Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – March 24, 2017

Investor’s know that when it comes to investing, there’s generally no such thing as a sure thing. In a week where there was so much going on, it was curious to see those that were convinced of a done deal (aka repeal & replace) come undone at the seams and those that were convinced of the worst (i.e. a capital gains tax hike) not see it come through.

This week’s roundup is chalked full of goodies courtesy of the federal budget and a handful of Canadian discount brokerages who’ve supplied investors with some interesting analysis and overviews of important changes for DIY investors to take note of. While the budget dominated the headlines, the next big story covered in the roundup looks at an interesting ‘blip’ on the radar from one of Canada’s largest online brokerages and how this might change the toolbox for younger DIY investors. From there we’ll scan through the latest tweets and DIY investor forum posts to see what investors and brokerages were talking about.

Budgetpalooza

This week, the highly anticipated federal budget was announced and it was maybe more of a surprise because of what it didn’t contain than for what it did.

Canadian DIY investors and pundits breathed a collective sigh of relieve when it was clear that the capital gains exemption rate would be left untouched at the current 50% rate.

Even though many experts describe the budget as a ‘business as usual’ move, it nonetheless weighed in at over 200 pages and did contain a number of nuggets that investors will need to pay attention to. Of course, like just about everything related to DIY investing, getting a full view of what the budget changes may mean requires quite a bit of reading and researching different sources.

Fortunately for DIY investors, there are couple of resources from Canadian online brokerages that can help make sense of the budget from an investor’s point of view.

We’ve identified three discount brokerages who’ve put together some useful resources related to this most recent budget announcement that DIY investors may want to pay closer attention to: Desjardins Online Brokerage, BMO InvestorLine (via BMO Wealth Management) and CIBC Investor’s Edge.

Here’s a quick overview of each source and what information that DIY investors might find most useful.

Budget 2017 Review: Desjardins Online Brokerage

Starting first with Desjardins Online Brokerage, who managed to pull together very good summaries of the budget very quickly. Their budget coverage included an ultra quick read/summary of some highlights of the budget including:

  • Access to the Canada Learning Bond (CLB)
  • Anti-avoidance rules applicable to registered plans
  • Phasing out the Canada Savings Bond Program
  • Consolidation of caregiver credits
  • Tuition tax credit
  • Tax credit for transit
  • Capital gain inclusion rate in computing income

None of these topics was explored in detail in the summary, but to provide added depth – especially from an economic perspective, there was also a budget analysis audio cast (great for listening on the road or treadmill) and PDF report. This report would be of interest to DIY investors who want take a ‘macro’ look at the possible impact of the budget on the Canadian economy.

Budget 2017 Review: BMO InvestorLine (BMO Wealth Management)

The BMO Wealth Management budget overview provided by BMO InvestorLine offered clients a detailed explanation of key changes in the budget that was particularly strong in highlighting a few changes that can impact DIY investors. In addition to the detailed article, there was a video interview (shown below) that provided a recap.

On a side note, the content/digital marketing efforts of the Canadian financial institutions are starting to ramp up (this is probably another topic for another day, but feel free to drop us a note if you want to chat about it!)

Some points of interest from the BMO Wealth Management 2017 budget overview were:

  • the detailed explanations on Anti-avoidance rules which are of importance to investors with RESPs or those thinking about using a DIY investor account for an RESP
  • timing of recognition of gains & losses for derivatives which should be important for advanced DIY options traders/investors to review
  • tax incentives for investors of flow-through entities (related to mineral exploration).

Budget 2017 Review: CIBC Investor’s Edge

The budget overview from CIBC Investor’s Edge consists of two parts. The first, a document prepared by tax and estate planning experts Jamie Golombek and Debbie Pearl-Weinberg, was a somewhat detailed look at key components of the budget that could impact individuals and small business owners.

This document covered quite a bit of ground but was nonetheless very readable. The most salient points for DIY investors included had some good explanations of rules impacting RESPs/RDSPs and a very good example of the changes to timing of recognition of gains and losses for derivatives – a must read for options traders.

In addition to their overview document, there will be a webinar presented by Jamie Golombek, scheduled for Wednesday March 29th from 12pm – 1pm ET, which will cover:

  • tax filing tips
  • splitting investment income with family members
  • Investing in RRSPs or TFSAs vs paying off debt
  • Donation strategies for investors

As this is investor focused content, it will likely provide some additional depth and colour to the points DIY investors are likely to encounter when tax planning.

Other brokerages

Although not directly from TD Direct Investing, the Money Talks series produced by TD provided some investor-focused budget content in video format and TD Economics put together a brief analysis of the budget from a ‘macro’ perspective.

The five minute-ish Money Talks video touched very briefly on several topics related to the budget, including what didn’t happen this budget. The big takeaway from this video was to talk to a tax/investment advisor for more guidance.

You’ve got a fund in me

It’s not often these days that DIY investors get to hear about mutual funds. In fact, when looking back at the past few years of investor education events, there haven’t been many (daresay any) of educational events for DIY investors from Canadian discount brokerages that specifically dealt with mutual funds.

That changed this week as TD Direct Investing held a webinar on mutual funds that appeared to coincide with the release of TD Managed ETF Portfolios (which are available as D-series mutual funds).

On the surface, it appears that DIY investors (especially those with modest portfolio sizes) who are looking for a convenient, cheap(ish) option for getting diversified exposure for their investment could be in luck. For a very good overview of what’s under the hood on the new offer, especially the finer point of these funds having an actively managed component, check out the Canadian Couch Potato article here.

In addition to the new product angle, what was most interesting about the TD Direct Investing webinar we reviewed this week was that the webinar appeared to provide only a partial view of the full landscape of mutual fund choices available to DIY investors who are with TD Direct Investing.

Specifically, there was no mention of the TD e-Series funds during the presentation even during the discussion of funds that could be accessed by DIY investors. Given the popularity of the TD e-Series funds with DIY investors and those that presumably would also be interested in the new D-Series funds, it was a very curious choice to omit.

Nonetheless, the combination of a webinar topic on mutual funds, especially those marketed to DIY investors, as well as the launch of a new DIY-focused set of mutual funds that have earned cautious praise from an influential voice in the Canadian DIY investing, signal a potentially interesting development across the industry.

Challenged by robo-advisors on the one hand and the trend towards passive (and ETF investing) on the other, bringing back the mutual fund into the DIY investor tool box is something other larger players might also try to get behind.

While it may not be the ‘cheapest’ option for DIY investors, these new mutual funds may gain traction because of perceived value. Specifically, for younger or less experienced investors, that value lever is convenience, something bank-owned discount brokerages such as TD Direct Investing know just as good as any firm how to sell.

Discount Brokerage Tweets of the Week

March madness was in full effect – and it wasn’t just basketball either. Mentioned this week were CIBC Investor’s Edge, Questrade (a lot!), Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

The Waiting Game

Does transferring to or from a discount brokerage really have to be so painful? Transfers happen all the time, however the internet is littered with horror stories from DIY investors who’ve had things go off the rails when trying to get into or out of an online brokerage account. Find out from this post what one investor had to go through when trying to transfer into a popular discount brokerage.

Into the Close

Investors have had a lot to chew on this week. Fortunately, spring is officially here, so here’s to thinking about warmer weather. In the meantime, hockey fans enjoy the race to the playoffs (for those who are still in it) and best of luck ducking the political drama this weekend!

Posted on by — Leave a comment

Event Review: Mutual Funds for the Self-Directed Investor

For many DIY investors, the idea of investing in the markets using mutual funds is somewhat of a controversial topic. So, it was interesting to see one of Canada’s largest online brokerages, TD Direct Investing, provide a webinar for DIY investors on the topic of mutual fund investing.

On the one hand, there’s no disputing the popularity of mutual funds as the dominant investment vehicle for many Canadian investors, especially on the managed wealth side of the spectrum. Mutual funds offer diversity and a ‘hands off’ approach that appeal to many non-DIY investors.

On the other, there’s the notion of cost – specifically that DIY investors can avoid the costs of products like mutual funds by choosing their own financial products or building their own portfolios.

Like all things related to investing, there are some interesting ‘grey areas’. There are (relatively) low cost mutual fund choices that might be appealing to some DIY investors and as such, this might be a webinar of interest to learn more about these products.

This webinar, produced by TD Direct investing and presented by Client Education Instructor, Jian Lu, offered a brief overview and introduction to the world of Mutual Funds (MFs).

The one-hour session included a 30-minute video on the basics of MFs followed by a live Q&A. There was also a walk through of TD’s online platform, WebBroker, so participants could see how costs, types, and other aspects of MF investing could be easily compared. The session moved along quickly and kept the viewer engaged and interested throughout, although it was clearly directed at novice investors.

