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Discount Brokerage Weekly Roundup – November 29, 2021

Just when we thought things couldn’t take a turn for the bizarre, Black Friday showed up, and with it, a whole new COVID-19 variant of concern. As a result, markets rapidly sold off, but as this edition of the Roundup is going live, there seems to be some enthusiasm that things will get better from here. 

In this edition of the Roundup, we review Qtrade Direct Investing’s latest move to launch real-time account opening, as well as look into the stats and rankings of online brokerages from Surviscor. As always, we serve up some healthy investor culture to end on. 

There in an Instant: Qtrade Launches Instant Account Opening

In a world where we can do almost anything online, it shouldn’t seem like instant account opening is a game changer, and yet, it definitely is when it comes to the world of online investing in Canada. 

This past week, Qtrade Direct Investing announced the launch of “real time” account opening for self-directed investors, and in doing so, has managed to get a highly-prized feature ready just in time for the start of RSP season. Importantly for Qtrade, this feature now enables them to provide a competitive onboarding experience relative to other Canadian brokerages that already have digital applications in place. 

Aside from being incredibly convenient for customers to be able to open accounts online, the speed with which an investor can get up and running has become an increasingly important determinant of whether or not investors will ultimately select a particular online brokerage. One only needs to look back at the past 18 months to see that the two major waves of self-directed investor interest tested the existing capabilities of online brokerages to be able to sign up clients fast enough. 

On both sides of the border, and in fact across the globe, self-directed investors poured into the stock market in unprecedented numbers. And, despite investors encountering long delays on customer service channels, as well as manual processes to actually complete an application, they nonetheless stuck it out because the opportunity (at least in the eyes of any traders) was there. 

And while it is difficult to predict whether or not something like the pandemic-driven sell-off in stocks will ever happen again, it is nonetheless important to acknowledge that the investor pool has dramatically changed. Those self-directed investors that have now become active in participating in markets have very different expectations about how quickly an online brokerage needs to be available to jump on fast-moving market opportunities. 

While online account opening seems like a natural feature for the online brokerage industry to adopt, the reality is that Canadian online brokerages have been fairly slow at doing so. Even with a more “digital” experience, approval times to get up and running can still take a few days. 

Another trend that has emerged over the past year relating to getting started quickly is in terms of funding accounts. Opening an account is only half the battle – there has to be a quick way to fund the account as well to be able to capitalize on market opportunities. In the case of Qtrade Direct Investing, opening an account is now faster, but funding it will still take time. Conversely, competitors of Qtrade, such as Wealthsimple Trade and Questrade, have digital account opening procedures and the ability to fund accounts right away, albeit with limited amounts. 

Heading into this RSP season, Qtrade Direct Investing has managed to address an important component of the onboarding process. In what is often a scramble to get an account opened or funded, Qtrade clients and those considering choosing Qtrade are in for a pleasant surprise. Conversely, the handful of online brokerages that still require printing or physical signatures of documents are increasingly going to be relegated to the sidelines until they can match the speed and efficiency of the instant account approval process. 

Ranking File: Questrade Notches Second Consecutive Top Mobile Experience Ranking

While the end of the year is typically the ramp up to RSP season, there’s also another important season for online brokerages that shows up around this time of year: online brokerage rankings.

This past week, financial services research firm Surviscor published their latest online brokerage mobile experience rankings, and it seems like this year there were a few surprises, as well as a fair share of tough love doled out to Canadian online brokerages.  

Before diving into the results, it is key to mention that when it comes to online brokerage rankings and ratings, methodology matters (a lot). Ultimately, the goal of online brokerage rankings is to be able to compare brokers to one another using some structured criteria. In this case, the mobile experience rankings are intended to measure the overall user experience of a self-directed investor via a phone or tablet device. 

Importantly, Surviscor uses a fairly comprehensive set of measures that assess various aspects of the service experience. Those components are then collated into six categories that can be used for a high-level view of the “mobile experience.”

Five of the six items that Surviscor reports on with respect to mobile experience at online brokerages include: 

  • Opening an Account
  • Navigational Design
  • Account Management
  • Market Information
  • Market Notifications

This year’s review covered 11 Canadian online brokerage firms. The four firms that were not covered were HSBC InvestDirect, Canaccord Genuity Direct, Laurentian Bank Discount Brokerage, and Interactive Brokers Canada. Interestingly, as part of the summary of the results of this year’s review, Surviscor revealed that while all online brokerages analyzed were invited to participate, several of them declined to do so. 

While the ranking data alone was interesting to see, to add deeper context on the ranking, we also gathered the scores associated with the above mentioned categories. In doing so, there are some fascinating observations of the state of mobile experience as defined by Surviscor.

The first important note to point out is that Questrade’s Edge platform was the one that was evaluated and not the recently launched QuestMobile. There has been considerable controversy among self-directed investors, in particular on user forums, about the switch to the new QuestMobile look and feel on the desktop platform. It is therefore important to distinguish between the way in which a user will interact with a platform on a mobile device compared to a desktop. 

Looking at the overall ranking more closely, the top three firms in the ranking, Questrade (77%), BMO InvestorLine (73%) and TD Direct Investing (72%) were relatively close to one another. Similarly, firms in positions six through nine were also very close in terms of overall ranking (range 54% to 57%). One very interesting result was just how poorly Wealthsimple Trade (33%) performed on this evaluation. Anecdotally, the aesthetic and user experience/user interface for Wealthsimple Trade is something that many self-directed investors specifically highlight as a positive feature. In this analysis, however, other than the account opening category, Wealthsimple Trade came up at or near the bottom of peer firms. 

Another interesting thing that jumps out from the full data set is that almost all online brokerage mobile apps do a poor job of notifications. Only four firms did not score 5%, with BMO InvestorLine scoring the highest in this category (95%). Market notifications are a particularly important feature for active investors, so it is curious to note that more firms would not make this component a more refined experience. 

One more pattern that emerged from the data is the correlation between navigational design and rank. In general terms, the better the navigation, the higher the ranking. That said, it was also interesting to see that navigation ranged from 67% to 90% and in this category; Wealthsimple Trade was a real outlier at 3%.

In the categories of Opening an Account, Account Management, and Market Information, the data show how variable the mobile experience can be in these categories. From a user perspective, this is the definition of hit and miss. It highlights some of the challenges associated with creating rankings and ratings, namely that there are some features that certain online investors will prefer and prioritize that others won’t. 

The mobile experience for self-directed investors in Canada, according to Surviscor’s latest report, has room for improvement and innovation. It seems like most online brokerages have managed to do a decent enough job of navigation but outside of that, there really isn’t a consensus from an industry perspective on what defines mobile experience. One goal to aspire to would be to do everything in an online brokerage account on a smartphone that you could do on a computer. 

From an execution standpoint, Surviscor didn’t hold back on a critique of some of the players in the online brokerage industry. The biggest critique, however, was that there was no app that “wowed” the rating team at Surviscor. There isn’t the kind of innovation or pace of innovation in the Canadian market that exists in other markets, such as the US. 

For self-directed investors looking for an online brokerage and for which mobile trading capabilities are important, this analysis is a great way to dive into the nitty gritty. There’s clearly work to be done by the online brokerages to provide a better trading experience. However, the tricky part will be understanding what clients generally want. 

From the forums

Live and Let Trade

In volatile markets, fortunes can change in an instant. For that reason, having access to accurate information on the latest stock prices is crucial to getting visibility on the best entry or exit points on a trade. In this post from reddit, one user looks to the self-directed investor community to find out which services other investors are relying on for real-time data.

Beware the Deals

Heading into RSP season, there’s no question that online brokerage deals and promotions are in full swing. Among the deal types, cash back offers are the most popular, but they’re not without some important considerations. In this post from RedFlagDeals.com, one forum user asks an important question about getting a cash back bonus for a registered account. 

Into the Close

Just when we thought we were out of the woods, Omicron surfaced and volatility came back into stock markets in a hurry and just in time for the weekend. It didn’t help matters much that the US had their shortened work week (because of Thanksgiving).  If there’s at least one silver lining, it’s that this time around, the world is much more prepared than previously. Stay safe and kind!

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Discount Brokerage Weekly Roundup – November 22, 2021

It’s been a tough week all around. As this edition of the Roundup goes to publication, there’s a tragedy unfolding in Wisconsin. And, in BC, there’s been a lot of bad news over the past week because of the floods. After the year and a half that has passed, when things rise to the level of exceptionally bad, it is often a moment to take a pause and reflect on the things to be thankful for.

In this shortened edition of the Roundup, the US online brokerage market is in the spotlight once again. We dive into recently released metrics to examine a possible shift in investor sentiment, as well as the uphill battle faced by Robinhood into the final stretch of 2021. To close out, we wrap up with some interesting chatter from the investor forums.

Growing Pains: Account Growth at Interactive Brokers and Schwab Spells Trouble for Robinhood

It’s barely winter, but already there are signs that online investor sentiment is “springing” back to life – albeit modestly.

Data from two large publicly traded online brokerages in the US, Interactive Brokers and Charles Schwab, appear to be pointing in the same direction with regards to positive month-over-month new account growth, the first time that has happened in 2021.

This year has certainly been a storied one for online brokerages. Right out of the gate, 2021 saw an unprecedented surge in retail investor enthusiasm based on the “meme stock” interest. All online brokerages in Canada and the US saw record-breaking activity in account opening and trading volumes. That interest, however, faded quickly as the meme stocks lost steam and the fast money sought other opportunities (such as crypto trading).

The October stats on new account growth at Schwab showed 397 thousand new accounts opened, an increase of just over 6% compared to September. By comparison, Interactive Brokers reported 46.3 thousand net new accounts opened in October, an increase of almost 6.7% month over month. Aside from the numbers of new accounts being vastly different at the two firms, the target clientele is also quite different. Interactive Brokers tends to target and attract active traders, whereas Schwab could be a better proxy for “main street” investors.

