Discount Brokerage Rankings – Page 3

Posted on November 23, 2012 by user — Leave a comment

Discount Brokerage Weekly Round Up – Nov. 23rd 2012

This week the biggest news for discount brokerages came in the form of the 2012 Globe and Mail Canadian discount brokerage rankings. Rob Carrick’s annual survey of the Canadian discount brokerage industry looked at 12 firms this year. The top spot went to Virtual Brokers which narrowly edged out the six year champ, Qtrade while the bottom ranking company was HSBC InvestDirect. The average score (out of 100) was 61.2% (with a standard deviation of 10.0 for those who mind the stats). What was interesting about looking at the stats was how most of the companies performed about the same (statistically speaking) except for Virtual Brokers and Qtrade. What this means for self-directed investors is that the difference between 3^rd and 12^th is not that significant and that even 1^st and 2^nd are only slightly more distinguishable than the rest. To read more about the rankings and our analysis, click here. Also, we put together a sortable version of the table of this year’s results to help make it easier to compare.

Another very big piece of news from discount brokerage deals section was the announcement by Questrade of the unlimited trading promotion. Scotia iTrade was the first to offer unlimited trading for 100 days, however like all innovations in this very competitive market, there’s a good chance that others will try to do the same. What sets this deal apart from the one offered by Scotia iTrade is that Questrade is offering unlimited trading for account deposits as low as $1,000 and $25,000 whereas Scotia iTrade’s deal requires a minimum deposit of $50,000. Not all self-directed investors really need or want unlimited trades, especially if it is only for one or two months, but for some it is one more reason to lean towards Questrade.

Event Horizon

The upcoming week in events is a bit light as we come to the close of November and financial literacy month. One interesting looking seminar that is coming up this week is geared towards options trading. The TMX group will be presenting via Scotia iTrade, Understanding the Collar Strategy.

Best Canadian Discount Brokerage Tweet of the Week

This week’s best discount brokerage tweet again comes from the affiliate of Disnat Direct, @DesjardinsGroup. We saw this week’s tweet as a way to spread a little goodness for a worthy cause. Desjardins will be donating $50,000 to cancer research across three organizations that gets the most votes here.

The People Have Spoken

It was a very big week for the Canadian discount brokerage space with the release of the 2012 Globe and Mail brokerage rankings. A lot of buzz was created around whether these were actually seen as valuable or not. This thread in the Red Flag Deals personal finance forum was a particularly heated conversation.

Posted on November 21, 2012 by user — 2 Comments

Globe and Mail 2012 Canadian Discount Brokerage Rankings Review

Virtual Brokers Takes Top Spot

The 2012 Globe and Mail Canadian discount brokerage rankings are out as of today with Virtual Brokers claiming the top spot and displacing the 6 year “reigning champ” of this survey, Qtrade (which came in second), by a razor thin margin.

Becoming Globe and Mail’s top ranked brokerage, albeit barely, was a pretty lofty achievement for Virtual Brokers for a number of reasons, not the least of which is because they were sitting at the bottom of the ranking back in 2010. This year (2012) marks only the third year in which Virtual Brokers has been included in the ranking, so for such a recent entrant into the ranking pool to move up so quickly is certainly noteworthy.

So what took Virtual Brokers from the bottom of the pack in 2010 to being crowned the best Canadian discount broker for 2012? Certainly credit is deserved where credit is due. Virtual Brokers has aggressively priced their services far lower than many of their peers and started to match the types of services found at their competitors. Of course, it also helps to understand how the types of categories that went into this ranking could impact the outcome. In order to understand what being the “best discount brokerage” really means, we took a closer look at the rating system used by the Globe and Mail’s Rob Carrick.

Looking at the Ranking Structure

The following five sections (and the percent they play in the scoring) are used in the Globe and Mail discount brokerage ranking to assess each Canadian discount brokerage:

Costs – 25%
Account Information – 25%
Trading – 20%
Tools – 20%
Innovation -10%

For this ranking, the two factors that heavily influence the overall ranking are costs and account information (combined they form 50% of the score). The last three categories of trading, tools and innovation combine to form the other 50% of the ranking. Interestingly, when looking at the definition of innovation: “Which firms are leaders in terms of cutting prices and introducing new services, and which are followers?” price comes in again.

Thus, the prices that a brokerage charges for its services end up having a bigger influence in the overall score relative to any other single component. Virtual Brokers had the strongest showing on fees and innovation and tied for first in the “trading” category which likely gave it the edge it needed to squeak out ahead of Qtrade. Qtrade shone brightest in the “account info” category. Sometimes the overall ranking can mask some particularly noteworthy performances. On the good side, buried in the results is an impressive perfect 20 out of 20 that TD Waterhouse managed to achieve in the Tools category (even though they were ranked 6^th overall). Conversely, the lowest ranking was given to HSBC InvestDirect which ‘earned’ a particularly biting comment: “They win in one respect – most annoying log-in process.”

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Posted on September 20, 2012 by user — Leave a comment

Canadian Discount Brokerage Investor Satisfaction Results – 2012

JD Power and Associates have just released the results of the 2012 survey of Investor Satisfaction℠ with Canadian discount brokerages.

Between June and July of 2012, 2900 Canadian retail investors were surveyed about their level of satisfaction with their discount brokerages. Data was obtained for 12 Canadian discount brokerages, although results for Credential Direct were not reported due to insufficient sample size. “Investor Satisfaction” was measured on a 1000 point scale, and covered areas such as trading charges and fees, interaction, problem resolution, financial planning tools, website accessibility and services and seminars.

In terms of scoring, the Canadian discount brokerage industry average score of investor satisfaction in Canada was about 700, with the highest score of the group (768) going to Disnat and the lowest score (656) going to Scotia iTrade. To put those numbers into context, US investors found their discount brokerage experience far more satisfying with an industry average of 768. To put that into perspective, the best scoring Canadian discount brokerage on this scale would be considered just average south of the border.

So where are Canadian discount brokerages falling short? It seems that there are some perceived gaps in problem resolution, trading charges and ‘interaction’. One very noteworthy statistic has to do with loyalty of Canadian investors to their investment firm. This survey found that only 19% (or 1 out 5) of Canadian investors strongly agreed to being loyal to their primary investment firm with 23% of respondents saying they “definitely will” recommend their primary investment firm. Put another way, it seems that 4 out 5 Canadian investors won’t be strongly loyal to their primary investment firm, a situation that will certainly cause Canadian discount brokerages to sit up and take notice.

The implications of this survey point to a real upshot for consumers. Canadian investors will likely benefit from the fierce competition from the crowded market that is the Canadian discount brokerage landscape. In order to get new clients or keep their existing clients from jumping ship, expect discount brokerages to start offering more incentives and promotions (such as the deals listed here), lowered commissions & fees, new services and tools and educational seminars (which you can find listed here) to earn new business and capture the turnover of those “not-so-loyal” customers.