Category: Discount Brokerage News

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Discount Brokerage Weekly Roundup – October 24, 2014

Makeovers seem to be making the headlines this past week. Markets this past week gave investor’s a bit of a portfolio makeover, actress Renee Zellweger got a bit of an extreme makeover and set the internet ablaze and even the Canadian discount brokerage landscape saw (and is about to get) a bit of work done.

In this week’s roundup we take our cues from a Zellweger movie-inspired theme to lead us through the makeover from a major bank-owned online brokerage pricing adjustment. Next we look at earnings from a pair of US brokerages to see what their operation looks like without the makeup on. Finally we’re proud to announce a new community feature from SparxTrading.com that we think will help change the landscape for the better for all DIY investors. Of course, our roundup will be completed by some insightful banter from the Canadian investor forums.

You Didn’t Quite Have Me at Hello

This past week saw an interesting announcement come from BMO InvestorLine regarding their flagship AdviceDirect platform. Specifically, BMO InvestorLine is changing the fee structure and lowering the threshold to participate from $100,000 down to $50,000.

While BMO InvestorLine has tactfully positioned this move as improving ‘accessibility’ the timing and nature of the changes demonstrate that evolutionary axiom: adapt or die.

It has been just over two years since BMO InvestorLine bet big that their unique AdviceDirect platform would meet a need for the “in-between” DIY investors who embrace the lone wolf approach, but still need the “pack” to provide counsel and confidence.

In the wealth management industry of today, however, two years is a long time to go status-quo. The “phone a friend” and flat fee approach of AdviceDirect has faced headwinds of ultra-low MER ETFs and the robo-advisor phenomenon. In fact, the same day BMO InvestorLine announced their changes to AdviceDirect, National Bank Direct Brokerage formally announced their launch of InvestCube service, an automated ETF management solution for DIY investors.

With new tiered pricing, fixed dollar charges and lower thresholds to participate, the new face of AdviceDirect may be more accessible to DIY investors. The challenge in front of BMO InvestorLine, however, is getting Canadian investors to pay attention in an even more crowded marketplace.

Show Me the Money

It’s earnings season for some major US online brokerages and with it comes a chance to ask or answer “how’s business?” Quarterly earnings for E*Trade Financial and Interactive Brokers seem to suggest the answer depends on who you talk to.

On the one hand, there is a ‘good news’ story. Bolstered by higher trade volume, E*Trade saw its third quarter earnings jump more than 31% as well as impressive performance on key metrics such as the number of trades and net new accounts. Interestingly the average commission per trade came in at $11.05 per trade, a number that seems incredibly high relative to Interactive Brokers’ average of $4.21 per trade. Nonetheless, after many years of grinding away at deleveraging their business, the results and market conditions are lining up in their favour. These latest results this represent a third successive earnings win for the US brokerage.

Interactive Brokers, on the other hand, probably provoked a wave of face palms from analysts and shareholders alike. The Q3 EPS tallied in at $0.05 – a far cry from the consensus estimates of $0.23. Among the reasons cited for the miss were some rather hefty losses (~$70M) by their market making segment demonstrating that markets can humble traders of all sizes. On a slightly more positive note for Interactive Brokers, they continued to see growth in the number of accounts (18% y/y) and total daily average revenue trades (DARTs) up 14% over the same period last year.

Help Me Help You

Many Canadians understand that being a DIY investor isn’t simple, but even so, we believe it certainly shouldn’t be prohibitively hard either. What we’ve observed over the few years we’ve been around is that one of the biggest sources of support for investors is actually other investors.

It’s both inspiring and awesome to know that there are lots of great online communities that investors of all experience levels can access to get support, encouragement and perspective on their investing journey.

So, after much research, discussion, caffeine and coding, we’re happy to announce first to the loyal weekly roundup readers that we’re launching a space on SparxTrading.com for the community of online brokerage users. We’ll have the official beta launch link on our Twitter feed so be sure to check our feed over the upcoming week to get the first look.

Ultimately we believe that by making finding and navigating information more efficient, we can improve the experience of being a DIY investor. We hope it will be a platform that will attract like-minded folks to help, support and learn from one another as well as a place to get reliable answers to questions relevant to their online brokerage experience.

Event Horizon

Attention all self-directed investor education and event enthusiasts, learning opportunities are abound. This week’s event horizon features a veritable potpourri of offerings. Sample and enjoy.

Oct. 25 (Sat)

  1. TD Direct Investing – Workshop: Getting Started with Options

Oct. 28 (Tues)

  1. NBDB – Introduction to Call Options
  2. TD Direct Investing – Introduction to Fundamental Analysis
  3. Scotia iTrade – Cash Management Using ETFs
  4. Desjardins Online Brokerage – Maximizing Your Trading Experience

Oct. 29 (Wed)

  1. TD Direct Investing – Understanding Margin & Short Selling
  2. Desjardins Online Brokerage – Portfolio construction using ETFs

Oct. 30 (Thur)

  1. TD Direct Investing – Introduction to Fixed Income
  2. NBDB – Introduction to Put Options

 From the Forums

Just when you thought you were out…

Is too much of a good thing no longer a good thing? In this forum post from Canadian Money Forum, a client of Scotia iTrade is testing the waters for what other investors might suggest as a good alternative. Check out the long list of pros and cons given to the author of the post from a handful of level headed voices.

Clear and present pricing

The impact of regulatory changes to the way brokerages report their fees shines through in this post from the Financial Wisdom Forum. In the post a BMO InvestorLine user details a breakdown of a potential bond transaction and shows that when brokerages are more transparent with pricing, good things can happen.

 

That does it for this week’s roundup. It has been a tough week for Canada. Going into the weekend, the SparxTrading.com team salutes and says thank-you to the brave men and women who, because of their courage and sacrifice, make this country the great nation that it is.

