noticeable evolution of the websites and marketing at most of Canada’s online brokerages. This month, there has been yet another website enhancement made from Canada’s largest bank-owned online brokerage – TD Direct Investing.

Looking back at the evolution of the TD Direct Investing story, one of the first important changes took place when TD Waterhouse switched to TD Direct Investing in late 2012.

In late 2015, TD Direct Investing then updated the front end of their website, modifying the look and feel of the brand to become more modern, not only in web design terms, but also in portraying what the ‘typical investor’ looks like. As part of a trend amongst the major Canadian banks, looking and feeling more appealing to everyday Canadians meant recognizing the diversity of what Canadians look like and what they support.

Now, in 2017, TD Direct Investing has updated their look and feel yet again in order to appear more modern and harmonize the brand experience the parent brand.

Screenshot of TD Direct Investing website 2017-01-27
Screenshot of TD Direct Investing website 2017-01-27

The front end of the TD Direct Investing section of the TD website, with the scroll features that tells the TDDI story, is remarkably familiar to many robo-advisor websites and borrows design elements that are found on other Canadian brokerage websites that use icons and the scroll-based design.

Clicking through the homepage, there are links that still point to pages that use the previous design standard as well as links that point to the newer look, signaling a gradual transition to a newer look and feel rather than a wholesale change. It is an interesting choice from a design point of view in that users see the old and new imagery and layouts within the same visit.

While the updated design does add an element of change, the key observation is that TD continues to use bold imagery of ordinary looking people. These may be stock images, however there is more thought in their selection that shows they’re conscientious about recognizing a more diverse-looking set of customers. Fortunately, TD Direct Investing is not alone in this regard. This is also true for a couple of TD Direct Investing’s bank-owned brokerage peers – BMO InvestorLine and RBC Direct Investing. With so much divisive rhetoric emerging from the US it’s nice to see Canadian banks being Canadian and embracing the portrait of an online investor as a mixture of men and women, old and young and all shades of skin colour.

On the Line

With markets making new all-time highs and a difficult to predict new president, there’s lots of uncertainty for investors on exactly how they’re going to approach trading this market. To get some insights, it was interesting to review the latest news coming out of US online brokerages’ earnings conference calls as they reported their quarterly earnings and spent time explaining their strategies and vision for 2017 as well as where they see investors headed during these uncertain times.

In the E*trade Financial conference call, one of the interesting priorities for them in the upcoming year will be in marketing. As we had mentioned in a previous weekly roundup, in a hypercompetitive marketplace, in particular in the online brokerage space, an increasing amount of focus will have to be paid to getting client acquisition and retention right. This means undertaking some bold but thoughtful marketing.

The comments made by E*Trade Financial’s CEO Karl Roessner during the most recent conference call certainly highlight that E*Trade will be focused on aggressively onboarding new clients, with the ever-prized active trader segment being of particular interest.

In conjunction with the strategy of acquiring new clients, it appears that E*Trade is also going to be undertaking major branding initiatives and enhancing their digital experience by upgrading their web presence. Like the recent moves observed by TD Direct Investing referenced above, the following quote signals that keeping the digital experience of E*Trade fresh and current is a key component to their marketing plans:

And at the top of a long list of initiatives is the re-launch of our brand. We’ve enjoyed phenomenal brand awareness, and we intend to build on that to reclaim our challenger position in the industry. Expect to see more around mid-year. In the meantime, we are working on updates to our website, including an overhaul to the look and feel, along with improved navigation.

Another conference call from an online brokerage took place this week, this time from TD Ameritrade. While also discussing the results of an integration with Scottrade, there were a number of interesting nuggets on the technology front revealed by TD Ameritrade.

For example, the launch of innovative integrations with Amazon’s Alexa (using the TD Ameritrade skill app) that enable individuals to get stock market updates points to a future where home automation or virtual assistants will meet the world of investing.

In addition, there was also some insight given on the social media monitoring tool, Social Signals, that helps investors look for investment opportunities based on what stocks individuals are talking about online – in particular on Twitter.

One of the most interesting perspectives, however, came from CEO Tim Hockey’s answer on the possible behaviour of retail investors heading into the next few months post-Trump’s election. Specifically, Hockey’s position is that DIY investors will be looking to reposition their portfolios given the new US President’s policies and initiatives. In particular, the comment that investors appear to be moving in a contrarian fashion – pulling money out on the big rallies, signals there’s some skepticism as to the valuation of the US markets and especially in the larger cap names.

While the US online brokerage marketplace is certainly distinct from Canada’s, there is clearly a view towards what the future may hold for the industry in Canada.

With regards to innovation, US brokerages such as TD Ameritrade are clearly developing the next generation of tools that DIY investors can use to monitor and potentially trade with. The race to bring in innovation to the DIY trading world reinforces the observation that online brokerages are going to have to become much more technology based than they already are, which may be easier said than done.

One potentially noteworthy comment by Interactive Brokers’ CEO Thomas Peterffy in their latest conference call probably should serve as a warning to online brokerages. Specifically, Peterffy was asked about why Interactive Brokers took the unusual step of payment of high amount of bonuses to employees at the end of Q4, to which Peterffy responded “It’s a very competitive world.”

Discount Brokerage Tweets of the Week

It was a tough week for online investors caught on the wrong side of a platform outage at Questrade illustrating once again that trading isn’t without its random risks. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE & TD Direct Investing.

From the Forums

Cut it Out

This past week the firestorm of tweets on Questrade’s platform outage also extended to comments in reddit’s Personal Finance Canada thread in this post. Fortunately, Questrade also stepped in to the discussion to help let people know their options during an outage.

Unpleasant Exchange

In this post, from the RedFlagDeals.com investing forum, one user learned the hard lesson about currency conversions at online brokerages – namely that they can get expensive. Read on to find out how others can get around the extra fees related to currency conversions.

