Discount Brokerage Rankings

Posted on December 4, 2015 by user — 2 Comments

Discount Brokerage Weekly Roundup – December 4th 2015

One of the great things about watching professionals in action is just how easy they make things look. If you’re Aaron Rodgers, airing out a game-winning pass with no time left on the clock just seems like a day’s work. While Canada’s discount brokerages don’t have quite the dramatic finishes that the NFL seems to produce, this past week brokerages have had their fair share of unexpected comebacks and champions that make winning look effortless.

This edition of the roundup is chalked full of commentary and perspective on one of the biggest weeks of the year. Kicking off the roundup is the review of this month’s deals and promotions and the signals that brokerages are moving more aggressively into 2016 than ever before. Next we dive into discount brokerage rankings season by looking at the two big names in Canadian brokerage rankings that published their results this week. Finally we take a look at the news and chatter across the discount brokerage space on social media and in the forums. Saddle up, this is going to be a fun ride.

Deals in Play

At the outset of December it looks as if at least two brokerages, HSBC InvestDirect and Questrade, are interested in spreading some holiday cheer in the form of new deals and promotions.

Starting first with Questrade. Late last month they relaunched their popular Apple Watch promotion – which is actually a $500 gift card to the Apple store. While the addition of yet another promotion brings the number of promotions to at least 8, the launch was interesting for two other reasons.

First, with the expiry date of this promotion well into March of 2016, this seems like one of the premiere offers Questrade will be putting forward heading into the coveted “RRSP season”. The timing of this offer just before the Christmas holiday buying season means that it might just be enough to tip someone into considering Questrade as an online brokerage. Further, the value of $500 at the Apple store for a $100,000 deposit makes it a competitive offering at this deposit level.

A second reason this offer is interesting is because Questrade continues to offer more incentives and promotions than any (or almost all) other online brokerages. Going into December, Questrade alone accounted for just about half of all of the promotions being offered. Alongside the offer for the Apple Watch, Questrade is also offering up an iPad Mini promo as well as other commission-free trading promos. For other Canadian discount brokerages, the fact that Questrade has continued to offer the number and diversity of offers should demonstrate that DIY investors are clearly interested in brokerages who are prepared to give in order to receive.

The second online brokerage to get into the giving spirit this month is HSBC InvestDirect. From December through to March 2016, HSBC InvestDirect is offering up 30 commission-free North American equity trades for individuals signing up for a new account. While this is not the first time HSBC InvestDirect has put forward a commission-free trading offer, it is interesting to note that they too have set their expiry date on this promotion well into March and have launched this offer a month before the end of the year signaling that perhaps HSBC InvestDirect is preparing to compete a little harder for new clients than they have in the recent past.

Like most other competitive marketplaces, these moves by Questrade and HSBC InvestDirect will not go unnoticed. The fact that both of these offers stretch well into 2016 are a signal to other brokerages that it is going to be a very competitive RRSP season and that the sooner they can bring interesting offers to market, the better.

BMO InvestorLine Goes for the Three-peat

This past week financial industry ranking firm Surviscor released their updated set of Canadian online brokerage rankings crowning BMO InvestorLine as their choice for top online brokerage yet again. These past few weeks have been good to BMO InvestorLine as they also took the prize for top online brokerage from the Morningstar awards, which are also very similar in structure to rankings/analysis underpinning the Surviscor ratings.

Below is a video from BNN of Surviscor President Glenn LaCoste giving his thoughts on the latest rankings and trends in Canadian discount brokerages.

In terms of scoring, Surviscor’s rating system included some new elements that weren’t present in years past, namely a ‘Service Level Assessment’ as well as a ‘Mobile Accessibility’ consideration.

One of the interesting components about the Surviscor analysis is that it takes into account over 4000 criteria when coming up with the final score. Of course, since those criteria are proprietary it is difficult to know exactly the weights that lead to the scoring.Even so, a look at the distribution of this year’s scores also shows just how tightly clustered most of the brokerages are according to Surviscor’s analysis.

The graph below (a histogram for the stats nerds) shows that most firms in the ranking have a score between 65% and 74%. What stands out when looking at this chart is just how poorly HSBC InvestDirect performed on this analysis compared to the rest of the firms profiled.

Distribution of scores from Surviscor 2015 online brokerage rankings.

At the other end of the spectrum, BMO InvestorLine and Scotia iTRADE scored above most of the other brokerages but relatively close to one another. This is particularly interesting given the fact that standard commission pricing at both firms is very different.

In terms of BMO InvestorLine, standard commission pricing is in line with many other bank-owned brokerages at just under $10. Conversely, Scotia iTRADE’s standard commission pricing is still closer to $25. Thus, commission pricing is only part of what factors into making a firm rank well in these ratings and, according to these rankings, the overall experience between BMO InvestorLine and Scotia iTRADE may be too close for most to notice.

In fact, the scoring shows that according to these rankings, for about 50% of the brokerages, the experience is bound to be “pretty close” to another brokerage.

For DIY investors the take home message to keep in mind when considering the rankings is that these scores represent a snapshot in time. The industry is constantly evolving and so new features or improvements may show up in between ranking cycles which then in turn change the order in which these firms would be ranked. The fact that many discount brokerages are clustered around the same scores show that most firms do a reasonably decent and probably similar job in terms of the criteria measured by the Surviscor rankings, so it seems that personal preference will have a greater role to play for most DIY investors.

That said, these numbers also show that most brokerages are locked in a very tight race with one another. The big challenge in front of the brokerages for 2016 is just how they’re going to start separating themselves from one another.

2015 Globe and Mail Online Brokerage Rankings Released

Of course what would online brokerage rankings season be without the most widely anticipated and longest running ranking of Canadian brokerages?

Earlier today the Globe and Mail’s Rob Carrick published his annual review of twelve of Canada’s most popular online discount brokerages and there were certainly some surprises contained in this year’s rankings.

Starting first with the actual scores. In the 2015 rankings, there was a clear theme that the top three Canadian online brokerages according to Rob Carrick just happened to be non-bank owned brokerages.

Virtual Brokers has once again reclaimed its title as best online brokerage after having lost it last year to Qtrade Investor (who incidentally came in 2^nd place this year). Following in third place was Questrade, a firm that has continuously been moving up the rankings for the past few years.

