What can beginner investors expect from your firm? At National Bank Direct Brokerage, beginner investors are taken care of and guided from the very beginning of their experience. For young and not-so-young, we are the place to start investing in ETFs with $0 commissions. We support them with an ETF Centre, an easy-to-use filter tool and ETF research reports from Morningstar and National Bank Financial. For young investors aged 30 and under, we offer special and advantageous pricing, with 10 annual free trades, $4.95 pricing on stocks and no administration fees. NBDB offers the necessary tools to trade, but we also offer an educational component. We have training courses, a YouTube channel where we publish instructional and educational videos, and several other tools that allow new investors to gain confidence and make informed decisions.
What can active investors expect from your firm? Best pricing, best service and a high-performance transactional Market-Q tool. Active investors can have the best of both worlds: $0.95 per trade on stocks and $0 on ETFs, when they qualify. For 2021, active investors can expect continued downward pressure on commission fees, including option pricing.
What online investing trends do you expect to matter to DIY investors? The feedback that we’ve received from our clients is clear: Clients are looking for greater online content (fundamental analysis, technical analysis, ETFs, options and strategies) and support that can assist them in managing their investments and become better investors.
What does user experience mean at your firm? At NBDB, we value customer experience. That is why we routinely send surveys to our customers to better understand their needs. This valuable information is then used to guide our decision-making, whether it be for tools, services or any other aspect of our business. We are customer-focused, and that is why our customers’ opinions are taken into account on a daily basis.
What sets your firm apart from your peers? We may not be the biggest direct broker in Canada, but we are the first in setting the tone by offering competitive pricing that benefits everyone. We offer innovative tools and services; a distinctive service for high-net-worth clients, InvestCube (ETF portfolios); and tools and services not offered by the competition.
Normally we talk about news that has happened – but considering the gravitas of the week ahead, it seems fitting to weave in some discussion of the future, this week in particular. As of the publication of this edition of the Roundup, there’s certainly a nervous energy in the news; however, if there’s one thing the online brokerage world has come to realize throughout 2020, it’s that volatility attracts opportunity.
In this edition of the Roundup, we take a look at how one Canadian online brokerage is playing into the volatility forecast by offering extended hours for clients to access markets and also is telegraphing some interesting signals about a possible very big year ahead in terms of new features. From there, we figuratively dial into the latest performance metrics from one US online brokerage – and await being able to literally dial into an earnings conference call, which falls on the eve of the inauguration of President-elect Joe Biden, for clues on the global state of online investing. In keeping with the usual diet of (mostly) healthy banter, we wrap with DIY investor conversations on Twitter and the investor forums.
Questrade Launches New Features & Teases a Big Year Ahead
It’s the early bird that gets the worm – or so the saying goes. When it comes to tapping into market-moving news, especially when that news takes place before the official start to the market trading day, being able to place orders and have them filled is an opportunity to get into potentially interesting trading opportunities a lot earlier than others.
This past week, Questrade announced the launch of a new feature: pre-market trading. Several Canadian online brokerages already offer this feature (as well as after-market trading), but for active traders, access to trading US-listed securities starting at 7 AM EST is bound to get some folks excited to be able to make moves on important news items, potentially ahead of the pack.
Trading outside of normal market hours is not without its risks, though. There is far less liquidity and far fewer participants outside normal market hours, meaning that bid/ask spreads are often very far apart. To mitigate the impact of this kind of volatile price movement, only limit orders are permitted, and the ECNs that can be selected to route the order to are ARCA or NSDQ. To accommodate the change, Questrade also updated the hours for their trading desk to now start at 7 AM EST.
Online, the reaction to the announcement was generally positive; however, it was clear that online investors had mixed feelings about trading outside of normal market hours. As such, the impact of the announcement will, likely, appeal to a smaller segment of users, those who are comfortable with the realities of extended market trading.
On a separate note, Questrade has also been ramping up the communications online to clients, which included a heartwarming milestone. Specifically, in 2020 Questrade was able to donate over 1 million meals to feed hungry Canadians via Food Banks Canada. Interestingly, and perhaps something that they might want to let more folks know about, Questrade donates a day’s worth of meals to Food Banks Canada for every new account opened.
Doing some further digging online this past week also revealed some interesting new features being telegraphed by Questrade representatives on Twitter. In response to customer service questions about mobile experience and the recent decommissioning of the Morningstar research features, it appears that two important developments are on the horizon.
In terms of the latter, it seems that a handful of clients were none too pleased at the removal of a research feature; however, Questrade reps did confirm that something “better” would be coming in its place.
In terms of mobile experience, which is a clear battleground issue among online brokerages in Canada, Questrade also hinted at plans for a new mobile app in the works for 2021. User sentiment on the Questrade mobile app is also starting to reflect the desire for change – at least for some categories of power or active users.
As we referenced in our recent Weekly Roundup, getting the user experience right for online investing is no simple feat. There are multiple categories of users, including those who like the predictability of knowing where things are, so making changes is a risk if user journeys or navigation takes a drastic turn. Ultimately, it should be great news for DIY investors; however, creating new things at the expense of shoring up existing features (e.g. customer service wait times) can make for volatile times for client support. A simple scan of Twitter posts over the past week points to that being the case.
Even though Questrade was playing it close-to-the-vest in the Look Back / Look Ahead (when it came to the looking-forward part), it’s clear that there’s a lot in the pipeline for 2021. In fact, taking a high-level view, with this many significant projects coming to market in the year ahead, this could signal a critical year for Questrade that brings with it even more surprises as it continues to compete in a potentially more crowded field. Finding the balance between promising new features to keep people excited and ensuring that these features hit the mark (and work properly) is also prudent. Kicking off the new year with this much news, however, is a clear indication that Questrade is hoping to have lots of positive things to say in 2021.
Interactive Brokers Latest Metrics & Earnings Call to Provide Clues on Marketplace Direction
With all of what’s been going on in the US, and what is poised to unfold this week, this is a great opportunity to tune in to one of the most informative trading bellwethers that has emerged over the past two years. Specifically, the Interactive Brokers earnings conference call, which is scheduled to take place on January 19th at 4 PM EST.
The primary purpose of the conference call will be to review the quarterly earnings for Interactive Brokers, which in this case happen to be for the fourth quarter of 2020 and, as such, will provide not only the performance of the quarter but likely a view on the year as a whole.
The latest stats released by Interactive Brokers about their performance over the final month of the year also reveal some very interesting numbers, which seem to indicate incredibly strong participation in trading.
Among the numbers we pay close attention to is the growth in client accounts, which for Interactive Brokers was 56% higher than at the same point last year and 3% higher than the previous month. The exceptional growth of their client base over the past year has fueled a surge in revenues and is likely, in part, responsible for their growth in valuation. Reinforcing that inference, Daily Average Revenue Trades (DARTs) are up 198% year over year and about even on a month-over-month basis.
Given the profile of the traders who operate on the IB platform – i.e. active and professional traders – it was also interesting to see the acceleration of buying into the end of the year, which lines up with the surge in bitcoin-related activity and with the market action overall. Thus, it will be of interest to see what the view is on the near to medium term for business conditions for online brokerages (in the US) and, potentially, as a pulse on online investing around the world. Interactive Brokers’ international footprint gives it a unique window into what trends are emerging with online investors the world over.
Recall that entering periods of high volatility, Interactive Brokers has raised the margin borrowing requirements to control its risk exposure. On two of those recent occasions, that has seemed to foreshadow some significant moves in the market. What jumps out in the numbers supplied by Interactive Brokers in terms of trading metrics is that it appears that traders were heavily selling into the end of the year – which is a little strange given where the index has risen to. It might be a case of profit-taking, or fast money in and out of a bitcoin rally; however, the magnitude and direction of activity suggest smart money may have cashed out.
For online brokerages, 2020 clearly settled the debate on volatility being good or bad for business. Historically, passive investors would shy away from huge price swings in stocks, in favour of a steady approach to buying. Interestingly, the dynamics of the marketplace have changed – perhaps tilted far in the other direction – where lots of new investors have flooded into the market looking for rapid fluctuations in price (upwards). The following video on social media might presage where markets head from here; however, when lined up against the backdrop of Interactive Brokers data, moves higher in the market heading into RRSP deadline season could make this a stretch over which even more investors seek out new investment accounts.
In this post, an investor asks whether they should acquiesce and allow their brother to open a second RESP account for their son. Is it just “free money” from the brother? Or a potential financial (and familial) nightmare? Fellow Redditors have strong opinions on the matter.
Ethics Over Profits?
Horrified by what happened in for-profit long-term care homes during the early days of the pandemic, this investor asks in this post how to make sure that none of her investments are in these types of businesses. Her fellow Redditors explain how to check this information and debate whether ethics and politics (and the resulting emotions) should be kept separate from investing.
Into the Close
This is going to be an unforgettable week. With so much on the line, there’s no question that eyes will be glued to the screen and folks will be tuning in to the news. So, let’s hope things go as smoothly as possible for our friends in the US, including our furry ones. Stay safe and good luck!
Q1: What can beginner investors expect from your firm? Beginning investors can expect a robust platform, with user experience enhancements that make it easy and intuitive to invest. We’re passionate about helping new investors find the right online investing tools for them.
Q2: What can active investors expect from your firm? Active investors will appreciate the overhauled design of InvestorLine 2.0 – it’s easier than ever to place trades, see meaningful data to help you make decisions, and manage your accounts. We make monthly updates based on user feedback, so we’re always looking to make a positive impact on how clients use the platform.