Into the Close

That’s a wrap on the first chaotic week of the Trump presidency and a record breaking week on the markets. For those trying to figure out where markets go from here, you may want to take the weekend off and simply remember that the trend is your friend until it ends. For all those celebrating the Lunar New Year  this weekend – happy New Year! And for those looking for something to celebrate – Monday isn’t here for another couple of days, make the most of it!

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Discount Brokerage Weekly Roundup – January 20, 2017

Trump, or more formally, President Trump is known for many things – among them, the art of the deal. The new US president isn’t the only deal maker around, however, as Canadian brokerages are also looking to start giving some ‘bigly’ deals to DIY investors.

This week’s roundup puts a spotlight on the latest deals action that occurred this week – a signal that competition amongst Canadian discount brokerages is reaching a new high. From there we’ll take a look at what DIY investors had to say to Canada’s online brokerages on Twitter and what was on the minds of investors in the financial forums.

Deals Reach Feverish Levels

This week there were three new offers that were added to the long list of promotions being offered by Canada’s discount brokerages to entice potential clients (as well as a few existing clients) to bring in assets.  Joining the fray this week were offers from Qtrade Investor, Credential Direct and RBC Direct Investing. Both Qtrade Investor and Credential Direct launched cash back promotional offers while RBC Direct Investing launched a points based promotion linked for RBC credit card holders.

With the addition of these new offers, the total number of advertised offers now stands at 32, of which 7 were added to the list in January – a sign that competition amongst Canadian brokerages has increased significantly. Interestingly, the only major Canadian online brokerages not offering a cash back or commission-free trading deal (at least at the time of publication) for new accounts are RBC Direct Investing and Interactive Brokers.

Whether it is the specter of Robo-advisors, the changes forecast with the CRM2 fee disclosures, the rally in the markets, or some combination of these, Canadian discount brokerages are definitely trying to perfect the art of the deal in order to attract new clients (or more precisely, new assets).

Heading into RRSP season, it’s clear that innovation and new features have taken a back seat to cold hard cash. In particular, there’s been a noticeable increase in cash back offers as a proportion of the total deals being offered which speaks to the growing recognition of the preference for these offers with DIY investors over commission-free trades.

With all of the offers now in play navigating them can be somewhat of a challenge. As such, we’ve done a little bit of the homework for readers looking to compare cash back offers between discount brokerages below.

Canadian discount brokerage cash back deals comparison

In terms of cash back offers, there two main types to consider, those that are available without a referral and those that are part of a referral offer. A quick comparison of the two show that for someone opening a new account (or in some cases bringing new assets) with a non-referral offer, the cash back bonus ranges from 0.1% to 0.5% of assets deposited. For the referral-based cash back offers, the range is wider going from 0.1% to 2.5%.

In the case of referral-based cash back offers, these generally are better deals for deposits of between $1,000 and $10,000 simply because there are no non-referral cash back offers for deposits under $15,000. In fact, for deposits under $25,000 referral bonuses offer the best selection and rates for a cash back bonus. Nonetheless, Credential Direct’s offer of $75 cash back for a minimum $15,000 and Questrade’s referral-based offer of $75 cash back for a minimum deposit of $25,000 are the offers that provide clients with the largest bonus in the sub-$25,000 deposit range.

Perhaps the most crowded segment of the deals market is at the $50,000 deposit mark, where there are 7 different offers ranging from a low of $50 (from BMO InvestorLine and Qtrade Investor) to a high of $200 (from CIBC Investor’s Edge). In this segment, CIBC Investor’s Edge’s offer is more than 1.5x that of its nearest competitor, Credential Direct (who’s offering $125 cash back). In addition, at that deposit level, brokerages are also willing to cover transfer out fees meaning that even greater total value can be obtained.

Interestingly, at the $100,000 deposit mark, the field thins out, with four offers specifically targeting minimum deposits at this level. The range for cash back bonuses goes from a low of $100 (Qtrade Investor) to a high of $400 (CIBC Investor’s Edge).

Finally, for deposit tiers higher than $150,000 (up to the $1M+ range), cash back bonuses range between 0.1% and 0.25% with maximum bonuses of $1,000 cash back being offered by Credential Direct and Qtrade Investor at the highest deposit tiers.

The big picture for DIY investors is that there are 27 different deposit tiers that they can qualify for between the referral and non-referral cash back offers – an extraordinary level of choice. Paradoxically, on a percentage basis, at most brokerages the higher the amount of assets an individual brings in, the lower the reward. So, for example, an individual who deposits $50,000 at Credential Direct receives $125 but if they were to deposit $500,000 they would not receive $1250, but only $500 instead.

Arguably, the cash back incentives are not going to be the primary reason an individual chooses a particular brokerage. With the dollar amounts being given out, there simply isn’t enough financial incentive for most people to go through the process of moving investments around just to get a cash bonus. That said, with services, features and pricing at most online brokerages being very close to one another, the tie-breaker will almost certainly come down to who’s more willing to give to get. And, when it comes to getting a new client, money definitely talks loudest.

Discount Brokerage Tweets of the Week

January might be the middle of winter but some of this week’s tweet seemed extra cold. Mentioned this week were CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing.

From the Forums

Stating the Facts

With CRM2 rolling out at Canadian discount brokerages, this post from Canadian Money Forum offers a very interesting look across the board at how investors are reacting to the new statements.

Deal or no deal?

With the launch of their cash back (plus free trade) offer, CIBC Investor’s Edge not only has an ultra-competitive commission cost but now one of the most competitive deals out there for those who qualify. This thread from the investing sub-forum of RedFlagDeals.com gauges the reaction of the bargain hunting community on whether the offer from CIBC Investor’s Edge measures up.

Into the Close

That’s a wrap on one of the most historic weeks in the new year. Within just a few hours of taking office there’s already lots for traders and investors to digest with Trump now at the helm of the US. At this point, there’s little doubt that things are going to continue to get interesting for investors. For those who are just a little too Trumped out, thankfully there’s some good football ahead. Stay warm!