But what about the “new kid on the block” aka Robinhood?

With the surge of interest in online trading this year, a new segment of investor emerged that didn’t fit the traditional understanding and paradigm of “investor” and many (if not the vast majority) of those investors found their way to Robinhood.

Now that Robinhood is a publicly traded company, it is possible to get a better handle on what kinds of investors are gravitating towards this online brokerage and to see how account performance stacks up relative to incumbent firms. To compare apples-to-apples on account growth, it is important to note that, unlike Interactive Brokers or Schwab, Robinhood does not report monthly performance metrics. As such, we have compiled data on new accounts based on quarterly totals so that we could compare how Robinhood’s performance to Schwab and Interactive Brokers.

The chart shown above helps to put into perspective just how big of a wave of interest in online trading the first two quarters of the year represented to Robinhood’s business and the disruptive force Robinhood has been to the online brokerage market in the US. In the first calendar quarter of 2021, Robinhood added more accounts than Interactive Brokers and Schwab did in the first two calendar quarters combined.

Equally as evident in the chart above, however, is the enormity of the drop off in new account growth at Robinhood in Q3 2021. New account opens plummeted from 5.1 million accounts to just 700 thousand – which is still more than Interactive Brokers but well short of Schwab. Another table from the Robinhood earnings release provides additional context on what investors who signed up for Robinhood were most interested in trading, and as a result, where Robinhood earned most of its revenues each quarter.

Against the backdrop of revenue figures, it’s clear that options trading followed by equities trading dominated the revenue picture for Robinhood for Q1 2021, but in Q2, crypto became the primary driver of revenues. In Q3, Robinhood earned most of its revenues from options trading. Based on the revenue mix, it appears that Robinhood has both active traders – who would prefer options trading and cryptocurrency over equities – as well as less active investors, who would prefer equities and ETFs. For Q4 of 2021, Robinhood has already signalled to expect a soft quarter in line with the Q3 performance figures.

The latest numbers from Schwab and Interactive Brokers indicate a possible resurgence in interest with both active and passive investors which should seem like good news for Robinhood; however, we can’t help but wonder whether there is a significant number of accounts jumping ship from Robinhood. Neither the pace of growth in terms of new accounts nor the trading activity at Robinhood is clear enough at this point in the quarter to make a call either way. If Robinhood wants to attract investors interested in gaining exposure to online trading, they will likely have to change the way in which they report performance to bring them in line with other online brokerages. The fact that they haven’t yet done so does beg the question as to why those monthly figures don’t get published?

In the Canadian online brokerage segment, the data on online trading activity and new account openings is much less transparent. The US online brokerage market serves as a proxy for the performance of online brokerages and online investing on this side of the border. Interactive Brokers’ latest account figures reflect their continuous appeal to active investors and traders, and despite charging commissions for trade execution, people are prepared to pay. Schwab, by comparison, has shown that commission-free trading is only a small component of the wealth management opportunity to be had, a model other Canadian online brokerages are likely to look to when deciding which is worth more to their long-term success.

For the growing number of investors interested and curious about options trading, Interactive Brokers offers an experience that is hard to rival here in Canada – even when factoring in commission pricing. That said, if Robinhood is an indicator, commission-free options trading is something that is going to be increasingly sought after while cryptocurrency trading capability is also important to the newer segment of online investors. In terms of the latter, Wealthsimple Trade has an edge that offers self-directed investors direct exposure to cryptocurrencies and equities in one platform. The major downside, of course, is the cost for trading in US dollars and the lack of options trading. On the other hand, almost all popular Canadian online brokerages offer options trading as well as US-denominated trading accounts.

Until all three products: options, cryptocurrencies, and equities are available in a single online brokerage in Canada (and at a reasonable cost), it appears that Canadian self-directed investors are going to have to figure out how to combine providers to get the exposure they desire.

Turning back to the US online brokerage market, the latest performance figures from Interactive Brokers and Schwab point to an interesting scenario which we will be monitoring when Robinhood reports its next earnings release – namely, whether the account growth at Schwab and Interactive Brokers is coming at the expense of Robinhood clients.

It is difficult to know with certainty that clients leave one online brokerage to go to another; however, the revenue mix provided by Robinhood does suggest that Interactive Brokers is now a compelling alternative for cryptocurrency trading (of certain currencies) and definitely for options trading. Interactive Brokers, as of this past quarter, now offers the “trifecta” of options, crypto, and stocks at a professional trader’s level of sophistication. To boot, Interactive Brokers also now offers an ESG-focused trading tool that takes investor values into consideration when screening companies for possible investment opportunities.

At the other end of the spectrum, many of those investors that thought they could make a fast dollar on the meme-stock frenzy might have learned that investing profitably is a challenge and takes time and effort to do well. Those investors might now prefer a more hands off approach, or even value advice, which would point them towards Schwab.

The concurrent uptick in new account growth at Interactive Brokers and Schwab is a positive sign for both firms and an interesting development at this point in the year and stock market cycle. While it is difficult to know the source of those new clients, it’s clear that winning over Robinhood’s clients seems like part of the strategy of the existing players. Despite Robinhood’s success in bringing in new clients earlier this year, learning to hang onto those clients is an entirely different game altogether.

From the Forums

Exit Signs

While price is one reason online investors make decisions, there’s sometimes more to the story than that. In this interesting post from reddit, one user explains their reasoning behind saying goodbye to traditionally low-cost online brokerage to find greener pastures elsewhere.

Shopping for Options

With Black Friday just around the corner, it seems like Canadian investors are in the shopping state of mind. In this reddit post, one self-directed investor is interested in choosing a new online brokerage catering to options trading and receives some interesting perspective and suggestions.

Into the Close

It’ll be a short week for trading in the US because of American Thanksgiving, one that will undoubtedly be tough for community of Waukesha. Often in times of tragedy, it is the strength of communities that shine through and the kindness shown to others that makes an immeasurable difference. It certainly showed up here in BC when it was needed the most.

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Discount Brokerage Weekly Roundup – November 15, 2021

There’s a saying that goes, “when it rains, it pours.” It is a fitting comment in more ways than one, especially in November in parts of Canada, and especially considering that climate is driving much of the conversation in the news and now among online brokerages.

In this edition of the Roundup, we’re keeping things lighter than usual. It was oddly quiet (perhaps too quiet) across the online brokerage space here, so we’ve elected to shine a light on a new feature launch from one US online brokerage that is likely to prompt a trend of helping investors “go green.” From there, we’ll close out with a few quick updates on things that crossed our radar and wrap up with chatter from the investor forums.

Betting on Better: Interactive Brokers Launches new Sustainable Investing App

When it comes to getting ahead of the curve, it seems Interactive Brokers has a knack for good timing. Just as the conversation about the state of the environment is taking place all over the world, courtesy of the COP26 summit, Interactive Brokers announced the launch of their new “sustainable investing” app: IMPACT.

While the prime directive of Interactive Brokers is to generate shareholder returns (they are a public company, after all), the natural question to ask of the online brokerage is how this new app, which is designed to help DIY investors make more value-aligned investing decisions, will be better for business overall?

If there is one thing that Interactive Brokers appears to be deft at, it is getting creative at finding ways to connect to their existing and desired clientele.

Just before the start of the global pandemic, for example, Interactive Brokers launched a simulated sports betting platform targeting individuals who were interested in monetizing their talent and enthusiasm for professional sports. Despite the sports platform itself being quietly decommissioned earlier this year (no pun intended), the thesis of individuals who bet on sports being interested in trading stocks turned out to be wildly true. The crush of interest in trading online that occurred during March of last year and January this year was in some part due to individuals not having sports to be able to bet on.

In the case of the new IMPACT app, it appears it is yet another attempt in focusing in on a key client segment — in this case, younger investors that could use this app and the commission-free trading price point to boost new client generation. The founder and former CEO of Interactive Brokers, Thomas Peterffy, appeared on CNBC this past week and stated this when asked who this app was designed to reach.

Of course, in addition to the IMPACT app, Interactive Brokers recently launched the ability for its clients to trade cryptocurrency at a fraction of the cost of some larger names in the crypto space. After years of skepticism on the digital currencies, it was interesting to see Interactive Brokers capitulate and essentially jump into the crypto trading game because it was such a highly sought-after feature for clients.

Clearly, Interactive Brokers is no stranger to keeping a pulse on what it is their customers want and trying to deliver that service or experience through their services ecosystem. What stands out about the latest mobile app, however, is that none of their direct competitors have something similar in market. For its part, Robinhood published a blog post in October raising awareness of Latinx investors, and published their own ESG report; however, there was nothing near the Interactive Brokers experience in this segment of the market.

Socially responsible investing isn’t just a trend in the US. However, it is clearly a global thesis that has gained considerable ground over the past few years.

What makes the latest move by Interactive Brokers especially interesting, however, is that they have paved the way for other online brokerages to step up with something equally as compelling, especially the “challenger brands” whose identity is predicated on making the world of financial services “better.” In a macro sense, this kind of competition is great for the planet, as it better enables investors to throw their capital behind their values.

And, while the Interactive Brokers solution involves a well-designed mobile app (from a UI perspective anyway), this is the kind of innovation that Canadian online brokerages have been desperately in search of.

To that end, it is an interesting case study to see how little traction some existing players – such as Scotia iTRADE – have had with their socially responsible investing features. We reported on the launch of Scotia iTRADE’s ethical investing tool back in the summer of 2017; however, despite the macro trend supporting a tool like this getting more exposure and strategic expansion, things have been remarkably quiet at iTRADE on sustainable investing.