The battle between Qtrade Investor and Virtual Brokers may now be turning into somewhat of a rivalry as both of these firms continue to score well in the Globe’s brokerage rankings only narrowly edging one another out each year for the past 4 years. And, even though Questrade may have placed third, according to Rob Carrick’s comments on this brokerage, they may very well take top spot should they continue at their current pace.

For the bank-owned brokerages, the only bright spot appeared to be TD Direct Investing. With a revamped website and the implementation of long awaited features (such as the US Dollar RRSP account), TD Direct Investing scored the best among Canada’s bank-owned online brokerages with a grade of a B+.

The rest of the pack of bank-owned brokerages, however, seemed to draw less glowing praise, to put it mildly.

Interestingly, for the businesses with the biggest profits (i.e. the Canadian banks), the ability to create exceptional experiences (at least in the view of the rankings) fell far short of what they could do. One of the reasons often cited by industry insiders, is that the online brokerage arms of many banks just don’t get the resources and respect as some of the other banking units. Ironically, for many bank-owned brokerages, the marketing that their parent bank spends to create expectations for consumers tends to backfire when the bells and whistles and attention to product experience don’t make it to the wealth management arm of their business.

Perhaps the clearest case to be made in these results is that the smaller, independent brokerages are able to be more innovative than their bank-owned counterparts. Some might even argue that in order to compete effectively, the smaller players have to innovate to stay relevant.

Innovation, however, is not without its downsides either. With so much of today’s DIY investing experience tied to being online, being first to market or creating a new platform or website is one thing – having it work under normal and even stressful conditions, however, is something completely different. As we’ve seen time and time again this past year, releases of new software platforms, app updates and websites has not been smooth for any brokerage. For smaller brokerages in particular having technology go down (or misbehave) can create a cascading series of frustrations as they neither have the customer service resources nor the communication channels that larger brokers have to mitigate these kinds of scenarios.

In the case of this year’s Globe and Mail online brokerage rankings, however, there seemed to be an especially large component of the analysis, scoring and commentary devoted to the look and feel of brokerage websites. The argument for doing so, according to Carrick, is that commission pricing is no longer the biggest component to differentiating brokerages. Instead, client experience and more specifically, website experience is.

Another interesting observation about this year’s rankings was that they were not as lengthy or detailed as they have been in years passed (including compared to last year’s). While it is purely speculative, a great deal of the shine on DIY investing has been eclipsed by robo-advisors and a significant focus of the personal finance conversation has been about Canadian real estate. Add to that a fairly abysmal year for Canadian equities and it’s clearly been a tough time for DIY investing to get any positive headlines.

Clearly, many of Canada’s discount brokerages have their work cut out for them in 2016. With rankings season now over, the writing is on the wall for the Canadian discount brokerage industry: step up or step back.

The non-bank owned brokerages are going to have to continue to innovate in order to fend off their larger competitors. Large bank-owned brokerages clearly have to work both smarter and harder at becoming seen as leading edge technology firms – something that is tough and expensive to do given their size. Perhaps the clearest message of all, however, is that discount brokerages that are on ‘auto-pilot’ are probably at the biggest risk of making themselves appear obsolete. While it may be tough to rank first in multiple rankings, occupying the basement of multiple rankings is a sign that DIY investors will almost certainly use to stay away.

Event Horizon

Bundle up and hunker down, it’s a busy week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to yield hounds, those who are new to investing, curious about trading strategies, and options enthusiasts. Tax efficient investing, technical analysis, and registered accounts round out this upcoming week’s selection.

December 7

Scotia iTRADE – Dividends, Balanced Portfolios and the Quest for Yields with Larry Berman

December 8

TD Direct Investing – Alternatives to Mutual Funds: Learn What Else Is Out There

TD Direct Investing – Options as an Income Strategy

December 9

TD Direct Investing – The Evolution of Indexing

TD Direct Investing – Technical Analysis – Advanced Indicators

TD Direct Investing – Tax Efficient Investing

December 10

Desjardins Online Brokerage (Disnat) – Discover the Benefits of the TFSA

Scotia iTRADE – Trading The Double Top with AJ Monte

From the Forums

In this edition of the forums sweep we found an update to this post from the RedFlagDeals investing section that highlights what will be a disappointing change for many Norbert’s Gambit fans at one of Canada’s largest brokerages.

Into the Close

That’s a wrap for this week’s roundup. Now that Black Friday and Cyber Monday have come and gone, there still might be a chance to save big. Speaking of big saves, here’s a treat for the Leafs fans and their new goalie Sparks (yep, we already like him) getting into the saving spirit. Have an awesome weekend!

Posted on November 27, 2015 by user — Leave a comment

Discount Brokerage Weekly Roundup – November 27, 2015

This past week, many DIY investors have been turning their attention to ways to spend their money rather than to grow it. Although online traders have typically avoided coming to blows with each other over discounted vegetable steamers, online trading is most definitely a fierce battle to get a deal that can be monetized by selling to someone further down the line. Undoubtedly there have been and will forever be expletives hurled at screens of all sizes when orders or trades don’t go as planned. Luckily those screens don’t talk (at least not for the moment).

For Canada’s discount brokerages, this past week they’ve done their best to score some time in the news cycle for much more positive reasons. In this edition of the roundup we take a look at one bank-owned brokerage’s three-peat in the winner’s circle for an online brokerage award. Next we take a look at what a survey from Canada’s largest online brokerage has to say about the future of DIY investing in Canada. We then focus on the latest tweets of the week and gather some interesting investor commentary from the forums.

BMO InvestorLine Crowned Best Online Brokerage by Morningstar

As one of Canada’s most visible bank-owned brokerages, BMO InvestorLine continues to find the awards spotlight. For the third consecutive year, this Canadian discount brokerage was recognized by the Morningstar Canada awards as being Canada’s best discount brokerage.

The ceremony took place on November 25th in Toronto and was an evening that recognized many within the Canadian financial services sector. For DIY investors, the best discount brokerage selection was performed by a committee of members

Morningstar’s Best Online Brokerage award is a submission based award which requires brokerages interested in participating to pay a $1,000 submission fee. According to their selection criteria, the Morningstar award for best online brokerage jurors are particularly interested in knowing the following from participating brokerages:

In what areas have you differentiated your business from that of your peers?
Emphasis should be placed on developments and upgrades introduced within the past 1-2 years.
Your submission should discuss any particular segments of the market targeted by your firm and how these are being reached.