Thanks Obama
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Discount Brokerage Weekly Roundup – January 13, 2017

For the superstitious, Friday the 13th is supposedly an unlucky day. As this week draws to a close, however, it seems that DIY investors are in luck as deals and promotions activity is red hot at the outset of 2017.

We’ll keep things light for this edition of the roundup, putting the spotlight on the deals and promotions being offered by Canadian discount brokerages and how the new deals that launched this past week could shake things up for other Canadian brokerages. From there, we’ll take a look at some interesting news and developments from across the online brokerage landscape that caught our attention and round out with the latest tweets from Canadian investors & online brokerages as well as what people are talking about on the investor forums.

Everyone into the Pool

This week, the deals gauge went from hot to red hot, and with good reason. There are now at least 28 advertised offers from Canadian discount brokerages, with cash back/commission-free trades now making a comeback after pulling back late in 2016.

The two brokerages causing the commotion this week, CIBC Investor’s Edge and Scotia iTRADE, have now made the case for all Canadian online brokerages to have a live cash back or commission-free trade offer or risk losing out new business to those who do.

CIBC Investor’s Edge, which has the lowest standard commission costs amongst Canadian bank-owned brokerages, made a big splash by offering up a cash back promotion of up to $400 for deposits of $100K or more. In addition, individuals who set up a ‘Regular Investment Plan’ (amusingly given the acronym RIP), are also eligible for up to 50 commission-free trades.

So, while it is a positive development for DIY investors that CIBC Investor’s Edge has stepped into the promotions space to start 2017, there are also a number of other reasons why their entry is significant.

First, as one of the lowest cost commission rates available, CIBC Investor’s Edge naturally enjoys a competitive edge over its bank-owned brokerage peers as well as the non-bank-owned group. This means that they inevitably get more attention or get considered more often by virtue of the fact that many DIY investors are looking for the best value – and low commissions for many investors equates to just that.

Second, now that CIBC Investor’s Edge is in the fray, the only major bank-owned brokerage without a cash-back or commission-free trade offer is RBC Direct Investing (BMO, CIBC, Scotia and TD are all offering these promos) which means RBC Direct Investing will either have to post a promotion or contend with direct competitors grabbing attention and market share from them. If mortgage rates and other financial services offer any clues, the odds that RBC Direct Investing stands idly by while the rest of the field eats their lunch just got lower.

Finally, while CIBC Investor’s Edge has offered promotions in the past, the presentation of this offer (specifically the push to a cleanly designed landing page) suggests an overhaul to the Investor’s Edge look and feel are probably on the way. The broader CIBC user experience (for example on mobile) has seen an upgrade so to maintain a consistent user experience, it looks like a new website will likely be on its way.

Scotia iTRADE also returned to the deals and promotions section, this time with two offers launching simultaneously. The primary offer of interest to DIY investors is a commission free-trade offer that ranges from 75 trades up to 250 trades, depending on the amount deposited into the new account. The second promotion is actually tied to their travel credit card program in which individuals who do have a Scotia credit card and who sign up for a new online brokerage account can receive a combination of 50 commission-free trades points

An interesting angle on the deals and promotions activity might also be a response to the Rob Carrick article recently published that encourages DIY investors to try non-bank-owned online brokerages on for size rather than defaulting to a big bank. To say that this has made waves is certainly an understatement considering the degree of influence Carrick has with Canadians – and especially within the realm of Canadian personal finance. What this means is that big bank-owned brokerages may need to be more active with deals and promotional activity to counter the recommendation from Carrick’s article for DIY investors to try a non-bank-owned brokerage.

While there are important points Carrick makes in the article about fees and banks recently being in the news for overcharging investors, the point to be made (and certainly reading through comments from investors who are clients at non-bank-owned brokerages also highlights this) is that all financial service providers can make mistakes – whether by omission or commission.  There are simply too many moving parts, from technology integration, compliance, security and more to not expect something to break. The real questions are (or should be) which provider would be best able to address an issue when it comes up and what would be a reasonable price to pay for that as a consumer?

Marketing Pullback

Normally this is the section where we mention upcoming education events or events of interest to DIY investors. One such event that’s coming up is the Vancouver Resource Investment Conference taking place on 22nd and 23rd of January. While the focus of this conference has been primarily on natural resource related investing, historically there have been a couple of Canadian online brokerages exhibiting in person, specifically Desjardins Online Brokerage and TD Direct Investing. Interestingly, neither of these brokerages are on the list of exhibitors this year (as of publication), hinting at least of a redrawing of plans in terms of where brokerages are going to spend their time (and money) connecting with investors.

Rise of the Machines

While robo-advisors are currently getting a lion’s share of the attention with regards to using algorithms in financial services, another story crossed our radar regarding the use of artificial intelligence integrated into the trading platform interface at Interactive Brokers. Their recently deployed “IBot” is gathering data on how individuals trade in the hopes of determining how best to work with human traders in providing information/answers they are seeking. While it seems like a high-powered search engine at this point, it certainly provides a glimpse into the kinds of innovation to the trading experience that will be required to get DIY investors excited. Provided, of course, that it works the way it’s supposed to.

Discount Brokerage Tweets of the Week

This week saw the big bank owned brokerages in the cross hairs of more than a few DIY investors. 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

Mini-Series

For DIY investors, one of the most popular choices are low cost mutual funds, such as the TD E-series. In this post from reddit’s personal finance Canada thread, one community member was interested in finding out whether the grass was greener on the DIY side of the fence or if E-series was the way to go.

Money-weighted Return

With new CRM2 compliant investor statements heading out to DIY investors, one of the less familiar terms to be aware of is money-weighted return (performance). In this post from reddit’s personal finance Canada section, one Questrade user was looking for a little more clarity and got a number of good examples to help explain the concept.