Among Canadian online brokerages, sustainable investing tools are a potential place to connect to self-directed investors (especially younger ones) who want to invest according to their values. The current approach of providing thematic choices is a decent starting point, but Interactive Brokers’ latest app demonstrates how much farther Canadian online brokerages need to be prepared to go to truly be seen as market-leading in sustainable investing.

In a small twist of fate, we at Sparx share a similar view to Peterffy when it comes to the power of capitalism being able to find a solution to the climate crisis faster than government action alone could. We think that investors, especially millennials, will be more informed about and willing to seek out brands that prioritize social responsibility as part of their business objectives.

The latest platform launch by Interactive Brokers is an example of their business interest in providing online trading services to as many people as possible overlapping with the next big wave of economic opportunity (imperative): saving the world.

Quick Online Brokerage Updates

Bandits in Sherwood Forest: Robinhood Security Breach

It was a tough week for some clients of US online broker Robinhood as the firm disclosed that five million of its customers had personal information compromised by a security breach. Ouch.

Apparently, the incident arose from a phishing scam that targeted an employee of Robinhood. The breach is yet another example of the hazards of operating online brokerages, and yet another strike on the reputation of Robinhood to contain phishing attacks.

Appy Days

If you can get beyond the characters on Twitter (looking at you, Elon), there’s all sorts of interesting data nuggets to uncover. This past week, an interesting thread started by The Globe and Mail personal finance writer Rob Carrick (famous for his online brokerage reviews) asked a very compelling question of the community of Twitter users. Check out what transpired when users were asked what they like and dislike about online brokerage mobile apps.

Looking Forward to Looking Back

The next edition of the Sparx Trading Look Back/Look Ahead series is just around the corner, and we are very excited to relay the updates shared with us by some of Canada’s largest and most popular online brokerages. We can see why there might be a slight dip in activity among Canadian brokerages this past week because there are clearly some big developments about to drop. Be sure to subscribe to our newsletter and Twitter feed for more details.

From the Forums

Need for Speed

If there’s one big lesson for self-directed investors over the past two years, it’s that when opportunity knocks, it helps to be able to get funded and get going. In this post from reddit, one user is looking for a non-bank-owned online brokerage that can offer faster deposits. Read what users had to say about the options available.

Departures and Rivals

There’s a lot of chatter these days about switching online brokerages. Because National Bank Direct Brokerage and Desjardins Online Brokerage are two of the first traditional online brokers in Canada to offer zero commission, naturally self-directed investors have questions. In this post from reddit, find out what perspectives users offered when considering a choice between these two new low-cost leaders.

Into the Close

That’s a wrap on another edition of the Roundup. We’re officially passing the halfway point in November and Financial Literacy Month is in full swing. It’s also Movember, and if you’re so inclined to mo-your support, we’re raising money at Sparx in support of the cause. Stay dry and have a profitable week ahead!

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Discount Brokerage Weekly Roundup – November 8, 2021

The end of 2021 is just a few weeks away. Incredible. It definitely feels like we’re on an express train through the calendar, and it is only going to speed up now that the official start to RSP season appears to be here. Thankfully, those of us fortunate to live in a spot with daylight savings have one extra hour to enjoy it!

In this edition of the Roundup, we review the latest promotions from Canadian online brokerages, including some big offers from bank-owned brokerages to try and sway interest their way in what is the most competitive landscape yet. Next, we call out an interesting trend forming among most online brokerages who appear to be pulling back from digital engagement on Twitter despite the record high numbers of investors flocking to online trading. Finally, we wrap up with the ever-entertaining banter from the investor forums.

Online Brokerage Promotions: Playing Cash Up

The RSP deals and promotions activity at Canada’s online brokerages is already off to a strong start this month. And, given who is now in the pool, it shouldn’t be too much longer before we see others follow suit.

Now a week into November, three of the big five bank-owned brokerages have published their seasonal promotions, and they all seem to have one important feature in common: cash.

The latest deals from BMO InvestorLine, CIBC Investor’s Edge and TD Direct Investing are all cash back offers, and as with past years, they are once again tiered promotions where the more you deposit, the more (at least in absolute terms) you stand to receive.

What is very different this year, however, is that it seems like TD Direct Investing (the largest online brokerage in Canada) has shown up with an historic offer for lower deposit amounts. TD Direct Investing’s newest promotion offers an eye-popping $100 for a minimum deposit of $1,500 and an extra $100 on top of any tier for individuals who set up regular deposits. In fact, it appears that among the cash back promotions of the (current) three bank-owned brokerages, TD Direct Investing has the best promotion bonus on deposits up to $25,000 and is tied for top deal up to deposits of $50,000.

By comparison, CIBC Investor’s Edge has staked out its sweet spot in the cash back promotion tier in the  $100,000 to $250,000 range. In that window, CIBC Investor’s Edge is offering up $500 which is more than either competitor by a lot. After deposits of $250,000, however, all three bank-owned brokerages are offering up identical rewards for comparable deposit tiers. Cash back amounts max out at $2,000 for deposits of $1M or more, which is similar to last year in terms of amount and associated tier.

For its part, BMO InvestorLine appears to have played their cards close to their chest in terms of the offer expiry date. The promotions from CIBC Investor’s Edge and TD Direct Investing that launched at the beginning of November run until the beginning of March 2022. The expiry date for BMO InvestorLine’s current offer, however, is the end of December 2021, which leaves enough time for them to decide how (or if) to respond with a slightly different promotion heading into the RSP contribution deadline.

Despite it still being early on in RSP season, the offer by TD Direct Investing is indicative of the competitive landscape this year. With zero-commission trading now a reality at a bank-owned competitor (i.e. National Bank Direct Brokerage), it looks like TD Direct Investing is going to challenge their peers hard at the sub $50,000 deposit level. This is especially interesting because it pits TDDI against brokerages like Wealthsimple Trade and Questrade by offering a more generous bonus than either of these brokerages provide at these deposit levels.

Unlike other online brokerages in Canada, it is hard to ignore or dismiss TD Direct Investing. For online investors looking to start out, TDDI might be a difficult choice because of inactivity fees for balances under $15,000. That said, it looks as if users who are willing to commit to a monthly pre-authorized contribution plan of at least $100 per month, they also stand to benefit from an additional $100 bonus and be able to waive the inactivity fee for a sub-$15,000 balance.

The early and aggressive launch of cash back offers from both TD Direct Investing and CIBC Investor’s Edge are a clear signal that the value equation has changed for self-directed investing. Now that there are at least three zero-commission trading options in Canada, one of which is becoming an increasingly better-known bank-owned brokerage, deals and promotions need to follow suit.

The reality is that it is a matter of when – not if – bank-owned online brokerages in Canada start to drop their commission fees, and as such, this could be one of the most opportunistic windows for online investors looking for a bonus offer on the way into a new account to secure one before pricing ends up shifting lower and promotional offers with them.  

Flying the Nest: Online Brokerages Migrating Away from Twitter

When it comes to quirky stories, Elon Musk seems like as good a reason as any to tune into Twitter. For some Canadian online brokerages, however, Twitter just doesn’t seem to hold the appeal that it used to, and we’ve spotted an interesting communications trend that reflects some of the challenges Canadian online brokerages are having engaging investors online.

Last month, we spotted the rather abrupt disappearance of Scotia iTRADE’s Twitter channel. And upon further inquiry, it seems that this channel had been folded into the customer support Twitter handle for the parent of the online broker: Scotiabank.

Normally, the disappearance of a social media channel would seem innocuous; however, Scotia iTRADE is not the only Canadian online brokerage over the past year to pull a sudden about-face on social media (much to the confusion of many users). As recently as last month, Virtual Brokers also folded up their Twitter handle because of their rebranding as CI Direct Trading, and earlier this year, Wealthsimple Trade also did something similar, opting to use the parent Wealthsimple handle instead.

A quick scan over other Canadian online brokerages who had Twitter accounts also shows that there hasn’t really been a whole lot going on there either. The last published tweet from the TD Direct Investing Twitter account, for example, was from February 2021. With that paucity of activity on social media despite having lots to talk about in other areas, it could be a signal that TD Direct Investing might take a similar approach to Scotia iTrade and wrap up its Twitter presence in favour of other channels being actively used by TD for either customer support or content creation.

As it stands, Questrade and Qtrade Direct Investing appear to be the only Canadian online brokerages using their Twitter handles for both broadcasting of messages as well as customer support responses. With many of their peer firms appearing to abandon pursuing a direct presence on Twitter, it could signal an opportunity for either of these firms to pull ahead with audiences who spend time on the social network.

Given the strategic importance of Twitter to the kinds of individuals that would pay attention to market-moving eccentric billionaires (like very active traders), it seems curious that online brokerages with tools and services catered to active traders aren’t doing more on Twitter. A quick look at the Twitter accounts of TradeZero or Interactive Brokers confirms that there is content being created for active traders there.

The most recent lightning rod tweet from Elon Musk got over 3.5 million people to cast a vote. Granted, he occupies rarefied air for a businessperson to be among celebrities whose primary job it is to entertain, so for brands such as online brokerages (especially Canadian ones), it is tough to compare. That said, if there is any lesson to be gleaned, perhaps it helps to realize that in order to succeed being on Twitter, it’s to make content that’s engaging and entertaining.

From the Forums

Hold the Music

Wait times on customer service lines are back – at least as a topic of discussion. Several weeks ago, we noted the hold music at TD Direct Investing had been replaced with banter. This past week, it seems like the wait time combined with the choice of non-musical accompaniment ruffled a few feathers. Here’s more of what redditors had to say about wait times and musical choices on customer service lines.

Character Flaw

Practice accounts are intended to give users a sense of what the trading experience is supposed to be like – much like a test drive. Unfortunately, one user on reddit discovered that their last name didn’t meet the minimum length requirements to sign up. Find out what others had to say in this post here.