That said, this webinar, while geared towards DIY investors, did not discuss (or even mention) one of the most popular categories of mutual funds for cost conscious investors – the TD e-Series. Instead, this webinar chose to discuss D-series funds, which are arguably a pricier version of the popular e-series product.

Screenshot of TD Direct Investing webinar – mutual fund series discussed.

Nevertheless, this webinar touched on a few issues that DIY investors might want to keep in mind if they plan to include MFs as part of their portfolios.

  • Fees are always a concern for the DIY investor, and MFs are no exception. This webinar discussed three kinds of fees including sales charges, trailers (commissions), and management expense ratio fees (MERs). They can add up quickly, and the DIY investor should check them out the MF to know what they are and whether the costs make this type of equity worth buying.
  • Mutual Funds are offered in different series. The D-series MFs are actively marketed to the DIY investor as they are, generally, cheaper to buy than other series (such as the A series). That said, TD Direct Investing also has e-Series funds (which were not discussed in the webinar) that may be less expensive than the D-series. In either case, there are still costs associated with MFs so there’s no free lunch.
  • MFs are not bought like stocks, in real time. Since they are a collection of equities, the price (technically the Net Asset Value or NAV) for any unit of a MF is determined after the bell. So, the ‘price’ you buy or sell the unit at is determined after the close of the trading day.
  • MFs are not meant for day trading, or for ‘market timing’. They are intended to be held, at least for a minimum period, and most funds will charge an early redemption fee (ERF) if they are sold too soon.

WebBroker, the TD Direct Investing platform that participants were walked through in the webinar, offers some good features that allow across the board price comparisons. One particularly interesting feature is that, when you do want to buy the MF, you can buy it by the number of stocks or by the amount of money you want to spend. You don’t have to work out either figure yourself, before making your sale or purchase.

Overall, the webinar was a helpful introduction to some of the MF choices available to DIY investors at TD Direct Investing. Given the complexity and diversity of MFs on the market, before getting started with any particular brokerage, it is probably a good idea to ask them about ALL the series you would have access to, not just the one’s they might prefer you to pay the most attention to. As a good reminder, when it comes to DIY investing, it pays to go the extra step in asking questions about what your options are.

 

 

 

 

 

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – March 17, 2017

March madness indeed. After ‘losing’ an hour to start the week, things were looking kind of looking up with Pi day, then there was the interest rate hike in the US, that whole ‘Ides of March’, the IPO of Canada Goose and finally St. Patrick’s Day on a quadruple witching day. Even though Canadian discount brokerages may be used to these ups and downs, the bigger picture appears to be how to stand out to investors with so much else going on.

In this week’s roundup we take a look at a couple of online brokerages attempting to grab the spotlight as best they can amidst a crazy news cycle. The first, a major platform upgrade, could be a signal of some changes to come at a brokerage that doesn’t often make the news. Next we look at what might be the ‘next big thing’ for socially responsible investors and a big differentiator at a bank-owned online brokerage. Also on the menu, we cut through the cat videos, Trump tweets and trolls to find what DIY investors were chirping about on Twitter and on the investing forums.

HSBC Launching New Platform

It’s almost cliché at this point but user experience is important for traders on the web today.

Over the past four years, there has been a concerted effort by most Canadian discount brokerages to improve ‘user experience’ for their existing and prospective clients. Earlier this year, Scotia iTRADE released a new front end website to improve navigation and usability. This past week, HSBC InvestDirect posted an update to their website indicating that a major facelift or upgrade to their online trading experience is on its way.

Screenshot from HSBC InvestDirect Website

Based on an early look at the new platform available on the InvestDirect website, the new trading platform features screenshots that highlight the cleaner look and feel to the landing page. A consolidated view of the holdings, positions and overall gains/losses makes up the dashboard.

Asset breakdowns are in line with other brokerage interfaces and contain clear(er) charts showcasing asset allocation, regions/sectors and performance to help track investments.

Under their ‘investor tools’ the layout includes essential trading information on a stock as well as essential functionality (such as the ability to trade, refresh for quotes, add stocks to a watchlist or setting an alert). The nice feature they have in their stock window is the ability to compare up to three stocks on a chart against one another. Even though it is clean and somewhat minimal in design, it appears to have some of the more popular features that most DIY investors would require.

In terms of screeners, HSBC InvestDirect provided a preview to their mutual fund, ETF and fixed income screeners. The filter parameters include a few standard values such as Risk, MER and Morningstar Ratings as well as the ability to run pre-defined search queries. With so many of these products on the market, a screener that has some advanced filters is a valuable tool.

Although this new platform is clearly catered towards the standard DIY investor (more likely the buy/hold or occasional investor/swing trader) it is nonetheless an important step forward for HSBC InvestDirect’s digital identity. Not only will the new platform enable them to better service their existing clients with an improved order entry, research and tracking experience, this newer interface might improve the perception of the HSBC InvestDirect brand.

For many years, discount brokerage rankings from Surviscor and Rob Carrick (Globe and Mail) for being out of touch with the needs/user experience of modern investors. For example, the last ranking from Rob Carrick referenced HSBC InvestDirect as “the broker that time forgot. Hasn’t done much to shake things up since the mid-2000’s…” while Surviscor assigned a grade of “C-“ to “transaction process” and a “D” to “website resources.”

Though the unveiling of a new trading platform won’t necessarily be revolutionary, the fact that it is evolutionary is a good sign for HSBC InvestDirect. And even though it’s hard to tell what else will be changing (if at all) and when, the best news for DIY investors is that they’re not standing still.

Scotia iTRADE goes for sustainability

Another interesting development this week was from Scotia iTRADE who became the first DIY investing brokerage to launch integrated tools to evaluate the ‘sustainability’ (measured across Environmental, Social and Governance – ESG – parameters) of publicly traded companies.  The tool itself is developed by a third-party, Sustainalytics, which has been involved in evaluating companies on ESG parameters for the past 25 years.

While there will be more to come in an upcoming post, at first blush this new feature looks like a significant directional move by Scotia iTRADE. At a time when marketing budgets across online brokerages are getting increasing scrutiny, the cost of professionally producing and launching a new product video is not insignificant, so the three part explainer videos hint at a major commitment from iTRADE to let investors know about this new feature.

Reading between the lines, the coordination of marketing efforts to do this means the ‘sustainable’ angle likely will form an important component to what will differentiate Scotia iTRADE from its peers, especially in the near term.

Interestingly, the spotlight on ethical and sustainable issues has never been more timely (and perhaps a tad ironic).

The Canadian financial services industry is still reeling from the blowback from the recent CBC news investigation that revealed (alleged) significant ethical violations from front-line staff. How the Canadian banks would fare on an ESG score sheet after this new revelation would be very important to track especially as more details emerge.

Discount Brokerage Tweets of the Week

Feature requests and customer service gripes made up the menu of tweets this week. Mentioned were CIBC Investor’ Edge, Credential Direct, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

 

From the Forums

Detail Disoriented

When it comes to investing and trading, everybody starts at the bottom of the mountain. Thankfully there are some good people along the way that can offer sober advice about the journey to becoming a confident DIY investor. In this post from reddit’s Personal Finance Canada thread, one new investor finds out that details matter and keeping them all straight is just the beginning of the juggling act of investing solo.

Certifiably Unhappy

Nothing like a nasty fee surprise to leave a bad impression of a service provider. For one DIY investor trying to deposit a share certificate with Scotia iTRADE, the sting of a deposit fee was enough to have them start to shop around. Read what others had to say about the share certificate fee-asco in this post from RedFlagDeals.com.

Into the close

That’s a wrap on another busy week. For anyone trading this week’s market, hopefully it ended on a green note along with celebratory (or necessary) drink (or two). Next week should be another wild ride for Canadian DIY investors with the federal budget announcement slated for mid-week. Rest up (while you can) & have a great weekend!

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – March 10, 2017

For many families, the reality of March break is about to set in. What it means is that, while there may be a change in pace, the word ‘break’ doesn’t quite mean the same to the parents as it does to the kids. Unfortunately for everyone though, there is no break from the mania that is Trump coverage. And, for online brokerages and DIY investors in the US and possibly here in Canada, there is the very real possibility that there are still more waves to be made when it comes to DIY investing.

In this week’s roundup, we recap a couple of interesting stories from the SparxTrading blog roll. Specifically, we look at the escalating commission-fee price war between major US online brokerages, the evolving regulatory landscape for investment product/service providers and how these events may shape Canadian DIY investing in the near term. Next, we look at how Canadian discount brokerages are approaching online security and what DIY investors should be doing to better protect themselves online. As is usual fare, we’ll also be looking at the tweets from DIY investors and close out with chatter from the Canadian investor forums.