Additionally, the three major categories that the panel of jurors considered were:

Online Presence
Customer Service
Costs

Of note, the Morningstar awards for best online brokerage are structured around several of the criteria used in the Surviscor discount brokerage rankings. Surviscor also helps to provide research and contributes to the MoneySense brokerage rankings. These also happen to be the rankings in which BMO InvestorLine has finished at or near the top of, and so it seems that BMO InvestorLine has maintained their strong showing throughout the year.

For BMO InvestorLine, the third consecutive victory also falls at the third anniversary mark of their advice-direct platform – something that hasn’t garnered nearly the same recognition or attention as their DIY investing arm has.

As we head into the end of the year, there is still one more major brokerage ranking (the Globe and Mail 2015 discount brokerage ranking) to go.

For DIY investors, it will be interesting to compare the results from the Globe’s rankings as they represent a very different approach than the Surviscor/MoneySense/Morningstar rankings. Historically, BMO InvestorLine has also performed well in those rankings however unlike the Morningstar awards, there is no submission fee to be evaluated. With free admission, the field is bound to be more crowded and therefore tougher to outshine.

DIY Investing Gathers Momentum

In spite of all the talk of competition between brokerages, it seems that a recent study commissioned by TD Direct Investing suggests the pool of Canadian DIY investors will continue to expand.

Results of recent survey of 1750 Canadian DIY investors this past September provided a number of compelling insights, many of which are summarized in the infographic below.

Aside from the finding that that the number of investors who are managing at least part of their investments could double within the next 10 years, it was what investors reported was still lacking on the part of the online brokerage providers that might touch off a wave of features in the near future.

One of those items DIY investors reported was that websites are ‘too complex’ to navigate. This is particularly timely given the number of new website releases that have taken place this year, with a handful more in the pipeline. TD Direct Investing also recently revamped their website with a decidedly simpler front end.

Another item that stood out was that only 7% of users polled preferred to use their smartphone for DIY investing. While stats were not provided for tablet users, this number is expected to grow now that the technology, internet connections and user interfaces/apps have matured. There are still features, such as charting and research, which are going to be challenging to do efficiently on a small screen, however the mobile trading experience today is drastically different than it was even just 2 years ago. That said, a quick look at the discount brokerage tweets for the past several weeks would show that that there is a divergence between theory and reality when it comes to mobile trading sites and apps.

For Canadian DIY investors, there is clearly an interest in taking a more hands on approach to managing their financial futures. With the upcoming fee disclosure changes coming to the advisor world and a tough year for Canadian equities, there might be additional momentum towards considering the benefits of DIY investing as investors take a closer look at what their fees are earning them. And, although several brokerages have already undertaken major redesigns of their website in anticipation of the new ways investors are hoping to interact with their products, the biggest challenge confronting brokerages will be to provide experiences to investors that truly meet their diverse needs.

Discount Brokerage Tweets of the Week

This week’s tweets feature a mixture of highs and lows. For DIY investors, the word of the week was ‘frozen’ (trading apps that is) and unlike Elsa and Anna, they did not let it go. Mentioned this week are BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTrade, TD Direct Investing and Virtual Brokers.

From the Forums

Trading out of the money

As any investor knows, it takes money to make money. Of course, nobody specified exactly whose money it has to take in order to make that next return. In this post from RedFlagDeals’ investing forum, it was interesting to note one DIY investor’s experience trying to trade an RBC Direct Investing account without funds in the source account.

Staying in-formed

Paperwork (and lots of it) is usually synonymous with DIY investing. Of course for anyone trading with US securities this only becomes even more of a challenge. In this post, one user with multiple brokerage accounts at several big brokerages has the onerous task of keeping the regulatory powers that be apprised of their financial and citizenship status.

Into the Close

That’s a wrap for this week’s roundup. Best of luck hunting great deals as cyber Monday promises another day of marketing madness and some great bargains. Of course, one savvy retail experiment shows that even if you promise nothing, people are still willing to pay.

Posted on May 8, 2015 by user

Discount Brokerage Weekly Roundup – May 8, 2015

What a week of wacky data to digest. From May the Fourth being with us, to Cinco de Mayo to the NDP landslide win in Alberta to Deflategate to stocks being called out for being overvalued and the markets going up anyway. It was definitely one of those stranger-than-fiction-headscratchers kind of weeks. Not to be left out, Canadian discount brokerages and DIY investors have a bit of headscratching to do with the release of yet another discount brokerage ranking.

In this week’s roundup, we take a look at the latest MoneySense discount brokerage rankings and attempt to glean what they mean. Next, we shine a light on one discount brokerage that is springing to life with more activity. From there we take a look at some notable developments in the US that are bound to have Canadian discount brokerages starting to be a little bit nervous and giving DIY investors a reason to cheer. As usual, we’ll close out with the upcoming investor education events and some interesting chatter from the forums, including the whisper of a new deal from one bank-owned brokerage.

Because this week’s roundup is a bit longer than usual, here’s the TL;DR version up top:

There were lots of discount brokerages crowned as the best discount brokerage in this year’s MoneySense discount brokerage rankings. With so many rankings and ratings providing conflicting signals, consumers should take the title of ‘best discount brokerage’ or ‘best online brokerage’ with several grains of salt.
CIBC Investor’s Edge is more active this year. It will be interesting to see what’s coming as they are definitely working on doing more for DIY investors than years past.
Commission-free trading might be coming to Canada. US discount brokerage Robinhood just announced they’re going global meaning it’s likely not a question of if so much as when commission-free trading shows up in Canada.

The Latest Best Discount Brokerage Rankings

While the theme song ‘Everything is Awesome’ is both awesome and catchy, it’s not that useful as a decision making tool – especially when trying to choose an online brokerage.

With rankings from the Globe and Mail, JD Power, Dalbar, Surviscor, Morningstar and MoneySense, there is no shortage of ranking information out there. For many DIY investors, and even for discount brokerages too, when so many Canadian discount brokerages are being crowned the ‘best discount brokerage’ the meaning of the word best really becomes challenging to pin down.

This week MoneySense’s latest discount brokerage rankings were spotted, and in them were 7 different winners of different categories, including the title of best overall (the bestest?).