Into the Close

That’s it for another week of curious developments in the online brokerage world. We’re hurtling towards the end of the year and for any die-hard readers of the Roundup, the good news to report on here is that we’ve got a very exciting Look Back / Look Ahead edition planned for this year. Stay tuned!

On another note, this upcoming week is Remembrance Day, and we wanted to take the opportunity to thank the brave individuals who have served and sacrificed in our armed forces, as well as those who continue to stand at the ready. Thank you.

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Discount Brokerage Deals & Promotions – November 1, 2021

November is upon us, and if you’ve stepped foot in a Canadian Costco lately, you’ll know that Christmas is just around the corner. For Canadian self-directed investors, however, the beginning of November signals the “unofficial” start to a very different season: RRSP season.

As if on cue, November kicked off with a new online brokerage promotion, a cash back deal from CIBC Investor’s Edge. Though it is still early in the month, there’s a very good chance that other Canadian online brokerages will follow suit in short order, in particular the bigger bank-owned brokerages. BMO InvestorLine’s current cash-back promotion was officially live at the time of publication of this update, however, they too will likely have something new on offer at the start of the month.  

Of course, the big story this year among online brokerages in Canada is zero-commission trading fees gaining mainstream acceptance. Starting first with National Bank Direct Brokerage and followed shortly thereafter by Desjardins Online Brokerage, the fact that two large financial institutions have already rolled this out makes for interesting times ahead during the most competitive season among Canadian online brokerages. To overcome the natural pull of these ultra-low price points, competing firms who insist on charging trading commissions will have to demonstrate extraordinary value for their clients. And one of the fastest ways to do that is through incentives.

The news isn’t entirely great for online investors, however.

Large bank-owned online broker RBC Direct Investing retired their short-lived 50 commission-free trading promotion at the end of October. Recall that this promotion enabled users to have access to 50 commission-free trades over two years.

We will be keeping our eyes and ears peeled for new updates. However, if you find out about an offer you’d like to see shared on SparxTrading.com, drop us a comment to let us know.

Expired Online Brokerage Deals

The RBC Direct Investing 50 commission-free trade promotion officially wrapped up at the end of October. This promotion, which we first spotted in the late summer, was something new from the popular bank-owned brokerage. In particular, the duration over which investors could use the trades (two years) was longer than what we have seen being offered previously, or at competitor brokerages. Interestingly, the promotion was only available for a brief time, however, it is clear that RBC Direct Investing has found a way to go even bigger with promotions than they’ve done in the past, a trend we’re likely to see play out among Canada’s most competitive online brokers.

Extended Online Brokerage Deals

No deal extensions to report at this time.

New Online Brokerage Deals

The latest cash back promotion from CIBC Investor’s Edge is a tiered offer that provides between $50 and $2,000 cash back for deposits ranging between $10,000 and $1M+. This promotion runs from November 1 to March 1 inclusive, with payouts of the cash bonus taking place in June 2022 or August 2022, depending on when accounts are opened. Check out our online brokerage deals index page for deposit tiers and more information about this offer.

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Discount Brokerage Weekly Roundup – November 1, 2021

Even though Halloween may be behind us, things are still a bit… “meta.” While the world tries to wrap its head around the Inception-esque metaverse, it’s officially November, and, coincidentally, earnings season at a lot of publicly traded companies. If there’s one thing this past week has revealed, it’s that being in the public eye opens you up to a lot of scrutiny.

In this (post Halloween) edition of the Roundup, we look at the skeletons and Pelotons shaping the latest developments at US online brokerage Robinhood and dig deep to unearth what their latest earnings report reveals about their future plans. And in keeping with the snackable financial content theme, this week, we’re dishing out a lot more investor chatter from the forums.

Robinhood’s Latest Earnings: A Lot of Sizzle at Stake

In their second-ever quarterly earnings report as a public company, Robinhood reported to investors a Dr Jekyll and Mr Hyde disclosure of exciting features mixed in with frightfully grim earnings numbers. The result: a drop in share price scary enough to qualify for a thrilling amusement park ride.

So why did the price per share for Robinhood fall so sharply?

Robinhood’s Q3 earnings report revealed a substantial drop in revenues, a sharp increase in expenses, and an admission that growth, not profitability, is the focal point for this business for the near to intermediate term. In short, revenues dropped, expenses rose, and the outlook for growth was muted.

By Robinhood’s own admission, they are betting the big expenditures (or “investments”) in hiring people to develop new features will be ultimately more valuable over the longer term than the current snapshot of financial performance would suggest. The market, it seems, is a bit skeptical.  

As is the case with most earnings reports, the standard metrics of business health – including revenues, expenses and earnings – were covered in the latest Robinhood results. However, the numbers we’re most interested in for this online brokerage relate to the numbers of new accounts and activity per user on the platform. These stats tend to provide insight into the rate of adoption of a platform, as well as the kinds of users (active or passive) that typically make up their client base.

Churn Baby Churn

One of the more stunning graphs from the Robinhood earnings presentation was the Net Cumulative Funded Accounts chart. This past quarter, Robinhood ended up with 22.4 million funded accounts, a slight decrease from the prior quarter of 22.5 million funded accounts.

What is astonishing, however, is that they added almost 700,000 new accounts during the quarter and lost (or “churned”) 900,000, meaning that Robinhood lost more customers than they gained this past quarter, something that has not happened in the previous four quarters this data was reported. During the quarter, they also managed to regain (or “resurrect” in their lingo) about 100,000 new accounts.

Here’s what CEO of Robinhood, Vlad Tenev said in the investor conference call:

“In Q3, net cumulative funded accounts were 22.4 million, up 97% year-over-year and slightly off versus Q2. We As we previewed last quarter, in Q3, we saw considerably fewer new funded accounts and lower revenue as compared to Q2. In Q3, we added 660,000 new funded accounts, bringing our total additions for the year to 11.4 million, nearly doubling our customer base since the end of last year”

Granted, the last three quarters in the online investing industry have been unlike anything witnessed before in terms of retail investor participation, so it would be a reasonable assumption that new client growth could not continue at the same pace it has over the past year; however, as we’ve noted as recently as two weeks ago, new account growth at other online brokerages, such as Schwab and Interactive Brokers, has been positive.

To contextualize the performance of Robinhood in terms of new user growth, Tenev stated:

“Historically, our growth has come in waves. The surges have come during periods of increased volatility or market events. We’ve also seen that new customers join when we add new products and features, giving us some degree of control over our growth.”

When measured against the user account growth at Interactive Brokers and Schwab, however, Tenev’s comments reveal a concerning stall in terms of what Robinhood appears to be bringing to the table for investors. Both Schwab and Interactive Brokers have found ways to overcome the churn despite what the waves that Tenev describes. Perhaps, the fact that a firm like Interactive Brokers has had the kind of consistent growth streak it has reflects just how impressive a feat it is to accomplish, all the while charging commissions for trading.

Back to the Feature

Despite the challenging quarter and with another similar one likely on the way in Q4, Robinhood appears unfazed, setting their sights farther down the track.

Prior to their earnings call and even all throughout the call itself, bringing on top talent into Robinhood was a key point of emphasis as to what will help Robinhood get a leg up on competitors in both the traditional online trading world and the brave new world of cryptocurrency trading. To navigate the next chapter in the Robinhood story, they’re going big on getting creative.

Case in point, Dara Treseder, the Senior Vice President and Head of Global Marketing & Communications at Peloton, is joining the Robinhood Board of Directors. And, to boot they added 580 new full-time employees across the company during the quarter in areas like engineering, compliance, and customer service. While the latter two areas are intended to ensure operating stability, the heavy investment in engineering is a signal they are going full throttle at product development and refinement of their technology ecosystem.

Not entirely unrelated, another noteworthy development that caught our attention in the Robinhood conference call was related to financial content. Specifically, Robinhood Snacks is arguably one of the best-in-class financial content productions aimed at millennial self-directed investors. The content is “digestible” and entertaining, something that is exceptionally rare in the world of personal finance, let alone the realm of investing.

With over 23 million unique readers of their Robinhood Snacks newsletter and more than 10 million downloads of their podcast in the past quarter, there’s a sizeable reach to their content program. And it appears that content is going to now go farther. In the earnings conference call, Tenev announced a partnership with Snap (of Snapchat fame) which will distribute the Robinhood Snacks content on their channel.

Curiously, despite the strong following on their newsletter and podcast, the official Robinhood YouTube channel is sorely lacking in followers and their reddit page, which despite having 937,000 followers (at the time of publication) has very little commenting or interaction taking place on it. So, while the numbers on the podcast and newsletter are a nice flex, other public channels for Robinhood show a startling absence of engagement.

Like most earnings reports, ultimately, the bottom line comes into focus. For Robinhood, however, it is clear that they are still operating in “growth mode,” meaning they are spending considerable time and energy building out new features and working to improve delivery of existing ones. It is important to contextualize that they practically doubled their customer base in about a year, and although online investing is capable of scaling, there are limits – which Robinhood has evidently discovered.

For Canadian online brokerages and self-directed investors, Robinhood has served as a harbinger of the sorts of things to come in the online investing space. Aside from commission-free trading of stocks, there are several other features, such as cryptocurrency trading, promotions that use stock bonuses, and heavy emphasis on user experience (UX), that other online brokerages have adopted as part of their strategy here in Canada.

While investors in Canada have learned to hurry up and wait when it comes to features launched in the US actually coming to Canada, there’s no doubt that Robinhood influences a Canadian investor audience as to what’s possible.

Of course, since Robinhood’s commission rates are at zero, everyone, but especially shareholders, are curious to see what their next act is going to entail.

From the Forums

Shifting Attention

One of the curiosities of the Canadian online brokerage market is how slowly other providers in the space are lowering their commission rates down to zero, despite the presence of three companies now offering trades at this rate. In this post from the Financial Wisdom Forum, one user elegantly sums up what big bank-owned brokerages need to fear about the shift to a competing online brokerage offering commission-free trades.