Q3: What online investing trends do you expect to matter to DIY investors? Digital is going to be a big space for investors, both in the self-serve category as well as in the advice realm. As more people enjoy the autonomy and freedom of choosing their own investments, we believe having the tools to support that will become more and more important.
Q4: What does user experience mean at your firm? We’re fanatic about client-centred design. We regularly incorporate user testing and feedback in every step of the product development cycle, and we use client data and feedback to guide us toward what our next updates will bring and how we improve our services.
Q5: What sets your firm apart from your peers? We believe our holistic investing platform is what really sets us apart. We have a full-featured platform that doesn’t just enable you to place trades, it’s also easy to use without sacrificing customizability, meaning you can truly make the platform your own. More specifically, adviceDirect empowers our clients by allowing them to make their own investment choices, since adviceDirect provides advice that’s customized to each client’s portfolio and goals.
Sometimes you just have to call a spade a spade. 2021 is shaping up to be more of a hangover than a do-over. Now that we are just over 2% into the new year, the road ahead is clearly bumpy. Thankfully, with talk of new promos and the finer points of design choices, we have much brighter news to report than most of what’s been flying (or not flying) around on social media.
In this post–coup d’état edition of the Roundup, we provide a refreshing piece of good news as multiple online brokerages launch new offers and reset the game clock on existing promotions for DIY investors to take advantage of heading into this year’s RRSP deadline. Next, we weigh in on an interesting conundrum for the online investing experience: innovate quickly or stick to the basics? Happily, we’ve got some interesting forum chatter and informative commentary from DIY investors on Twitter to close out on.
Deals Activity Shows Cash Is King
If there’s one thing we could all use right about now, it’s a healthy dose of positive developments. Fortunately, the January deals and promotions section has been filling up with just that – especially for online investors looking to score a deal on an online investing account ahead of the RRSP contribution deadline.
Kicking things off is the great news that RBC Direct Investing has jumped back into the deals and promotions section with a cash-back and commission-free trade offer. After the conclusion of their go-to commission-free trade promotion at the end of 2020, it seems that RBC Direct Investing made a resolution to start off the new year with something bigger and bolder for DIY investors this RRSP season.
Beginning this January and lasting until the end of March 2021, RBC Direct Investing is offering a tiered cash-back promotion. The cash-back amounts range from $50 (for deposits of $5,000) up to $2,000 (for deposits of $1 million or more). In addition to a cash-back amount, all deposit tiers qualify for 10 commission-free trades that are good through to the end of August 2021, leaving ample time for individuals to use this bonus.
We were also eagerly awaiting what BMO InvestorLine would launch early this month. Their previous promotional campaign expired in early January, unlike many of their peer firms’ deals, which expired at the end of December, so it was interesting to see what BMO InvestorLine would do given the clear trend toward cash-back offers from their competitors this year.
Fortunately for DIY investors, BMO InvestorLine has shown up with a relatively competitive offer and significantly dropped the qualifying deposit amount for the lowest tier of the deal from their usual range of $25,000 to $50,000. As with their previous cash-back offer in the fall, the new cash-back offer is a tiered promotion; however, this promo features deposit tiers starting from $15,000 (which offers $150 cash-back) up to deposits of $1 million and more (which offers $2,000 cash-back).
In addition to the launch of new offers this past week, we also saw several offers have their expiry dates officially updated. Notably, there were a couple of offers from Questrade – their five-free-trades offer, as well as their one month of commission-free trading, saw their expiry dates move to December 2021. Also, the refer-a-friend offer from BMO InvestorLine was extended another year, with the new expiry date falling on January 6th, 2022.
If there’s one clear trend this year when it comes to online brokerage deals and promotions, it’s that cash is king.
All of the big five bank-owned Canadian online brokers have a very competitive cash-back promotion now live, with most of them expiring at the beginning of March (RBC Direct Investing’s is the only exception, finishing at the end of March). That said, there are some patterns that emerge in the offers that are worth exploring further.
First, it was interesting to note the trends at the extreme ends of the deposit tiers.
At the lower end of the deposit spectrum (generally under $25,000), all of the big bank-owned online brokerages had some kind of offer in place. RBC Direct Investing had the highest offer, with a cash-back award of $50 and 10 commission-free trades, an offer that their only rival at this deposit level, Scotia iTrade, was well behind (Scotia iTrade offers $25 cash-back). Interestingly, BMO InvestorLine, who lowered their deposit threshold to qualify for a deal down to $15,000 (compared to the $50,000 minimum deposit for their fall campaign), went significantly higher than any of its peers with an offer of $150, which is 50% higher than what TD Direct Investing offered ($100).
Meanwhile, at the higher deposit levels ($500,000+), there appears to be a whole new battleground forming.
To start, almost all online brokerages with cash-back promotions have an advertised offer for deposits of at least $1 million. The one online brokerage that does not, however, is TD Direct Investing. This seems like a remarkable decision given the value of the prospective clients at that level, and while for portfolios of $1 million or more the deal isn’t the first thing that a shopper might consider, all else being equal, three direct competitors are willing to pay $1,000 more for the business.
It bears mentioning that the appearance of $1 million as a deposit tier used to be a headline maker; however, this deposit tier has almost certainly become the new-normal top-end deposit. That said, it was also fascinating to observe that Qtrade Investor created a new top-deposit tier for individuals bringing over at least $2 million. Given that the bonus Qtrade Investor is offering for this deposit tier ($2,000) is the same amount that rival online brokerages are offering for deposits of $1 million, it seems as if this tier was a clever way in which to stand out against their competitors. While the dollar amount for the bonus isn’t higher, the deposit tier is, which makes Qtrade Investor appear to be larger than their bank-owned peers. Further, there are no other non-big-five-bank-owned brokerage competitors to Qtrade Investor at these higher-level deposit tiers.
Aside from extreme deposit tiers, it was also fascinating to observe which segments were sought after by specific brokerages.
For example, neither BMO InvestorLine nor TD Direct Investing saw value in putting offers into market for prospects with less than $15,000. Additionally, in the deposit range between $15,000 and $500,000, BMO InvestorLine is aggressively pricing their cash-back bonus. With the exception of the $25,000 tier (in which TD Direct Investing has the highest cash-back offer), BMO InvestorLine either has the highest amount or is tied for the highest amount of cash-back (at the $100,000 deposit tier with CIBC Investor’s Edge).
With several key names still on the sidelines heading into RRSP season, we suspect that there might be a few offers still to come to market; however, it is unlikely that the current prices will be significantly outbid across pricing tiers. Instead, if an online brokerage is contemplating launching a cash-back offer, it is more likely that they will stick to the average offering in that tier or find a way to combine cash-back with commission-free trades to have a more competitive offering.
Thankfully, the deals and promotions news for Canadian DIY investors is actually improving in 2021 – and that was coming off a strong close to 2020 in terms of offers.
Most of Canada’s largest online brokerages have the most popular offer type (cash-back) available, which makes this an opportune time for anyone considering opening an online investing or online trading account to get the maximum benefit for doing so. Of course, we’re curious what some smaller or lesser-known online brokers are going to do in terms of promotions, but from now through the end of February we expect the focus to be on marketing and advertising.
Mind the Generation Gap: User Experience for Online Investing in the Spotlight
There’s no question that the picture of the world we’re living in exposes divisions nearly everywhere we look. In the world of online investing, although it is not nearly as polarizing, there is a significant challenge for online brokerages to contend with: trying to balance providing the kind of user experience younger (read Millennial and now Gen Z) investors expect with that preferred by the existing (and likely higher-asset-bearing) clientele comprised of “boomers.”
Originally, this second story of the Roundup was going to focus on only one topic – either the myriad of recent legal woes experienced by Robinhood while the Weekly Roundup was on hiatus, or an article published by Rob Carrick in The Globe and Mail at the end of December explaining to baby boomers how they can manage their investments using online brokerage apps. In diving into the comments of the Carrick article, however, it became clearer that the story of Robinhood’s regulatory troubles and the realities of mobile apps for older clients represent two sides of a user-experience coin. Hence, they’re both the focus of this particular story.
Starting first with Robinhood’s journey back into the spotlight at the end of 2020. Without question, for most of 2020, it was an incredibly positive year for the balance sheet of the scrappy “zero-commission” online brokerage in the US. At the outset of the COVID-19 pandemic in North America, and for the better part of the first half of 2020, Robinhood saw its client base skyrocket. Stunningly, Robinhood added more new clients in that timeframe than many of their peers – in fact, arguably adding more clients than most of their competitors. In 2020, Robinhood added 3 million new customers to its ranks in the first four months alone, it grew to 13 million users, and it currently sits at a valuation of more than $20 billion (USD). What has helped Robinhood skyrocket in users over 25x in seven years has been a combination of zero-commission stock trading prices as well as a user experience designed around being mobile-first and appealing to younger investors. Clearly, they are onto something.
That growth, however, was not without missteps. Whether it was the botched roll-out of their “chequing account” or multiple trading platform outages, their hypergrowth in 2020 exposed many of the leaks in the system running at full tilt. There was the tragic news of the suicide of a young investor who, because of the way information was presented on his account page, believed he had lost over $700,000 (USD) from a failed trade; there were security breaches with client accounts getting drained; and there were outages in times of heightened volatility.
This past December, however, there were consecutive regulatory arrows slung at the online brokerage, first in the form of a $65 million (USD) settlement with the Securities and Exchange Commission (SEC) for misleading customers about how Robinhood made money from selling order flow to high-frequency trading firms. Also, from securities regulators in Massachusetts in December, the charge that Robinhood resorted to “aggressive tactics to attract inexperienced investors, its use of gamification strategies to manipulate customers, and its failure to prevent frequent outages and disruptions on its trading platform.”