Fee-ling the Pinch: US Online Brokerage Fee Wars and the Fiduciary Duty Rule

Turn on the TV, surf the internet, open a newspaper and the one thing dominating the news cycle is Trump. For DIY investors, in the US and potentially here in Canada, however, there are a pair of stories that are probably worth tuning into more closely.

In this week’s blog post, we examine the latest explosive fight between giants in the online brokerage space in the US and the fallout from a price war. But there’s more to the story than just a simple race to the bottom. There’s also the likely possibility that the largest players, such as Schwab, smell blood and sense an opportunity to gain ground on their much smaller (but still sizable) peers.

Here’s a quick recap. US online brokerage fees and commissions have been on the chopping block since last year, in part prompted by competitive dynamics and the announcement from the Department of Labor’s new fiduciary duty rule, which was slated to come in to effect next month, in April. That rule could bring financial advisors into conflict of interest with their clients as it sets higher standards demanding advisors act in the best interest of their clients and not their own or their firm’s.

The tumble in commissions and fees for the biggest asset management firms such as Fidelity, Blackrock, Vanguard and Schwab also impacted their stock prices. Stock prices have waivered since the fees war escalated, and new EPS estimates were impacted by the millions lost in fees from cost cuts hovering at the 30% mark in plenty of cases.

Fidelity, for example, dropped its online stock trading fees by a whopping $3, costs sit now at $4.95/trade. And a few days ago, Schwab lowered its base trade commission to match Fidelity after already lowering its prices in February; other brokerages have followed suit including TD Ameritrade and E*Trade Financial. Firms are saying the price wars are just part of doing business, but Blackrock, at least, acknowledged that their fees were dropping in response to the DOL’s impending fiduciary rule.

For Canadian DIY investors, and discount brokerages, there are several important lessons.

First, Canadian Securities Administrators (CSA) are considering setting similar standards for financial advisors here in Canada. While there is a lack of consensus between provincial regulators as to exactly what a ‘best interest standard’ would look like, recent admissions by TD Bank staff that they put profits and performance ahead of client best interests may accelerate the timetable and will to push these standards into being.

Second, larger online brokerage players are in a very strategic position to benefit from this rule and they can essentially force smaller online brokerages into a very challenging position by lowering standard commission pricing. In other words, the US online brokerage market is an interesting playbook for any large, competitive bank-owned brokerage to emulate.

Finally, although the US and Canadian markets may be different, there are still fundamental economic forces at play. Canadian DIY investors will, like their US investor counterparts, be drawn to better perceived value. One of the reasons Schwab has been able to withstand (and in some cases instigate) a fee drop is because beyond lowering commissions on trading, they’ve also expanded the selection of commission-free ETFs, introduced a robo-advisor service and provided other advisory services to clients.

For the full analysis on how the fee wars and regulatory shifts could influence the Canadian online brokerage marketplace, click to read the blog here.

Online Security for Canadian DIY Investors: How to Stay Safe While Trading Online

As part of Fraud Awareness Month, we continue our look into how DIY investors can better inform and protect themselves about online fraud when trading online.

In our most recent blog post, we take a deeper dive into the world of online brokerage security guarantees and what they do (or don’t) cover and what they require DIY investors to do to qualify.

Fraud is kind of a big deal

Fraud has grown to epic proportions in the last decade, becoming a local, national and international security concern. Worldwide costs of cybercrime are estimated to run between $375 billion and $575 billion annually. In Canada, recent survey results show that companies here lose an average of about $6 million with every data breach.

For Canadian discount brokerages, there hasn’t been any major public, large scale breach that’s made headlines. Rather than become a news story, however, the financial services industry has started – albeit slowly – to adopt a variety of good practices to keeping clients safe. One such approach that is favoured by many in the tech community is two factor authentication (TFA).

Two factor authentication essentially ads an extra step to the traditional user name and login in which a security code (or secondary ID source) is used to confirm identity. Interestingly, only a handful of Canadian discount brokerages do offer this, but it is increasingly getting attention from IT departments across the Canadian brokerage community as a feature which could offer a more robust approach to security.

Details matter

Like most insurance policies, the devil is in the details. For Canadian online brokerages offering up a security guarantee, we found it particularly interesting that there were many different approaches and instructions given to DIY investors regarding online security.

Aside from some of the more well-known preventative measures, such as not sharing a password with another person or using a public computer to log into a trading account, there were other measures, such as ensuring you have an up to date anti-virus, logging out after every session AND closing the browser or sharing a password with an account aggregator (such as Mint) that could invalidate the security guarantee.

Perhaps the best suggestion to address possible fraud is to regularly and frequently check account status for any suspicious activity. Discount brokerages, such as BMO InvestorLine and RBC Direct Investing, stipulate that clients must report a breach within five business days of receiving a monthly statement. For the buy and hold crowd, this means taking the effort every month to check what’s happened on every statement.

The biggest takeaway from looking at the different online security guarantees offered by Canadian discount brokerages is that the brokerages do put quite a bit of responsibility for security on clients themselves so if the security guarantee is a ‘selling point’ for any brokerage, make the effort to check what’s required to comply before getting going.

Discount Brokerage Tweets of the Week

The conversation on Twitter this week highlighted the special role that it plays as a customer service tool for DIY investors. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE & TD Direct Investing.

From the Forums

Hard lessons

Some good advice we could all heed out of the forums this week: “Never bet with money you’ll regret losing” sent out to one young investor who lost $6K in the past year with risky investments . . . hopefully a lesson you only learn to learn once . . .

ETF or e-Series

The ever-popular debate continues for DIY investors looking to stretch the most value out of their investment dollar. In this post from RedFlagDeals’ investing forum, users chime in on whether TD e-series or Questrade’s commission-free ETF buying would be the better bet.

Into the Close

Another sure sign of spring being just around the corner: losing an hour of sleep for daylight savings ending. For the traders out there it just means one less hour to wait to get back into the swing of things. Have a great (shortened) weekend!

Posted on by — Leave a comment

Online Security for Canadian DIY Investors: How to Stay Safe While Trading Online

Data breaches, fraudulent activity, and online tricks and traps are all around us. It happens so often we’ve dubbed March fraud month to raise awareness of the growing issues. In fact, we’ve got enough to say about it that we’ve broken up this article into two parts. Part one looks at two factor authentication (TFA) and your responsibilities as a DIY investor. Part two examines investor confidence and how you can check to be sure your advisor is trustworthy, accredited and competent. To cap things off, we’ve also included some handy resources at the end of Part one.

Online brokerage security agreements: a handshake

First things first: don’t freak out. Despite the multitude of risks and negative headlines concerning online activity, there’s plenty of security, and lots you can do to ensure your online brokerage account is safe and secure.

That said, what DIY investors cannot do is stay complacent, or just assume that an online brokerage is either solely responsible for online account security or necessarily doing all it could to keep investment safe. Just like learning about how to choose investments comes with the territory of investing online, going the DIY investor route also requires learning enough about technology and online security to ensure that access to your trading account is as safe as is reasonably possible.

While online brokerages may have regulatory compliance standards in place that ensure a minimum level of security, investors (i.e. online brokerage clients) must also take steps to keep up too.

It’s a handshake agreement between you and your online brokerage that only works when you both maintain a steady grip.

Internet security: conditions apply

The good news for DIY investors is that most Canadian discount brokerages have a security agreement of one kind or another, offering a “100% security guarantee.”

Those agreements, however, have stipulations that depend on a DIY investor maintaining good security practices, which begs the question, what strings are attached to the ‘100% security guarantee?’

Most guarantees offered by Canadian discount brokerages are limited to “direct losses” in your online brokerage account that come about from “unauthorized” activity. At the very least that means they likely won’t cover losses that occur if you allow someone to use your account and then that person cleans you out. Also, most online brokerage security guarantees say that you must adhere to the conditions they have placed on your end. That might include installing up-to-date software such as firewalls and frequent passcode changes, among other conditions. The bottom line: Learn them. Know them. Do them.

Meet security conditions if you want losses reimbursed

Online security conditions vary among online brokerages, so be sure to check yours out—and carefully.