Here are the results according to their latest rankings:

Best Online Brokerage Category	Winner	Runner Up
Ease of Use	BMO InvestorLine	Scotia iTRADE
Customer Service	Scotia iTRADE	Qtrade Investor
Fees and Commissions	CIBC Investor’s Edge	Credential Direct
Account Information & Reporting	BMO InvestorLine	Questrade
Educational Resources	Desjardins Online Brokerage	TD Direct Investing
Market Intelligence	TD Direct Investing	Scotia iTRADE
Best Overall	BMO InvestorLine	Scotia iTRADE
source: Surviscor

For consumers, it is important to take a step back and put the results into context to understand what the title of ‘best discount brokerage’ really means from the source that is using it.

One of the first things that stands out with these results is the weight/preference on certain categories.

In this latest series of results, BMO InvestorLine was declared as ‘best overall’ with Scotia iTrade coming in as runner up overall. Looking more closely, BMO InvestorLine took first place in “ease of use” and “Account Information and Reporting”. Scotia iTrade, ranked best at customer service and runner up with “ease of use” and “market intelligence”.

Based on these results, the best overall means that ease of use and account information would likely have to far outweigh customer service and market intelligence, and each of those would have to outweigh the importance of fees and commissions, and educational resources.

Without getting into too much of the logic puzzle, the takeaway is that DIY investors will attach different priorities to different categories as well as define those categories differently than those who composed the rankings. Who decides, after all, what ‘ease of use’ quantifiably means, how to measure it and how much a percentage point of ‘ease of useness’ really amounts to for every DIY investor?

Another thing for consumers to keep in mind is how quickly the rankings can and do change.

Data for the MoneySense rankings were gathered in March and April of 2015 by Surviscor and so it is interesting to compare the customer service category scores in the MoneySense ranking against the results published earlier this year in the customer assessment to see the differences.

In the 2014 Canadian Brokerage Service Level Rankings, Credential Direct (91%) was awarded the top honours followed by Qtrade Investor (90%) and Desjardins Online Brokerage (73%). In that ranking BMO InvestorLine was ranked 8^th (with a score of 31%) and Scotia iTrade 4^th (with a score of 71%). It is therefore interesting to see Scotia iTrade’s customer service response score in the latest MoneySense rankings surpass Desjardins Online Brokerage, Qtrade Investor AND Credential Direct in that narrow window of time.

And then there are the surprises.

One of the biggest of those surprises was in the cost category in which CIBC Investor’s Edge took top spot followed by Credential Direct. Neither Virtual Brokers, Questrade, Qtrade nor Interactive Brokers appeared at the top of this category which again highlights the importance of the way ‘cost’ is measured and calculated when determining the “winners”.

For DIY investors looking for an online trading account, the bottom line is to take the term “best discount brokerage” with a grain (or several) of salt. There are many different ways to define and measure what that actually means. While the rankings themselves might have a systematic and defined process, the details and motives of that process are what’s most important in establishing the degree to which they are reliable and, ultimately, meaningful.

Where There’s Smoke

After a long winter (especially for the folks east of the Rockies), it’s reassuring to see signs of spring. It’s a fitting metaphor for one bank-owned discount brokerage that may be sprouting back to life. Although it is not a big move, the announcement on CIBC Investor’s Edge’s website about an upcoming webinar from Morningstar Research is the kind of thing that signals that something different is happening.

To put it into context, after a relatively quiet first portion of 2014, CIBC Investor’s Edge has been steadily and more frequently surfacing with pricing changes or promotions.

No doubt they have started to see the increased interest in their online brokerage offering ever since they dropped their standard commission price to one of the lowest amongst their bank-owned peers. That was October. Earlier this year they ran a promotion for commission-free ETF trading. Now they are offering up an investor education webinar.

Even though it is too soon to draw definitive conclusions, it is becoming clear that CIBC Investor’s Edge is stirring. And, that being the case, we won’t be the only ones watching to see what’s going to come next.

Commission-Free Trading in Canada?

For Canadian DIY investors, the entry of online brokerages such as Questrade, Interactive Brokers and Virtual Brokers (and TradeFreedom way back when) offered the first glimpse of a world in which DIY investing could happen at an affordable level.

Fast forward to 2015 and the new normal is a world in which commissions for equity trading has fallen to just under $10 for most brokerages and ETFs are capable of being bought (and sometimes sold) completely commission-free. For DIY investors, it’s a wonderful world. But could it be better?

It’s hard to imagine the race to the bottom on commissions hitting zero however US-based online brokerage Robinhood has promised and delivered on doing just that. While they have been restricting use to the US, something significant happened this week when they announced not only that they received additional investment to the tune of $50M but also that they were going global. Specifically, they’re looking to roll out in Australia.

There are many parallels drawn between the markets here and in Australia. It stands to reason, therefore, that how they roll-out in Australia will definitely be an interesting test-bed for Canada. One this is for certain: nobody likes to see their money go down the drain, no matter which way it spins on the way down.

In addition to landing a hard right hook on pricing, Robinhood appears to be taking a serious jab at established discount brokerages when it comes to user experience.

Last week we noted how other brokerages in the US have Apple watch apps that enable users to review their investments – even TD Direct Investing offers the ability to get an update on balances and stocks. Robinhood, however, has made the leap of building a transactional Apple watch trading app.

One look at their Apple Watch trading app basically summarizes not only how nimble they are within their niche but also that they “get it” when it comes to usability. To paraphrase a bad clickbait headline: this online brokerage designed an app and they totally nailed it.

Although it took the better part of 15 years for pricing to come down meaningfully, many investors are watching a world where zero-commission trading and robo-investing is happening and spreading. And, as it turns out, they are lining up in droves to get it. Recall, this is not unlike how Facebook and every other social phenomenon got traction. A bunch of young people chomping at the bit to use it. Suddenly commission-free trading in Canada doesn’t seem so silly.

Event Horizon

Here are the upcoming investor education events from Canadian discount brokerages:

May 9

Desjardins Online Brokerage (Disnat) – The Secret to Finding Hot Stocks

May 12

TD Direct Investing – Options as an Income Strategy

Scotia iTRADE – Trading Tips Using Active Investing and ETFs with Horizons

TD Direct Investing – Discovering Leveraged and Inverse-Leveraged ETFs, with Horizon ETFs

Desjardins Online Brokerage (Disnat) – Investing With the Stockscores Approach

NBDB – Discover ETFs – [Fr]

May 13

NBDB – Swing Trading Course with Michel Carignan – [Fr] (Paid)

Desjardins Online Brokerage (Disnat) – The Stockscores Approach to Active Trading

NBDB – Stop Orders: A Winning Solution Worth Knowing – [Fr]

From the Forums

Deal Whisperer

With a number of discount brokerage deals and promotions in play, one of the popular promotional offerings is the “refer a friend” promotion. In this post from the Financial Wisdom Forum, there are whispers of an improved refer-a-friend deal from BMO InvestorLine that might be on the horizon.