Negative Sentiment

Like the stock market, there’s a strong relationship between sentiment and loyalty when it comes to online brokerages. In this post from reddit, one user relays their frustration with the state of their current online brokerage (Questrade) and whether or not the time is right for making a change.

What’s in Your Wallet

Cryptocurrency trading at Wealthsimple is a very popular (and sometimes controversial) feature. One of the biggest pain points with customers, however, is the limitation on withdrawing crypto into an external wallet – something that this post on reddit indicates is going to be changing soon. Read more for responses from other investors.

Early Birds

Trading on the stock market is just too exciting for some self-directed investors. In this post from reddit, one investor asks whether any online brokerages allow trading ahead of regular market hours. Not surprisingly, there are others who are curious about this feature too.

Error of Commission

When is a good deal on trading via an online brokerage platform? With so many providers in Canada charging slightly different pricing of self-directed investing, sometimes the costs of paying a commission are outweighed by a simpler or more robust feature set. Find out in this post on reddit whether one user is paying too much.

Into the Close

It’s going to be a big month across the board. From new online broker promotions to feature launches and even some great updates from Sparx Trading in the mix, the official launch to RSP season is here. You could say the launch is going to be so… meta.

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Discount Brokerage Weekly Roundup – October 25, 2021

Halloween is just around the corner, and it’s not just ghouls and goblins that are causing a fright around online brokerage circles. Apparently, the specter of zero-commission trading is a bit of a phantom menace on both sides of the border.

In this edition of the Roundup, we reveal (yet) another new commission-free online brokerage setting its sights on coming to Canada and what that could mean to existing online brokerages’ plans to keep commission rates where they are. Next, we review one US online brokerage’s move to put account funding in the fast lane and dive into what it could mean for active traders here in Canada who want to get going as fast as possible. Finally, we cap off this week’s news with some fascinating commentary from self-directed investors in the investing forums.

TradeZero Coming to Canada

Last week we mentioned the news that TradeZero announced they would be going public. A fun fact about going public is that there is usually a pitch deck for investors to buy into your company, and in the case of TradeZero, there were several interesting nuggets of information about their intent as an online brokerage.

Buried in the TradeZero investor presentation deck was the revelation that TradeZero intends to launch in Canada sometime in 2022. Although they had officially registered in Canada as far back as June of this year, the investor presentation put a timeline and target on what the opportunity for them in the Canadian market could look like. It appears that TradeZero is using its launch in Canada as part of a series of launches in different countries and regions over the next few years.

Perhaps the most interesting angle in terms of their expansion is that TradeZero is positioning itself to compete directly against Interactive Brokers for the ultra-active retail trader. Of all the segments of investors, the active trader is highly prized but comes with the highest expectations for quality of experience, platform stability, capability for complex trading, and competitive pricing.

Although it is unclear as to what they will launch in Canada, it’s a safe assumption that the products will be aligned to active traders, and according to their investor presentation, options, and cryptocurrency trading, are likely candidates alongside equities to be a part of the go-to-market offering. The timeframe to achieve the scale they’re looking for, namely some percentage of the 160,000 accounts, is also unclear. For comparison, account opens cited by other media sources peg Questrade as opening 200,000 accounts per year, and while there very well may be a large number of accounts in the total addressable market in Canada, hitting their target number won’t come easy.

It begs the question, who would TradeZero’s competitors be in Canada?

At the top of the list would be Interactive Brokers; however, based on their target demographic and the active trader profile, there are several other firms whose lunch TradeZero would try to eat. These would include CG Direct (the legacy business from Jitneytrade), Wealthsimple Trade (because of crypto and US equities), and it’s fair that Questrade and TD Direct Investing would be in the mix too because of their active trader offering, especially on the options side.

Then, there is the branding issue. While active traders might be more inclined to trial or check out a new technology or brokerage, being a new online brokerage in the Canadian market is generally met with some suspicion, regardless of the offer. A great case in point is the fact that despite having low standard commissions and offering a lot of the perks of being bank-owned, both HSBC InvestDirect and National Bank Direct Brokerage have yet to see the kind of traction from price sensitive online investors that would have been expected. Even with zero commission trading now available from National Bank Direct Brokerage, it is surprising to read how many investors are willing to stay with their existing brokerage in hopes that commission rates will drop at their broker.

In order to ramp up to the addressable market that TradeZero is targeting for Canada, there will almost certainly be a significant investment in marketing and advertising to let people know who they are and what they do best – perhaps better than the alternatives. And, to make matters more challenging, they will also be doing this alongside at least two if not three other new entrants into the Canadian online trading landscape – the most directly challenging one being Tastyworks.

Of course, Interactive Brokers is also no slouch and is unlikely to simply allow a new entrant to directly compete for high value clients. The product mix, especially with regards to account types such as RRSPs and TFSAs, are crucial to the “convenience factor” even for ultra-active traders. The benefits of TFSAs and RRSPs for wealth creation are simply too high to not try to take full advantage of, hence clients who wish to “trade fast” with TradeZero will have to maintain another relationship with another online brokerage to do the “slow stuff,” thus opening the door to being courted away.

To TradeZero’s credit, despite the hurdles, they are clearly ambitious in their desire to expand their brand globally and into the highly regulated areas of securities trading. The fundamental business case is certainly there; however, so is the competition. There are pain points among users of Interactive Brokers, such as a steep learning curve of the trading platform and lackluster customer service, so TradeZero does have a foothold if they can improve the client experience of active retail traders.

The consequences for the Canadian online brokerage landscape may not be felt right away, especially given the segment that TradeZero will be pursuing. That said, with a name like TradeZero and an offering of commission-free trades, there is almost certainly going to be increased pressure on incumbent online brokerages to drop their commission prices. It is already happening a few times per week in investor forums and discussions and will likely only ramp up as each new commission-free brokerage comes on stream.

Canadian investors and traders alike might just find the pace of change at their own online brokerage slow enough that they’d be willing to at least try TradeZero, and at that point, it’s a slippery slope as to whether they switch brokerages. Those are the odds that perhaps TradeZero is banking on.

Interactive Brokers Puts Payments on Rails

Payments were an interesting thread of discussion at Interactive Brokers this past week. In the first instance, there were some intriguing remarks made by founder and Chairman of Interactive Brokers, Thomas Peterffy, regarding payment for order flow (PFOF), the (now) controversial practice that enables zero-commission online brokerages like Robinhood to sell the orders their clients place to buy and sell stocks to a third party.

An industry veteran, it is always fascinating to hear Peterffy’s take on the mechanics of online trading, and in an interview last week with Yahoo! Finance, it was his position that despite the increased scrutiny from the US financial regulators, the reality is that the practice of selling orders would likely still persist although under a different pathway. In short, even if PFOF was clamped down on, online brokerages would find another way to monetize the trade execution.

Another interesting talking point about Interactive Brokers this past week was an announcement that they are launching a real-time payment solution that will enable clients to make instant deposits to their accounts. The rollout of this feature in the US is starting with clients who have accounts with Chase; however, given the desire for fast money traders to be able to move money around just as fast, this is a huge step forward.

Getting funds from point A to point B is remarkably longer than it should be in 2021, especially among online brokerages who aren’t bank-owned. The ability for individuals to open an account and essentially fund the account instantly removes a major friction point from being able to quickly jump into hot trading opportunities.

In the case of real-time funding of accounts, among Canadian online brokerages that are not bank-owned, this has been a significant stumbling block to individuals who are looking to get started as quickly as possible. Earlier this year, we reported on Questrade launching instant deposits (up to $3,500) and Wealthsimple (Trade) too, with the latter raising deposit limits significantly since they first launched and tying the ability to send more (up to $1,000) to their premium service. For Interactive Brokers in Canada, the funding time listed on their website states up to four business days for funds to be available, depending on the funding method chosen.  

As the launch of the real time payments option in the US is still in the early stages of a roll out, there is likely some time before Canadian self-directed investors can benefit. That said, it is a sign of a trend already in place whereby the faster an online investor can fund their account, the more likely they are to choose that brokerage to get up and running with. It’s not enough to have instant or fast account approvals if the ability to trade opportunities – especially fast-moving ones – is limited. Clearly, other online brokerages in Canada have figured this out, so it is now a bit of a race for others, including Interactive Brokers, to ramp this feature up quickly or risk being derailed by whatever the next big wave of new trading opportunities brings.

From the Forums

Trade Interrupted

If there’s one thing that all seasoned DIY investors know, it’s that online trading is not without its risks. One active investor learned the hard way about the risk of a platform not working as intended, and shared their experience in this post on reddit. Find out what fellow online investors had to say about what happened as well as the aftermath.

Hold On, For One More Day

Being told to wait is rarely music to any investor’s ears. In this post on reddit, one self-directed investor pointed out that the new hold music (or lack thereof) at TD Direct Investing was an unusual experience. Find out what fellow online investors had to say about this small but interesting detail of the customer service experience.\

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Discount Brokerage Weekly Roundup – October 18, 2021

If there’s one thing that stock markets can do quite well, it’s to price in expectations. Judging by the rally in stock markets, including in the share prices of some online brokerages, there’s optimism and some insight as to what the market thinks is going to be necessary to succeed in the coming months.

In this edition of the Roundup, we peek across the fence at the latest developments in the US online brokerage market, with a particular view on different strategies for growing in a highly competitive market. From there, we relay updates from one Canadian fintech firm looking to add zero-commission trading into its suite of services by the end of this year. Finally, we cap off the news with some fascinating feedback from self-directed investors in the forums.