Here are some common concerns:

  • Use a unique user name and password that you change frequently. But how often is that? Not as often as you might think. A UNC-Chapel Hill study showed that people tend to create new passwords out of old ones, thus making the new one as easy to breach as the previous one. Lifehacker argues that hackers run hardware and software full-time to crack user names and passcodes and frequently changing a password isn’t going to stop them. And Mark Burnett, author of Perfect Passwords, told Wired that it’s enough to change your password every six months to one year . . . if you use one that’s 16 to 20 characters long.
  • Install a firewall. A firewall is like a security guard at the door to the building, checking the list for who goes in and who goes out. Of course, to add to the confusion, one of the go-to diagnostics for connectivity troubles for many trading software platforms is to disable a firewall to verify if that interferes with connecting.
  • Ensure your browser uses 128-bit or even 256-bit encryption—and has its own firewall. Some brokerage agreements demand it.
  • Protect your wireless network and internet connection from hacking by using a strong password.
  • Install the latest anti-spyware and anti-virus software.

These aren’t anywhere near all the conditions that you might have to meet for your internet security guarantee to kick in. And, in most cases, whether you have met the required conditions is determined by the online brokerage, not you. So, you might want to track things like how often you change your password and, at a minimum, regularly check your account (even if you’re a passive investor) to ensure no irregular account activity is taking place.

Ultimately, account security is a two-way street, and you might want to ask your online brokerage if their security system is the best it could be. More and more companies online are turning to two factor authentication, aka 2fa or TFA, as data breaches and fraud become only more prevalent.

Online brokerages: how they keep your online accounts secure

Of 14 Canadian online brokerages, three currently offer two factor authentication (TFA) including BMO InvestorLine, Interactive Brokers and HSBC Invest Direct. But what is TFA, anyway, and does it matter to have it as part of your log in system at your online brokerage? Well, the short answer might be, how much do you care about your money and investments?

Two factor authentication (TFA): the way of the future?

If you don’t know already, two factor authentication (TFA) requires two steps, or factors, as part of the authentication process when you access your account.

The first step is your username and password. The second step is either a physical token (like your debit card) or a PIN. The PIN is usually sent to you via your cell phone when you enter your user name and password. You can see it’s a pretty secure approach since only you (presumably) have your phone with you, and only you know your username and password.

The 11 online brokerages that currently do not use this system have other, multiple levels of security. These include 128-bit or even 256-bit encryption, multiple firewalls, anti-virus software, internal protocols and constant electronic monitoring, among other measures. Thought hackers get better all the time, two factor authentication (TFA) may be the best security around right now.

DIY investors and regulatory agencies call for increased vigilance as data breaches escalate

Data breaches cost Canadian companies an average of $6.03M every time they occur according to The Ponemon Institute, and Blackberry estimates that total costs for Canadian companies will reach $23B by 2019.[i]

And, like most costs, those losses are eventually passed on to consumers. Canada’s regulatory agencies are also weighing in on the matter. The Investment Industry Regulatory Organization of Canada (IIROC) itself the victim of a data breach in 2013[ii] offers a cybersecurity report card to its member organizations.[iii]

As well, the Mutual Fund Dealers Association of Canada (MFDA) offers a 4-part toolkit that investors can use as a guide including checking out your advisor and the organization to see if either has been litigated against.

Costs alone may lead to two factor authentication (TFA) become more widely used, as losses from data breaches or hacking can be fantastic. While industry certainly has financial motive to prevent exploits, DIY investors are making their thoughts on the matter heard too.

In 2016, for example, Redditors had a vigorous debate over security at a popular online brokerage, Questrade. One redditor commented, “I think this should be a higher priority than their many website facelifts of recent months.”

As they often do on the DIY investing forums, John, a support representative from Questrade, responded: “I can confirm that we have moved beyond the investigation phase and are working on a two-factor authentication solution. We will be announcing more details as the project progresses.”

If your DIY investor account is breached, act fast

In the event your account is compromised, there are several things that will need to be done relatively quickly to qualify for coverage of an online brokerage security guarantee.

Here are a few:

  • Notify your online brokerage immediately.
  • Change all passwords immediately.
  • Determine what data has been breached.
  • Contact all credit reporting agencies.
  • Put stops on all your credit cards.

DIY investor takeaways

Although most Canadian online brokerages do offer guarantees protecting investors from unauthorized access, the fine print of what clients must do often varies from brokerage to brokerage. It is therefore important to ensure that you comply with your discount brokerage’s specific conditions to have the guarantee apply.

Finally, here’s a list of a few extra resources to help boost online fraud awareness.

Are you susceptible to fraud, security breaches and online vulnerability?

 Sources:

[i] Sagan, A. (2016, June 29). Average cost of data breach in Canada is $6.03M: study.  Retrieved from http://globalnews.ca/news/2793414/average-cost-of-data-breach-in-canada-is-6-03m-study/

[ii] The IIROC lost financial information for 52,000 clients involving 32 investment firms when a laptop went missing in February, 2013.  IIROC. (2016). IIROC to support clients whose personal information was on a lost portable device [Press release]. Retrieved from http://www.iiroc.ca/Documents/2013/d8d465f9-0a37-4325-8732-1b12cbd2ddb8_en.pdf

[iii] IIROC. (2016). IIROC issues cybersecurity report cards for dealer firms [Press release]. Retrieved from http://www.iiroc.ca/Documents/2016/8272fe2a-a1a5-4319-9b0c-7739d04ff097_en.pdf

Posted on by — Leave a comment

Fee-ling the Pinch: US Online Brokerage Fee Wars and the Fiduciary Duty Rule

With all the legal and political battles going on in the US right now, it’s a little hard to keep track. There are, however, a pair of feuds that DIY investors and Canadian discount brokerages may want to keep on their radars, namely the commission price war between US online brokerages and the efforts to rescind the Department of Labor’s (DOL) Fiduciary Duty Rule.

A tale of two fees

For DIY investors, competition between online brokerages is generally a good thing whereas for the online brokerages themselves, it’s not so rosy.

Compared to the Canadian discount brokerage marketplace, the world of US online brokerages is much more competitive. While the standard thesis that competition drives price cuts helps to explain why commission pricing is under pressure in the US online brokerage market, there’s also potentially another strategy related to the Trump view on financial deregulation that some bigger players in the DIY investing space might be hoping to use to their advantage.

Over the past several years, while interest rates have been low and market volatility muted, major players in the online brokerage space have diversified away from relying heavily on trading commission revenues and instead increased the proportion of their revenue that relies on fee-based advisory services, including newer services such as robo-advisors.

The result: certain players, such as Schwab, one the largest of the US online brokerages, now make most of their money from services and fees other than trading commissions. Other brokerages, such as their peers in the space TD Ameritrade or E*Trade Financial, are relatively more dependent on trading commissions.

Thus, the bigger players like Schwab can sway their online brokerage peers into a price war and still emerge a winner because they have the assets and scale to price out their competition.

Making the cut

While the pricing wars on US trading commissions between online brokerages seemed to have subsided for the time being, the carnage on the charts is already clear. Schwab’s price chart looks remarkably untouched by recent price cut announcements, whereas TD Ameritrade has clearly been knocked down a few pegs.

Chart of TD Ameritrade from 3/10/17
Chart from Schwab 3/10/17

Fidelity, one of the three biggest Assets Under Management (AUM) companies (the others being Vanguard and Schwab) led the battle to rock-bottom pricing several months ago by dropping commissions on some of its Blackrock ETFs, among other assets. Fidelity and Blackrock share an ETF alliance where traders can buy certain products, especially ETFs, through either company without paying extra fees. The alliance brought Fidelity in to the ETF game and helps both companies shore up market share against competitor Vanguard Group.

Fidelity continued to lower fees in February and March, slashing $7.95 trade commissions by $3 to $4.95 on online trading stocks and ETFs, then chopping 10 cents from its options pricing contracts, from $0.75 to $0.65. Fidelity manages assets of just below $2 trillion. The play created a domino effect prompting Vanguard and Schwab to quickly follow suit.

The Vanguard Group, with AUM hovering over the $3 trillion USD mark, announced in early 2017 that it was also lowering fees on trading stocks and ETFs. Vanguard had already dropped prices on 35 different funds in December of last year.

Schwab, with $2.6 trillion USD under management, also clearly felt it had to leap into the fray, dropping its prices on trading commissions and index mutual funds, first in early February, lowering its base trade commission to $6.95, and then again to match Fidelity’s hard prune to $4.95.

Screen shot of Schwab’s commission fees (as of 3/10/17)

Schwab now boasts having the lowest fees on trading stocks and ETFs—saying that “technology and scale” have lowered operating costs and allow them to pass savings on to their clients . . . well, maybe . . . but one wonders how much the prize of gathering assets and the possible ‘repeal’ of the US Department of Labor’s new fiduciary rule has to do with it.

One rule to cut them all

The US DOL Fiduciary Duty Rule is intended to ensure that financial advisors act in an investor’s best interest, and avoid conflicts of interest when they give advice on retirement planning and purchase and sale of assets.