Into the Close

That’s a wrap on this week’s action across the Canadian discount brokerage landscape. Remember, US markets will be closed on Monday for Martin Luther King Jr. Day. With all of the uncertainty in the markets, it seems appropriate to check out something a little lighthearted heading into the weekend. Of course, for all of the market watchers, maybe the picture of a bubble might hold a little more meaning. Stay warm and go Seahawks!

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Discount Brokerage Weekly Roundup – January 6, 2017

Welcome to the first roundup of new year! It’s good to be back at the helm in what will likely be one of the most exciting and unpredictable years for DIY investors in recent memory. Given all of the uncertainty, the theme of this year seems to be strategy – the traditional playbook is out and the ability to improvise and rapidly adapt is in. For Canadian online brokerages, this year more than any other will test their resourcefulness as well as their talent for getting creative.

In this week’s roundup we take a look at how the deals and promotions from Canadian discount brokerages started the year and what incentives might be in store for DIY investors heading into 2017. From there we take a look at the preparations brokerages are making for the final stretch of CRM2 and then recap the tweets to and from Canadian brokerages this past week. Finally, we close out with some topics of interest from DIY investor forums.

Deal updates

At the start of 2017, Canadian DIY investors looking to open a new brokerage account (or to switch brokerages) have lots to look forward to in the way of deals and promotions. This month’s deals action has already been swift, with new offers from HSBC InvesDirect and BMO InvestorLine to start the year.

Screenshots of offers from HSBC InvestDirect (top) and BMO InvestorLine (bottom) at the beginning of January 2017.

In total, we’ve spotted 25 public promotions that are now active that DIY investors can look to when shopping around online for a new trading account. Part of the reason this number is at this level was because two bank-owned brokerages, TD Direct Investing and National Bank Direct Brokerage, each launched deals ahead of the holiday season. Also sources at several other brokerages have indicated that January is likely to see additional deals activity so there is even more in the works for online investors.

As far as deals and promotions from Canadian online brokerages are concerned, the lead up to the RRSP contribution deadline will be a busy time.

With markets flirting with new all-time highs in both the US and Canada, an IPO for Snapchat on the horizon and whispers of a potentially frothy year for IPOs in general, the roll out of the final phase of CRM2 and added competition from robo-advisors looking to win over prized millennial investors, Canadian online brokerages will be pulling out all the stops this year to get attention from DIY investors thinking about investing online.

We will continue to monitor the deals and promotions activity but bullish signals such as the long expiry dates for most offers, healthy participation from multiple brokerages as well as renewed enthusiasm in the equity markets will likely translate into Canadian discount brokerages stepping up their efforts to gain market share, and more importantly to them, share of wallet.

Making a statement

For a very long time, investors have had to face unclear and sometimes incomprehensible investment statements. Over the past few years, however, things have gotten better and in 2017, investors are about to see more detail on how their investments are being managed and exactly where the costs for managing their money are coming from.

To better assist Canadian investors with understanding exactly where and how fees are generated on their investment accounts, financial market regulators required financial service providers, including Canadian online brokerages, to disclose fees more clearly to their clients. A great primer on the upcoming changes done by the Globe and Mail can be found here and a good explanation is also provided by FAIR Canada in the video below.

Heading into 2017 Canadian discount brokerages have begun alerting clients on their respective websites and via email that newer, easier to understand, investment statements are now available. Some of the more visible notifications have come from firms such as BMO InvestorLine, National Bank Direct Brokerage and CIBC Investor’s Edge. Interestingly, BMO InvestorLine and CIBC Investor’s Edge went a step further by also including a video that explains the changes to their statements.

Interestingly, and certainly not by accident, Questrade has been anticipating this transition with a popular and widespread campaign on asking tough questions to financial advisors.

The reasoning is that once investors, especially those with mutual funds, begin to see what they’re paying for the service with these new statements, they may start to look around for better value. Curiously, other brokerages have been less visible or have yet to launch campaigns directed at capitalizing on the ‘sticker shock’ of finding out how much in fees is being eaten up.  In this regard, Questrade has managed to get out in front of their competitors and will stand to benefit from having timed their campaign so well.

It is difficult to imagine a scenario in which the new statements being sent to investors would not provoke investors into considering a lower fee alternative. For the larger institutions, there has been a noticeable effort to become more ‘friendly’ and also more service focused, in hopes of being able to demonstrate value for the fees that are being charged.

Perhaps the biggest upshot for investors year end summaries of activity will be able to show how much is being spent on trading commissions. For active traders, this will really hit home to see whether or not trade execution could be more economical at another brokerage. This would certainly be an interesting and opportune moment for a savvy online brokerage to drop standard commission fees or for those with low commission rates to speak up. We suspect either of these may already be in the works.

Discount Brokerage Tweets of the Week

Fees, speed, service – this week had a little bit of everything to kick off 2017. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE and TD Direct Investing.

From the Forums

Dating issues

In this post from the reddit personal finance Canada thread, one user wanted to get what seems like a simple answer to what date the deadline is for contributing to an RRSP in 2017. Interestingly, there is clearly still quite a bit of confusion as to when an individual investor can make a contribution to their RRSP and which year it “counts” towards when making it.

TFSA and Daytrading

This post from reddit’s personal finance Canada thread is a perennial favourite for those who seek clarity on whether or not ‘trading’ in a TFSA is allowed. Definitely interesting to see the variety of interpretations on what is a very grey area to begin with.

Into the Close

That’s a wrap on the first week of 2017. While this year is going to be full of surprises, perhaps one of the most curious sights was the clamoring of individuals for ‘free salt’ in Vancouver. Not sure what the lesson is here (or even if there’s just one) but something about supply and demand springs to mind. Whatever you happen to get up to this weekend, hopefully you’re staying warm (and you have enough salt)!

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Discount Brokerage Weekly Roundup – December 30, 2016

Welcome to the last edition of the roundup for 2016. As the year winds down, it looks like markets and investors have finally decided to take a pause and celebrate an eventful year. This edition of the roundup will be short and sweet, featuring the final installment of the roundup of roundups from 2016 as well as the last batch of tweets and chatter from across social media and investor forums.