Charting New Territory: US Online Brokerages Trade Their Way Higher

Stock markets aren’t the only ones pushing new highs. Share prices for a couple of online brokerages in the US are also on the move upward in a scenario that appears to be more than a simple case of a “rising tide lifting all ships.”

Earlier this month, Interactive Brokers reported their regularly scheduled performance metrics, and this past week, online brokerage giant Schwab also reported their latest quarterly earnings. Included in both reports are numbers around new account growth rates that we’ve been tracking closely to gauge what the retail online trading sentiment is like south of the border.

The latest data continues to show an interesting divergence in new account growth at these two big names. Interactive Brokers continues to grow net new accounts while the pace of new account growth at Schwab has continued to contract. Interestingly, the share price trend over the past year points to the opposite – at least until very recently.

Historically, and in “normal conditions,” the growth rate of new accounts at Interactive Brokers has managed to stay positive. The exception, however, was the meme-stock mania which significantly distorted stats. After account openings reached a peak frenzy in January and February, the enthusiasm for new account opening has been waning.

As can be seen in the Interactive Brokers account growth data chart above, after bottoming out in May, Interactive Brokers has shown new account growth in the past four consecutive months. It looks like things are “back to normal” insofar as account growth is concerned.

On the other hand, account openings at Schwab show that after the peak of account openings earlier this year, the month over month decline persists. It is worth noting, however, that the magnitude of difference in the number of accounts opened between Schwab and Interactive Brokers is enormous.

Schwab has opened about 10 to 20 times the number of accounts that Interactive Brokers has over the past 9 months, which is no small feat. The combination of Ameritrade and Schwab within the online trading space has created a formidable giant against which only agility and service experience can truly outcompete.

Considering the context of the two firms, however, Interactive Brokers’ growth is exceptional in that they still charge for commissions per trade (in their IBKR Pro, they do offer a commission-free version IBKR Lite) which is clearly not a deterrent for some.

The online brokerage space is incredibly competitive, especially in the US and increasingly around the globe. Earlier this month, zero-commission trading firm Tradezero filed to go public (via SPAC) and just this past week, UK-based Freetrade announced it had reached one million users. Both of these zero-commission trading brokerages have Canada on their roadmaps (and likely the US as well).

Growth in interest in trading online certainly helped propel zero-commission trading into the spotlight. However, for an online brokerage to be sustainable, the model has been shown time and again, that other financial services must be a part of what the online brokerage offers. Scale is also important.

Despite the differences between Canadian and US online investing markets, the dynamic of being able to survive and thrive as an online brokerage are remarkably similar. At the end of the day, online brokerages need to make money – and profit – to sustain themselves and aside from the active trader segment, there has to be more than just trading stocks or ETFs.

As National Bank Direct Brokerage and TD Direct Investing have both pointed out, it’s those “other” relationships and financial products that offer opportunities to deepen the value self-directed clients bring to their respective firms.

Interactive Brokers and Schwab demonstrate two different approaches to monetizing the online brokerage space. In the case of Interactive Brokers, it is still able to charge for commissions because of superior technology and user experience for active traders. Conversely, Schwab is able to survive because they have the immense scale to be able to generate higher earnings with interest rates. In either case, agility or scale, the room for new entrants is tough, so creative differentiation and investment in product will be key to survival for newcomers.

The stock prices for Schwab and Interactive Brokers are signaling a brighter future than Robinhood’s. That future seems to suggest that to truly succeed, an online brokerage must be fast or big. Simply being the least expensive option isn’t enough.

MogoTrade Coming Soon(er)

One of the hallmarks of a great Thanksgiving is having some leftovers to dig into after the holiday is over. Cue some developments earlier this month that we didn’t get a chance to report on.

This past week there was an interesting update on the commission-free trading front that will naturally add more kindling to the smoldering conversation about when “that” pricing model will gain wider adoption here in Canada.

Mogo Financial, a Canadian fintech firm, provided another update on the status of their commission-free trading service, MogoTrade, announcing that they had selected CI Investment Services to provide “operational and back office services, including clearing and settlement, custody of client funds and securities, and trade execution.”

The biggest update in the press release, however, was a forecast that the launch date would be coming later this year, putting MogoTrade and the zero-commission option in the conversation for investors during peak season for online investors poking around for new online brokerage providers.

By working with an established services provider like CI Investment Services, MogoTrade is able to hit the ground running in technology, operations, and compliance required to run an online brokerage in Canada. This, in theory, should enable MogoTrade to focus on bringing on new clients and working on user experience. It is currently unclear what account types and features will be a part of the launch. And, importantly, based on the infrastructure costs associated with online trading (including all of the back office function), how MogoTrade will make money will be an important question many investors will surely be asking.

As referenced above, the connection of online trading to other financial products seems to be key to Mogo’s strategy to enter into the world of self-directed investing, with a particular focus on beginner investors.

Mogo has a number of additional lending products as well as cryptocurrency trading connections that could enable it to use self-directed trading as a mechanism to cross-promote other services, a direction laid out in their recent investor presentation. This increasingly familiar playbook of cryptocurrency trading showing up beside traditional online investing in stocks and ETFs might become a sign of things to come at other online brokerages in Canada.

From the Forums

Readying to Move

When it comes to transferring away from an online brokerage, sometimes the exit can be complicated. In this reddit post, one user wants to minimize the financial hit incurred from switching brokerage away from Questrade. Find out what fellow investors provided in terms of perspective.

A Portfolio Built for Two

DIY investing isn’t just about managing one’s own investments, for many couples and families, additional account management comes into play. In this post, it was interesting to see how many self-directed investors are also taking on the management of their significant others’ portfolios.

Into the Close

That’s it for another edition of the Roundup. It was a short week; however, as we round past the halfway point in October, signals from all over point to an incredibly busy stretch to the end of December. On deck for the week ahead is yet another earnings wave, and with several new online brokerage stories forming, there’ll be lots to digest. Fortunately, if Thanksgiving is any indicator, there’s always a creative way to find more room for something enticing.

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Discount Brokerage Weekly Roundup – October 11, 2021

If there’s one thing that Thanksgiving is famous for, it’s making a little extra room for treats. And, fortunately, it seems like online brokerages on both sides of the border were dishing out a healthy portion of good news heading into the Canadian long weekend.

In this edition of the Roundup, we kick things off with some bite-sized updates on new pricing and new naming from a couple of popular online brokerages. Next, we dial into the main course – a deep dive on the latest big feature from Robinhood: phone customer service. And finally, you’ll want to save room for dessert, which consists of some sweet chatter from the online investor forums.

Appetizing Canadian Online Brokerage Updates

BMO adviceDirect Lowers Fees to Attract New Clients

In the ramp up to RSP season, we expect to see a flood of new features and pricing announcements come through from Canadian online brokerages. This past week, BMO InvestorLine announced some interesting enhancements to their adviceDirect service that made it more accessible and enticing to investors with lower portfolio balances looking to trial out this service.

The biggest change is the reduction in the required minimum to open an adviceDirect account, from $50,000 down to $10,000. Of course, in an era of zero-commission trading, there were also some free trades (15, to be exact) thrown in for good measure for accounts with deposits of between $10,000 and $50,000.

One of the biggest challenges for consumers, especially those looking at the cost of “advice” on their portfolio, is paying fees. The minimum annual fee for adviceDirect has also been lowered from $750 to 0.75% on billable assets, with a maximum annual advisory fee of $3,750. For the entry point investor (i.e. someone with $10,000) the annual cost for the service would be $75.

While many online investors are aware of BMO InvestorLine, there are many who don’t know about adviceDirect, and given how long adviceDirect has been around, there are many online investors in DIY circles who’ve simply viewed this option as pricey. So, the move to lower the balance requirement as well as the fee structure is a great opportunity to introduce the new cohort of investors to this product. The challenge, however, will be in changing the narrative and conversation around adviceDirect, which is something that has been heavily shaped by the many years of discussion about it. As such, we expect that going into the RSP season, there will not only be greater advertising of adviceDirect, but more effort into repositioning this solution with the kinds of investors who would value having additional support and advice when making investing decisions.

Another interesting angle to this offering is that adviceDirect standard commissions per trade are $7.75 whereas BMO InvestorLine commission rates are $9.95. The disparity between the two presumably is a result of additional revenues from clients paying an annual fee for services. This, of course, naturally raises a couple of questions around how much BMO InvestorLine would be willing to lower their commission rates to in order to secure minimum activity thresholds.

Peer firms, such as RBC Direct Investing or TD Direct Investing offer discounted commission rates for active traders, but BMO InvestorLine does not. Instead, BMO InvestorLine offers up access to additional features (such as their advanced trading platform) for clients who trade more actively. If BMO InvestorLine were to lower their commissions to zero to match other brokerages, like National Bank Direct Brokerage, then it also could impact the pricing structure for adviceDirect.

Digging deeper into the pricing at this entry point tier, if a new client is being charged $75 for the service and 15 trades, that works out to $5 per trade – far lower than the current $9.95 for the self-directed investing service and the $7.75 for the adviceDirect standard commission.

For now, it’s clear that based on the pricing and the free trades for the new tier created for adviceDirect that BMO InvestorLine is very interested in attracting in new clients to give this service a try. As RSP season heats up, this latest move from BMO InvestorLine signals that there is likely more to come in terms of either features, pricing, or promotions to entice the self-directed investor segment. And, if BMO InvestorLine is any indicator, the other bank-owned online brokerages won’t be too far behind with something big.

Virtual Brokers Now CI Direct Trading

It may have taken some time, but the Virtual Brokers brand has finally seen its sunset. After Virtual Brokers was acquired by CI Financial in 2017, it was unclear as to how the Virtual Brokers brand would co-exist among the other brands managed by CI Financial. Then, in early 2020, there was some clarification that the many brands owned by CI Financial, while strong in their own right, were not building the CI brand directly, and as a result, they were all brought under the umbrella of the “CI Financial” name.