 

Credit: Nathan Denette/CP
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Discount Brokerage Weekly Roundup – October 17, 2014

[updated Oct.18] If you’re like the markets this past week, you’ve ‘bear’ly made it to Friday.  For many investors and traders, a higher than usual dose of uncertainty made it a harrowing week.  Of course, Canada’s discount brokerages know all too well about the specter of uncertainty as they are now trying to navigate a brave new world of low-commission pricing.

In this week’s discount brokerage round up, we take a look at the different directions brokerages are taking in this new landscape. First, we look at a pair of direct competitors adding features into their product mix. Next we scope out an emerging battle for investor attention as brokerages are going to new channels to capture attention.  We then roll-out a new feature of the roundup – our “event horizon” which highlights upcoming investor education webinars and seminars. Finally, we cap off the week with some very instructive investor comments on the harsh realities of online trading.

Support and Resistance are Futile

The infamous mantra of Star Trek’s Borg came one step closer to becoming reality as the “robo-advisor” trend continues to gain momentum here in Canada.

National Bank Direct Brokerage recently launched their new “InvestCube” service and in doing so, they’ve taken direct aim at that large segment of investors who want intelligently diversified, low-fee ETF portfolios without the ongoing maintenance work of constant rebalancing.

While NBDB are not alone in this regard, they are casting their nets at a time when marketplace excitement over these kinds of services is heating up.

Briefly, InvestCube is being touted as a way to simplify DIY investing by combining expertly curated exchange-traded fund (ETF) portfolios with smart automatic rebalancing synched to allocation thresholds.  Investors can choose from the following five portfolio categories:

  1. Conservative
  2. Moderate
  3. Balanced
  4. Growth
  5. Equity

With a catchy name and polished pitch, National Bank Direct Brokerage is hoping InvestCube has the curb appeal and sticker price to win over long-term investors who want to go it alone, but don’t necessarily have the time, or the desire, to analyse data.

Fees for the service range from 0.99% to 1.04%, depending on the portfolio selected, with no per trade commission costs. The minimum buy-in for this service is also $25,000, which means there is a clear segment of this ‘robo-advisor seeking’ group NBDB is looking to go after.

NBDB says InvestCube is currently available for all account types; including RRSP, TFSA, RESP, LIRA / LRSP, RRIF account cash margin account and InvestCube is available in all Canadian dollar denominated account types.

Party in the TFSA (…and RSP)

Desjardins Online Brokerage was also on our radar as they’ve recently added US dollar registered accounts (RRSP and TFSA) to their feature offering.  Although this feature release has been in the works for some time, it comes on the heels of a recent announcement from TD Direct Investing highlighting the long awaited launch of USD registered accounts.

Foreign exchange fees have (and continue to be) a generous revenue generating function for brokerages but with several other brokerages already offering USD registered accounts (RRSP, TFSA and LIRA), Desjardins Online Brokerage is wisely closing the gap between themselves and their competitors on a long-sought after feature.

For Desjardins Online Brokerage’s competitors, things are less rosy. The impact of this latest feature release means that smaller players, who were among the first and most vocal champions of this account type (and the ones who rely on it the most to differentiate themselves from larger brokerages), will have to dig deep to come up with something that makes them seem to be truly ahead of the curve. Also, competitors (big and small) that don’t offer this particular feature have a very tough time convincing clients to continue to park all of their assets in one place.

May I Have Your Attention, Please?

While pricing and features are one way to get attention from investors, another way is to try and be more ‘interesting’. In today’s world, one way to do that is to turn to video.

Qtrade recently rolled out a platform product video demonstration, that we spotted on their website. While popcorn and soda won’t be required for this screening, the video features a palatable 210-second run through the platform. And Qtrade is not alone.

National Bank Direct Brokerage is also in the mix with some branding video content, all geared towards capturing the attention of Canadian self-directed investors. Other brokerages such as TD Direct Investing have gone even further into the “video” field by pushing and sponsoring their own content channel.

As today’s online investor is smarter, more knowledgeable and spends more time online, Canadian online brokerages are going to have to go beyond price in order to compete for and win their attention. If they don’t like what’s being said, today’s investors will simply change the channel or worse swipe left.

Event Horizon [New!]

Introducing the newest feature of the round up: the event horizon. This section highlights the self-directed investor education events and opportunities for the upcoming week.  While many of the events are held by discount brokerages, there are other events included too. [note: TD Direct Investing holds many events however because of space limitations, we’ve selected a few we thought might be interesting to include. Also, events may reach capacity at which point registration may not be possible. Please ensure to check if space is available if you’re interested in attending.]

Oct. 21 (Tues)

  1. National Bank Direct Brokerage: Stop Orders: A Winning Solution Worth Knowing
  2. Scotia iTrade:  Index Iron Condors – A Friend When There Is No Trend with Pro Market Advisors
  3. TD Direct Investing: Smart Money: Investing Like a Pension Fund
  4. TD Direct Investing – Options as an Income Strategy

Oct. 22 (Wed)

  1. Scotia iTrade: Options Trading and Volatility with Montreal Exchange
  2. TD Direct Investing – Portfolio Strategies

Oct. 23 (Thur)

  1. TD Direct Investing: Options Trading using Technical Analysis
  2. TD Direct Investing:  Financial Repression – Where are interest rates heading? [Fr]

Oct. 24 (Fri)

  1. TD Direct Investing:  Advanced Options

Oct. 25 (Sat)

  1. TD Direct Investing: Workshop – Getting Started with Options

From the Forums

Hello, is it cash you’re looking for?

With the exception of Lionel Ritchie, there’s probably nobody else that could charm their way out of a margin call from their broker – and even then those are slim odds.  As one online investor found out from this comment on Questrade’s profile page, that when it comes to risk-management, it’s every trader (and brokerage) for him or herself.