Brokers and others who work on commission may be most affected as a potential conflict of interest arises.

At least one AUM firm, Blackrock, has admitted that price drops have been influenced by the impending rule, scheduled to come in to effect on April 10 . . . but just to throw another wrench into the works, President Trump signed a memorandum in February directing the DOL to review its implementation of the fiduciary rule. That likely means it won’t take effect next month anyway. No matter, it seems everyone has jumped into the pool of fee restructuring, whether they wanted to or not.

Other discount brokerages that have lowered costs include TD Ameritrade (AMTD) and E*Trade Financial (ETFC), both announcing cuts to standard commissions.

Unsurprisingly, values of the stocks for the brokerages themselves see-sawed in the past few weeks in response to the plummeting fees.

Could it happen here?

Could a price war on commission fees happen with Canadian discount brokerages? Technically it already has.

Canada had a similar price war in 2014 when standard commissions for trading stocks and ETFs nosedived to $9.95 from $29 for online brokerages once RBC Direct Investing changed its fee schedule. Minimum investments thresholds to qualify for cheap commissions were also dropped for most brokerages at the same time.

The plot twist to the Canadian online brokerage price war story is that Virtual Brokers bowed out of the ultra-low commission pricing competition with Questrade signalling that there may be a floor to what a non-bank owned Canadian online brokerage charges for commission pricing. That said, CIBC Investor’s Edge has had the lowest standard commission pricing ($6.95) amongst major Canadian bank-owned brokerages since 2014 and this hasn’t yet prompted its bank-owned peers to follow suit.

As for the fiduciary rule, Canada may take its cues from spirit of the DOL plan. There has been an undeniable interest in improving the protections for investors in the face of complex financial products and services.

For at least the past five years, the Canadian Securities Administrators (CSA) have been toying with the idea of placing a similar obligation on Canada’s financial advisors by setting a regulatory “best interest standard.” The standard would work to ensure that financial advisors act in the best interest of their clients, have appropriate disclosures regarding sales of assets and funds, and otherwise protect the interests of the investor. That said, there are still disagreements from provincial securities regulators that demonstrate just how controversial the notion of acting in the ‘best interest’ of a client is.

Interestingly, the firestorm surrounding TD Bank this past week put this very topic into the spotlight in Canada with the revelation that staff may have been operating unethically in suggesting or providing financial products or services to bank clients.

Bottom Line

Financial services, and investment services in particular, may have different dynamics in the US and Canada but they nonetheless follow some very basic economic principles.

Competition drives innovation and pricing that favours consumers, however, what also appears to be true is that providers like online brokerages will need to find more creative (and still legal) ways in order to generate profits.

With fees falling fast and furious, and President Trump with pen in hand, until the dust settles it’s hard to say who will win the race to the bottom in US and whether the trend of ‘deregulation’ in the US will be a counterpoint or inspiration to regulators here. Judging by the fallout in this week’s news, however, Canadians are being vocal in backing investor protection.

Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – March 3, 2017

Crazy real estate, crazy IPOs, crazy politics, crazy Oscars, crazy Amazon outages and one very crazy sprint to the RRSP contribution deadline. Not a bad way to ring in the third month of 2017. There’s certainly no shortage of items pulling DIY investors’ attention in every direction this past week and perhaps no coincidence that Canadian discount brokerages are trying to capitalize on the increased attention investors are paying to the market by making some ‘bigly’ moves of their own.

In this week’s roundup we take a look at the latest collection of discount brokerage deals that DIY investors can choose from and how different brokerages are working to stay on the radar of those investors. Next we take a look at the big news story for investors – the Snapchat IPO and whether investors will be over it or all over it.  From there we take a look at the latest online brokerage tweets of the week as well as a couple of interesting posts from the investor forums.

New Deals Roundup

With stock markets flirting with new all-time highs, investor sentiment towards getting into the markets has clearly thawed. Investment capital is flowing again and there’s no better indicator of that than the excitement and hype that was the ‘snapchat’ IPO. Another interesting indicator, however, is the number of Canadian discount brokerages offering up promotions or deals.

Heading into the new month, almost all Canadian discount brokerages, with the exception of two (Interactive Brokers Canada and Laurentian Bank Discount Brokerage) are offering some kind of incentive offer to attract new clients or new assets from existing clients. In total, we’ve spotted 30 deals that are being actively advertised or publicly promoted.

Breakdown of Canadian discount brokerage deals for March 2017.
Breakdown of Canadian discount brokerage deals for March 2017.

While most brokerages offer up the standard transfer fee coverage, this category of deal makes up roughly one third of the offers out there. The rest are a mixture of commission rebate offers, cash back promotions or some other kind of promo.

Although no new deals technically hit the wires at the outset of the month, there was some activity in the final days of February which helped put a little spring in the step of the deals activity heading into March.

The good news from two brokerages came in the form of deal extensions. Both Qtrade Investor and Desjardins Online Brokerage extended their offers a little further into 2017. In the case of Qtrade Investor, their cash back offer was extended to mid-March. For Desjardins Online Brokerage, their popular 1% commission-rebate offer has been extended out to almost the end of April (April 28th).

Scotia iTRADE was the other Canadian discount brokerage to ramp up the deals activity with the launch of their VISA gift card offer that coincided with the launch of their new front-facing website. The deal itself offers between $50 and $500 for deposits ranging from $25,000 to $1,000,000+.

Overall, Virtual Brokers is leading the pack with six different offers in play followed by Scotia iTRADE which is now offering up five. Interestingly, the Scotia iTRADE site special offers section currently is displaying only two offers, however links to the deals (shown in the deals & promotions section tables) do point to the live offer pages.

As we head further into March, however, it won’t be just the number of deals that makes the difference but also the visibility of those offers.

TD Direct Investing, for example, does not have as many deals going as their peers but has increased their advertising presence – including front page newspaper ads and increased online advertising – in a bid to get their deal or brokerage noticed. It will be interesting to see how their counterparts, such as RBC Direct Investing who doesn’t have a commission-free or cash back offer (they do have a ‘points’ related offer for existing RBC clients) or CIBC Investor’s Edge (who does have a very competitive offer) elect to respond in the sprint to income tax refund season.

From the Blog: Oh SNAP! An IPO like no other?

It may have taken a couple years to get here, but the biggest threat to Facebook’s dominance in the social media space successfully IPO’d this past week and now has a market cap of $34B US.  From a startup in 2010 to public company in 2017, Snapchat – or more formally Snap Inc, debuted on Thursday to a very warm reception.

Screenshot from the opening of SNAP at NYSE.

Despite all of the hype leading up to the IPO, there were lots of investors – mainstream investors in particular – that had to wait until shares went live on the open market in order to get a piece of the action.

Only time will tell if this millennial phenom can sustain the imagination of investors, advertisers and the very fickle user base of younger technophiles.

In a blog post this week, we took a look at the lead up to the Snapchat IPO and add a bit more colour to a story that is bound to have investors of all ages debating whether SNAP is a hit or is just hype. Click here to read more.

Fraud Prevention Month

March is the official month of fraud awareness and prevention. For DIY investors, the world of investing can be a dangerous place. From ‘hot tips’ to the threats of being hacked, there are numerous risks that all investors would be wise to understand and properly prepare for.

Stay tuned this week as we launch an interesting comparison of the different fraud protection measures currently in place at Canadian discount brokerages and what DIY investors can do to better protect themselves against fraud – including evaluating the security of their online brokerage.

Discount Brokerage Tweets of the Week

Lots of chatter as DIY investors slid into the RRSP contribution deadline this week. Mentioned were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Closing time

Break ups are hard. But for one DIY investor, who chronicled their exit from Virtual Brokers, the process was not as simple as it seemed. Click here to read the reddit post on how it all went down.

Down to the Wire

The procrastinators for RRSP contribution deadlines might be able to relate to this post from reddit’s Personal Finance Canada section. One user who was close to the deadline was looking for a quick route to open an online brokerage account for an RRSP and was considering Questrade but was up against a few hurdles for just how long it would take to get funded. Read on to find out the play by play heading into the contribution deadline.

Into the Close

Well if there was one lesson from this week, it’s to expect the unexpected. Good tip for traders heading into the weekend as chatter of interest rates and more fallout from scandals from the US await. So, on that note, have a great weekend and for a bit of schadenfreude, here’s that Oscar moment that is so hard to watch but so hard not to.

Posted on by — Leave a comment

Oh SNAP! An IPO like no other?

