Tag: Qtrade Investor

Welcome to March. With spring on the horizon (at least that’s what’s supposed to happen) and the RSP deadline now behind everyone, it’s time to start looking forward to bigger stories through the rest of the year. Fortunately for online brokerages (and DIY investors) once they recover from the mad dash that was the RSP contribution rush, there are some bullish signals that DIY investing continues to strengthen.

In this edition of the roundup, we highlight the latest activity in the deals and promotions section. With the arrival of a new month, and this month in particular, this month is going to be full of changes and surprises as the deals deck shuffles. Keeping on theme with spring, we’ve also spotted a few interesting developments sprouting up – one that mining investors may want to take note of and another that shows that IPO activity in 2019 extends even into the online brokerage segment. As always be sure to check out the latest tweets and forum posts from DIY investors.

Deals March On

Now that March has officially arrived, the mad dash to the RSP contribution deadline is finally over. Over the next few days, Canadian discount brokerages & investors alike will be tallying their respective wins.

For investors, there were definitely some big wins to celebrate. Historic high numbers of offers, participation from almost all online brokerages, as well as an increase (in certain segments) in the value of offers being put forward. The combination of these factors suggests a bullish sentiment for DIY investors through 2019.

That said, an adage of markets (and physics) applies equally to the online brokerage market and what has gone up will most certainly come down.

With a significant portion of deals timed to coincide with the RSP contribution deadline or shortly thereafter, March is scheduled to see quite a bit of turnover in the deals & promotions section. So, while market volatility may have taken a back seat for the first part of 2019, for online brokerages and DIY investors, the deals category is going to sail through choppy waters.

Case in point, the most popular categories of offers – cash back promotions and commission-free trade deals – is set to have 7 out of the 14 (50%) current offers expire in March.

Notably, the deal from TD Direct Investing expired at the RSP contribution deadline of March 1^st. Offers from BMO InvestorLine (March 4^th), Qtrade Investor (March 15^th), CIBC Investor’s Edge (March 24^th), RBC Direct Investing (March 29^th) and both Virtual Brokers and Scotia iTRADE on March 31^st.

Also on the chopping block in March is Questrade’s big transfer fee coverage offer (set to expire March 31^st).

Of course, with so many deals set to expire, the landscape for DIY investors will be pretty interesting for those other deals still in play. Even though the big push of RSP contributions will have come and gone, income tax filing season is now here and personal finance questions will still be top of mind for many investors. In fact, what could be interesting to watch is whether there are any stumbles with regards to tax reporting across the tax-filing season as hiccups invariably lead to investors getting fed up and looking elsewhere for greener pastures. The result, for online brokerages with promotional offers still active during this time period, there will be less competition to contend with.

Interestingly, it will likely be challenger brokerages – such as National Bank Direct Brokerage, HSBC InvestDirect, Desjardins Online Brokerage and Questrade who will directly benefit from the deals action pull back. In all likelihood, however, we also expect BMO InvestorLine to post an offer to keep their long-time streak of offering a promotion intact. Additionally, given Questrade’s climbing prominence in rankings and growing awareness of this provider among online investors, it is unlikely that other, larger, online brokerages will sit by and cede market share to Questrade  – especially during this time of year.

So, even though we don’t know exactly what’s in store for DIY investors in March, the early data suggests a bullish sentiment for brokerages to introduce new deals and/or extend offers.

DIY Investing Potpourri

Despite the winter warnings, we can still look forward to March being the official start to spring. With that in mind, we’ve pulled together a few interesting developments across the DIY investor space that are worth taking note of.

PDAC 2019 Now Charging Investors to Attend

When it comes to conferences for investors, there aren’t a lot to turn to. And, when it comes to major mining conferences in Toronto that would attract the global spectrum of the mining industry, there really is only one: PDAC 2019.

Taking place between March 3^rd and 6^th this globally renowned show brings in mining and exploration companies at a scale that is unrivaled in Canada and so it was particularly interesting to see the PDAC roll the dice when it came to attracting investors into this convention. Specifically, this year PDAC opted to charge $24.99 for admission to the Investors Exchange – the hub of about 500 mining & exploration companies.

For #investors thinking of checking out #PDAC2019, just a heads up that this year it’ll cost you almost $25/day to get into the Investors Exchange. 💰😕 pic.twitter.com/0hnBfiFWl3

— Sparx Trading (@SparxTrading) March 3, 2019

So, either sentiment in the mining sector is about to take a significant uptick or PDAC carries enough weight with investors to warrant charging admission. Among the many selling points for investors is that this is arguably the best opportunity to meet with mining and exploration companies’ representatives as well as to discover other ones.

There are just shy of 500 companies listed to exhibit in the Investors Exchange so for anyone to try and cover that kind of ground, it will likely require a multi-day effort. To make matters more potentially costly, 65 exhibitors (13%) are there only for one day, either March 5^th or March 6^th.