D-Lister

For every shining star there has to be a lot of surrounding darkness. In the stock market, there are many companies that don’t make headlines for the good reasons and there are many more that fade into the darkness of being delisted.  This post on the reddit personal finance Canada highlights some important points about which stocks can and can’t get past the velvet rope of TFSA eligibility.

That does it for another edition of the roundup.  Wherever your adventures happen to boldly take you this weekend, hopefully fun follows at warp speed!

 

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Discount Brokerage Weekly Roundup – October 10, 2014

Whether you’re rolling into the end of the week like a new Tesla or like a slightly battered blue chip, congrats on making it to the Thanksgiving holiday weekend. Even Canadian discount brokerages are getting into the spirit by dishing out a generous helping of interesting stories for DIY investors to tuck into this weekend.

In this week’s roundup, we’ll start with an exciting dish: a deal announced from one of Canada’s largest discount brokerages. You’ll want to sample the sides as well; Dalbar Canada served up a ranking award to a popular Canadian online brokerage. And speaking of rankings, we’ve dished out a big scoop of our special series on J.D. Power & Associates’ 2014 Canadian discount brokerage rankings. Finally, we’ll send you home with a few parting gifts from the forums, if you can make it out the door.

Pass the Greens

It’s official, discount brokerage deal season is here. Just ahead of the long weekend, TD Direct Investing served up a holiday platter of its own. The skinny: it’s a commission free trade offer for those with $50,000 or more. The dish includes a hearty number of commission-free trades, up to 200 (which could be worth up to $2,000 in maximum savings). For extra helpings on the details, check out our discount brokerage deals page.

Let’s Get this Party Started

TD Direct Investing’s latest offering arrives on the heels of the recent move by CIBC Investor’s Edge, who officially slashed their standard trading commission rates to $6.95. TD’s response mirrors one  from earlier this year when they lowered standard pricing to $9.99 per trade in response to RBC Direct Investing’s radical price drop.

The price war between Canadian discount brokerages is on and collateral damage is likely intended. While self-directed investors are reaping the rewards,  discount brokerages without a big deal or low standard fees are on the clock and will need more than Pepto-Bismol to deal with the “agita”.

Undo that Belt Buckle, It’s Dessert Time

We’re rolling out the roundup sweet table with a piece of our special series pie. This week’s confection features our first installment of the review of the 2014 J.D. Power & Associates’ Canadian discount brokerage rankings.

The article explored how investor satisfaction is measured and why that matters for those who use the rankings when evaluating potential brokerages. Also baked into our special series are some fascinating investor satisfaction insights into price and perception. Don’t forget to save room for part 2 which is coming around the corner.

Making a Statement

This past week saw Questrade take the top spot amongst several Canadian discount brokerages for the quality of their investor statements as evaluated by Dalbar Canada.

The evolution of the Canadian financial regulatory landscape has meant that brokerage firms are increasingly being required to disclose critical information about fees and charges for the services they provide.When it comes to statements, however, there is a unique opportunity to provide clients with additional information that may be of value.

It was in this light that Questrade’s investor statements stood out amongst their peers earning  a “very good” designation for their efforts  – the only Canadian discount brokerage of those evaluated to do so.   The discount brokerages that had their statements evaluated as part of this year’s study included:

  1. BMO Investorline
  2. CIBC Investor’s Edge
  3. HSBC InvestDirect
  4. Questrade
  5. TD Direct Investing
  6. RBC Direct Investing
  7. Scotia iTrade

As online brokerages continue to navigate their way through the new low-commission price environment, they will inevitably turn their attention to details big and small to improve customer experience. And, the attention they pay to great client experiences might just be the statement that speaks the loudest to consumers.

From the Forums

Fee Fight Fo Funds

Discount brokerages aren’t the only financial players locked in a heated price war.  ETF providers north and south of the border are also battling one another on fees much to the delight of DIY investor portfolios everywhere.  This past week one of the big stories for do-it-yourselfers was ETF provider Vanguard lowering their fees on many of their already low commission ETFs.   Forums were abuzz and we’ve compiled the threads here for easy reading:

  1. Canadian Money Forum – “Vanguard Canada lowers fees on 11 ETFs”
  2. Financial Wisdom Forum – “Vanguard Canada Cutting Fees”
  3. Reddit Canadian Personal Finance – “Vanguard Canada cuts ETF fees across the board”
  4. RedFlagDeals’ Investing Forum – “Vanguard drops fees on 11 of its Canadian ETFs”

Extra Stuffing

Who doesn’t like a great deal? Although this thread didn’t get much attention, it did contain an interesting comparison between the promotions currently underway at CIBC Investor’s Edge and Scotia iTrade. Readers get an extra nugget of information about forex conversions that is likely to get some folks grinning wider.

That does it for this week’s roundup.  Don’t “fur”get that Canadian markets will be closed on Monday for the holiday weekend. Hopefully the only trading this weekend will be great stories, fantasy sports picks and great recipes.  Have a safe and enjoyable weekend!

 

 

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Discount Brokerage Weekly Roundup – October 3, 2014

Leaves and temperatures aren’t the only things falling this time of year.  Apparently markets and commissions at Canada’s discount brokerages are dropping too.  Even though we’re barely into the fall and have just crossed into October, the battle for discount brokerage supremacy is back in full swing after a late summer lull.

For this week’s roundup we’ve raked in some of the most colourful stories starting with a big price drop from a bank-owned brokerage, a long awaited feature launch, a selection of hearty DIY investor-themed stories and interesting stats on retail investor trading activity from a US brokerage.  To close-out the roundup we’ll take a look at what investors were saying in the Canadian financial forums.