Roundup of Roundups: Q4 2016

The last quarter of activity in 2016 saw a big focus on feature announcements from Canadian discount brokerages, the year-end rankings and ratings as well as the release of some interesting data on deals & promotions that highlighted the gap between what DIY investors want and what brokerages have been offering. With the uncertainties now thrown into financial markets, increasing competition between brokerages as well as from robo-advisors, the moves being made in the last few months of the year have set the stage for an interesting start to 2017.

Tell You What I Want…

Online investors are, not surprisingly, turning to online channels when doing their research on which online brokerages to choose. Seeing a fair share of traffic from these folks, we at SparxTrading.com set about asking those in the market for an online brokerage whether or not the deals or promotions actually matter to a purchase decision and if they do matter, what kinds of promotions were they interested in. The results, published in October and November, pointed to an interesting set of findings. First, for those respondents in the market for a discount brokerage account, 85% said deals make a difference as to who they would choose. Secondly, there appears to be a disconnect between what DIY investors really wanted and what online brokerages typically offered as an incentive. For example, even though respondents said they overwhelmingly prefer cash back incentives, the majority of deals or incentives offered in 2016 did not fall into this category. Interestingly, and perhaps not coincidentally, later in the fall of 2016 major online brokerages started marketing commission credit deals as ‘cash back’ offers.

Two Steps Forward

The fall continued to be busy with announcements and unveilings of new features. Several Canadian discount brokerages, including TD Direct Investing, Qtrade Investor and Virtual Brokers announced significant additions to their set of services. In the case of TD Direct Investing, they were able to successfully roll out conditional order types on WebBroker. Qtrade Investor, on the other hand, released a number of feature enhancements, most notable among them being the addition of more commission-free ETFs to bring the number to 100. Finally, Virtual Brokers launched into the world of investor education in a big way with the addition of an investor education section.

Climbing the Ladder

The last big story for the final calendar quarter of 2016 was the rankings and ratings of Canadian discount brokerages. The ranking and comparison of online brokerages is something that we’ve spent a lot of time on over the years and what stood out about the 2016 rankings, especially from the Globe and Mail, is the sense that we may have reached peak DIY investor. While it doesn’t spell immediate decline for DIY investing, there are now alternatives to the DIY investor approach, notably from robo-advisors, that offer yet another choice in the landscape of financial services for investing. As for the results themselves, Qtrade Investor had a strong showing in 2016 taking top prize in both the Surviscor ratings as well as in Rob Carrick’s annual online brokerage rankings. Interestingly, when we compared the rankings from the Globe and Mail for the past several years, the rank and order of results were largely the same, suggesting that in spite of the many changes that have occurred, the changes have been more evolutionary rather than revolutionary.

Discount Brokerage Tweets of the Week

The diehard investors were still online and tweeting heading into the last week of 2016. Mentioned this week were CIBC Investor’s Edge, Questrade, Scotia iTRADE & TD Direct Investing.

From the Forums

Investors in the House

One of the great developments over the past few years is that online brokerages, or at least some online brokerages, are allowing members of the same household (or even friends) to qualify for a group discount on fees. This post from RedFlagDeals.com reveals what happened when one investor tried to set this up at Scotia iTRADE.

Double Take

Sometimes it pays to get a second, third or fourth opinion when making a financial decision. In 2016 (soon to be 2017) the power of crowd-sourced wisdom is available to tap into when it comes to making financial decisions. In this post from reddit’s Personal Finance Canada subreddit, one user was looking for some added perspective before taking the leap into DIY investing at TD Direct Investing.

Into the Close

That’s a wrap for 2016. It has been another eventful year in the Canadian discount brokerage space and 2017 is sure to be even more exciting. On behalf of everyone at the SparxTrading.com team, have a safe and happy New Year!

 

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Discount Brokerage Weekly Roundup – December 23, 2016

Well, it’s hard to believe but Christmas is literally just two sleeps away. While DIY investors are either busy looking for a deal, a present or are relaxing from the mayhem that is a shopping mall, it looks like Canadian discount brokerages are taking cues from other businesses and putting up deals for DIY investors ahead of Christmas.

In this holiday edition of the roundup, we’ll keep things short so you can get back to enjoying the festivities. We kick off with news that every investor loves to find out about – a new deal being offered by one of Canada’s bank-owned online brokerages. From there we’ll take a look at the highlights from Q3 of 2016 in the third of our 2016 roundup of roundups. As always, we’ll close out by taking a look at what DIY investors were chatting about on social media and on the investing forums.

Gift Wrapped Deal

Just in time for Christmas yet another Canadian discount brokerage is offering up a big gift to DIY investors in the form of a promotion. This past week, National Bank Direct Brokerage crossed our radar with a generous trade rebate offer with a very splashy headline: up to $1000 cash back for individuals signing up for a new account.

While the headline does grab attention, it is important to unpack the clever advertising from the real picture, so let’s drill down on some of the details of their latest offer.

Perhaps the most important component to this offer is that it is actually a commission-rebate offer, meaning that individuals who are eligible for this offer can have their trading commissions reimbursed up to the amount stated in the promotion.  Unlike other cash-back offers that provide a payment of a fixed amount up front, this ‘cash back’ occurs after individuals make eligible trades.

The dollar amount that an individual can get credited depends on the value of the account they open with NBDB. In the case of this offer, there are two deposit tiers, the first ranging between $20,000 and $99,999, for which individuals receive up to $500 in commission rebates; and the second for deposits of $100,000 or more for which individuals can receive up to $1,000 in commission-credits.

In looking at NBDB’s latest promotion, it is interesting to see who they are positioning to compete with. On the one hand, their offer is very similar in structure to the TD Direct Investing offer – commission rebates marketed as cash-back promotions. Comparing the two offers side by side, NBDB has the lower threshold to qualify versus TD Direct Investing, however for depositors with more than $50,000, TD Direct Investing is offering more in terms of commission rebates. One very important distinction, however, is that the NBDB offer is eligible for 90 days whereas there is a fixed cut-off date for TD Direct Investing’s offer, so TD’s offer becomes more challenging to fully use up the longer individuals wait to take advantage of it.