Which brokerage to use for ETFs?

The popularity of ETFs with Canadian investors shows no sign of slowing down. In this post from reddit’s Personal Finance Canada section, it is interesting to review what the thoughts are of different users on which discount brokerage would be best for ETFs.

That’s a wrap for this edition of the roundup. Thankfully it looks like a fantastic weekend to say thanks to all the mom’s out there (including Mother Nature!) and to raise one last toast to Don Draper for many smoke-filled seasons of thought.

Posted on March 13, 2015 by user — Leave a comment

Discount Brokerage Weekly Roundup – March 13, 2015

It’s Friday the 13th. Tomorrow is Pi Day (3/14). As Jerry Seinfeld might irrationally proclaim, what is the deal with all these numbers?

For DIY investors, however, keeping track of numbers is an integral part online investing. And, with income tax filing deadlines around the corner, now is time of year that many folks will be reviewing numbers – so long as Netflix isn’t on.

In this week’s roundup, we start with an important message for Fraud Prevention Month regarding binary options. Next we’ll take a look at some interesting numbers from the US brokerages that might add up to an interesting trend for brokerages here in Canada. Also, we’ll take a look at a recent ‘number themed’ promotion launched by one online brokerage in a very curious case of direct target marketing. Upcoming investor education events will be next on the list and finally we’ll wind down with some interesting investor forum discussions.

A Bad Option

If you’ve ever tried to Google information on options trading, there’s no doubt that you’ve probably come across ads promoting binary options. While binary options have evolved rapidly to look and feel like they’re legitimate trading alternatives, the disturbing truth is that they are, at best, gambling sites – many of which are unregulated, offshore companies simply out to separate internet users from their money.

Thankfully, the Canadian Securities Administrators (CSA) issued an important bulletin warning Canadians of the murky world of binary options trading. Although the bulletin named a large number of websites (37) as attempting to solicit Canadian investors, the list is far from exhaustive.

The lines between investing online and gambling are certainly blurry when it comes to ‘trading/betting’ on short term moves in markets. In fact, the controversy stirred up by Michael Lewis’ book Flash Boys (which happens to be celebrating its 1-year anniversary) highlights how even the biggest financial institutions and best and brightest minds in quantitative finance are exploiting microsecond advantages. What unregulated operators would do in jurisdictions that give them free reign usually spells trouble for an unsuspecting visitor.

Barron’s Rates Interactive Brokers Best Online Brokerage

When it comes online brokerage rankings, the only number that matters is number one. Interactive Brokers (US), managed to land first once again in the 2015 ranking by Barron’s Magazine, narrowly beating out online brokerage firms OptionsHouse and TD Ameritrade.

As with other rankings and ratings of online brokerages, it is important to understand how the rankings were devised and what components go into the evaluation. Barron’s online brokerage ranking is one of the more thorough evaluations of brokerages in the US and, although this makes it of limited value for Canadian brokerages per se, it is interesting to see the features and trends available to US online investors (as well as those investors interested in using an online brokerage in the US).

The following 8 categories were evaluated as part of the ranking:

Trading Experience & Technology
Usability
Mobile
Range of Offerings
Research Amentities
Portfolio Analysis & Reports
Customer Service & Education
Costs

Among those categories, Interactive Brokers had the best showing by far when it came to costs. While anecdotal, many Canadian DIY investors also state that when it comes to pricing Interactive Brokers is very difficult to beat especially for very active traders. Active traders are particularly sensitive to cost and it is likely why Interactive Brokers is strategically pursuing this segment of the investor market (not to mention that active investors generate almost 10-fold the revenue of an average investor).

For most DIY investors, cost per trade is and remains to be a major deciding factor when it comes a brokerage so it is interesting to see cost being given equal weight to other items when it comes to scoring. As with all rankings, the priority that individuals place on the particular features as well as the overall experience ultimately determine the right fit.

A Precise Promotion

While some discount brokerages are looking to selectively target particular types of clients, a recent promotion launched by National Bank Direct Brokerage, takes things to a whole other level – 10 decimal places in fact.

The latest promotion launched by National Bank Direct Brokerage targets engineers as well as engineering students and graduates with a 97.4874371859% discount (yes that’s how it is being marketed).

Instead of paying $9.95 per trade, NBDB is offering 25 trades for $0.25 each for a 3 month period for deposits of $20,000 or more (for engineers and engineering graduates) and 10 trades for $0.25 for deposits of $5,000 or more (for engineering students). The extremely precise discount offer is good until the end of May.

On a side note, it is interesting that NBDB is looking specifically at this group for a special offer. There is some anecdotal data regarding the kinds of occupations seen with DIY investors and engineers do tend to be more open to DIY investing. Whether this particular promotion is connected to that data is speculative, however the precise demographic/occupational targeting may be something other online brokerages might be considering after seeing this kind of promotion.

Change of Guard

In an unrelated story, National Bank Direct Brokerage appears to be looking for a new President. The outgoing President, Nancy Paquet, whom we interviewed late last year, has now taken on the role of VP Partnership with National Bank. Interestingly according to the job posting, the new president of NBDB will also act as VP for National Bank, splitting their time between the two roles.

Strategically, bank-owned brokerages such as National Bank Direct Brokerage, are able to compete by being able to tap into the pool of clients from the banking side and vice versa. The new President appears to have this as part of the mandate coming in.

National Bank Direct Brokerage isn’t the only online brokerage that is seeing some change at the top. Vancouver based Qtrade Financial Group saw its CEO Scott Gibner depart officially as of mid January. Currently Qtrade Financial’s board co-chair Bill Packham is serving as interim CEO.

Event Horizon

Lots of learning options (about options) taking place this week.