Given the meteoric success of Robinhood coming into 2020, and certainly throughout the year, it has clearly had an impact on the online brokerage industry as a whole in North America and is helping to shape the trading and user experience here in Canada as well. The emergence of Wealthsimple Trade, and their use of tactics similar to the ones that Robinhood used to fuel their own growth, is perhaps the most striking illustration of the Robinhood effect in Canada. More specifically, however, the issue at hand is the interface that users of online brokerages use in order to access their online investing experience, as well as the features they prioritize. Which brings us back to the article posted in The Globe and Mail at the end of December.
As part of the requisite research for the upcoming edition of the popular online brokerage rankings, Rob Carrick dove into the various Canadian online brokerage mobile apps to test-drive what the investing experience was like with all of them. While the article itself provides a useful overview of where mobile apps from Canadian online brokers shine and where they fall short, it was especially interesting to wander through the comments and reactions.
It was clear that “boomer investors” were the intended audience for this piece, and as such, the comments turned up what seemed to be significant resistance to the notion of trading on a mobile app – or to active trading in general – as well as the much greater pain point of the phone experience, which has nothing to do with the online interface and everything to do with customer service staff actually answering the phones at online brokerages in Canada. And therein lies the conundrum for online investing.
When it comes to designing features and capabilities, there has clearly been a shift away from cramming everything that could be done or said on an online investing interface into a more streamlined interface. That is a significant departure for almost a generation of online investors who’ve been accustomed to lots of menu options, features, and information on a landing page and who’ve generally not had a “mobile” interface to contend with, preferring to use a web-based interface instead.
By comparison, the “mobile first” approach to user interface design is highly constrained by the viewing area and behavioural inputs of a smartphone. To put it plainly, designers for phone interfaces need to decide what the most important functions and features to make available on mobile apps are.
Thus, it seems mobile apps reflect the collision course of the newest innovative design aesthetic – something that younger cohorts of investors and clients favour – and the functionality and user experience of managing wealth as a DIY investor. This is both a challenge and an opportunity for Canadian online brokerages.
From a business standpoint, the balancing act between building a technology and user environment for the future versus creating an environment that meets the needs of stakeholders today is what Canadian brokerages need to wrestle with. Based on the feedback accruing from Twitter and DIY investor forums, it appears that neither group – the newer investors nor the established and seasoned ones – is likely to find the perfect experience in one place.
The current slate of lawsuits and regulatory challenges facing Robinhood is likely going to put user experience for investors – especially in mobile environments – under the microscope. At what point does making investing more approachable, plain-language, and enjoyable cross the line into something bad? At what point is change necessary to enable more people to participate in wealth creation? The regulations have been formed, for better or for worse, based on historical notions of what investing ought to be, and, thus, to a degree, what it should look like.
Robinhood, along with the platforms and interfaces that emulate it, represents drastic change. Rules and established norms represent order. There is clearly a middle ground to be struck, but firms that seek to draw a line of best fit through different user groups, instead of building around those groups, risk being “forgettable.”
The real prize, it seems, is achieving more thoughtful customization at scale or accepting being very good at being niche, even if it does mean being “boring.”
How do you end a relationship with a financial advisor and take control of your own investing? That’s the question on the mind of the investor in this post. Fellow Redditors offer their opinions.
New Year, New Room in Your TFSA
It’s the most wonderful time of the year for anyone with a Tax-Free Savings Account. DIY investors share their enthusiasm for making a lump-sum TFSA contribution as soon as possible each January.
Into the Close
The tragic and shocking events that unfolded in the US in the first few days of 2021 certainly do offer cause for pause. As the fallout from that surreal riot/coup attempt continues to play out, there are still scary headlines about COVID-19 here in Canada. It goes without saying that we could all stand to hear some better news – or at least see a steady stream of cute kittens as a palette cleanser. It’s all about finding the small wins at this point.
2020 is now officially behind us. 2021 will be one of those years that most of us will not have any trouble remembering to write correctly, even in the first few weeks. And, speaking of easy to remember, this month and year are off to a memorable start. Once again cryptocurrency FOMO is sweeping through online investors, there’s a whole host of drama in the US in the lead-up to the inauguration, and RRSP season is now in full swing. Lace up your new sneakers because week one of the new-year news cycle is going to hit the ground running.
Keeping things manageable but exciting heading into week one is on our agenda for this Roundup. The first story of the new year is one that will definitely be worth diving into as we look at the huge volatility in deals action heading into 2021 and what online investors can expect in the weeks leading up to the RRSP contribution deadline. Up next are a series of fun announcements about new features to look forward to from Sparx Trading. We know time is a premium as everyone eases back into the workweek so we’ll keep this edition short and sweet. Happy New Year and enjoy!
Volatility Hits Online Brokerage Deals and Promotions
There’s no doubt that the end of 2020 couldn’t come fast enough. In the real world, it was a year of challenges and tragedies, and while there is no question it was a year that many want to leave behind, anyone looking at the “digital world” of equity markets or cryptocurrency would say there were at least some things that 2020 brought that were not bad.
For Canadian online brokerages, the start of 2021 is an interesting moment as it represents the convergence of several key factors that point to one heck of a year ahead. Already the latest deals and promotions activity forecasts a heavy dose of volatility (if not outright drama).
The first key factor to the start off the new year is that this is the time of year when Canadian discount brokerages kick into overdrive to get on the radar of online investors. The RRSP contribution deadline (March 1st) is behind the ramp-up of efforts to win over investors in the market for online investing accounts. And, DIY investors can expect to see even more advertising, offers, and other activities from asset-hungry online brokerages.
From a deals and promotions perspective, December was the busiest stretch since the start of 2020, signaling a return by online brokers to this popular tactic of attracting new clientele. Interestingly, the official start to 2021 (i.e. January 1st) was a holiday, and, as such, many of the offers that were scheduled to end on December 31st were left posted on the websites of several online brokers. It is unclear if the offers that were scheduled to expire at the end of December will actually be renewed or extended or if other offers will be launched to replace the outgoing ones. Suffice it to say, it will be a busy first week back to amend dates, update websites, or launch new offers. So, stock markets aside, we expect a bit of deal volatility to start the year.
Brokerages with offers that expired at the end of December include National Bank Direct Brokerage, Questrade, RBC Direct Investing, and Virtual Brokers. It would be hard to imagine a scenario in which all of these online brokerages stay on the sidelines for the duration of RRSP season, especially considering that all of the other major bank-owned online brokers have live offers and that, as of mid-December, Qtrade Investor jumped into the promotions pool with a new cash-back offer as well.
The second key factor that is bound to play a role in DIY investor demand for online trading access harkens back to the start of 2019. Similar to what took place two years ago, there’s been a huge run-up in the price of cryptocurrencies to start the year. What’s also on the menu this year (akin to the cannabis push in 2019) are rumblings of a new push into psychedelics. These “hot” new investor stories are compounded by enormous gains from tech companies benefitting from the work-from-home boom. The takeaway: Retail investor sentiment to jump into fast money seems to be driving markets to very frothy levels.
For Canadian online brokerages this a very bullish signal – something that could factor into either the scale or the duration of offers that might yet still come to market. Note that during the height of the market volatility here in mid-2020, many online brokerages pulled their deals altogether, with retail investor interest being sufficiently strong to render offering promotions and incentives unnecessary. We believe, however, that RRSP season is too tempting an opportunity to pass up, in spite of the retail investor sentiment, suggesting more offers to come from online brokerages this January. Also coming: increased urgency to open accounts and the accompanying frustration to get started right away.
Given the run-up in cryptocurrency prices, there is one Canadian online brokerage that stands to benefit disproportionately compared to its peers: Wealthsimple Trade.
Heading into the end of the year, we saw them launch a very short and creatively packaged cash-back promotion. Tearing a page out of the US online brokerage Robinhood’s playbook, Wealthsimple Trade pitched a “free stock” promotion that offered new users the equivalent dollar value to certain popular stocks traded on Wealthsimple Trade. The promotion ran for just about a month, and so it is curious from a timing standpoint as to what could be coming next for this online broker. Nonetheless, they are the only Canadian online brokerage to offer up direct cryptocurrency (Bitcoin and Ethereum) trading – something that would undoubtedly attract retail investor interest at this point. For that reason, there is a serious tailwind behind Wealthsimple Trade until (or if) cryptocurrency prices turn.
With so much happening in just the first week, we’ll be keeping our eyes on the deals activity among Canadian online brokerages throughout the month. There’s almost certainly going to be additional promotions updates coming and, if 2020 has taught us anything, probably a surprise or two before the month is over.
Announcements From SparxTrading.com
One of the fun things that the start of a new year affords us the opportunity to do is to change things up just a bit. Normally, we’d recap the latest developments in this section, but seeing as how we’re coming off a bit of a quiet spell in December (not counting the fact that Robinhood is in the crosshairs of financial regulators in the US), we’re going to take the opportunity to talk about a few big developments taking place at Sparx Trading.
Relaunching of Our Newsletter
Elon Musk won’t be the only one sharing epic launches in 2021. Sparx will also be launching a few big items, although ours will be into cyberspace and way less boring (pun intended).