Snapchat has taken its sweet time to go public since co-founder and CEO Evan Spiegel hinted in 2015 that the company needed an IPO. But the time for Snapchat (whose official name is now Snap Inc) to go public has finally arrived. This week,  200M Class A Common stocks went public, and what an entrance it made. Up 44% in its debut and another 10% the day afterwards, there’s a lot being priced into the hopes and dreams of this millennial phenom. Whether shares hold their value or have it disappear like the ephemeral messages that drives its popularity remains to be seen.

The chatter: why SNAP’s Class A common stock offering gives investors the jitters

The investor circle is making a lot of noise about the stock structure that SNAP rolled out this week with its IPO on the NYSE. There are A, B, and C level stocks, with only 200M Class A common stocks available to the ‘main street investor’. Remarkably, the Class A shares are non-voting stocks that anyone can buy—and that’s what the noise is about. No votes? So you can pay, but you get no say (although apparently you can still attend the AGM). Class B stocks are reserved for executives and early investors and carry one vote per share. The Class C stocks are held by CEO Evan Spiegel and co-founder CTO Bobby Murphy. Each of these stocks carries 10 votes. That means all the votes are held by the early investors and the co-founders, and the co-founders maintain a stranglehold of nearly 90% ownership in the company through the stock structure and vote-rich Class C stocks.

Snapchat founders ring the opening bell at NYSE. (screenshot of NYSE website).

The stock structure: SNAP IPO not that unique

It’s not the first time that an IPO has structured itself so founders and early investors maintain control of shares—that also allows them to retain a controlling interest in what happens with the product they created, after all. But usually investors receive at least a token vote on the shares they buy, even if majority interest remains elsewhere. SNAP isn’t even trying to pretend they’re offering any real say in their company, and flat out said so in their IPO filing: “to our knowledge, no other company has completed an initial public offering of non-voting stock on a U.S. stock exchange”. So the question investors need to be prepared to ask themselves before investing is: what’s my level of confidence in the founders and developers of SNAP?

SNAP’s IPO: comparing SNAP to Facebook and Twitter

It’s impossible to watch yet another social media IPO without thinking back to Facebook’s bumbled opening with Nasdaq, and Twitter’s better opening, but later less successful, offering. Biographical comparisons are also hard to avoid between SNAP’s co-founder, Evan Spiegel and Mark Zuckerberg. Both are university drop outs, and both had expensive fights with turfed co-founders they had to pay off to shut up.

Facebook went public five years ago in 2012, stalled at opening by technical glitches. In part, the Nasdaq couldn’t handle the huge demand for the stock. Facebook hiccuped—Nasdaq got sued (a couple of times) for its bungling of the IPO—and for months the stock roller-coasted, at one point below $US29 after opening at $US38 and climbing as high as $US45 the first day.

Twitter hit the ground running in 2013 at $US44.93 and quickly climbed to $US69 before plummeting like a stone year over year to its current valuation of just under $US16 per share. Facebook now sells at a cool $US137, nearly the same price as Apple stock. What happened? And can we use the lessons of Facebook and Twitter to predict SNAP’s trajectory?

Facebook was already a giant in the industry when it went public. It had 483M daily users, $3.7B in revenue, and a positive net income of $1B. SNAP has barely one-third as many daily users even today, at 158M, revenue of $404.5M, and posted net losses of $514.6M in 2016. At first blush, SNAP looks a lot more like Twitter when it went public in 2013 with 100M daily users, revenues of $317M, and a net loss of $79M. What’s different?

SNAP: it’s about the next generation of internet users

SNAP has a private valuation of about $18B, a strong user base of under 30-year olds, especially in Europe and the USA, and a group that does not want to use Facebook (mostly because their parents use it). But a Business Insider graph tells a possibly different tale.

About 45% of SNAP’s users are under the age of 24; that amounts to about 71M users. Facebook has about 16% of its users in the same age range. But FB’s total daily user number is 1.2-1.65B, meaning at least 192M users are 24 or younger . . . hmmmm. Still, Zuckerberg is concerned enough about SNAP that he unsuccessfully tried to buy the company for a rumored $3B. He did buy Instagram, a direct SNAP competitor, in 2012 for $1B. Since then, he’s copied SNAP’s upgrades, notably Snapchat Stories, but it doesn’t seem to be stemming the tide of kids clicking in Snapchat.

The thing that’s different is that SNAP is visual, not text-based, and the snaps you send only last a few seconds before they dissolve. Given the growing concerns about internet pornography and not knowing where your data might be going (and whether your parents, teachers or the police might see it), SNAP is a popular choice to avoid these potential problems. It also changes the way the net is used, something that FB may not be able to compete with, no matter what it does with Instagram. It’s just seen as yesterday’s app to a user group that changes its whims with the wind . . . . SNAP is just where it’s at.

IPOs: buying SNAP . . . take a number

SNAP is the biggest social media company to go public since Twitter, back in 2013. There are multiple underwriters including Morgan Stanley and Goldman Sachs who are leads on the deal. The way IPOs work is that shares are sold to major investment banks, broker dealers and dealer-investors, usually in large numbers. It’s just easier when you’re trying to sell millions of shares to sell to the big guys who can afford to buy them in bulk. These get distributed to investors. It can be hard to participate in an IPO just because the average investor is usually only buying a relatively small number of stocks. This pent up demand for ‘retail investors’ to participate in the hype is likely one of the reasons why SNAP rose as much as it did on its debut and first full trading day.

Are IPOs a gamble? Well, FB’s rocky start has since turned in a stellar performance. Their initial 108B valuation has almost tripled: FB is worth about 382B today. And Twitter? Worth roughly one-half their initial valuation of $24B in 2013. Where will SNAP end up? Your guess is probably as good as anyone’s . . .

 

Posted on by — Leave a comment

Discount Brokerage Deals & Promotions – March 2017

March is finally here. With the promise of spring ahead of us and the RSP deadline now behind us, attention is going to shift to tax season and where, how and with whom those refunds will be invested.  The great news for DIY investors is that there are still lots of promotional offers to choose from when looking at potential Canadian discount brokerage deals, so there’s no shortage of options.

This month we kick off with a whopping 29 offers from 13 different discount brokerages. Almost all Canadian discount brokers have some kind of promotional offer (except for Interactive Brokers), even if it is just a simple transfer fee coverage offer. Like all good things, however, several of the discount brokerage deals offered this month have a particularly short shelf life expiring during or at the end of March. So, while it has been possible to see what offers might have launched through the RSP deadline, there’s a good probability that many of these deals won’t be around for the rest of the year or even until next year.

Read on to get the full breakdown of expired, extended and new offers to hit the tape this month. Of course if there are any offers that you spot or know of that other DIY investors would find useful, let us know in the comments section below.

Expired Deals

After having received a minor extension to meet the RSP contribution deadline, the RBC Direct Investing Rewards points offer officially expired on March 1st.

Extended Deals

There’s nothing like the word ‘extension’ to put a smile on the faces of procrastinators everywhere. Fortunately, two offers managed to stick around just a little while longer.

The first extension is from Desjardins Online Brokerage who extended their commission rebate offer through to April 28th. Next, Qtrade Investor extended their cash back offering until March 15th. See the table below for more details.

New Deals

Rolling into the new month, there were technically no new offers announced at the very start of March. In late February, however, Scotia iTRADE launched a new Visa card (cash back) deal that coincided with the launch of their new website. Although the offer itself didn’t appear in the promotions section at the time of writing, the link to the offer was live on their site.

Visa card values range from $50 to $500 for deposits that range from $25,000 to $1,000,000+. See table below for more details.