If a Commission Price Falls in the Woods…

It most certainly does make a sound.  This past week we reported that one of Canada’s bank-owned online brokerages, CIBC Investor’s Edge, may be lowering their standard commission rate to $6.95 for all clients regardless of trading volume or account size.  While the timing of the move is likely to come in the near future, internal sources suggest it could be announced as early as Monday.

Despite a price drop by RBC Direct Investing to kick-off the year, the latest price drop by CIBC Investor’s Edge takes the competition among discount brokerages to a whole new level.  By substantially beating the current standard commission prices (which are now just under $10 per trade) at most of their bank-owned peers (and some independent brokerages), Investor’s Edge is pushing the other brokerages to go all in on the pricing or step up substantially on service and platforms to justify the cost differential.

Coming this Fall

Even though there have been many dates thrown around for the launch of the long awaited US dollar registered accounts to be implemented at online brokerage giant TD Direct Investing, it appears that the date has finally been narrowed down to several weeks from now (possibly by the end of November).

Early reaction from DIY investors is a mixture of excitement and skepticism. Should it turn out to be “different this time” brokerages that have heavily advertised the USD registered accounts as a selling point (such as Questrade and Virtual Brokers) will have to go back to the drawing board to sway investors from the allure of bank-affiliated convenience and now lower fees.

#FinLit

This past week also saw several articles of interest to the DIY investor crowd come from the Globe and Mail.  The first was an excellent article by Rob Carrick on the tenuous connection between providing financial advice and the selling of financial products.  Carrick does a great job of articulating the challenges of navigating the financial advice landscape and how investors need to be both cautious and skeptical when seeking out financial counsel from an “advisor”.

In keeping with the advice theme, another article from the Globe and Mail on the use of social media, Facebook specifically, for investment advice could be risky for consumers as well as for providers.  We’ve taken a look at social media and investing information previously, however the conclusion is always largely the same: always be careful when taking investment advice from the internet.

Finally, the price war between brokerages also got a bit coverage on the heels of the Qtrade price drop last week.  In this article (available to Globe subscribers only), Qtrade’s CEO Scott Gibner provides a bit of context behind their latest move to try and get ahead of the big banks. Of course as CIBC Investor’s Edge may soon show, Qtrade’s wager may need some recalibration.

The Starter Menu

Starting a new month means that we reset the game clock on the deals activity across the Canadian discount brokerage landscape.  Coming into October the deals and promotions were relatively stable with Questrade shuffling a few deals out the door and bringing other in their place. One notable new entrant into the deals section was Credential Direct who is bringing back their ‘risk-free trial’ offer where they’ll cover the transfer fees (up to $150) for clients who want to switch over.  After 90 days if clients are not satisfied with the move, Credential Direct will waive their exit fee ($125).   Given their recent pricing drop, and that of their regional neighbour Qtrade, it should be interesting to see what other promotions start to emerge as Canada’s online brokerages try to get creative in attracting in new clientele.

Cashing In

Once again Interactive Brokers’ trading figures have been released and they show they’re grinding higher across a number of performance metrics.  Notably, they saw a substantial increase in the number of Daily Average Revenue Trades (DARTs) of 21% (year over year) and 17% (month over month). Trading tends to pick up with market volatility so the spike may be reflective of greater uncertainty with stocks.

Also of interest, the average commission per equity trade of $2.27 and order size of just under 2000 shares.  While not a straight apples-to-apples comparison, looking at the fact that earnings and account growth are positive at Interactive Brokers while commission pricing is very low makes a case for commission pricing continuing to fall here in Canada.

From the Forums

There was quite a bit of discount brokerage related commentary this past week across the Canadian investor forums.  Here is a sampler of some of the interesting posts that we saw pop up in several spots covering the same/similar topics.

TD Direct Investing Launching US Dollar Registered Accounts

This was definitely a big story given the size of TD’s market share of the discount brokerage market.  Here’s a list of several forum threads and the buzz already forming:

CIBC Investor’s Edge Lowering Commission Pricing

Reactions on the Canadian personal finance reddit page as well as the investing thread of Red Flag Deals were generally positive (who doesn’t like to save money?) to the news of a lowered standard commission fee.

Qtrade Lowering Standard Commission Fees

There were a couple of forums that this announcement stirred up.  A particularly insightful thread on the financial wisdom forum is worth a look to see how seasoned investors’ view the latest move by this brokerage.  (There was also a reddit post here)

Phew. That does it for this week’s roundup.  While the week ended on a less flashy note than a George Clooney wedding, a busy week and a weekend always make for a perfect couple – too bad that romance doesn’t last longer. Fantasy sports fans good luck in your hockey drafts, and for non-fantasy sports players, find a way to make this a stunning weekend!

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Discount Brokerage Weekly Roundup – September 26, 2014

When it rains it pours. That’s not only true if you’re in Vancouver, but also if you’ve been following what’s been going on with Canadian discount brokerages this week.

In this edition of the roundup we highlight what’s probably been one of the biggest and busiest weeks of 2014 for Canadian brokerages. On the menu: an article that dives into the strategy behind one of the largest offers currently available from a brokerage, a major discount brokerage ranking announcement, a big price drop announcement from an independent online brokerage as well as a mention for SparxTrading in the news, and the tour of the Canadian investor forums.

Trade Here Often?

It’s no secret that competition between Canada’s discount brokerages is at an all-time high. Since the RBC Direct Investing commission price drop earlier this year, brokerages big and small have been scrambling to not only match the offer but to also innovate and differentiate themselves in a new pricing world. While many brokerages have followed suit by lowering commission prices (including one this past week that we look at below) Scotia iTrade, a major bank-owned brokerage, has opted for a particularly challenging road by not lowering their standard commission fees. In this article on Scotia iTrade’s latest promotion we take a deep dive into one of their recent strategies of offering 500 free trades, and what it signals to consumers as well as to iTrade’s fellow brokerages.