The first of these will be an epic reboot of the SparxTrading.com newsletter. After being dormant for more than a few years, the newsletter is being completely remade and will feature a handy way for you to stay on top of the latest online brokerage news – and especially the Weekly Roundups. The newsletter is going to be published monthly and will feature quick recaps of the biggest stories across the online investing space over the previous month as well as any important updates taking place on SparxTrading.com (of which there will be more than a few!). Look for the first edition to launch in mid-January, and sign up using the following link:
Even More Perspectives on 2021
We’re thrilled with our latest Look Back / Look Ahead edition. Not only does it give readers a unique window into the world of the Canadian online brokerage industry during the pandemic – from the vantage point of those in charge of leading those brokerages – but it also provides previews on what’s coming up next in 2021.
Online brokerages, however, aren’t the only voices that have a unique and influential impact on how DIY investors navigate online investing. We’re excited to be launching a follow-up to Look Back / Look Ahead that features some of the most influential reviewers in the Canadian online brokerage landscape.
This one we’ve telegraphed already, but we’re getting close to launch and are really excited to be testing out features on the new SparxTrading.com website. A lot has changed about the online brokerage world since we started Sparx Trading, and much has also changed about the team behind the scenes at Sparx. With more hands on deck, and even more excitement about where we can take things, it was only fitting that we tackle something more ambitious. So, fingers crossed, we’re good to launch by the end of January, and users will be able to research online brokerages even faster, look for deals and promotions more intelligently, and track the latest developments at the online brokerages they’re most interested in more conveniently.
That’s a wrap for this first-of-2021 edition of the Weekly Roundup. With cryptocurrency mooning and stocks in rally mode to start the year, there’s a welcome dose of green amidst some of the negative news still confronting us regarding COVID-19. Clearly, there’s a lot to take in for the week so best of luck catching up, and we look forward to a wild month and year ahead. Happy New Year again, and stay healthy and profitable!
*Update: January 8* Cheers to 2021! While 2020 marked a year full of surprise and change – both inside and outside the DIY investing space – we believe it is safe to say we are all ready for a fresh start. To help you ring in the new year and celebrate in (financial) style, Sparx Trading has rounded up the latest deals and promotions from Canadian discount brokerages.
With 2021 officially here, RRSP season is now officially in full swing. Whether it is a personal New Year’s resolution of yours or not, make sure you do not fall victim to procrastination this year. The deadline for contribution to RRSPs to count for the 2020 tax year is March 1st, 2021.
Scroll on to learn more about all the current online brokerage deals and promotions for January – including a new offering and a few that are set to expire at the very start of the month.
As always, we will continue to monitor the deals space and provide updates on new discount brokerage developments, so make sure you check back throughout the month. In the meantime, if you discover any new deals that you believe would be of interest to fellow DIY investors, please let us know in the comments below.
Expired Deals
The stroke of midnight not only signified the beginning of a new year, but it also signified the end of several online brokerage deals. Optimistically, we expect that after the holiday, various online brokerages will be updating their sites and long-standing offers which technically happened to expire might be given a new lease on life. That said, here’s what officially expired as of January 1st, 2021.
National Bank Direct Brokerage’s 100 free online trades
Questrade’s 5 commission-free trades and month-long commission-free trades/advanced data (now back)
RBC Direct Investing’s 25 commission-free trades
Virtual Brokers’ “No Minimum 2020” promotions all expired on December 31st, 2020
During the month of December, we also saw a rather creative cash back offer from Wealthsimple Trade quietly expire.
Looking ahead, three promotions are scheduled to expire on January 5th, 2021: BMO SmartFolio’s cash back promotion, BMO InvestorLine’s refer-a-friend campaign, and BMO InvestorLine’s Fall 2020 cash back campaign. See tables below for full promotion details and eligibility requirements.
Extended Deals
*Update: Jan. 8 – Questrade’s promotion section is now up to date as their entry level five commission-free trade offer makes a comeback. Also back, is the 30 days of unlimited commission-free stock and option trades in the form of commission rebates, plus one free month of an advanced data package, when opening a new account. Both deals will expire on December 31st. See the full terms and conditions in the tables below.*
New Deals
*Update: Jan. 8 – RBC Direct Investing has launched a new cash back promotion that will run until the spring. Set to expire on March 31st, this new deal offers cash back and commission-free trades to investors who open a new account and transfer funds from a non-RBC investment account to their new account. See the table below for full terms and eligibility details.
BMO InvestorLine has also launched a new cash back promotional offer which is set to expire on March 2, 2020. This new promo is a tiered promotion and qualifying deposit levels start at $15,000. Scroll down to see the full promotion terms and conditions.*
Though not technically new, we are adding the Wealthsimple Trade referral promotion to our coverage. DIY investors can receive cash towards their next trade each time a new client signs up for an account using their referral link. For more details, including eligibility requirements, please see the table below.
Open a new RBC Direct Investing account by March 31, 2021 and fund it with at least A) $5,000; B) $25,000; C) $50,000; D) $100,000; E) $250,000; F) $500,000 or G) $1M+ by May 31, 2021 and you may receive a cash back of A) $50; B) $100; C) $200; D) $300; E) $500; F) $1,000 or G) $2,000; plus 10 free trades to be used by August 31, 2021. The fund must be from a non-RBC investment account. Use promo code WCMP2 during account opening and be sure to review the full Terms and Conditions.
A) $5,000 B) $25,000 C) $50,000 D) $100,000 E) $250,000 F) $500,000 G) $1M+
Cash Back: A) $50 B) $100 C) $200 D) $300 E) $500 F) $1,000 G) $2,000 Plus 10 free trades
Scotia iTRADE is offering two choices for new investors who open accounts before March 1, 2021 and fund it with at least A) $5,000; B) $10,000; C) $25,000; D) $50,000; E) $100,000; F) $250,000; G) $500,000 or H) $1M+: Option 1: you can use promo code C21 to receive cash reward of A) $25; B) $50; C) $100; D) $200; E) $400; F) $750; G) $1,000 or H) $1,500; plus a discounted commission of $6.99 per trade until June 30, 2021. Option 2: Use promo code FT21 and you may be eligible for A) 10; B) 20; C) 50; D) 100; E) 200; F) 300; G) 400 or H) 500 free trades to use for 90 days after the account is funded. See terms and conditions for full details.
A) $5,000 B) $10,000 C) $25,000 D) $50,000 E) $100,000 F) $250,000 G) $500,000 H) $1M+
Cash Back: A) $25 B) $50 C) $100 D) $200 E) $400 F) $750 G) $1,000 H) $1,500 or Free Trades: A) 10 B) 20 C) 50 D) 100 E) 200 F) 300 G) 400 H) 500
Fund your new or existing CIBC Investor’s Edge account before March 2, 2021 with at least A) $10,000; B) 25,000; C) $50,000; D) $100,000; E) $500,000 or F) $1M+ and you may be eligible to receive a cash back reward of up to A) $50; B) $100; C) $200; D) $500; E) $1,000 or F) $2,000. To qualify, the fund must be from outside CIBC. No promo code required. See terms and conditions for full details.
A) $10,000 B) 25,000 C) $50,000 D) $100,000 E) $500,000 F) $1M+
Cash Back: A) $50 B) $100 C) $200 D) $500 E) $1,000 F) $2,000
Open a new qualifying account at BMO InvestorLine with new assets worth at least A) $15,000; B) $50,000; C) $100,000; D) $250,000; E) $500,000 or F)$1M+, and you may be eligible to receive a cash back reward of up to A) $150; B) $250; C) $500; D) $800; E) $1,000 or F) $2,000. Use promo code SDCASH2000 when registering to qualify. Be sure to read full terms and conditions.
A) $15,000 B) $50,000 C) $100,000 D) $250,000 E) $500,000 F) $1M+
Cash Back: A) $150 B) $250 C) $500 D) $800 E) $1,000 F) $2,000
Open a new TD Direct Investing account by March 1, 2021 with promo code INVESTNOW and fund it with new assets worth at least A) $15,000; B) $25,000; C) $100,000; D) $250,000 or E) $500,000, and you may be eligible to receive a cash back reward of up to A) $100; B) $200; C) $300; D) $500 or E) $1,000. The fund must be deposited to the account by April 30, 2021 and at least one trade is placed by June 30, 2021. In addition, you may also be eligible for another $100 cash reward by setting up a Monthly Contribution Plan (min. $100 per month) with the first contribution occur before April 30, 2021. The maximum reward one could receive is $1,100. See terms and conditions for full details.
A) $15,000 B) $25,000 C) $100,000 D) $250,000 E) $500,000
Cash Back: A) $100 B) $200 C) $300 D) $500 E) $1,000
New clients who open and fund a new Qtrade Investor account before March 01, 2021 with at least A) $25,000; B) 50,000; C) $100,000; D) $500,000; E) $1M or F) $2M+ may be eligible to receive a pre-paid Visa gift card of up to A) $50; B) $100; C) $250; D) $800; E) $1,500 or F) $2,000. Only the first 500 customers are eligible. Please use promo code VISA2K. See terms and conditions for full details.
A) $25,000 B) $50,000 C) $100,000 D) $500,000 E) $1M F) $2M+
Cash Reward: A) $50 B) $100 C) $250 D) $800 E) $1,500 F) $2,000
New accounts opened between Jun 22 and Dec 31, 2020 will be awarded 100 free online trades in one year. This promotion applies to new and existing NBDB clients who use the code “FREE2020” to open new accounts. There’s no minimum funding requirement, however some other restrictions may apply.
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive $88 in commission credits (up to 17 commission-free trades). Use promo code SPARX88 when signing up. Be sure to read terms and conditions carefully.
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully.