Discount Brokerage Deals

  1. Cash Back/Free Trade/Product Offer Promotions
  2. Referral Promotions
  3. Transfer Fee Promotions
  4. Contests & Other Offers

Cash Back/Free Trade/Product Offer Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package. n/a Discounted Commission Rates none For more details click here none
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. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2017
Open and fund a new registered account at Virtual Brokers with at least A) $5,000; B) $25,000; or C) $50,000+ in new assets and you may be eligible to receive A) $30; B) $50; C) $100 cash back. Use promo code RRSPCB2017 when signing up. Be sure to read terms and conditions for full details. A) $5,000 – $24,999 B) $25,000 – $49,999 C) $50,000+ A) $30 B) $50 C) $100 Cash back will be deposited just after October 31, 2017 RSP cash back bonus April 30, 2017
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive 2 months of commission-free equity trading and a $250 USD/mo credit towards Edge Trader Pro for 2 months. Use promo code 2MFREE2017 at sign up to qualify. Be sure to read full terms and conditions for details. $5,000 2 months commission-free equity trading + $250 USD/mo platform fee rebate. 2 months 2 months free trading April 30, 2017
Disnat Desjardins Online Brokerage is offering new clients 1% of assets transferred into the new account in the form of commission credits (to a maximum value of $1,000). Minimum qualifying deposit is $10,000. To qualify, individuals will have to call 1-866-873-7103 and mention promo code DisnatFlex or email: [email protected]. See details link for more info. $10,000 1% of assets transferred in the form of commission-credits (max credits: $1,000) 6 months Disnat 1% Commission Credit Promo April 28, 2017
Open and fund a new account with Virtual Brokers with at least $10,000 and you may be eligible to receive a commission-credit of up to $10,000. Use promo code 10K2017 at sign up to qualify. Be sure to read terms and conditions for full details. $10,000 Up to $10,000 in commission credits (@ $9.95 per trade) deadline to use trades March 31, 2017. Commission rebates to be offered in January 2018. $10,000 Commission Credit Offer March 31, 2017
Open and fund a new account by March 31st with at least A) $20,000 or B) $100,00+ and you may qualify to receive up to either A) $500 or B) $1000 in commission reimbursements. Be sure to read terms and conditions for full offer details. A) $20,000 – $99,999 B) $100,000+ A) up to $500 commission reimbursements B) up to $1000 commission reimbursements 90 days National Bank Direct Brokerage Cash Back Promotion March 31, 2017
Open and fund a new account at TD Direct Investing with at least A) $25,000; B) $50,000 or C) $100,000+ and you may be eligible to receive A) 50; B) 100 or C) 200 commission-free trades. Be sure to read terms and conditions for full offer details A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000+ A) 50 commission-free trades (max value: $500) B) 100 commission-free trades (max value: $1000) C) 200 commission-free trades (max value: $2000) April 28th, 2017 Commission charges will be credited the month following when the charge was incurred. TD Direct Investing 200 Commission-free Trade Offer March 31, 2017
Open and fund a new account with Scotia iTRADE with at least A) $25,000; B) $50,000; C) $100,000 or D) $250,000+ and you may be eligible to receive A) 75; B) 150; C) 200 or D) $250,000+ in commission-free trades. In addition, new clients will also receive FlightDesk active trading platform free for 90 days. Use promo code W17FT when signing up to be eligible. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000+ A) 75 (max value: $749.25) B) 150 (max value: $1498.50) C) 200 (max value: $1,998) D) 250 (max value: $2,497.50) 90 days Winter 2017 Free Trade Offer March 31, 2017
CIBC Investors Edge Open and fund a new account at CIBC Investor’s Edge with at least A) $50,000 or B) $100,000 and you may be eligible to receive A) $200 or B) $400 in cash back. Also, individuals who setup a regular investment plan may also be eligible to receive 50 commission-free equity trades. Be sure to read terms and conditions for more information. A) $50,000 – $99,999 B) $100,000+ A) $200 B) $400 +Bonus 50 commission-free trades for setting up Regular Investment Plan. Cash back will be deposited within 30 business days after account funding. Commission-free equity trades good for 60 days after setup of Regular Investment Plan. Cash Back & Free Trade Offer March 31, 2017
BMO InvestorLine Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000; B) $200,000 or C) $300,000+ in net new assets and you may be eligible to receive A) $200; B) $400 or C) $750 cash back. Use promo code PROMO750 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer. A) $100,000 – $199,999 B) $200,000 – $299,999 C) $300,000+ Cash back bonus A) $200 B) $400 C) $750 Cash back will be deposited the week of November 6, 2017. 2017 Winter Campaign April 2, 2017

Expired Offers
Open a new account with HSBC InvestDirect and you may be eligible to receive up to 50 commission-free North American equity trades. Be sure to read terms and conditions for full offer details. n/a 50 commission-free North American equity trades 60 days HSBC InvestDirect Cash Bonus Promo March 3, 2017
Open and fund a new account with Qtrade Investor with a deposit of at least A) $25,000; B) $50,000; C) $100,000; D) $250,000; E) $500,000 or F) $1,000,000 or more and you may be eligible to receive a cash back bonus of A) $25; B) $50; C) $100; D) $250; E) $500 or F) $1,000. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000 – $499,999 E) $500,000 – $999,999 F) $1,000,000+ A) $25 B) $50 C) $100 D) $250 E) $500 F) $1,000 Cash back will be deposited by July 31, 2017. Qtrade Investor Cash Back Bonus March 15, 2017
Open and fund a new account or fund an existing account at Credential Direct with at least A) $15,000; B) $50,000; C) $150,000; D) $500,000 or E) $1,000,000+ in new assets and you may be eligible to receive A) $75; B) $125; C) $200; D) $500 or E) $1,000. Use promo code CASH2017RSP when signing up. As an added bonus, Credential Direct will donate an amount equivalent to 10% of the bonus paid out to United Way. Be sure to read terms and conditions for full details. A) $15,000 – $49,999 B) $50,000 – $149,999 C) $150,000 – $499,999 D) $500,000 – $999,999 E) 1,000,000+ A) $75 B) $125 C) $200 D) $500 E) $1,000 Cash back will be deposited week of October 9, 2017. Credential Direct Cash Back Promotion March 16, 2017
Last Updated: Mar. 17, 2017 17:35 PT

Referral Promotions

Company Brief Description Minimum Deposit Amount Incentive Structure Time Limit to Use Commission/Cash Offer Deposit Details Link Deadline
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 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 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) Refer a friend terms and conditions Code Number: 476104302388759 none
Scotia iTrade 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) 60 days Refer A Friend to Scotia iTrade tbd
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 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. $50,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs 45 days after minimum 90 day holding period(subject to conditions). BMO InvestorLine Refer-a-Friend June 30, 2017

Expired Offers
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit 30 days none none
Last Updated: Mar. 2, 2017 00:15 PT

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $135 in transfer fees $135 $15,000 Transfer Fee Rebate Details none
Transfer $25,000 or more from another brokerage and Credential Direct will cover up to $150 in transfer fees. Use promo code SWITCHME when signing up to qualify for the transfer promotion. $150 $25,000 Credential Direct Transfer Fee Rebate none
Transfer $25,000 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. $150 $25,000 Transfer Fee Rebate none
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 $25,000 Transfer Fee Promo none
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 Contact client service for more information (1-800-465-5463). none
Transfer $25,000 or more to Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Transfer Fee promo tbd
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
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees $135 $25,000 Transfer Fee Rebate none
Disnat Disnat is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code DisnatFlex. See details link for more info. $150 $50,000 Disnat 1% Commission Credit Promo April 28, 2017

Expired Offers
Last Updated: Mar. 2, 2017 00:25PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Credential Direct has partnered with Trend Micro to offer 50% off Trend Micro Titanium Internet Security. Use code “TrendCF” at checkout. n/a Trend Micro Special Offer Code none
Disnat Desjardins Online Brokerage, in conjunction with MoneyTalks, is offering 3 months of the “Inside Edge” investor information service to Desjardins Online Brokerage clients. Use promo code DESJ2016 during checkout to qualify. Be sure to read full terms and conditions for more information. n/a MoneyTalks Inside Edge Discount none
Disnat 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. $1,000 Broker@ge 18-30 Promotion none
Scotia iTrade 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. $1,000 StartRight Free Trade offer none
Scotia iTrade Open and fund a new account with Scotia iTRADE with at least A) $25,000; B) $50,000; C) $100,000; D) $250,000; E) $500,000 or F) $1,000,000+ and you may be eligible to receive 50 commission-free trades plus A) 5,000; B) 7,500; C) 15,000 or D) 20,000; E) 25,000 or F) 50,000 travel points on an eligible Scotia travel points credit card. In addition, new clients will also receive FlightDesk active trading platform free for 90 days. Use promo code W17RP when signing up to be eligible. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000 – $499,999 E) $500,000 – $999,999 F) $1,000,000+ Scotia reward points offer March 31, 2017
Open a new account with Virtual Brokers with a deposit of at least $1,000 (for the Classic Commission Account) and you may be eligible to win a $250 gift card to the Apple store. Use promo code 250AGC2017 during sign up to be eligible. Residents of Quebec are not eligible for this contest. Be sure to read terms and conditions for full details. $1,000 (Classic Commission Account) $250 Apple Gift Card Draw April 30, 2017
Open a new account with Virtual Brokers with a deposit of at least $1,000 (for the Classic Commission Account) or $5,000 (for the Commission Free Trading Account) and you may be eligible to receive a one-year subscription to access 5i Research. Use promo code 5iVB2016 when signing up. Be sure to read terms and conditions for full details. $1,000 (Classic Commission Account); $5,000 (Commission Free Trading Account) 5i Research Offer March 31, 2017

Expired Offers
Last Updated: Mar. 2, 2017 00:15 PT
Posted on by — Leave a comment

Discount Brokerage Weekly Roundup – February 24, 2017

Spring may still be a month away but there are many who’ve already had more than enough of winter. Of course, change is certainly the theme for Canadian discount brokerages as their new reality is one in which they will have to become better at managing it and demonstrating that they can pull it off without a hitch.