They’ve got the Power

As we step into discount brokerage rankings season, JD Power’s Investor Satisfaction Survey results are in and Desjardins Online Brokerage has once again taken top prize. There were many interesting angles to this past year’s results: from the fact that only 7 online brokerages were actually covered instead of the previous years’ 11 to rise in the ranks of RBC Direct Investing. The big story, of course, is that Desjardins Online Brokerage has managed to not only earn a podium finish in all of the awards and for most of those they’ve been first. Stay tuned for our upcoming story on the results for 2014. In the meantime, check out our primer on the survey and how the results are typically calculated.

What Rhymes with Price Drop?

There are those who believe that if you’re planning on showing up fashionably late then you better look fashionably good. One online brokerage may have done just that with their standard commission price drop today when Qtrade Online Brokerage announced that they have lowered and simplified their standard commission price for online trading. The new numbers they’re sporting: $8.75 for their standard commission price and $6.95 for their “investor plus” pricing – eligible to those who make 150 or more trades per quarter or have $500,000 or more in assets with Qtrade.

Not content to just match the offers of the big banks, Qtrade has taken their standard pricing to lower than the “$9.99” and “$9.95” crowd, and also lower than their regional counterpart Credential Direct’s $8.88 per trade pricing. Their previous standard pricing started at $19.99 per trade and so this move offers substantial commission savings for the “standard” crowd.

Like their bank-owned counterparts, the way to offset lowering commission prices is with administrative and ‘inactivity fees’. The conditions on the new offer include paying an administrative charge of $25 per quarter for those who have less than $25,000 with Qtrade. The fee may be waived by placing at least 2 commission-generating trades per quarter.

While the new commission fee structure is effective immediately, it seems that the inactivity fees take effect in January, so there’s just about a quarter without having to worry about that new charge for those to whom it applies. Be sure to check out the upcoming piece on Qtrade’s latest move coming shortly.

That’s Us in the Spotlight

SparxTrading got a little media love courtesy of an interesting piece in the Globe and Mail by Gail Bebe on discount brokerage deals – something we track pretty closely here.

While the crux of the article was to make a careful decision when weighing the benefits of an incentive such as free trades (or a “free iPad”), one of the reader comments to the article also made a compelling point:

“Given that most of the brokerages basically all offer the same core level of service for the same price (give or take a couple of bucks per trade), if you are looking for a new broker you might as well take advantage of the best promo you can get.”

 From the Forums

 Aaand it’s gone

Although it’s an infamous South Park reference, the feeling of putting money into an online investing account only to have it disappear is not just the stuff of fiction apparently. In this post from the RedFlagDeals.com investing forum, one user had the unfortunate scenario play out. Check out what readers had to offer for perspective and how the brokerage involved (Questrade) tried to correct it.

Tricks of the Trade

In another post about getting funds into Questrade, this post by a reddit personal finance Canada reader offers up a tip when transferring money to this discount brokerage. Check out the commentary offered by the group and the interesting fact that Questrade’s social media team (aka John from Team Questrade) is also covering reddit.

That wraps up another edition of the roundup and takes us into the end of September. Hopefully the only red we’ll see stepping into fall will be on the trees and not the markets!

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Discount Brokerage Weekly Roundup – September 19, 2014

As summer officially winds down, the news in the markets and amongst discount brokerages seems to be about closing out summer with a bang. A far cry from the tumbleweed of last week, this past week saw some big numbers from the new all-time highs on major indices, the mega-iPOs and a brokerage deal that is kind-of-a-big-deal.

In this edition of the roundup, we take a look at a major deal announcement from a popular discount brokerage, a ‘battle of the brands’ investor educational dust up, a personal finance site hitting a major milestone and of course we round out with interesting chatter from the forums and a geeky allusion to the current market hype.

Free Trade Agreement

Earlier this week the Canadian discount brokerage landscape saw a massive deal unfold. Scotia iTrade announced their latest offer: 500 commission-free trades or $500 cash back for deposits of $500,000 (or more). Yes, that is correct, 500 commission-free trades.

Without question, waving a big red banner with 500 free trades is going to get the attention of bullish investors, competitors and industry observers. Part of that attention may come from a desire to take advantage of the offer, however there is probably another set of voices asking: how much is too much?

Reading between the lines, both the timing and size of this deal are strategically important to Scotia iTrade. Last week we mentioned that the clock is ticking closer to the Globe and Mail discount brokerage rankings and that pricing is going to be a rough patch for Scotia iTrade in the upcoming scoring.

Stay tuned for an in-depth look at this offer and what the strategy behind the offer might signal to both competitors and investors alike. For more information on Scotia iTrade’s latest promotion, check our deals and promotions section.

Taking it Outside

One of the strategic ‘battlegrounds’ between Canadian brokerages has been with investor education. Several brokerages in particular: Desjardins Online Brokerage (Disnat), National Bank Direct Brokerage, Scotia iTrade and TD Direct Investing have committed significant resources to ongoing live investor education.

While each of these brokerages has taken a slightly different approach to providing investor education, partnering with high profile traders/investors has been largely the strategy of Desjardins Online Brokerage (in particular Disnat) and more recently Scotia iTrade.

In the upcoming weeks both of these brokerages will be taking their star-power on the road for multi-city education tours.

For Desjardins Online Brokerage, their popular guided portfolio strategy (GPS) spokesperson and portfolio strategist Steve Deschesnes will be heading to Calgary, Edmonton, Vancouver and Victoria throughout October. Desjardins’ team will also be at the World Money Show in Toronto as will Tyler Bollhorn and Rejean Paul, both of whom are educational partners of Desjardins Online Brokerage.