Open a new RBC Direct Investing account by December 31, 2020 and fund it with at least $5,000 by March 5, 2021 and you will receive commission rebates for 25 trades that occur within 1 year of account opening. Be sure to use promo code NTBW2 during account opening. You will be charged regular commissions on the trading date, and the rebate will be deposited back into your account after 3-5 business days. If you are an existing customer to RBC DI, the type of the new account being opened must be different from the account types that you current have.
Open and fund a new qualifying account with at least $25,000 and you may qualify for one month of unlimited commission-free trades and up to one month free of an advanced data package. Use promo code ADVANTAGE14 when opening a new account. Be sure to read terms and conditions for full details.
$25,000
commission-free trades for 1 month + 1 month of advanced data.
Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements.
A) $1,000 B) $10,000 C) $25,000 D) $50,000 E) $100,000+
$25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back
Cash deposited into Questrade billing account within 7 days after funding period ends (90 days)
If you refer a friend/family member who is not already a Scotia iTRADE account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link.
A) $10,000 B) $50,000+
A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50)
You may receive $10 cash incentive for each new client that you refer to Wealthsimple Trade. They must use your unique referral link during account opening and make a trade value of at least $100. The referred friend will also get $10.
If you (an existing Qtrade Investor client) refer a new client to Qtrade Investor and they open an account with at least $1,000 the referrer and the referee may both be eligible to receive $25 cash. See terms and conditions for full details.
$1,000
$25 cash back (for both referrer and referee)
Cash deposited at the end of the month in which referee’s account funded
If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $5,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details.
$5,000
You(referrer): $50; Your Friend(referee): $50
Payout occurs 45 days after minimum 90 day holding period (subject to conditions).
Transfer $15,000 or more into a new HSBC InvestDirect account and you may be eligible to have up to $152.55 in transfer fees covered.
$152.55
$15,000
Confirmed via email contact with HSBC InvestDirect Rep. Contact client service for more information.
none
Transfer $15,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details.
Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to contact TD Direct Investing for further details.
$150
$25,000
Transfer Fee Promo Contact client service for more information (1-800-465-5463).
none
Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made.
$135
$25,000
Confirmed with reps. Contact client service for more information (1-800-567-3343).
none
Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account and you may be eligible to have transfer fees covered up to $200. Contact client service for more details.
$200
Contact client service for more information
Contact client service for more information (1-888-776-6886)
none
Expired Offers
Desjardins Online Brokerage is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $10,000 into a Desjardins Online Brokerage account. You’ll have to call 1-866-873-7103 and mention promo code DisnatTransfer. See details link for more info.
The minimum commission per equity trade ($1.99) is waived for new accounts from account opening till December 31, 2020. As a result, your commission is just 1¢/share (max $7.99). However, this offer does not apply to Odd Lot orders (i.e. orders with quantity less than 100 shares if price >= $1 or price < $0.10; or less than 500 shares if price in the $0.10 – $0.99 range). Please be reminded that at Virtual Brokers ETFs are always free to buy.
Submit your information via the Hardbacon website to be referred to National Bank Direct Brokerage. Open and fund a qualifying account and you may receive up to 200 commission-free trades and discounted trading commissions. Be sure to read full terms and conditions.
Open a new Non-Registered trading account and fund it with at least $100 by December 18, 2020 and you may receive a random cash bonus ranging from $1 to $4,500. The cash bonus amount will be equivalent to the value of one of the fifteen stocks that have been selected by Wealthsimple Trade for this program. Please refer to the Terms and Conditions for more details.
Desjardins Online Brokerage is offering $50 in commission credits for new Disnat Classic clients depositing at least $1,000. See terms and conditions for full details.
Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details.
Be one of the first 100 clients to open and fund an account with a minimum of $10,000 at Qtrade Investor using the promo code TRADE695 and you may be eligible for 100 trades at a preferred commission rate of $6.95 for 6 months. See terms and conditions for more details.
Open and fund a new Questrade Portfolio IQ account with a deposit of at least $1,000 and the first month of management will be free. For more information on Portfolio IQ, click the product link.
Open a new SmartFolio account and fund it with at least $1,000 and you could receive 0.5% cash back up to $1,000. Use promo code SFJAN1000 when opening a new account. See terms and conditions for full details. This offer is limited to new SmartFolio clients only, and can be combined with the refer-a-friend promotion.
BMO SmartFolio clients will receive $50 cash back for every friend or family member who opens and funds a new SmartFolio account. Friends and family referred to SmartFolio will receive $50 cash back for opening and funding an account, plus automatic enrollment into SmartFolio’s mass offer in market at the time. See offer terms and conditions for more details.
Transfer at least $25,000 into Virtual Wealth when opening a new account and you may be eligible to have up to $150 in transfer fees covered by Virtual Wealth.
Professionals and students in the below fields can benefit from a reduced pricing structure: * Engineering students * Legal, accounting and business students * Healthcare students * Health sciences students * Nursing students Benefits: * $5.95 commission on equities * $0 commission on ETFs * $0 annual administration fee
Accounts holders who are 30 years old or younger are offered 10 free trades each year. After the free transactions, a commission rate of $4.95 per transaction will be applied (which is just half of the regular price).
The phrase that’s been a mantra for many of us in 2020 – aside from “You’re on mute” – has been “Is it over yet?” Finally, it’s a lot closer to being true than at any previous point in the year. Thank goodness. In keeping with the sentiment of a very long year, this end-of-year edition of the Weekly Roundup is itself longer than usual. Unlike 2020, however, it is intentionally long because so many interesting things took place.
Packaging so many big developments into one post was a challenge. So, for this final edition of the Roundup for the year, we offer up an homage to a movie franchise that seems to go on just about as long as 2020 has. This Fast and Furious edition of the Roundup recaps the year one quarter at a time. Keep reading for high-octane stories that powered the Weekly Roundup for the past year, including important feature releases, interesting trends, and the stories that were kind of a big deal. In true Weekly Roundup form, we roll the credits on 2020 with DIY investor chatter from Twitter and the forums.
Buckle up, it’s going to be a wild ride.
Q1 2020: Everything Was Normal Until It Wasn’t
Looking back on the beginning of the year, the start to 2020 in the Canadian online brokerage space seemed pretty “normal” by most accounts.
One theme early in the year was pricing drops. Desjardins Online Brokerage, for example, significantly dropped their commission rates, especially for active investors, to under $1 per trade. Similarly, HSBC also teed up an offer for active investors: zero-commission pricing between April and December 2020. Although these two firms aren’t as well known in the Canadian online brokerage space as other mainstream firms or the big-five bank-owned online brokers, it was clear that commission pricing in 2020 would continue to be under pressure as smaller firms looked to gain market share. These moves were also timed around the start of the year because of the heightened interest in RSP accounts, and, as such, there would be a much larger audience of investors willing to consider these new pricing features. Interestingly, the rest of the Canadian online brokerage industry did not immediately move to lower commission prices. As it turned out, once the tsunami of investor demand for online brokerage accounts took hold, commission prices stayed largely untouched until the latter part of 2020.
Another important theme early in the year (prior to COVID-19 hitting with full force) was the release of online brokerage reviews and rankings. Both The Globe and Mail and Surviscor released their respective rankings of Canada’s online brokers in order to coincide with the time in the calendar when many DIY investors hunt out new online investing accounts and offers.
What stood out about the 2020 edition of The Globe and Mail online brokerage rankings (which happened to be the 21st edition of these rankings) was that a number of firms scored a respectable grade (B or better), but of the top three firms by letter grade, two of them were bank-owned online brokers: TD Direct Investing and Scotia iTrade. The firm that reappeared at the top of these rankings was Qtrade Investor, which earned an A+ rating overall. Ironically, TD Direct Investing suffered from a trading interruption (something that would become a lot more commonplace across the industry in 2020), and Scotia iTrade continued to face challenges responding to clients in a timely fashion over the phone.
In the Surviscor rankings, Qtrade Investor also took top spot, edging out Questrade and TD Direct Investing. Not to be outdone, Questrade earned a DALBAR award for client service, providing additional points for their brand in a year that started off strong in terms of rankings progress.
Of course, the major story during the first quarter of 2020 was COVID-19, and specifically how it roiled markets and caused a massive shock to trading systems, online brokerages, and DIY investors. For some, it was catastrophic, but to others, the opportunity of a lifetime. It was this latter group that won the day, however, as new investors jumped at the chance to invest in household-name stocks at incredible prices. Further, the “Robinhood effect” was cited as another reason the volatility seemed to skyrocket. The US online brokerage had moved to a largely commission-free model, and, as such, investors could “scalp” trade – making small and frequent trades – with no real downside (in terms of commission pricing). It turned out, however, that most online brokerage systems were not equipped to handle the surge in interest in trading combined with market volatility.
Some weird things happened. Among them, Wealthsimple Trade having to effectively halt new clients from being able to trade on their platform.
@wstrade As a new user, why would you not include this message when I was signing up and depositing money? I now can’t make trades and have not even been provided with a timeline of when I can expext to be off the waitlist #disappointingpic.twitter.com/tO2Y52wmjF
Major online brokerages also suffered trading platform downtime, slammed telephone reps, and the biggest surge in online brokerage account opening since the bitcoin craze in 2018. Oh, and they had to contend with all of this while being transitioned to a work-from-home model.
Also strange, people deciding to hoard toilet paper.
Q2 2020: Outages & Outrage
The start of the second quarter picked up right where the first ended, as things went from weird to certifiably insane. Volatility and trading volumes managed to take down trading systems at multiple Canadian bank-owned online brokerages, but that would not even be the weirdest thing to take place in April. As it turns out, prices for commodities, like barrels of oil, could not only fall to zero but also go negative.