March 14 – Scotia iTRADE – Top Global Investment Themes for 2015 – Larry Berman Roadshow (Montreal, QC)

March 15 – Scotia iTRADE – Trading with the Expert with Ziad Jasani

March 17 – Scotia iTRADE – Basic Option Income Strategies with Pro Market Advisors

March 18 – TD Direct Investing – Introduction to Fundamental Analysis

TD Direct Investing – Introduction to Investing in Options

TD Direct Investing – Introduction to Weekly Options

Scotia iTRADE – Equity Strategies Using ETFs with iShares

March 19 – NBDB – Stop orders: A winning solution worth knowing – [Fr]

Scotia iTRADE – The Power Of The Put Option with AJ Monte

March 20 – Scotia iTRADE – Trading with the Expert with Ziad Jasani

From the Forums

A Superficial Situation

As we move into ‘tax season’ there are all kinds of discussions about some of the tax implications associated with investing. One of the popular (and important) topics is the superficial loss rule and what that means for investors. This post from the Canadian Money Forum shows one investor’s experience in navigating through their options and the impact of a superficial loss. Also, here’s another helpful link explaining how this rule works.

Urge to Merge

Having only one discount brokerage account is a reality for some and a dream for others. While there are various reasons individual investors open up (or end up with) multiple investment accounts, consolidating them means making a commitment to a particular online brokerage. In this post from the Red Flag Deals investing forum, it was interesting to read the responses to one user’s questions about which brokerage to single out.

That’s a wrap for this week’s roundup. After a bit of a miserable week for those long markets, oil, the loonie, the weekend might offer a bit of a reprieve. In keeping with our numbers theme, however, it was a pretty rough week for this groom who saw his wedding end because of a failed math question. Of course nothing caps off a week like watching 14 silly kids just being. So here’s a more jovial send off. Enjoy the weekend no matter what you’re counting!

Posted on November 21, 2014 by user — Leave a comment

Discount Brokerage Weekly Roundup – November 21, 2014

What do shows like Big Bang Theory, Dancing with the Stars and Sons of Anarchy have to do with Canadian Discount Brokerages? Well, if you guessed fall ratings then Bazinga!

Finding the right metric to judge the ‘best TV show’ is easier in some respects than finding the “best online brokerage”. As we move into the unofficial ratings season for the brokerages, however, prepare for all kinds of plot twists.

In this week’s roundup, we take a look some of those twists, first by reviewing the latest online brokerage rankings to be published. Next we take a look at the interesting news coming out of the wealth management space with a major move by one online brokerage stepping out of the frying pan and into the fire. Finally we take a quick tour through the investor education events being held in late November and close out with a couple of interesting brokerage-focused forum discussions.

Best Online Brokerage Rankings Kick-Off

For consumers, when evaluating who Canada’s best online brokerage is, it is essential to understand the ranking system used. As we’ve highlighted in the past, there are several rankings and ratings that each measure and define “best online brokerage” or some variation of “best” (like “top” or “#1”) in many different ways.

Surviscor 2014 Rankings of Canadian Online Brokerages

This past week, financial services ratings firm Surviscor released their latest edition of rankings of Canadian online brokerages. BMO InvestorLine ranked the highest according to the Surviscor criteria (earning a score of “90%”), followed by Scotia iTrade (“84%”) and then Credential Direct (77%). As we’ve done with other rankings and ratings of Canadian online brokerages, we drilled down into the the scores and stats for a better picture on what these results tell us.

One of the first things that jumped out was how everyone else did in the rankings. The average score of the group was 68% with the standard deviation coming in at just under 16%. What does all that math mean (no pun intended)?

The rankings for the whole field show there are many companies clustering around the average score. We interpret this to mean that most of these companies are pretty close to one another except for some very clear outliers (to the downside): Laurentian Bank’s discount brokerage and HSBC InvestDirect (which interestingly placed near the top in Dalbar’s rating for client service but near the bottom when evaluated by Surviscor).

When we dropped these two firms from the rankings, the distance between first and last narrowed substantially and the differences between the online brokerages became even less numerically significant. For example, the difference between 3rd place and 8th was a difference of 7%.

With a race this close, small changes in features, especially those that impact the heavily weighted categories within this evaluation could have an outsized effect. For example, account services, cost of services and getting started are collectively responsible for 60% of a firm’s result.

Also, with changes happening constantly taking a snapshot of who the “best” online brokerage is (or was) as of a certain point in time of the year doesn’t necessarily hold true several months down the road.

So, while BMO InvestorLine did score well in this analysis, their victory may be short lived. There are already changes within their own firm as well as with their competitors that could disrupt those results at any moment.

Handling Change

While they were alluding to something big last week via social media, this past week Questrade officially launched their new wealth management division and reconfigured their website in the process.

Questrade has officially added managed wealth into their service mix, and in doing so, has definitely got the attention of brokerages big and small.

There are many angles to this recent announcement that can’t be squeezed into the roundup – so stay tuned for more perspective on Questrade’s recent move. One that stands out is that Questrade has been incredibly busy pulling together information for this launch, which has seen them go on an all out social media blitz on YouTube, Twitter and Reddit.

So, even though the headline here is definitely the shift into a new service line, one of the more curious aspects is their marketing and communications.

Questrade has assembled a lot of videos and content related to their products and services, as well as positioned themselves across many online (and traditional) channels. The scale of this effort is something that even the larger bank-owned brokerages are having trouble contending with.

What this means for online brokerage consumers is that they will likely be seeing Questrade in more places than ever before. The challenge, however, is going to be establishing and communicating what Questrade should now be known for as the shift away from being known for DIY investing exclusively has pitted them against an even wider field of competitors.

Event Horizon

November closes with an flurry of educational events. Enjoy.

Nov 25. (Tue) NBDB – Introduction to technical analysis: Trends – [Fr]

Nov 25. (Tue) Scotia iTrade – Leveraged and Inverse ETFs with Horizons ETFs

Nov 25. (Tue) NBDB – Technical analysis – [Fr]

Nov. 26 (Wed) NBDB – Day Trading – [Fr]

Nov. 26 (Wed) Scotia iTrade – Introduction to Canadian ETFs and ETF Options with Montreal Exchange (online)

Nov. 26 (Wed) TD Direct Investing – Introduction to Fundamental Analysis

Nov. 26 (Wed) Desjardins Online Brokerage (Disnat) – Trading ETFs with Desjardins Online Brokerage

Nov. 26 (Wed) TD Direct Investing – Options as an Income Strategy

Nov. 26 (Wed) TD Direct Investing – Do-It-Yourself Investing for Women

Nov. 27 (Thur) NBDB – Introduction to technical analysis: Supports and resistances – [Fr]

From the Forums

On Cue

Although this is not one of the most popular comparisons, it was worth mentioning for two reasons. First, it’s an example of brokerages being compared head to head but also of where one brokerage is prepared to venture into so that they can reach those interested in their brand. Check out this post for an interesting comparison of Questrade vs Qtrade and the comments (and commentators) on each.