As of the publication of this edition of the Roundup, Virtual Brokers is now CI Direct Trading. It was unclear once CI Direct Investing was created whether Virtual Brokers would fall under that brand or another, especially given how crowded the “direct investing” name has become.

Qtrade, RBC, and TD all have “Direct Investing” in their name, so the “Direct Trading” brand does help them stand out but with the “direct” in the name, they also must contend with CG Direct – something that will almost certainly cause confusion, especially if CG Direct decides to ramp up their marketing to make more investors aware of their offering.

One of the biggest challenges facing CI Direct Trading, however, will be managing the transition from such a well-known name. For example, although the website has changed names, the current site structure and design are still the same. Also, the mobile app links still point to the existing Virtual Brokers mobile app page and naming.

The roll out of a new brand, especially as big of a change as a name, reveals the complexity of an online brokerage in terms of moving parts. Qtrade Direct Investing did an effective job managing their rebrand earlier this year, and when they went live, they also initiated a new marketing campaign to carry the new brand forward with the energy and momentum required to build excitement with their existing stakeholders.

If there are any clues as to where things go for CI Direct Trading, there might be some in the CI Direct Investing user experience. The shift from WealthBar to CI Direct Investing set a high bar for user experience and design for the CI Financial family. So, if the transformation for Virtual Brokers is anything like the look and feel for CI Direct Investing, it seems like Canadian self-directed investors are in for a pleasant surprise.

Robinhood Launches 24/7 Phone Support

One of the biggest stories out of the US online brokerage space this past week was from Robinhood, who announced on their blog that they have rolled out 24/7 phone support. The mixed reaction (or lack thereof) to the news is a unique reflection of where this feature fits into their business and the continued overhang of negative sentiment towards Robinhood from very vocal users online.

Historically, phone service was never really a priority at Robinhood – it was simply too expensive a feature that a zero-commission online brokerage couldn’t effectively support. Instead, for much of its existence, Robinhood fielded customer enquiries digitally, through email and chat and eventually with some limited phone support. In contrast, many peers of Robinhood, such as Schwab, Ameritrade and Interactive Brokers, have robust phone customer service infrastructure, including coverage 24 hours a day for the business week, if not for the whole week.

So, why is rolling out 24/7 phone customer service such a big deal at Robinhood?

For starters, launching a point of contact that is available all day, every day is a signal that Robinhood is trying to improve the customer experience. Events over the past 18 months, in particular the crush of volume of new accounts and the meme stock rush, uncovered issues with how customers of Robinhood dealt with things like outages, trading restrictions, account hacks/breaches, and more. Ultimately, these high stakes situations required many customers to reach out to the Robinhood customer support team.

Thus, 24/7 phone service – while a standard feature amongst other large online brokerages – provides a measure of comfort to clients who want or need to get in touch with a human to help sort through an issue.

A bigger reason why the phone service access matters, however, is because Robinhood also supports cryptocurrency trading – a market that never closes. While there was very little chatter among online investors on the stock trading side about this feature at Robinhood, the crypto community was abuzz with this innovation. There simply is no analogue for customer service at that level from crypto exchanges.

Scaling up to meet the needs of their 22+ million customers won’t be easy – or smooth. Their initial approach to providing phone support will require clients to use the app to request contact from a Robinhood agent. According to an article published in TechCrunch, there are no “guaranteed” wait times, however, the targeted call back time is within half an hour. To meet that commitment, Robinhood will employ in-house customer service reps, as well as contracted outsourced agents. Clients can therefore expect some heavy triaging of calls to ensure that resources be allocated efficiently. Of course, one of the quirks of dealing with individuals in finance is that interactions can’t seem “too rushed” otherwise the experience becomes less enjoyable. As a result, Robinhood customer service will be subject to the same forces that tend to impact their peers when the markets get extremely volatile: longer wait times on the phone.  

As important as this as a development for Robinhood, they are not the only US online brokerage to be shoring up their customer service and customer experience. Interactive Brokers, another brand for which customer support has been a lower priority, had mentioned earlier this year that they are working on something exciting for their customer support experience.

Here in Canada, 24/7 customer service at an online brokerage is a very rare feature. In fact, there is no online brokerage that offers this, but there are two that come close: HSBC InvestDirect and Interactive Brokers. The rest of the online brokerages phone service channels typically operate around business hours on Eastern Time, which is a frustrating thing for clients in Western Canada.

HSBC InvestDirect’s phone customer service hours are 24 hours a day from Monday through Thursday, and from 12am to 8pm ET on Friday. Agents resume phone coverage again on Sunday evening starting at 6pm ET. Interactive Brokers has phone service coverage 24hrs a day, five days a week. Interactive Broker’s phone customer service hours are 24 hours a day, Monday through Friday. For Interactive Brokers, however, the Canadian service operation runs from 8am to 8:30pm ET and outside of these hours calls are answered by an international affiliate of Interactive Brokers.

Perhaps unsurprisingly, Canadian online brokerages have some work to do to provide a cutting-edge phone customer service experience. To begin with, coverage for Canadian online brokerages is largely limited to business hours, with several big named brokerages only offering coverage during business hours in the Eastern time zone. Then, there are simple features, like call back (instead of waiting on hold) to letting clients know where they are in a call queue with an estimated wait time, which are still not in place at many online brokerages.

What the latest move by Robinhood demonstrates, however, is that eventually customer service and customer experience do matter and that even at a commission-free online brokerage, clients still expect to be able to connect to a human being to solve complicated or urgent issues. It is also instructive to note that any online brokerage that currently deals with a “market that never closes” like cryptocurrency (such as Wealthsimple Trade) or international trading is going to have to support customers with a phone channel at extended hours.

The silver lining for Canadian online brokerages and self-directed investors is that phone support is an area that has been an important focal point for improvement after the mega-delays experienced during the pandemic surge last year. Firms such as BMO InvestorLine and Questrade have been very public about their investments in increasing call centre resources to keep wait times low. Impressively, BMO InvestorLine also publishes wait time numbers on their customer login pages so clients can see how long wait times are.

Despite Robinhood’s launch of the new 24/7 phone support system, cynicism among clients and observers remains high.

The outages and trading restrictions are still fresh in the minds of many online investors who have weighed in on the Robinhood announcement, so getting it right on phone support will be key. The real test will come during times of market volatility, which have benefited them in the past, but going forward, will expose what they haven’t yet thought about as far as customer service.

From the Forums

Zeroing in on Commissions at Questrade

Heavy is the head that wears the crown. For the Canadian online brokerage that long held the title of the lowest-cost online Canadian brokerage, recent developments around zero-commission trading have raised questions from clients as to when Questrade will follow suit. Threads like this one on reddit are reflective of a growing chorus of investors looking for more value in a highly competitive market.

Not So Simple After All

Cryptocurrency trading – the direct way – seems to continue to present opportunity and controversy at one Canadian online brokerage. Wealthsimple Trade, which initially launched under the mantra of supporting “getting rich slowly” announced a recent development regarding cryptocurrency transfers that got online investors buzzing in this reddit post. The pivot for Wealthsimple towards cryptocurrency did not go unnoticed, and was the focus of this article in the Globe and Mail which also had a lot of people weighing in.

Into the Close

That’s a wrap on this holiday edition of the Roundup. There’s a lot that we didn’t get to this week (but that’s what leftovers are for right?), including a shout-out to World Investor Week. For Canadian self-directed investors, it might be a short week ahead but there’s no shortage of new developments on the radar (including a few generated by us!). However, between Squid Game, football, new movies starting to trickle out, and the unemployment rate dropping to pre-pandemic levels, it’s going to be quite the battle for attention regardless of what screen you’re watching from.

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Discount Brokerage Weekly Roundup – October 4, 2021

And just like that, October is upon us. Changing leaves, falling temperatures, and costumes are now part of the normal routine; however, this year it seems like this month (and those coming after it) are going to be filled with new features and deals from Canadian online brokerages.

In this week’s Roundup, we catch up on the latest activity in the deals and promotions section, and highlight how commission-free trading is starting to shape the kinds of promotions we’re seeing emerge from online brokerages heading into RSP season. From there, we review the rocky start to QuestMobile, the new trading app experience launched by Questrade and the lessons to be learned from rolling out a new platform. With all of the commentary on the Questrade story, forum chatter was paused for this week (not to worry, there’s plenty to dig into) but will return again next week.

Tricks and Treats: DIY Investor Deals Update

October is often associated with treats and for Canadian self-directed investors, it seems like this month is shaping up to be especially treat-worthy.

The start of a new month is a great time to check in on deals and promotions being offered by Canadian online brokerages, and this month did not disappoint. With two big names, RBC Direct Investing and Qtrade Direct Investing, electing to extend commission-free trade offers and another bank-owned online brokerage, HSBC InvestDirect, launching a commission-free trade offer, there was a clearly a trend towards leaning into commission-free trading.

This year more than any other, promotions and incentive offers are going to play an important role in swaying online investor opinion – and loyalty.

Since the seismic shift in the Canadian online brokerage landscape from National Bank Direct Brokerage and Desjardins Online Brokerage offering commission-free trading (on equities and ETFs), there’s no doubt that other Canadian online brokerages are discussing how they might position themselves in a commission-free trading world.

While none of Canada’s online brokers are in a hurry to go commission-free, there is also a sense that this might be the last year in which commission rates can stay where they currently are. As such, commission-free trade promotions offer a middle ground for existing players to entice new clients while they configure themselves for a commission drop. In both the commission-free offers from Qtrade Direct Investing and RBC Direct Investing, the timeframe to use up a healthy number of commission-free trades (50 apiece) ranges from several months to two years, respectively. In terms of RBC Direct Investing, it is the longest that we’ve seen a commission-free trading offer stretch out to, a signal that the need to do so has clearly come.