Unfortunately for traders – and especially for Interactive Brokers clients – the oil contract price going negative wound up impairing (if not wiping out) a significant number of traders, and that was because of a programming glitch on Interactive Brokers’ platform that didn’t account for prices of contracts being able to turn negative. All told, Interactive Brokers ended up taking a $90 million loss because of the exceptionally rare move to reimburse traders caught offside by this issue. Of course, while embarrassing for Interactive Brokers, these were truly unusual times, and there were other traders who didn’t see it coming.
Nonetheless, Interactive Brokers also had a huge silver lining after the oil futures contract fiasco: They experienced record-breaking new-account growth. As the canary in the coal mine, Interactive Brokers telegraphed exceptionally strong account openings (+22% year over year) and revenue gains from the sheer volume of activity taking place. In fact, there were more accounts opened at Interactive Brokers in April 2020 than in the last six months of 2019 combined.
Against the backdrop of market volatility, another online brokerage ranking was published, this time from J.D. Power. The Self-Directed Investor Satisfaction Study was revealing in that even before many of the issues that came to light during the heavy volatility in the markets, the Canadian online brokerage industry was starting to slip in terms of investor satisfaction. The report card showed that online brokerages fared worse in 2020 than they did in 2019 when it came to overall satisfaction.
Questrade managed to take top spot in the rankings for 2020, an accolade that is the result of a long journey of constant improvement. Conversely, the bottom four online brokerages in Canada, according to J.D. Power, were from the big five: RBC Direct Investing, TD Direct Investing, CIBC Investor’s Edge, and Scotia iTrade, respectively, were the firms that scored the lowest on the 2020 edition of this ranking. One telling stat was that website stability and accessibility were areas where online investors felt underserved, with 46% of those polled experiencing a problem with their provider’s website.
One of the best, smartest, impromptu speeches I have ever heard. Amazing leadership. pic.twitter.com/SHiPBdVDvC
Finally, the major development in the second quarter of 2020 (outside of COVID-19) was the death of George Floyd and the igniting of social justice movements in North America (and across the world) to a point not seen since the US Civil Rights movement. Though the stock markets were largely insulated from the headline risk, major names in the public markets (like Nike) took very public stands on the death of George Floyd and the Black Lives Matter movement. One potentially coincidental shift that we noted in the websites of two online brokerages at this time was the use of more inclusive and diverse imagery. What a DIY investor was “supposed to look like” changed in terms of the imagery used on the websites of Interactive Brokers and Virtual Brokers. Other online brokerages in Canada had already made the shift to more inclusive imagery, so it was nice to see these online brokers take a step in the right direction when it comes to representation.
Another important note on Virtual Brokers emerged during this time, which was that the parent company, CI Financial, had opted to consolidate the “Virtual Brokers” name under CI Direct Investing along with another key name in the digital investing space: WealthBar. Although no definitive timetable was published on this move, it means that a long-standing name in the online brokerage space will disappear, and DIY investors will have to learn another new name. To make matters even more challenging, the new online brokerage that formed from the acquisition of Jitneytrade by Canaccord is named CG Direct. These two names are bound to confuse DIY investors even more than the current challenge of sorting out Qtrade Investor and Questrade.
Q3 2020: Sun and Shade
With the nicer weather and relative calm in stock markets, it seemed like an opportune moment for several online brokerages to make big announcements and feature enhancements/changes. And there were a few.
Starting in June, TD Direct Investing announced updates to its mobile app that focused on enhancements to investor education. Interestingly, as it came to be seen later in the year, this move toward bolstering investor education was both a timely one, given the number of new investors coming into the stock market, and a well-calculated one, supporting the big reveal that would come in Q4. The trend of improvements to mobile trading experiences was something that surfaced several times in the year, notably with RBC Direct Investing as well as Virtual Brokers.
One of the biggest announcements to cross the tape was that Wealthsimple Trade would be launching cryptocurrency trading in Canada. Offering trading in both Bitcoin and Ethereum, this move by the “zero-commission” online broker in Canada was yet another step to appeal to a younger, more tech-savvy audience who wanted both an easier way to access these digital currency instruments and a more user-friendly way. This pilot program will ultimately help to inform whether cryptocurrency trading can be properly regulated by financial authorities in Canada. In 2020, Wealthsimple Trade continued to lean into its identity as a “Robinhood Canada,” given the success of the US online brokerage in winning over new investors to its platform.
One big feature roll-out that didn’t quite go as planned was from CIBC Investor’s Edge. Unfortunately, the feature upgrade’s first attempt resulted in trading interruptions that, in turn, prompted the online broker to offer commission-free trades to those who were impacted by the outage. Eventually, however, a new online trading experience was rolled out – in part – and set the stage for further improvements to the user experience.
After a very quiet stretch, signs of life in the deals and promotions section started to appear. National Bank Direct Brokerage launched a sizable commission-free trade offer, and, interestingly, Wealthsimple Trade launched a contest with a draw for $5,000 in cash. What made the latter offer stand out is that it was an early signal that despite offering zero-commission trades, Wealthsimple Trade also had to undertake some further effort to entice new clients to their platform (something that showed up again in Q4).
Q4 2020: A Few Good Mends
It’s hard to believe that the fourth quarter was actually just one quarter, given how much happened. The resurgence of COVID-19 via the “second wave,” the huge rally in the stock market to set new highs, and the US federal election all would have been massive stories on their own but, combined, they made it nearly impossible to keep from watching the news.
Despite all of the negative headlines, what did emerge for online brokerages and DIY investors was an interesting convergence of events.
While the first portion of the year showed unprecedented strength of interest by online investors to open up accounts and trade, by the time the fourth quarter rolled around, things had levelled off somewhat. Nevertheless, Canadian online brokerages, much like their US counterparts, were seeing elevated trading activity and, unlike their peers in the US, were generating significant revenue as a result. The fourth quarter in the year is also the time when online brokers in Canada typically start their ramp-up to campaigns for RSP season. What resulted from these events taking place simultaneously was that the deals and promotions activity in November just exploded. Offers came to market from all major online bank-owned brokerages as well as most other Canadian online brokers in one way or another. Even Wealthsimple Trade managed to jump into the deals and promotions fray, once again taking their cues from Robinhood and launching a promotion to give away cash in an amount equivalent to a particular popular stock.
Deals were just one part of what the fourth quarter of 2020 had to offer. Also on deck for the end of the year was a huge announcement from TD Direct Investing, which launched their new commission-free ETF trading platform, GoalAssist. While the platform only allows commission-free trading for TD-branded ETFs, it is a huge step in moving the needle forward on commission-free trading for Canadian DIY investors. Already ETFs are free to buy (at Questrade and Virtual Brokers) or free to buy and sell (all ETFs at National Bank Direct Brokerage and a limited selection at Scotia iTrade and Qtrade Investor). So, for TD Direct Investing, one of the biggest names in Canadian DIY investing circles, to launch this product (and in a mobile-only format to boot) means that they are directly going after the commission-free trading offering by Wealthsimple Trade.
Ironically, it appears that in the fourth quarter, Wealthsimple Trade was already at work to challenge the traditional Canadian online brokerage offering of a “desktop experience.” Prior to this year, Wealthsimple Trade had been available in mobile-app format only – something that ultimately ended getting Wealthsimple Trade disqualified from being included in some of the Surviscor online brokerage rankings.
As of the fourth quarter, however, Wealthsimple Trade has launched a desktop version of their web platform that is being tested by users. Given that fewer people are actually going into an office or are on the go to and from an office, more and more users are spending time on their laptops or desktop computers. So, this highly sought-after feature is another shot across the bow aimed at the online brokerage industry indicating that Wealthsimple Trade is getting up to speed on the features that online investors want.
New features didn’t stop there for Canadian online brokerages, however. BMO InvestorLine rolled out a 2.0 version of their online trading experience, which significantly streamlines their existing web interface, though it is still being updated in terms of features. At first blush, it looks like the trend among online brokerages has shifted away from completing all features before launch, moving instead to an “agile” model of shipping features out and enhancing/optimizing over the product lifecycle. Another big announcement from an online broker regarding features was from National Bank Direct Brokerage, which officially rolled out OptionsPlay as part of their offering to clients. This platform is intended to assist individual investors in manoeuvring through trading options.
Finally, one more noteworthy milestone took place in the quarter, as the Sparx team launched the fourth edition of the Look Back/Look Ahead series. This publication featured in-depth coverage of several of Canada’s most popular online brokerages, which offered a unique glimpse at how 2020 unfolded for them as well as what features and trends they’re looking to in 2021. In addition to the online brokerage space as a whole, the magazine also offered a sneak peek at the new SparxTrading.com website coming in 2021.
Even summarizing it a quarter at a time, this year had lots of other stories that we didn’t get a chance to highlight in the Roundups as well as in this ultimate year-end review of stories that shaped 2020 in the Canadian (and US) online brokerage industry.
2020 being what it is, there’s still room for some kind of unplanned surprise that could impact investors – whether it’s a new deal or feature launch – however, the good news is that with just a few more days until the official end of the year, online brokerage employees are going to be in holiday mode, too. As such, we don’t anticipate more feature releases going live just yet.
So, on that note, we’ll be doing something different and signing off for the Weekly Roundup for 2020 for the final stretch of December. We will be rebooting in early January, with a few other surprises to mention right out of the gate, as well as more exclusive content. Unless, of course, 2020 drops a story too big not to cover in the online brokerage space.