The good news for DIY investors is that it appears that online brokerages are once again starting to work harder to try and win new clients – especially heading into the busy RRSP season. Interestingly, this is now the second offer to launch in December (the other was TD Direct Investing two weeks ago) that appears to run until the end of March of next year. This is definitely a bullish signal that bank-owned brokerages are placing their bets early because it will likely motivate both larger and smaller discount brokerages to follow suit.

Discount Brokerage Roundup Recap from Q3 2016

#Hashtag You’re It

TD Direct Investing gets social by hosting their first DIY investing Twitter chat. #FunFact many years ago, SparxTrading  was tweeting live from an Investools seminar and helped get the ball rolling on the TD Direct Investing Twitter presence. Since then, TD Direct Investing, has become a very active on social media. Here is a recap of 350+ tweets we put together that covered their #DIYInvesting Twitter Chat.

Eye of the Buyer

Along with the US presidential election race, our eyes were turned stateside to see what was happening with US-based online brokerages and what, if anything, that could mean for Canadian online brokerages. One of the advantages of looking at the US market is that they provide a window into how the online brokerage business works, what challenges they’re facing as an industry and what innovation is taking place. In the case of a couple of July weekly roundups, we learned that Interactive Brokers is crushing it when it comes to profitability per account as well as steady account growth. Anyone watching the space closely can see that they are clearly going to harder to challenge as they grow in size and presence globally. We also learned about consolidation taking place in the US market, with E*trade acquiring OptionsHouse.

Going Back to School

Scotia iTRADE got a jump on the competition and back-to-school season by launching a rebranded educational offering for DIY investors. Their Scotia iTRADE U managed to predate the push later on in the year by Virtual Brokers to get into the investor education game. Interestingly, the biggest player in the space, TD Direct Investing, has seen a shift in how and where it is delivering investor education content – choosing to deliver it via webinar rather than run as many in person seminars. Later in 2016, Virtual Brokers would also roll out its new education centre

Preferred Pricing

In early September, Qtrade Investor took a big step into the commission-pricing battle by offering up a pricing break on commissions for young investors (where was this when I started investing!). The commission rates for younger investors are $7.75 per trade – down from the standard $8.75. That move by Qtrade Investor certainly helped to put them back on the radar of price sensitive DIY investors and arguably helped to maintain their presence atop the Globe and Mail Online Brokerage Rankings for 2016 which came out in December.

Discount Brokerage Tweets of the Week

From the Forums

Icy Conditions

If there’s one thing that winter driving reminds traders of, it’s to always keep an eye out for things that can go wrong. Of course, that’s not always possible for active traders who rely on technology to work the way it’s supposed to – especially with stop losses. In this post from Canadian Money Forum, one user’s experience with stop losses not working with bracket orders is definitely a good reminder or lesson to anyone using these order types.

The People’s Choice

With the latest results from online brokerage rankings now published, there’s one source that DIY investors consult that provides a very different point of view. In this post from reddit’s personal finance Canada thread, one person asking for who the ‘best online brokerage’ would be, gets a very different answer than either of the two recent rankings crowned.

Into the Close

That’s a wrap on the second last weekly roundup for 2016. On behalf of the SparxTrading.com team, happy holidays to all of our loyal readers. Next week’s edition will be the last of the current format – we’ve got some exciting news and changes coming to SparxTrading.com planned for 2017. Stay tuned, stay safe and enjoy the time off from trading to do something fun!

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Discount Brokerage Weekly Roundup – December 16, 2016

If there was any doubt that winter is coming, it’s pretty much been buried at this point underneath a pile of snow. The infamous game of thrones reference seems more appropriate than ever, not just for markets, but also for the tough times to come for Canada’s discount brokerages.

In this week’s roundup, we take a look at the most influential brokerage ranking of the year and what it signals about the Canadian discount brokerage landscape. From there, we’ll take a look at the second roundup of roundups from 2016 and then close out with some interesting tweets from the week and investor forum chatter.

Globe & Mail Online Brokerage Rankings 2016: Evolution or Revolution?

This past week, the 18th (yes that’s right) annual discount brokerage rankings were published by Rob Carrick at the Globe and Mail. It’s an amazing milestone, even more so considering how much of the online world has changed over that span of time. Ironically, change, or lack thereof, happens to be an interesting theme when looking at this year’s results and when evaluating Canadian discount brokerages.

While the results themselves tell an interesting story, perhaps the bigger and more intriguing picture is what the rankings and the accompanying commentary suggest about Canadian online brokerages. Namely, like many 18 year olds, this year’s Canadian online brokerage rankings seem like they’re ‘over it’.

Before looking at the big picture, let’s recap the results.

This year’s results saw Qtrade Investor and Virtual Brokers both achieving the highest letter grade, an A, resulting in a tie for ‘the best’ online brokerage in Canada whereas HSBC InvestDirect once again earned the dubious distinction of coming in last. Interestingly, the results from this year’s rankings are largely the same as past four rankings going back to 2013 (see table below) this despite substantial changes in pricing, features, websites, and trading platforms across the industry.

On a year-over-year basis, letter grades improved for CIBC Investor’s Edge, Desjardins Online Brokerage, Qtrade Investor and RBC Direct Investing. Dipping slightly was Questrade, who fell to a B+ from an A-. Nonetheless, Virtual Brokers and Qtrade Investor have remained the clear favourites for Rob Carrick’s rankings for four years running, owing in large part to the curb appeal for “everyday” investors.

For Qtrade Investor, this has been a big year for awards as they’ve landed top scores with MoneySense’s ranking, Surviscor’s ranking and now the Globe and Mail ranking.