In this week’s roundup we take a closer look at one Canadian online brokerage that unveiled a major change to its front-facing website earlier in the week. From there we’ll take a look at a recent evolution by the parent of another popular online brokerage as they introduce Canada’s latest robo-advisor. As usual, we’ll close out with the latest chatter from DIY investors on social media and in the investor forums.

Scotia iTRADE website gets a major overhaul

This past week, after what likely involved many conversations about the finer points of typography, colour palettes and ‘user experience’, Scotia iTRADE unveiled their new public-facing website.

While we were given an early look at the new website, now that the site has gone live we can finally shine a brighter spotlight on the website itself, what Scotia iTRADE hopes it will achieve and what the new site means for DIY investors and iTRADE’s competitors.

Online trading continues the tradition of change

Ever since online brokerages hitched their wagons to the world of internet trading, there has been a constant tension between the world of finance and the world of technology.

On the one hand, finance is about stability, trust and continuity. On the other, technology is about change, innovation and taking chances. And, as a result, as money becomes more digital, online brokerage firms are increasingly becoming technology firms first and financial service firms second.

That said – what does the digital shift for finance have to do with online investing? In a nutshell, everything.

When it comes to online brokerage websites, it is clear to see that the first thing that consumers see and interact with will have an important impact on how perceive that particular brand or firm. Are they competent? Are they trustworthy? Do they run a dilapidated front end or do they care about what they do enough to make it look good and function effectively? These are just some of the questions DIY investors would have asked while visiting a branch in person but now ask when they visit a website or use an app.  The website is the digital ambassador for the brand and the longer online brokerages leave their sites fallow, the less inclined anyone will be to pay attention, let alone trust what the experience will be like.

That said, good websites are not cheap to design, build, implement and monitor. In a world where Canadian online brokerages are facing fierce competition from one another, as well as declining commission revenue and possible threats from products/services such as robo-advisors, justifying the spend to redo a website communicates that a brokerage is willing to keep itself in the game and that it can evolve with the times. As in the real world, you have to dress the part.

And, while we have witnessed many of Scotia iTRADE’s peers already go through the redesign process over the past three years, the fact that Scotia iTRADE has finally rolled out their new site signals that they, too, are very much in the Canadian online brokerage race for the long haul – good news, of course, for the long-term buy and hold investors who want to park their money somewhere that is well maintained.

Features, functionality and feelings

Being the weekly roundup, we can’t go into excessive detail on the new site, but given the scope of changes, we can touch on a few interesting elements in their new website and explore a bit about how these changes stack up to the previous site.

One of the most notable changes to the new Scotia iTRADE website is that it has drastically reduced the amount of text on pages in favour of a cleaner, less cluttered look and feel.  As shown in the image below, menu options – at least at the top level menu section – have been simplified from the 9 options to go somewhere down to four key categories: About, Invest, Fees & Education.

While their very meaty dropdown menus still contain quite a bit of information, they are far less overwhelming that the previous design. Also the new menus have clearer quick links to take a user to common information without having to hunt too hard to find it.

Another notable element that has changed in the new website is the removal of the login window at the top of the screen. This might be a sore spot with existing clients who would prefer not to click anywhere to go to a login window, however it was a reasonably good gamble that existing clients would accommodate the change to having to click the ‘sign in’ button to access their account to get access to their own money. The tradeoff (pun intended) is that with the new design, the iTRADE branding stands out and the sight line is cleaner as the page loads.

In keeping with a trend that appears in a number of other online brokerage sites and financial services web pages, icons have found their way onto the homepage. TD Direct Investing and Qtrade Investor’s recent website upgrades, which preceded the launch of Scotia iTRADE’s website, also rely on icons to communicate conceptually relevant information in a way that provides some visual variety to the text and photographs on the page.

 

 

Scotia iTRADE has divided the icon section into information for new clients and existing clients, placing what are likely the most popular pieces of information to either visitor at the very top of the list of icons displayed.

 

 

Lastly, the new website is also notably more diverse and colourful in comparison to its predecessor.

In keeping with a trend in Canadian financial services firms towards embracing a more diverse view of what a ‘DIY investor’ should look like, the imagery selection features many more women, investors of varying ages and ethnicities. Additionally, although the new website makes extensive use of stock images, the choices of outfits and settings of the models are more visually striking yet approachable than the previous choices of black & white photographs with red accents.

Having opted to design a responsive website for a mobile-driven world, Scotia iTRADE is clearly banking on a future in which those who want to access their website will do so from a variety of devices. The decision and execution on going the responsive route are not without their own challenges either.

As can be seen from the image above, there are still kinks to be ironed out – such as the copious amounts of whitespace in one of their most popular sections linked to commission pricing. Because mobile design likes to stack elements vertically, there are a number of examples on the new website where how information gets presented requires figuring out the unique challenges that a responsive design environment poses.

Making it happen

Ultimately, done is better than perfect. Replacing a website is a significant undertaking and not without it its risks. So, for an online brokerage to invest in an upgrade to their website – especially on at the size as scope of the Scotia iTRADE site, it is encouraging sign that Scotia iTRADE feels confident they will be in the online brokerage race for some time.

The lack of immediate public outcry or praise from DIY investors means that Scotia iTRADE can count this launch as a win. From a user experience point of view, the new site is simpler to navigate, easier to find information and more accessible.

For DIY investors, while the important features and pricing haven’t changed, it is encouraging that financial service firms understand the value in being responsive to consumer expectations and are shifting to make their product offering easier to understand.

Of course, it will be particularly interesting to monitor how Scotia iTRADE intends to keep their brand fresh and engaging to DIY investors in this new digital reality. As all online brokerages have come to learn, the digital first impression will almost certainly become what the next generation of DIY investors will use to determine whether they are in the right place or not.

On our radar

Earlier this month, Qtrade Financial (parent to Qtrade Investor) entered the robo-advisor (or digital advice) pool with their own new service called Virtual Wealth.

While the roll out is still in its early stages, Qtrade Financial is deploying a product in an already crowded space.

With over a dozen firms already in the fray, it will be interesting to see what VirtualWealth does to distinguish itself from its competitors – many of which are either startups or the products of deep-pocketed banks and to see what kind of splash it attempts to make to gain awareness and mindshare in this space.

On a more curious note, the mindshare piece may be a bit of an uphill battle – at least at first. The branding decision to go with VirtualWealth could present some challenges as online brokerage, Virtual Brokers, has largely come to be associated with the ‘Virtual’ tagline in the Canadian online investor market.

That said, Qtrade Investor is no stranger to a little bit of confusion. DIY investors on forums still routinely confuse Qtrade Investor with Questrade, despite having almost two decades to distinguish these firms from one another.

Ultimately, naming choices aside, succeeding will come down to more than just who wears it better.

In an already crowded field, the website for VirtualWealth feels at home with a clean and modern design that leans on elements from Qtrade Investor’s recent website refresh. This is clearly not their first rodeo and despite being a new product line, they don’t seem out of place.

Also, there’s a noticeable continuity between branding elements on the Qtrade Investor site and the new VirtualWealth site. And, while subtle, these elements will be very important for VirtualWealth to leverage the strong brand reputation of Qtrade Investor and Qtrade Financial as established but innovative financial services providers. This latter point is especially relevant as the ‘startup’ style robo-advisors have little to no track record to trumpet and thus will have an even more difficult time pricing their offering higher than that of the competitive rates VirtualWealth is entering the market with.

Discount Brokerage Tweets of the Week

With more DIY investors in the market as RRSP season draws closer to the deadline, the timing for outages could not be worse. This week’s tweets highlight the not so smooth rides. Mentioned are CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE & TD Direct Investing.

From the Forums

Feeling De-Fee-ted

If there’s one thing DIY investors really dislike, it’s probably fees. In this post from reddit’s Personal Finance Canada, one user was looking to get his father a better deal by asking other DIY investors for their suggestions on discount brokerages.

By the Numbers

As a DIY investor, one of the unpleasant realities is record keeping and tax documentation. In this post from the Canadian Money Forum, one forum user is trying to get to the bottom of why the numbers don’t add up on an important tax form.

 

Into the Close

So this week was certainly out of this world. Yes, there are Oscar moments coming up, and probably some great hockey or grim news – but seriously – new planets?! In all the excitement, here’s hoping that we manage to keep ourselves around long enough to enjoy what is a great discovery for humankind. Have a great weekend!