Not to be outdone, Scotia iTrade also has a big fall educational tour with their marquis educational partner Larry Berman (of BNN’s Berman’s Call). Interestingly, Scotia iTrade will also be present and visible at the Toronto Money Show as show sponsors and with educational partners and reps. The incredibly ambitious Fall road show Larry Berman and his team have planned will take them to 14 cities across the country between now and the end of November.

Of course in addition to the educational tours, there is the Money Show and the Cambridge House International Canadian Investor Conference which should make this fall a busy one for investor education.

A Rising Tide

One of the popular sources for conversation on Canadian personal finance is quickly becoming the personal finance Canada thread (subreddit) on Reddit. The growth in readership on this source has been substantial with the group going from just under 8000 ‘readers’ in May to 10000 ‘scallywags’ as of this past week. The thread covers a wide array of personal finance topics, including many questions about investing and brokerages, as well as insurance, taxes, credit cards and more.

While the pirate/nautical themed language is a recent development, it has been great watching the community grow and help out one another in their journey to improve their understanding of personal finance. Congratulations to the community and here’s hoping there’s many more who find value in the group (yarr).

From the Forums

With that great segue, this week’s forum scan picked up a couple of interesting discount brokerage related stories.

Settling Down

In this first post from the Red Flag Deals investing forum, an active investor who made the switch from TD to Interactive Brokers hit a slight speed bump when it came to accessing their funds immediately after closing out a position. Check out what the community offered up in terms of explanations.

One Stop at a Time

In this post from the Canadian Money Forum, an interesting thread from a user highlights the use of trailing stops as part of a risk management strategy. Check out the interesting response from the community about the reliability of backtesting and how that can impact the interpretation of results.

That’s a wrap for this week – and what a week. With all of the hype coming back into the markets thanks to the massive Ali Baba IPO it’s interesting to see how much further things advance without the markets taking a bit of time to breathe. If you’re a football fan, you might be interested in this IPO-meets-football story that could get your portfolio into the end zone (or turfed). And, if you’ve bought into the hype of the markets so far, here is a somewhat nerdy yet elegant demonstration of the ‘mercurial’ nature of bubble bursting as some food for thought. Have a great weekend!

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Discount Brokerage Weekly Roundup – September 12, 2014

Spectacular northern lights thanks to solar flares, wild summer snowfall in Alberta and Apple being able to design a smart watch but not a smart map. It’s been a strange week to be sure. Equally strange – the silence from Canada’s discount brokerages through the month of September. It’s not often that there’s a quiet patch amongst the Canadian discount brokerages, however this past week that rare event came to pass. As the saying goes though, still waters run deep.

Even with the brokerages stepping out of the spotlight, there is still lots of activity going on amongst the brokerages which should surface this fall or in short order. In this week’s roundup, we’ll take a look at the ‘whispers’ of what’s coming from brokerages here in Canada including piecing together an interesting trend we see emerging. Following that, we’ll take a look at several DIY investor and online-brokerage focused news pieces that crossed the roundup radars this week. Finally we’ll wrap up this week’s roundup with some insightful conversations about online brokerages from the Canadian investor forums.

Things are Quiet, Too Quiet…

The ominous cliché of something about to happen appropriately captures the state of affairs in the Canadian online brokerage landscape. While this past week did not see any major announcements, feature releases or big promotions, Canadian discount brokerages are still hard at work planning some interesting and splashy products to be rolled out in the very near future. While we can’t yet reveal specifics, here’s what we’ve heard is (and seen to be) around the corner from several different brokerages:

  • A complete website upgrade
  • A new iPhone/iPad app
  • New active trading platform
  • Fall deals/promos

Building the Bench

Equally interesting is the recent blip in the hiring of client service representatives at Canadian brokerages. What specifically caught our eye were recent and coinciding job postings by RBC Direct Investing, Scotia iTrade and BMO InvestorLine. Most interestingly, Questrade is currently shopping for 10 client service reps to join their team (according to their careers website).

Hiring for front line service reps is always on the minds of online brokerages however given the shift in the competitive dynamics on commission pricing, service is going to play a much more prominent role in the customer experience and so building bench strength in this area will be increasingly important.

The kinds of positions Canadian online brokerages are seeking to fill are suggestive of the trends in their business as well as the direction that consumer demand and competition are pushing. The focal point appears to go beyond pricing and is starting to center on client experience – from customer service through to website and platform interaction.

For online investors, this should be an exciting fall season. Stay tuned as we continue to track this trend and how it unfolds.

To DIY or not to DIY

This past week also saw a couple of interesting DIY-focused articles get published in the Globe and Mail.

The first article, by personal finance writer Gail Bebee, tackles the question of whether or not DIY investing is right for everyone by exploring some of the advantages and disadvantages of going the DIY route.

Among the advantages to DIY investing mentioned were greater control, lower fees and the potential for better returns. Some of the cautions raised included the amount of time to learn the ropes, excessive trading and improper asset allocation. It’s worth a read especially for those at the beginning stages of their investing journey.

A second article (available via subscription only) related to DIY investors came from Rob Carrick, also a personal finance columnist with a particular specialty in the online brokerage segment.

As a lead up to his annual online brokerage rankings, the article discusses the new reality of sub-$10 per trade commissions for many Canadian brokerages.

What seems to stand out in the piece is that brokerages will be categorized (and scored) in his upcoming rankings on the basis of whether they offer sub-$10 trading commissions as a standard price or not. Two brokerages in particular, Scotia iTrade and CIBC Investor’s Edge, were highlighted as trailing the pack of their bank-owned peers when it comes to reducing standard pricing.