In keeping with years past, there was the combination of commentary on each of the brokerages, much of it colourful and pulling no punches, as well as commentary on the industry as a whole.  In addition, there was also a table containing forty features of a “great” discount brokerage.

While we will be publishing a more detailed analysis on the Globe & Mail online brokerage rankings in the near future, here are several very interesting observations about the latest online brokerage rankings that stood out.

First, for any long-time follower of the rankings, this iteration felt leaner than years past. It’s true that the style of writing has shifted to become more concise and digestible (a deliberate appeal to millennial readers and the tl;dr generation) but there  are a number of features, such as screenshots, extra comparison tables and analysis that were not present this go around.

The second very interesting observation was the tone of this year’s rankings. While it’s generally difficult to get very excited over financial services, this year’s online brokerage rankings felt particularly grim with Carrick stating “The old binary world of full-service and do-it-yourself investing is dead.”

These are very strong words coming from one of the most influential voices in the Canadian personal finance space, and certainly should give pause to Canadian online brokerages. For 17 versions of the rankings things have seemed upbeat and exciting, but for number 18, it seems that the writing is on the wall for Canadian discount brokerages, and the message clear: innovate or become irrelevant.

Of course, as with any ranking or rating, it is important to contextualize the figures and commentary. The letter grades, while based on a system, still reflect a high degree of subjectivity and opinion of the author.

In the case of these online brokerage rankings, it is particularly interesting to note the lack of variance in the rankings over the years and also to compare the 40 attributes of a great online brokerage to the letter grades that were given.

While we will explore these in more depth in a subsequent article, it was noteworthy to observe that the more attributes of a great brokerage a provider has, it doesn’t necessarily translate into a better letter grade, and in fact, in some cases the differences between letter grade and number of features can be substantial. The following table shows, for example, that despite having more “great” features, RBC Direct Investing and Scotia iTRADE (each with 29 out of 40 attributes) received a grade of B while Questrade (with 22 out of 40) received a B+.

Change, and more importantly exciting change, as the tables above show, is hard to come by in this space. Over the past several ranking cycles, at least according to the categories measured by Rob Carrick’s analysis, most Canadian online brokerages are treading water.

With shrinking margins and increasing competition from other investment service providers, innovations in the online brokerage world seem like they’re going to be evolutionary rather than revolutionary. DIY investors, on the other hand, might need to stop asking ‘which online brokerage is best?’ and start asking ‘which online brokerage adapts the best?’

Roundup of Roundups Q2

The quarter was filled with excitement – a Canadian election, wildfires in Alberta and a Brexit all dominated the news cycle. On the discount brokerage front there were also some noteworthy developments heading out of the ‘busy season’.

The first important development noted was the pullback in deals from Questrade. As the dominant promotional offer provider, it was interesting to see them pump the brakes on offering new deals or promotions. This move would come to define the deals space for the remainder of 2016 and it opened up the field to other brokerages, such as Virtual Brokers, who were ramping up in providing incentives and promotions.

Another interesting development was the launch of the MoneySense brokerage rankings in April. These rankings, powered by Surviscor, crowned Qtrade Investor as the best Canadian discount brokerage overall, with numerous awards being the best at something being given out to many other brokerages too.  As we would come to learn later in the year, MoneySense magazine would abandon doing print versions of its magazine and instead publish exclusively online.

Social media starts to show signs of life in May with Scotia iTRADE launching another competition to drive traffic to its investor centre and National Bank Direct Brokerage making a play on LinkedIn to get a foothold there. Interestingly, late spring is when a number of issues and outages were noted with TD Direct Investing’s WebBroker – especially around the Brexit vote aftermath. These issues would continue to persist and irritate investors through the summer and fall.

Discount Brokerage Tweets of the Week

Glitches and technical hiccups were the theme of many tweets this week. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Green and/or Green

In this post from reddit’s Personal Finance Canada section, one investor was considering the pros and cons of choosing betwen a TD e-series account or a DIY investor account at Questrade. Find out what users (and Questrade) had to say.

Into the Close

That’s a wrap on a cold and snowy week. Remember, if you can’t get out of it, you’ve got to learn to get into it. Stay safe and warm this weekend!

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Discount Brokerage Weekly Roundup – December 9, 2016

It looks like 2016 is not about to go quietly. With new all-time high for the Dow and markets generally buoyant after the US election, bulls are still driving the bus. Good thing for them they’ve got snow tires. Also not slowing down heading into the end of the year: some Canadian discount brokerages who are hoping to hit the ground running (as it were) in January.

This week’s roundup features the latest big launch from one of Canada’s non-bank-owned brokerages as they double down on investor education. Next, we look back at Q1 of 2016 for the first in the series of reviews on 2016. As usual, we also have the latest investor chatter from Twitter and close out with conversations on investing forums to bring a little more colour into the mix.

Virtual Brokers Bets on Learning

Despite the finish line to 2016 being only a few weeks away, at least one Canadian online brokerage wanted to end the year on a high note with the launch of a new investor education section. Virtual Brokers, a non-bank owned online broker, launched a new investor education section on their website earlier this week.

The new investor education section contains a selection of videos and articles on a variety of topics relevant to DIY investors, such as options trading, registered accounts, different types of investing products and more.

One of the first things that stands out about the investor section is that it has a very different layout and experience than the rest of the Virtual Brokers website. The navigation of the education section is definitely built around being in the education section, something that Virtual Brokers believed to be important to creating a more content-focused experience for visitors to this section of the website.

As the investor education section has just launched, the content that is currently there will grow and it will likely evolve over time, according to Dennis Kim, a marketing specialist at Virtual Brokers who was directly involved in the development of this section. For the moment, however, the categories focus on a mixture of specific topics, such as account types, or life stages/personas, such as students, families or those who are working or retired.

The content itself is a mixture of internally produced and authored material, as well as content authored by investment firm AGF, which was republished by Virtual Brokers.