Calculated Move

So, it seems like everyone is talking about Robo-advisors. And, as they start to make their presence felt here in Canada, this post from the reddit personal finance Canada thread showcases one attempt to start comparing them. Again, it looks like Questrade is all over this Reddit section with their newly released portfolio IQ figures in hand.

That’s a wrap for this week’s roundup. It’s been an exciting week all around and for those who’ve made it this far, here’s a little treat from 30 Rock’s Tracy Jordan on how to handle this (and every) week ahead. Have a great weekend!

Posted on October 7, 2014 by user

Special Series: An In-Depth Look at the 2014 J.D. Power Canadian Discount Brokerage Rankings – Part 1

This year’s J.D. Power & Associates’ Canadian discount brokerage rankings were recently announced. As with years past, the rankings and the underlying survey they’re based on, provided a unique window into the collective voice of Canadian self-directed investors and their perceptions of Canada’s online discount brokerages.

In the first of our multi-part special series on this year’s discount brokerage rankings, we take a look at the survey that produces the rankings, including how it measures investor satisfaction as well as some of the unique features of this year’s survey and results.

The next part of our series will drill down into the actual performance of Canada’s brokerages on this year’s ranking and what these results mean for the online brokerages as a whole as well as self-directed investors.

A Quick Recap of the 2014 Canadian Discount Brokerage Rankings

When it comes to the various Canadian discount brokerage rankings, the J.D. Power & Associates evaluation occupies a special niche. Unlike other rankings that focus on direct evaluation of features, the J.D. Power ranking of Canadian brokerages is unique because its is the based on the systematic organization of opinions, experiences and perceptions of discount brokerage clients – what they call the “voice of the customer”.

Between mid-May and mid-June of this year, the Investor Satisfaction Survey polled just over 2500 clients from a number of Canadian discount brokerages to find out just how satisfied (or dissatisfied) these investors were with their current online brokerage. In total, 7 Canadian discount brokerages ended up having sufficient data to participate in the rankings (compared to 11 last year), with an average investor satisfaction score of 736 (compared to an average of 724 last year).

The firms covered in this year’s ranking (along with their overall investor satisfaction score) are shown in the chart below.

While numbers help to make the assessment and ranking easier, the process behind how these numbers are generated is actually fairly complex. (For those who want a more detailed explanation of the survey and scoring system, click to read our overview on the J.D. Power Investor Satisfaction Survey here)

It is useful, however, to get a quick sense of how these numbers are derived to better understand what they mean.

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Posted on January 23, 2014 by user — Leave a comment

Review: Dalbar Canada’s Direct Brokerage Service Award 2013

For individual investors, shopping for an online trading account often requires doing a fair amount of research and comparison between brokerages. While commissions & fees are the most important factor investors consider when choosing an account, what it’s like to be a client of a particular brokerage is also something many investors are often curious about.

Fortunately for self-directed investors, one Canadian research firm (Dalbar Canada) measures client experience for most of the Canadian discount brokerages as part of their direct brokerage service evaluation (DBSE) program. As part of the DBSE, Dalbar Canada also recognizes the high achievers in their evaluation with their Direct Brokerage Service Award.

Earlier this year, Dalbar Canada announced the two highest performing brokerages on the DBSE: RBC Direct Investing and HSBC InvestDirect.

Quick Overview

In our previous two-part series explaining the Dalbar Direct Brokerage Service Evaluation, we looked in detail at how the evaluation takes place including the components that go into defining ‘client experience’ at discount brokerages. Here is a brief overview of why client experience still remains an important feature to track when comparing discount brokerages.

More than Just Price

With competition amongst online brokerages increasing, many of them (especially bank-owned brokerages) have adopted very similar pricing models. Thus, comparing discount brokerages by price alone may not provide enough information for potential clients to make a decision. Going forward, shoppers will have to turn to the other features of a brokerage (such as client experiences) in order to evaluate how ‘good’ they believe the fit will be.

For those shopping for an online trading account, the only somewhat reliable ways to find out about client experiences have been through third party research/reviews and/or from other investors via investor forums or friends, family and colleagues. The Dalbar Direct Brokerage Service Award is therefore unique in its focus on client experience and tries to provide a picture of what clients can expect from a brokerage when connecting via phone or email.

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Posted on November 22, 2013 by user — Leave a comment

Discount Brokerage Weekly Roundup – November 22 2013

Well when it rains in the discount brokerage world, it certainly pours. Fitting for November. This week’s roundup looks back on a busy week filled with a major discount brokerage ranking being released, a very cool (and geeky) way to learn about options pricing as well as a frenzy of conversation about discount brokerages from the forums. It’s a full card so this roundup is 2 pages long – be sure to check out the ending for some sage ‘market wisdom’ courtesy of Guns N’ Roses.

2013 Online Brokerage Rankings are here

After a lot anticipation, the 2013 Online Broker Rankings were finally released this past week by the Globe and Mail’s Rob Carrick. This year the online broker rankings went back to the ‘report card’ style evaluation of 12 Canadian discount brokerages, with each broker receiving letter grades rather than percentages. In line with the past few evaluations (learn more about the historical online brokerage rankings here) the key criteria being measured were:

Costs
Account Info
Trading
Tools
Innovation

While getting called a cheap option by one of Canada’s largest newspapers may not seem flattering, for a discount brokerage in the midst of a price war the label is a badge of honour. The brokerage with the best overall ranking (and ‘cheapest broker’) for 2013 was Virtual Brokers (overall grade: A) for the second year in a row. The first runner up was Qtrade (overall grade: B+).

Despite being tied for third with RBC Direct Investing and Scotia iTrade, BMO InvestorLine was described as “the best bank-owned” online brokerage (each of these bank-owned online brokerages scored a B overall). The media team at BMO published a release celebrating the claim. Incidentally, Questrade also received an overall grade of “B”. The worst overall score received this year was a “D” and it was given to HSBC InvestDirect along with some pointed remarks about their offering.