According to Carrick “brokers offering low commissions on a flat, no-questions-asked basis will have a decided advantage. Sub-$10 stock trades are the new reality in online investing, even if some firms haven’t quite accepted it yet.“

From the Forums

This Spud’s For You

Regular readers of the roundup or of investor forums have invariably come across questions about the Canadian Couch Potato. In this post from Reddit’s Personal Finance Canada thread, one reader asks which online brokerage is best for the Couch Potato approach. The ensuing conversation about particular brokerages is worth checking out if you’re considering the strategy.

The Grass Isn’t Always Greener

Staying on the theme of customer service becoming increasingly important for brokerages to ‘get right’, these next two threads, both from Red Flag Deals’ investing forum, are interesting to compare side by side. In the first thread, a reader appears to be less than pleased with the service interactions with Virtual Brokers and queries whether other users are feeling the same. Handily enough, another post from a different reader on other side the bank-owned brokerage side of the fence (TD Direct Investing) also felt the service was less than stellar and was contemplating a change. It’s serendipitous but also a reminder that the size of the brokerage doesn’t render you immune from customer service bumps.

It’s hard to believe that another week has come and gone. Of course if you’re feeling like your estimates of time may be a bit generous, the following cartoon might mean you’ve got a promising future as an analyst (just ask followers of LULU). Have a better-than-you-expect weekend!

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Discount Brokerage Weekly Roundup – September 5, 2014

For many students, September means getting back to school. For students of the stock market, however, every day is a chance to learn something new (and hopefully not get schooled). As the old stock market cautionary saying goes, however, don’t confuse brains with a bull market.

In this week’s roundup, we’ll preview a couple of upcoming events that are geared towards increasing the know-how of self-directed investors, we’ll take a look at the deals that surfaced from Canadian discount brokerages at the outset of September and round out with a pair of interesting forum posts.

Attendance Optional

This month (September) brings with it three big events for self-directed investors in Toronto and Montreal.

First up, the Montreal Exchange is hosting its Options Education Days in the two cities starting first in Montreal on September 13th and then going to Toronto on September 27th. Options Education Days are a great opportunity for both beginner and advanced options investors to learn from seasoned instructors and industry experts. Although the cost of the event is $45, the price of admission includes all materials and meals (usually breakfast and lunch).

As with past sessions, a number of Canadian online brokerages will be sponsors at the event. This year there are 7 online brokerages in attendance, including one newer face at these events, BMO InvestorLine. Sessions in Toronto are generally busier than other regions so if you’re considering attending, be sure to register early.

For a full review of Options Education Day, click here.

Conference Call

Another investor-focused event of interest going on in Toronto this September (on the 25th and 26th) is the Canadian Investor Conference being put on by Cambridgehouse International. The Canadian Investor Conference has taken the place of the Toronto Resource Investment Conference and is not only focused on junior mining and exploration stocks/stories.

This upcoming conference will be smaller than its Vancouver counterpart however there will still be a number of interesting speakers and discussion panels. Some highlights will include a panel on the ‘world outlook’ featuring Danielle Park in the afternoon of day 1 and a panel on capital raising featuring the heads of a couple of major stock exchanges in the morning of day 2.

For more details or to register, click here.

What’s the Deal?

No, we’re not talking about airline peanuts although the deals from discount brokerages this month are feeling as if they’re in the same category. September got off to a slow start as far as deals and promotions were concerned with 10 active promotions, however, as we’ve seen in month’s past, it wasn’t too long before brokerages started to stir the deal pot. Two brokerages, Questrade and BMO InvestorLine, have added on promotions into their offering mix. For Questrade, they reactivated their 100 commission-free trade offer and, thanks to an eagle-eyed reader, an extra bonus offer on top BMO InvestorLine’s current deal looks like its active as well. To read more about the current offers, check out this link to the deals section for September.

From the Forums

What’s the downside of Investor’s Edge?

One of the most attractive features of CIBC Investor’s Edge is their loyalty pricing discount on trading commissions. In this post from the Reddit Personal Finance Canada forum, one reader wanted to get a sense of what the experience of other investors was like with this brokerage. Check out what the Redditors had to offer in terms of feedback and alternative choices of brokerage.

Getting in on the Ground Floor

The prospect of getting in on the next Facebook or Apple while they still may be in their dorm rooms or garages is both risky and exciting. For many investors that want to get involved by investing in a startup, this next post from the Canadian Money Forum may be of interest. Check out some of the responses from investors who do venture into the private markets to look for the next big thing. Coincidentally, the British Columbia Securities Commission’s investor education platform Investright has recently released a very comprehensive and clear document on what to consider when investing in private placements – a worthwhile read.

That does it for this week’s roundup. Even though the week was short it appears that nobody in the markets was.  Have a great weekend and if you’re looking for a great (and tad long) video to do a little DIY learning on luck and skill, check out this video (thanks to Sultan for spotting this!)

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Discount Brokerage Weekly Roundup – August 29, 2014

Greetings roundup readers. This pre-long weekend version of the discount brokerage roundup is coming to your from none other than the ‘fabulous’ Las Vegas.

Against the backdrop of opulent hotels, sunny skies and seemingly endless “premium” brands, an interesting takeaway from Vegas is just how tricky competition makes things for brands.

Sidestepping the association between trading and casinos, for Canadian online brokerages getting and keeping the attention (and loyalty) of Canadian investors is going to hinge on getting those investors to ‘care’ about the product and service. After all, if everyone claims to be the best, what ‘the best’ means starts to become muddied.  So, there is probably a need to shift strategies away from claiming to be the best and towards something different. The challenge is formidable considering that finance (and online investing) is typically not very ‘touchy-feely’. Interestingly, on the banking side, TD has been actively evolving their image and experience to become more ‘friendly’.

In this week’s abbreviated roundup, we take an early look at the deals landscape as we roll over into a new month as well as an interesting article geared towards DIY investors wading into markets. From the investor forums, we’ve got a couple of interesting threads on how orders get displayed and the ‘other’ fees investors need to consider when looking at a discount brokerage.