One of the key themes of the investor education section, according to Virtual Brokers, was to make information entertaining and ‘fun’.  Admittedly, finding information is a bit of an adventure as the layout may be challenging to navigate for specific information. Nonetheless, the content is freely available to website visitors without having to register or provide personal information – which is a big plus to those who would like to get information without having to provide their own contact details to access it.

Investor education provided by online brokerages has traditionally been something that DIY investors have met with some trepidation. On the one hand, there is clearly a benefit on the part of online brokerages to promote trading and investing, as that directly leads to more commissions being generated. Conversely, investors, especially those seeking to enter the markets for the first time or who are investing on their own, benefit from having tools, knowledge and confidence to navigate the markets.

So, while it seems like the ultimate win-win, investor education from most Canadian discount brokerages has historically fallen short of providing well structured, comprehensive investor education.  The reason is probably simple: discount brokerages are not in the primary business of education. To be fair, however, most brokerages have gotten around this by offering investor education via partners who are professionals.

From a strategic point of view, the latest move by Virtual Brokers to build out their educational offering is an interesting one.

At a time when the industry as a whole is facing challenges to contain costs, doing investor education well and in a timely manner means that it won’t be cheap. And, with pressures on margins, adding a line item like content creation means there is going to have to be an associated return (i.e. more clients or clients trading more) that can justify the spend.  Further, with other sites such as GetSmarterAboutMoney.ca from the OSC and InvestRight from the BCSC also actively marketing themselves as sources for trustworthy information on ‘the basics’ of investing/trading, attracting an audience and differentiating the product to the DIY investor will also take time, effort and ultimately resources.

For DIY investors, the upshot is that in order to effectively compete against one another, Canadian discount brokerages will have to adding features and services that are relevant and useful in order to stand apart from one another. Virtual Brokers’ latest move into investor education signals that they are not standing still in a landscape that is becoming increasingly competitive. With robo-advisors now nipping at their heels and other online brokerages doubling down on technology, now more than ever, the brokerages who aren’t moving, aren’t improving – and that will be a tough lesson for any brokerage to learn the hard way.

TD Direct Investing Launches a Big Deal

Is it a coincidence that TD Direct Investing launches a major commission-free trading deal just before the official colour 2017 was announced to be a shade of green? We think not.

For DIY investors heading into the Christmas break (and who are surfing around for an online brokerage to choose), TD Direct Investing seems to have a knack for timing by launching a new offer that provides up to 200 trades commission free. Of course, being the ever savvy marketers, the ‘pitch’ to investors is that of getting up to $2,000 cash back, something that investors would definitely tune in to. But, all is fair in love and advertising.

This offer looks to take aim at clients that most bank-owned brokerages would be interested in, namely individuals with at least $25,000 in assets. TD Direct Investing’s latest promotion is tiered meaning the more an individual deposits the higher the number of trades they can get commission-free. The minimum deposit is $25,000 which nets 50 commission-free trades; the next tier starts at $50,000 which can get DIY investors up to 100 commission-free trades and finally those depositing at least $100,000 are in line to receive up to 200 trades.

Of course, now that TD Direct Investing has stepped into the deals pool, it will force a pre-Christmas scramble across the board for other brokerages to step in or risk being eclipsed by one of Canada’s most popular online brokerages heading into 2017.

Roundup of Roundups Q1

Now that 2016 is almost over, it’s a great moment to look back on the year that was and reflect on what some of the biggest stories were over the year. With so many great stories to consider, we’ve decided to break down the biggest stories by quarter, starting first with Q1 of 2016.

The year kicked off on a somewhat panicked note for many investors. With the price of oil in a tailspin and investors worried, the savvy investors that braved the bad news were handsomely rewarded. On the discount brokerage front, one of the biggest stories from Q1 came from Virtual Brokers, when they announced their new commission-free trading offer and also reconfigured their commission pricing structure. And that was just January.

Not to be outdone by fee changes, National Bank Direct Brokerage pulled the trigger on removing commission fees altogether on Canadian ETFs. After a couple of promotions in which this same offer was made, the official shift to commission-free ETFs, at least for Canadian ETFs, meant that their bank-owned brokerage peers now had to pony up some serious counter offers to compete. While Scotia iTRADE, the only other Canadian bank-owned brokerage to offer a selection of 50 commission-free ETFs, National Bank Direct Brokerage’s offer made over 500 ETFs available. With the shift in the Canadian dollar, this made the offer all the more attractive for NBDB. As the year went on, however, there wasn’t as much hype or advertising around this feature, nor from NBDB in general – a surprise given the contest to gain ground against more visible and established online brokerages can really only be won at this point by a boost in awareness (i.e. marketing).

Lastly, the trend towards improving user experience via website improvements saw RBC Direct Investing announce a major upgrade to their previous website. As a very recognizable brand, RBC Direct Investing later found out very quickly that newer doesn’t necessarily mean better – something that should ring true while technology budgets are increasing across the board in financial services. While generally receiving positive feedback, there were still many users who had grown accustomed to the previous layouts and where to find things that mattered to them.  Nonetheless, the shift in digital direction spoke to a larger trend across the online brokerage space where technology and digital strategy became a huge talking point for 2016.

Discount Brokerage Tweets of the Week

This past week there was lots of green and red on users screens, not just from upticks and downticks. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Qtrade Investor, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Easy Come

In this post from the reddit Personal Finance Canada thread, one user recounts the process involved in opening an online brokerage account with TD Direct Investing along with questions on some of the thornier parts of getting started.

Easy Go

In contrast to the post above, this post, also from the reddit Personal Finance Canada thread, was about the experience of switching out of TD to Questrade.

Into the Close

That does it for this week’s roundup. For those of you who managed to conquer the snowpocaplypse in Vancouver, congratulations! Of course just know that the rest of Canada is looking westward and thinking it still seems like a dusting. Whether you’re digging out from under a pile of snow or digging around in a mall for a last minute Christmas gift, have a great weekend!