In this post, one investor asks for recommendations of stable, secure American companies to invest in for the next 10 to 15 years. The advice pours in, covering ETFs, the couch potato strategy, Canadian versus American stocks – and why you should avoid taking advice about specific stocks from random people on the internet.
Live and Learn
An investor who knows very little about their own investments asks about the best way to learn about the topic. Redditors share their favourite books, websites, courses, podcasts, and more, along with their personal financial journeys.
Into the Close
That’s it for the final Roundup for 2020. With vaccines now in place and hope on the horizon, there is lots to look forward to in the coming months. The next few weeks will be the most challenging; however, to pull a (final) line from the Fast and Furious franchise, “We do what we do best, we improvise.”
Stay safe, healthy, and connected, and see you again in 2021.
’Tis the season for gifts, and it seems like with recent fervour around IPOs, those gifts are coming in the form of jingling market bells. For both DIY investors and online brokerages, the excitement around recent IPOs and the optimism heading into 2021 bode well for the run-up to RSP season.
In this can’t-believe-the-end-of-2020-is-so-close edition of the Roundup, we review the least likely name to have experienced an outage and what that means for online investors in the brave new world of trading online. Next, we highlight one bank-owned online brokerage that has quietly launched a potentially disruptive feature that will challenge the rest of the Canadian online brokerage industry to find a way to follow suit. As always, we’ll toss in a healthy dose of investor commentary courtesy of the forums and Twitter.
If there’s one lesson that DIY investors learned the hard way this year, it’s that online brokerage platforms are not bulletproof. Multiple platform outages across the year, sometimes in the same week or day, sometimes (always) at the worst possible moment, have plagued DIY investors and online brokers alike and eroded the confidence of many active online investors in the ability of their online broker to be functional when opportunity knocks.
Nobody is more keenly aware of this than those who actively trade. Active trading is inherently risky, but the risk of technical failures – which is an ever-present risk – is something online investors have had to contend with a lot more this year, it seems, than in any other year before.
One name that has largely stayed out of the outage spotlight this year has been Interactive Brokers. On several occasions leading up to forecasted volatility in the markets, they hardened their systems and reigned in risk exposure to deal with the impending storm. This past week, however, Interactive Brokers clients were greeted with something frightening, as a system failure during the market open essentially sidelined investors for almost half the day’s trading session.
Contextually, it is important to note that unlike most other online brokerages, Interactive Brokers is highly attractive to professional investors as well as retail investors because of the professional-grade nature of their pricing and market access. On average (per their latest investor presentation), they are home to over 980,000 clients and execute more than 1.8 million trades per day.
For this level of active trader, there is lots of money (and risk) on the line, so of all the types of investors, this lot seldom tolerates technical failures. Naturally, some of this group took to Twitter to express their frustration – and did not hold back. For context, we are well versed in Twitter reactions to online brokerages, especially when there are service interruptions. However, the reaction to the outage from the group of Interactive Broker clients on Twitter was swift, unpleasant, and, because of their client base, global.
Aside from the extraordinary fact that Interactive Brokers’ systems went down during the trading day (technically, before the opening bell), what was also interesting about how things played out was the acknowledgement and ownership of the issue by the CEO of Interactive Brokers, Milan Galik. Of the many service interruptions or outages that have taken place here in the Canadian online brokerage space, there hasn’t really been this level of personal acknowledgement before. Suffice it to say it was a big deal.
The lesson for online investors is that regardless of the calibre of online brokerage, the risk of failure due to technical outage is ever-present. The cause for the failure and service interruption was attributed to a failed data storage system from an external (unnamed) vendor. However, the reality is that architecture for modern trading systems continues to get increasingly complex, so it is likely a matter of when rather than if a system will go down. With more moving parts comes the increase in risk of something going wrong. This is a material consideration for active investors, especially those using margin to trade.
This year has been a bumpy one for Interactive Brokers. After the debacle with oil futures going negative in April, along with this outage, which happened on a relatively benign day in the market (can’t imagine what this would have been like on high-volatility day), there will be cause for concern for some investors. Still, industry and retail perspectives would likely both agree that one would be hard-pressed to find an online brokerage platform as invested in technology and automation as Interactive Brokers.
This past week also saw Interactive Brokers present at the Goldman Sachs US Financial Services Conference, and the key takeaway from that session was that Interactive Brokers remains on a healthy growth trajectory.
Clearly, there will be many clients who will remain unhappy about how things unfolded with regards to the outage, but, on balance, there appears to be significant momentum behind Interactive Brokers to continue their push higher in 2021.
RBC Direct Investing Navigating New Territory
For many individuals, 2021 can’t come fast enough. In addition to wanting to leave this wacky year behind us, the sentiment of having something better to look forward to (aka hope) is much more appealing than dwelling on 2020.
When it comes to Canadian online brokerages, the future is a bit of a touchy subject.
Understandably, for competitive reasons or simply to manage expectations, online brokerages have been coy about what they’re working on. From time to time, however, an online brokerage may mention a key feature that has been requested or even talk about something exciting, but those occasions are usually few and far between.
Against that backdrop, the launch of a new content offering from RBC Direct Investing stands in contrast to the historical way of doing things at Canadian online brokerages. Perhaps as a signal of change within the firm, and quite likely something that will (once again) prompt the Canadian online brokerage industry as a whole (in particular the bank-owned online brokerages) to consider matching the tactic, the latest communications move by RBC Direct Investing might be the snowball that starts an avalanche of information from their competitors.
This past November, as part of their Inspired Investor magazine, RBC Direct Investing launched a feature called “Navigators,” which is described as a “monthly go-to for what’s happening at RBC Direct Investing.”
Contained within this feature are updates about new or interesting features at RBC Direct Investing, as well as tips on how to navigate the RBC Direct Investing platform and the most read article from the preceding month’s Inspired Investor series.
The first issue, for example, telegraphed upcoming improvements to site navigation and improved stock screener experiences. In the most recent (also the second) issue, the new stock screener experience was showcased as well as a milestone of achieving full online account opening for RBC Direct Investing accounts – specifically, this feature is now available to non-RBC banking clients, too. Additional enhancements coming soon to the RBC Direct Investing experience were also mentioned and included improvements to the portfolio analyzer and filtering of order statuses on the mobile app.
Normally when incremental features are released, they get very little coverage from online brokerages – however, it is exactly these small enhancements that users often miss and that fill the gaps between major feature releases. Not only do they help to inform the DIY investor community (some of whom are already RBC Direct Investing clients in this case) as to what is going on, but they also serve to demonstrate that change and innovation are happening.
It is not an understatement to say that signs of innovation within the Canadian online brokerage space are difficult to spot, not because they don’t happen but because they are often underreported.
As we stated in the Look Back / Look Ahead series for 2020/2021, we believe that an emerging trend for how online investors will evaluate online brokerages will sway toward those that are always working on enhancements. We certainly don’t live in a static world, and online investing is no exception. When cars can get over-the-air updates, online brokerages ought to be able to continuously be upgrading the user experience. By letting users know which features are in the works, it may improve the odds of a client opting to stay rather than switch or open a new account simply to access a particular feature.
For those reasons, there is likely to be greater incentive and pressure on peer firms to a) innovate and b) discuss the kinds of features they’re working on improving. Of course, it will be crucial to then follow through on those improvements.
Taking a step back, this is clearly what market differentiation looks like. We saw what happened to the online brokerage space in 2014, when RBC Direct Investing opted to lower their commission price to $9.95 per trade: almost all of the other bank-owned brokerages quickly followed suit. Now that RBC Direct Investing has rolled out a way to keep DIY investors apprised of what’s “cooking in the kitchen,” they have thrown down the gauntlet for their competitors to try to do the same. With two issues now released, it is safe to say there are going to be more readers curious to see what RBC Direct Investing is working on next.
The simple question DIY investors will be asking Canadian online brokerages heading into RSP season is what they can expect to get from each one they’re considering. Fortunately for RBC Direct Investing, they have a lot more to talk about than just their pricing, which is not something most of their peers can say.
In this post, a Redditor asks if they should take part in their employer’s matching program for retirements savings. The problem? A very high Management Expense Ratio (MER). Redditors weigh in on whether receiving this “free” money is still a good idea with the high MER.
#LifeGoals
After landing a dream job at a pre-IPO start-up, a new investor with an incredible salary and low monthly expenses asks for help planning for the future in this post. Hundreds of responses pour in, with tips on everything from avoiding “lifestyle creep” to saving for an emergency fund to making the best use of TFSAs and RRSPs.
Into the Close
In “normal” times, this point in the calendar is when things would slow down, and other than the rush to pick up last-minute presents, there would be room for a little bit of a gear-down. Alas, this is a 2020 December. With hot IPOs hitting the market, and literally nowhere else to go for many of us, it will be a mad dash to the finish. Several stories hit our radar this week that were not covered here, so we’ll try to squeeze them in before the year ends. And, if you haven’t already done so, be sure to check out Look Back / Look Ahead for awesome insights and previews of what’s coming around the corner in 2021.
Take a deep breath. Believe it or not, December is here, and with it, news of several COVID-19 vaccines, stock markets making record highs, and hope on the horizon. Certainly not a coincidence. Another non-coincidence at this time of year is the appearance of special treats and the idea of wrapping things up with a bow.