Some new features in this year’s online broker rankings included comparisons of current margin rates, forex rates and costs for trading certain amounts of stock at each broker. To read the online brokerage rankings, click here. Also, stay tuned for the in-depth analysis of this year’s Globe and Mail online broker rankings coming soon.

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Posted on October 25, 2013 by user — Leave a comment

Discount Brokerage Weekly Roundup October 25 2013

Coming into the home stretch of October, equity markets are continuing push higher. The constant string of ‘good news’ is something that may lure more investors back into the markets, which is also probably why there are some major initial public offerings (IPOs) also being announced.

Against the backdrop of optimistic markets, some discount brokerages also got some news to cheer about. This past week, a discount brokerage launched its new mobile website, one more “best online brokerage” was crowned and there was some interesting chatter in the investing forums about keeping cash ready in a trading account and what can go wrong if it it’s in short supply.

Disnat’s New Mobile Site Ready to Roll

Canadian discount brokerage Disnat officially rolled out their new mobile website (available at m.disnat.com). The new site offers quite a substantial upgrade over their previous mobile website (reviewed here). There are quotes and market updates available directly on the front end (without having to login). There’s also access to videos and event info so the mobile site offers some of the core features of the full site. Look out for the updated mobile website review coming soon.

The Best Online Brokerage – For Now

BMO InvestorLine announced this past week that they had been awarded the title of “best online brokerage” in the 2013 Q3 evaluation by Surviscor. BMO InvestorLine managed to edge out competitors Qtrade and Scotia iTrade by 3% landing a score of 84% overall versus Qtrade and Scotia iTrade who both scored 81%. The winner of the Q1 2013 evaluation period, Scotia iTrade, enjoyed a brief stay atop the discount brokerage field however as these results show, the industry is highly dynamic and the best discount brokerage today might not still be the best tomorrow.

Around the Forums

A popular idiom among traders is ‘keeping some powder dry’. This refers to having some cash on hand so that if or when an investing opportunity presents itself, there is a way to take advantage of it instead of having to watch it go by. Cash in the account seemed to be the theme with two interesting posts about discount brokerage accounts this week.

Hurry up and wait

In the first of two threads from Canadian Money Forum, user “Peterk” was feeling a little restrained from the delay of moving money between bank accounts into brokerage accounts. Sometimes the delay could be a good thing, however in markets timing is half the battle. Check out what fellow users had to say about it here.

Feeling marginalized

So what does happen when cash isn’t available in the trading account when one wants to make a purchase? Well if the account is a margin account, the transaction may still take place but it will be made ‘on credit’ i.e. on margin. In the following thread, Scotia iTrade caught a bit of heat from forum user “mrcheap” after this user was apparently dinged for margin interest while cash was en route from a yet-to-be-settled trade. It’s a valuable lesson to investors that they have to pay attention to the settlement dates (usually T + 3 for stocks) between execution and settlement.

That’s it for this week’s roundup. Keep on your toes because while the markets might seem like a treat today, there’s still a good chance it has some tricks up its sleeve. Have a safe and enjoyable weekend and most of all stay classy!

Posted on October 18, 2013 by user — Leave a comment

Discount Brokerage Weekly Roundup October 18 2013

After all of inescapable deal making drama in Washington this past week, it appears that stock markets had already placed their bets that events would unfold with a deal being struck. Rather than a disastrous crash, The S&P 500 hit an all-time high and Canadian traders also shrugged off their Thanksgiving turkey hangovers to push the TSX to close at its highest point since July 2011.

What does all of this mean? It seems a lot of folks will be asking that question, so in this week’s roundup, there was one Canadian discount brokerage who offered up a trader’s perspective on what happens next. In this post-Thanksgiving week, one discount broker got into the giving spirit by offering a chance to win some free trades while another discount brokerage officially rolled out some new features to their trading interface. Finally on the roundup, it looks like a proposed switch over from a major discount brokerage is now rolling out, albeit somewhat slowly for the likes of a few investors.

What’s the Deal with the Deal?

If Jerry Seinfeld chimed in on airplane snack food, one can only wonder what he would be asking what now that there has been a deal to extend the debt ceiling in the US. It just so happens that a video from TD Direct Investing’s investor education section looks into that. In this episode, Ryan Lewenza (North American equity strategist & portfolio manager for TD Waterhouse private investment advice) laid out his thoughts on the market sentiment in response to the debt ceiling deal.

Trading Gravy

Questrade got into the Thanksgiving spirit by offering to give away 10 free trades. The deal was announced on their blog on October 9^th with the contest rules and regulations stating that it would run until October 16^th.

Later on in the week though, a couple of tweets by Questrade seem to suggest that the contest is still on although it is not quite clear based on the rules for the contest when this offer expires.

Taking Quotes to the Next Level

As hinted at last week, the new feature from Qtrade that got released was an addition of free level 2 trading data on Canadian stocks to their equity order screen. It should be pointed out the quotes are ‘snap’ quotes not streaming quotes so users wanting to see updated information on a particular stock or ETF’s trading activity will have to hit refresh. As this feature is limited to Canadian equities at the moment, it might be of interest to those looking for additional depth information on smaller or less liquid names.

Canadian Discount Brokers React to J.D. Power Survey Results

A recent article in Investment Executive this past week covered the recent results from this year’s J.D. Power’s discount brokerage rankings. In particular, the article highlighted the win by National Bank Direct Brokerage as well as how discount brokerages, such as BMO InvestorLine, are trying to figure out how to respond to some of the information and advisory needs of self-directed investors. Interestingly, while BMO InvestorLine may have been first out of the gate to launch an ‘on demand’ advisory type feature, other discount brokers appear to be opting for providing portfolios that investors can ‘follow along with’. To learn more about the J.D. Power discount brokerage rankings for 2013, click here.

Rolling Out the Canadian Carpet

Around the forums, the chatter on discount brokerages was somewhat subdued this past week. There was, however, important news on the roll out of Interactive Brokers Canada account transition announced earlier this year. The following post from forum user Mark77 in the RedFlagDeals forum suggests that Interactive Brokers Canada clients are having their account restrictions updated to reflect the changes that were announced earlier this year.

Despite the short week, there was still lots to digest (including the turkey!). Have a great weekend all and for those who’ve made it this far, here’s a tusk-in-cheek cartoon from cartoonist Mike Luckovich on the recent Washington shenanigans.