A subtle but important maneuver we have also observed is the movement of expiry dates of the promotions themselves.

While extending offers is nothing new (Desjardins Online Brokerage famously kept extending their commission-free deal for a few years), the duration of recent deals seems to be a bit shorter than in years past. Wealthsimple Trade, for example, has been using shorter time frames than their competitors, and with the latest offer from RBC Direct Investing, the extension of the promotion expiry date was only for an additional month. Historically, promotional offers would last for several months; however, the tide has clearly shifted given everything that has happened this year.

Looking across the online brokerage landscape, it’s almost a given that big-bank online brokerages that don’t have a big deal will have to come to market with something enticing. Cash-back offers are hard to come by these days, which is why BMO InvestorLine currently stands alone in this category – especially when compared with its bank-owned brokerage peers. That said, long-duration commission-free trades seem to make the most sense for “occasional” investors who would enjoy the peace of mind that for the next year or two, there is a low likelihood of them needing to pay much (or anything) for equity or ETF trades. It would certainly sway investors away from opening a “test” account at zero-commission brokerage and instead open a new account or deposit new funds into an existing account.

The fact that we’ve already seen two big deal extensions and a new offer come to market at the beginning of October is a clear signal that online brokerages in Canada are gearing up for a busy RSP season battle.

Promotions offer a strategic option to online brokerages that aren’t ready to drop commission prices just yet. And, even at online brokerages that offer commission-free trading, such as Wealthsimple Trade, promotional offers still play an important role in capturing new client interest. Whichever route that brokerages take this fall, Canadian self-directed investors are in for a treat.

A (Cautionary) Tale of Two Screens: Questrade’s New Layout Generates Mixed Reviews

If there’s one big theme to 2021, it’s been new features and offerings from Canadian online brokerages. This past week, Questrade was the latest online brokerage to launch a new (and long-awaited) mobile trading experience.

Unfortunately, it didn’t quite go as intended.

The launch of a new website or app experience is something that wouldn’t ordinarily generate a lot of discussion or coverage. So, in that regard, this roll out was unusual in the degree to which many online investors did not like what they saw.

In fact, on the Questrade reddit thread, we collected (and read through) no fewer than 20 different threads complaining about the changes to trading experience. Twitter and other online investor forums also had a similar set of responses. For reference, here are some of the comments regarding QuestMobile on Questrade’s reddit:

  1. https://www.reddit.com/r/Questrade/comments/pwgqko/kiss_keep_it_simple_and_stupid_is_a_great/
  2. https://www.reddit.com/r/Questrade/comments/pwgxeb/i_think_this_is_the_silliest_change_ive_ever_seen/
  3. https://www.reddit.com/r/Questrade/comments/pwgyox/new_layout/
  4. https://www.reddit.com/r/Questrade/comments/pwhgt1/i_wanted_to_see_what_everyone_was_complaining/
  5. https://www.reddit.com/r/Questrade/comments/pwhide/why/
  6. https://www.reddit.com/r/Questrade/comments/pwifuw/how_do_i_view_open_orders_with_new_layout/
  7. https://www.reddit.com/r/Questrade/comments/pwiln8/wow_this_is_so_brutal_this_new_layout_im_already/
  8. https://www.reddit.com/r/Questrade/comments/pwj9qk/horrible_ui_update/
  9. https://www.reddit.com/r/Questrade/comments/pwjlg9/the_new_user_interface_is_awful/
  10. https://www.reddit.com/r/Questrade/comments/pwjney/feedback_on_questrades_new_changes/
  11. https://www.reddit.com/r/Questrade/comments/pwjqzw/new_ui_is_ridiculous_considering_leaving_after_4/
  12. https://www.reddit.com/r/Questrade/comments/pwjvr4/new_layout_heres_whats_wrong/
  13. https://www.reddit.com/r/Questrade/comments/pwkf2z/we_cant_see_the_bidask_spread_anymore/
  14. https://www.reddit.com/r/Questrade/comments/pwmg3r/go_back_to_old_ui/
  15. https://www.reddit.com/r/Questrade/comments/pwnymp/this_new_questrade_ui_is_god_awful/
  16. https://www.reddit.com/r/Questrade/comments/pwocab/new_ui_on_the_website/
  17. https://www.reddit.com/r/Questrade/comments/pytgrc/voicing_displeasure_with_new_ui/
  18. https://www.reddit.com/r/Questrade/comments/pwu4g8/the_biggest_problem_with_the_ui_update_imo/
  19. https://www.reddit.com/r/Questrade/comments/pwr4s6/new_mobile_app/

There is definitely a lot to unpack in reading through the investor comments and reactions to the new interface. Through some detective work, it is evident that online investors seemed to take issue with the fact that the desktop and mobile experiences were rendered in the exact same way, something that clearly didn’t sit well with desktop users.

While the new QuestMobile experience was designed around keeping things simple and easy to navigate, the biggest ask for users of the desktop experience was how to revert back to the way things were.

Unlike other rollouts of new platforms we’ve seen over the years, it wasn’t just the case that things were unfamiliar either, it was that information that users on desktop were used to seeing was no longer there. Information such as bid/ask spreads or watchlists were not part of the “new” default view. To find those features, users had to navigate to and install Questrade Edge, a separate platform that was what desktop users were used to seeing.

As feedback from the new rollout started to emerge, the responses from Questrade on reddit and social media seemed to reflect an understanding that something had not gone according to plan. Though it was clear they were aiming to simplify things, the reality is that many online investors were confused by the move.

The fact that Questrade now has two mobile apps, Questrade Edge and QuestMobile, is also a source of confusion (or choice) for users. What will need to emerge over the coming weeks is a clarification to existing clients as well as to prospective ones, as to the differences between the platforms.

The reality of the QuestMobile app, however, is that despite the issues and reactions mentioned in regards to the “desktop” experience, mobile users of the new app were generally positive on new layout and experience. On Google Play and on the Apple App Store, for example, ratings for the new app were relatively high (compared to the other Questrade mobile app), a sign that although not perfect, it was resonating with clients who tried it out.

It is also important to note that in addition to the “basic” overview of trading online, Questrade has also telegraphed that they are working on a new mobile app experience tailored for active traders as well.

As mentioned above, there is clearly a lot to unpack. For a few years now, Questrade has signaled to online investors that a new mobile trading experience was on its way. And, granted, while it took quite some time to arrive, it is clear that they have taken design cues from competitors like Wealthsimple Trade to try and simplify how trading information is presented in a mobile-first experience while also enabling a simplified navigation experience as well. The new QuestMobile is lighter than its Questrade Edge counterpart, for better or worse.

Although it is unclear when or if Questrade will adopt the commission-free trading model that peer firms in the online brokerage space have, it does seem like the QuestMobile trading experience hints at a path for lower cost online investing to happen. By effectively unbundling features from their current platform experience into a “lite” and “full featured” combination, it seems like Questrade could create two different pricing structures around those features. This is all speculative, of course. However, Wealthsimple Trade has shown that they are willing (and able) to charge users for a more premium experience, as has Robinhood in the US, so the precedent is established for zero-commission online brokerages to charge for specific features.

After 20 years in the online brokerage space, Questrade has learned a few things about handling missteps. One can go back to their decision to charge inactivity fees in 2012, for example, in which they had faced a similar firestorm from clients who were not happy with the move. Eventually, they phased them in anyway and then as market forces shifted, they phased them out.

Granted, there is now a renewed interest in trading online and there are even more channels to which investors can turn for information about online investing. So, the stakes for getting things wrong now are certainly higher than they were almost a decade ago. And yet, as was the case in 2012, Questrade is adapting to the times.

The new QuestMobile app was developed for a simpler use case for investing online and it is precisely because it has fewer features than what existing clients were used to that they voiced their discontent. But, those existing clients represent a different use case than potential new clients, in particular those who are not “active traders.” Individuals who are contemplating switching from other online brokerages, including Wealthsimple Trade, who are looking for a simple-to-use interface will find exactly that on the new QuestMobile platform. And, it seems with a bit of work on the communications front, making it easier to find and take advantage of the Questrade Edge interface can help with supporting more complex investing/trading needs – at least until the “active trader” version of QuestMobile gets released.

If there are any lessons for other online brokerages to glean from this roll out, it’s clear that giving existing users a clear way to opt out of a new platform is key to managing the transition between old and new interfaces. BMO InvestorLine did an especially good job of this in the roll out of their new online trading experience. Although the switch to a “new” platform experience took quite some time, users had the ability to toggle between the “old” and “new” and it is clearly stated in multiple places that users were able to do that.

Another important lesson to draw from the QuestMobile experience is the difference between mobile and desktop interfaces. Going “mobile first” doesn’t mean that mobile UI/UX translates well into desktop. They clearly do not map onto one another 1:1, which is something many of the responses pointed out.

Finally, it turns out that one of Questrade’s greatest strengths, the ability to reach self-directed investors on social media and in forums, is not without its risks. Building those strong communities online has helped propel Questrade’s growth. But as the reddit threads, investor forums and Twitter comments have shown, in 2021, online investors also on those channels are also much more willing to be vocal about what they don’t like. If there seems to be consensus across forums and social media that something needs to change with the QuestMobile experience, Questrade would be wise to pay attention.

From the Forums

With all of the forum chatter from this week, it seemed appropriate to cap coverage of investor commentary. Forum chatter will return again next week.

Into the Close

That’s a wrap on another week. It was an important week on many fronts – Canada marked the first National Day of Truth and Reconciliation and at Sparx Publishing Group, we also launched our first edition of Make The World Better Magazine. We know there is a lot of news that can be sad and disheartening; however, there is also a lot of great work being done by individuals and organizations who are out there trying to make a positive difference in the world, which is exactly what we wanted to feature.