In this special edition of the Roundup, we turn once again to the topic of deals and promotions, with a regularly scheduled check-in of the deals landscape to kick off the new month. From there, the big announcement: Sparx Trading’s exclusive Look Back Look Ahead series for 2020-2021 is now live! We’ve got a great overview of this unique series that features Canadian online brokers giving their perspective on the past year as well as on what’s coming in 2021. And, as always, we’ve got a full helping of DIY investor comments from Twitter and the DIY investor forums.
De(al)cember Update
The countdown to the end of the year has been going on for some time, but now that December’s here, the finish line to 2020 is in sight.
Despite the gloomy weather and even gloomier forecasts for COVID-19, the SparxTrading.com online brokerage deals and promotions section offers some brighter news. As is customary at the start of each month, we take stock (pun intended) of the deals and promotions landscape among Canadian online brokerages. The good news: this year is as strong as ever in terms of promotional activity among Canadian brokerages.
Although no new deals launched at the beginning of December, a very competitive offer from National Bank Direct Brokerage did get extended for another month. The 100 commission-free trade offer by NBDB is one of the most competitive offers for DIY investors interested in commission-free trades, and with zero deposit requirements, it also has the lowest hurdle.
Last month was a watershed moment for deals and promotions activity among Canada’s online brokerages. After being mostly dormant since the end of RSP season last year, almost all online brokerages decided to launch a cash-back or commission-free trade offer.
Interestingly, there are still a few brokerages currently not on the deals and promotions list, something we anticipate changing either this month or early next month. Firms we expect to see stepping into the promotional space soon are Qtrade Investor, HSBC InvestDirect, and Virtual Brokers, given the fact that other brokerages are already offering something.
Finally, another deal we’re watching this month is Wealthsimple Trade’s “free stock” offer, which is set to expire on December 18th. It is an unusual time for a promotion to end, but it is encouraging to note that the deal is happening at all, since offering zero-commission trading is a significant draw on its own.
With all of these offers currently in play, this is likely an ideal window for online investors interested in an investing account to maximize the selection of promotions.
So, while the weather outside is frightful, this might be the most wonderful time of the year for getting a little extra boost for opening an online brokerage account.
Sparx Trading’s Online Brokerage Look Back Look Ahead Is Live!
More countdown-related content continues to emerge this month, this time from yours truly at Sparx Trading.
Our highly anticipated fourth edition of the Look Back Look Ahead series is here, and – to borrow from Robinhood’s Market Snacks podcast (fair game to borrow from Robinhood, amirite?) – this is the best one yet.
This edition features in-depth submissions from six Canadian online brokerages that offer a fascinating set of perspectives on how 2020 unfolded and preview what they have in store for 2021. In addition, we’ve given our own perspectives on the online brokerages that did not provide a submission and outlined what we thought were noteworthy developments during the year. Finally, we’ve provided a detailed preview of what the next version of SparxTrading.com has in store for DIY investors.
The series is now in its fourth iteration, and it’s interesting to see how things have evolved since we first launched it in 2014. One of the readily apparent changes is that in addition to a blog format, we also have a magazine edition, which we rolled out starting in 2018. Even though it takes considerable work to pull together a magazine format, we thought it was an opportunity to create something great-looking and engaging, which offered a different way to present stories about an exceptionally fascinating year.
One thing that has remained consistent about contributions to the Look Back Look Ahead series has been the unique perspective that only the voices of the online brokerages’ senior leaders can provide. It remains a rare opportunity to hear from senior stakeholders on how the year unfolded as well as their vision for the year ahead.
Another great feature of this year’s issue is that the Q&A format provides an interesting perspective on several points relevant to DIY investors, including:
What beginning investors can expect
What active investors can expect
Which online investing trends they think will matter to DIY investors
What user experience means to their firm
What sets their firm apart from their peers
As referenced in the beginning of the blog version of this series, there were a number of themes that emerged from the responses and analysis of the online brokerage landscape from 2020. Three big themes that stood out were the need for agility, the importance of communication, and the rising prominence of user experience.
Based on a macro view of what has transpired this year, the consensus is that COVID-19 helped accelerate the future into the present. For the world of online investing, it seems that DIY investors will be looking beyond just the headline price of commissions to the full experience of what it means to be “self-directed.” Case in point: Despite DIY investors having to pay commissions for trades, the industry as a whole saw record-breaking account openings and trading volumes during the height of the market volatility, from March through the summer.
What has become clear, now even more than in previous years, is the need for transparent and ongoing communication in order to create strong relationships with clients. With the heightened uncertainty, communication channels at online brokerages have been tested, and going forward, the hallmark of an online brokerage who “gets it” will be one that excels at communicating with clients proactively. Further, DIY investors will be looking for brokerages to harden the systems that matter in a crisis or in times of extreme volatility. Patience for service interruptions or delays has worn thin, and demonstrating “uptime” is also going to become a marker of quality.
On a lighter note, observant viewers will notice that our cover art tried to capture the work-from-home look, something that embodies the spirit of 2020 for many of us. There are some special details we tucked into the image that we’re sure DIY investors can appreciate. Sticking to the aesthetic for a moment, the soon-to-be-launched new website and content will feature our bull and bear prominently. Unless it’s sensationalistic, a lot of financial content is difficult to engage with, so we hope to continue to provide a more engaging way in which to consume DIY-investor-focused content.
Personally, I found this issue to be an enriching read, and I am excited by the prospect of DIY investors discovering something new and interesting about the Canadian online brokerage landscape as we move through the end of 2020 (thankfully) and into a new chapter in 2021.
To read the Look Back Look Ahead series, click here.
A Redditor in Ontario with a baby arriving soon asks in this post how to establish an RESP and get the full benefit of it – and also wonders if they need to be actively involved after the initial setup.
Exasperated by Exorbitant Expenses
In this post, one frustrated investor wants to know why Canadian brokerages have such high fees compared to their American counterparts. Redditors weigh in with their best theories.
Into the Close
That’s a wrap on this early-December edition of the Roundup. Markets continue to price in optimism around the corner, which should continue to lift spirits for now. There have been some significant comeback stories this past week – including Blackberry – and even more excitement as IPOs like Airbnb and DoorDash prepare their public debuts. One thing’s for sure, there’s lots to keep DIY investors glued to their screens in what was supposed to be a quieter time of year.
After making it through 2020, there are few things that would count as truly surprising anymore. Between COVID-19, the wild US presidential election and everything else that has unfolded this past year, 2021 can’t come fast enough for many of us.
For Canadian DIY investors and Canada’s online brokerages, despite a wild year of volatility, volume and very rapid change the macro picture appeared to be a positive one. Record account opening, revenues from trading and after a sharp selloff, a strong rebound in stock markets have favourably positioned Canadian online brokerages heading into the new year.
In the latest edition of Sparx Trading’s exclusive Look Back / Look Ahead series, Canada’s online brokerages provide a unique snapshot of the past year at their respective firms, as well as provide an enticing view to 2021 – yet one more reason the new year can’t come quickly enough.
This edition is one of the most fascinating yet. If for no other reason, hearing about what 2020 was like at Canada’s online brokerages during such historic times is worth tuning into. There is, however, so much more worth finding out about.
Also included in this issue is a fascinating preview of what Canada’s online brokerages have in store for DIY investors in 2021. Further, our unique Q&A feature zeros in on what beginner and active investors can expect from each online broker as well as what sets each online brokerage apart from their peers.
There is lots more content that DIY investors can dig into, so be sure to check out the featured brokerages that provided detailed submissions of the year that was and what’s coming up.
In the meantime, we’ve put together three key themes that emerged from this year’s series that provide some food for thought when assessing the Canadian online brokerage space.
Theme 1: Agility
COVID-19 forced massive change on everyone, online brokerages included. Withstanding a pandemic-level impact was only one of the major challenges Canada’s online brokerages had to move quickly to address, however.
Compounding the challenge was the sheer volume of interest from DIY investors to open up and fund their online investing accounts. Ultimately it came down to agility, technical capability and operational resilience.
Online brokerages who already had invested in online account sign ups were able to more readily handle the challenges that accompanied the immense interest in opening accounts than those who had to route investors through paper-driven sign up processes.
The key takeaway for DIY investors is that COVID-19 showed which online brokerages were more ‘change ready’ and which features matter during times of heightened market volatility.
Theme 2: Communication
With so much of our lives now digitized, instant access to what’s going on is now the norm. A great example is Uber Eats – where you can find out in real time where your food order is.
In that world, DIY investors will be hungry for more information from their online brokerages. It might be price, it might be service experience, it might be platforms or even promotions. One thing that stands out about online brokerages in 2020 is that those who prioritized connecting and communicating with investors are now better positioned to have their story and message heard.
With so many online brokerages available to service DIY investors in Canada, those that are able to create special content or deliver engaging investor education experiences or simply have a solid, regular communications strategy in place can ensure DIY investors have something worth tuning into.
Theme 3: User Experience
This was one of the more fascinating trends to dive into in this issue of the Look Back Look Ahead feature.
For DIY investors, it was reassuring to see online brokerages define user experience in terms of customer experience. That said, one of the challenges created by 2020 is that there are lots of novice investors who have entered the markets on a whim and for whom the markets only appear to be making new highs.
Providing this new crop of investors with the right tools and resources to navigate the journey of online investing will be important. Further, the balancing act continues between older clients who may not be as tech savvy or inclined towards mobile features, and younger investors who are demanding different aesthetics to websites and apps. Interestingly, there will be several notable upgrades in platforms and online investing experiences coming throughout 2021 so we’ll be curious how different online brokerages tackle the challenges in the new year.
Click the links below to learn about what each Canadian online brokerage had to say about 2020 and what to look forward to in 2021.