Deal Me Out

As we near the end of August, there are a number of online brokerage deals that are set to expire. The early look at September’s deals section shows that Questrade has shuffled the deck on their promotions and that there have been deal extensions from Desjardins Online Brokerage, and Scotia iTrade.

Here’s a quick highlight of the deals currently set to expire going into September:

Questrade

  • 100 commission-free trades
  • Free trade per month offer
  • Unlimited trade promotion

Scotia iTrade

  • 100 free trades

Stay tuned for the full September deals run-down coming soon.

DIY Investing meets Gen Y

Canadian personal finance writer Rob Carrick has published part two of his “Gen Y” focused investor guide. Like the first part, part two of his guide provides quick tips for beginner investors on low-cost portfolio building strategies using mutual funds and ETFs.

From the Forums

Tipping Hands

Transparency and stock trading are constantly at odds with one another. On the one hand, the system as a whole is supposed to function efficiently when buyers and sellers can trust that they’re getting the best price for their order. On the other hand, information about how much ‘demand’ and ‘supply’ there is for any given stock is incredibly valuable to traders looking to gain an edge on order flow. This post on where an order to buy or sell shows up when placed provides an interesting look under the hood of a trade.

Hooked on a Fee-ling

The reality of all Canadian online brokerages, big or small, is that they’re in business to make money (would you feel comfortable putting your money with a brokerage that was running at a loss?). Brokerages that offer a break on trading commissions are appealing to many, however to make up the revenue ‘lost’ from lowering commission fees, other areas such as margin interest or administrative fees are typically high. This post from Red Flag Deals’ investing forum shows that the upcoming changes to Questrade’s administrative fee structure are on the minds of value-savvy investors – specifically for ‘partial de-registration’ fees.

That’s a wrap for this week’s roundup. Remember Canadian and US markets will be closed Monday for the Labour Day holiday. Wherever you happen to find yourself this long weekend, have a safe and enjoyable one.

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Discount Brokerage Weekly Roundup – August 22, 2014

With the markets continuing their push higher yet again, it seems like the bears may just want to find a comfier place to rest – for now. Despite the advances, there seems to be no shortage of market stories looking to poke them back into action. Aptly enough, this week’s roundup has a focus on investors being able to share stories (none of which seem to involve bears though).

This week we take a look at a project launched by one major discount brokerage that seems to have investors talking, followed by an article on trading as a DIY investor, and then hop to a couple of interesting threads from the Canadian investor forums.

RBC Direct Investing Forum Shows Promise

One of the great promises of the internet was that it could bring people together. As a DIY investor, however, trading online can be a bit of a solitary enterprise. Enter investor forums.

As many regular readers of the roundup know, the Canadian investor forums are one of the ways in which investors of all skill levels can connect and discuss a variety of online-investing related topics – or simply brag/trash their latest stock choice.

Recognizing the power of user engagement and the importance of creating a space for investors to connect and compare notes, several Canadian online brokerages including Desjardins Online Brokerage (via Stockscores), Questrade and RBC Direct Investing have created investor-specific forums.

This past week, RBC Direct Investing announced an update on the progress of their investor community and forum. As part of their update, RBC Direct Investing provided some interesting stats on usage of the forums that were launched in 2013. At the most recent count over 8,500 clients have joined the community and RBC has been running a contest in order to encourage more individuals to sign up. One of the unique features of RBC Direct Investing’s community is the ability of users to compare their portfolio against other users (anonymously) which a functionality that none of the other popular forums (online brokerage run or otherwise) currently offer.

Strategically, social and finance is a difficult combination to get right.

One example of it not going right was the now decommissioned TMX social site Waggle. Although considerable money was spent on its development and deployment and it had promising functionality, it never really gained traction. Conversely, the barebones Reddit Personal Finance Canada section continues to grow (and has well over 9500 “readers” at the time of writing), in popularity largely on the strength of community participation.

For RBC Direct Investing, being able to adequately resource the forum doesn’t seem to be the challenge. Instead, like their competitors, the success of their community feature will depend on the time and effort users choose to invest on it.

Do You Like To Trade It, Trade It?

There are more than a few savvy investors that believe that active trading is not only (largely) futile but also detrimental to portfolio performance.

In an interesting piece in the Globe and Mail geared towards DIY investors, author David Israelson highlights this position as he lays out the perils of “overtrading” – a term that the article admittedly acknowledges has no consensus.   While the perspectives in the article provide important guidelines for investors to bear in mind, the article essentially posits that a strategy that loses money in the markets is not a good one. These are similar to Warren Buffet’s infamous advice on investing in the markets: “Rule No.1 is never lose money. Rule No.2 is never forget rule number one.”

What is cold comfort to DIY investors is that just like the professionals, there is no way to know if their portfolio strategy worked until after they’ve tried it. For DIY investors, however, it is especially more of a challenge because they don’t have the same structures and controls in place to manage risk or cut losses that professionals (usually) do.

From the Forums

This past week, there were a couple of interesting forum threads courtesy of the Reddit Personal Finance Canada subreddit.

Fact or Fiction

For DIY investors, one of the most difficult decisions is which discount brokerage to trust with their online trading account. In this post, one user talks about the reports of horror stories associated with Questrade, however the Reddit community chimes in to provide a more balanced point of view.

Are we there yet?

In keeping with the previous thread, the following post is from another user (an account holder with Questrade) who attempted a transfer of funds into their trading account. In an increasingly ‘instant’ world, the delay seemed to get the author a little panicked. While the answers that the community provided where valuable, it was also interesting to note that a rep from Questrade also replied to the author.

That does it for this week’s roundup. For those sports portfolio pickers, good luck on the fantasy football drafts and the season ahead. Have a great weekend and be sure to find excuses to go long on fun!