While the final numbers will ultimately bear out whether attendance is impacted by charging for admission, given the state of the mining markets, giving investors one more hurdle to cross seems like a bold move. So, for investors serious and committed enough to fork over $25 per day to talk to companies, you can almost bet the questions will be coming from more engaged investors and there will be fewer ‘no shows’ (although the extreme cold may also challenge attendance).

It will be interesting to see what kind of experience DIY investors can expect from this year’s show – but one thing is for certain – PDAC has raised the bar for creating an outstanding investor experience now that investors are paying to be there.

IPO for Chinese Online Brokerages

While the spotlight on IPO’s was dominated this past week by the filing from Lyft, earlier last week Chinese online brokerage Tiger Brokers also announced they would be seeking an IPO on NASDAQ (TIGR). Interestingly, they are not the only Chinese online brokerage and trading firm seeking to raise capital from and list on the US markets. Direct competitor of Tiger Brokers, Futu Holdings (FHL) also filed to go public with a target of raising up to $300 million.

Futu Holdings is backed by Tencent while Tiger Brokers is backed by Xiaomi and Interactive Brokers also reportedly has a stake in Tiger Brokers. For Interactive Brokers, their presence in the Asian markets continues to strengthen ahead of their peers in the US online brokerage space.

What also crossed our radar from the disclosure data was the reporting that 71.5% of clients were under 35 – a massive difference in the demographic profile compared to online brokerages in North America. Also noteworthy: conversion rates of 15% and retention rates of 82% through the end of 2018. In spite of attracting customers, a look at the financials show that negative earnings and operating losses which reflect a number of challenges the online brokerage segment still faces in the Chinese market.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Stop & Go

When it comes to investing, things don’t always finish on the upside.  At first glance, stop loss protection might be an option to mitigate the risks, but do fellow forum users on Canadian Money Forum agree? See what they have to say.

Expanding the Horizon

One investor takes to the forums to see what ETF options are available outside the energy and resource sector. Forum users take a closer look and share their thoughts on investing in mining and resources while offering up their suggestions on the Financial Wisdom Forum.

Into the Close

That’s a wrap on another set of noteworthy developments. There’ll be lots to see this week, including content coming out of PDAC. Metals are also in going to be in the news with the NAFTA trade deals now up in the air. For the numerologists, the 10^th year of the bull market is coming up marking the week in which the S&P 500 hit its low of 666. Not creepy at all. Of course other numbers in focus will be the job growth and economic performance. Wherever the numbers land, here’s hoping you have a profitable week!

Even though markets took a pause for Family Day in Canada and President’s Day in the US, the calm before the storm is officially over and when the market bells ring again on Tuesday, it will be a mad dash to the RSP contribution deadline. With first time and seasoned DIY investors alike kicking the tires on Canadian online brokerages, the good news is that there is plenty on the table in terms of offers as well as ranking data to help make those important decisions.

In this edition of the roundup we take a deep dive into yet another deals & promotions development in which two Canadian discount brokerages launch late-stage offers. Next, we profile another online brokerage ranking dealing with customer service that revealed some very interesting trends as well as challenger brands that will shift the online brokerage landscape in Canada in the years to come. Of course, we’ll also serve up a healthy dose of online brokerage tweets as well as chatter from the investor forums.

No Country for Old Deals

With the RSP contribution deadline just a few days away, Canadian discount brokerages are pulling out all the stops to try and get DIY investors’ attention (and business) while investments are on their mind. This month has seen a flurry of activity ranging from commission price drops at Scotia iTRADE, something that they have resisted doing for about five years, to just about all Canadian online brokerages putting forward either a commission-free trading or cash back offer.

The trend of posting new offers continued last week with offers from non-bank-owned online brokerages, Questrade and Virtual Brokers, both posting promotional offers.

Questrade’s offer is actually one that deserves a bit more discussion since it is unlike anything we have observed take place in the industry since we have been tracking deals and promotions. Questrade’s latest promotional offer is a transfer-fee coverage offer (something almost all online brokerages offer) however the big development is that Questrade is offering to cover the transfer out fee for any deposit level. This is a massive development for two reasons.

At Questrade, we set out to give Canadians better, simpler and more affordable ways to invest. Until March 31, transfer your account over to Questrade, and we’ll cover any transfer fees regardless of the amount transferred over https://t.co/LloS4O3grV. pic.twitter.com/yLq20CWPn4

— Questrade (@Questrade) February 12, 2019

First, the normal deposit threshold for qualifying for a transfer fee coverage offer is between $15,000 and $25,000. Even then, there are times where there is a sliding scale of coverage, so only larger deposit amounts qualify for the full coverage. Occasionally, Qtrade Investor has lowered the transfer fee coverage threshold from the standard $25,000 down to $10,000. So, for Questrade to drop the deposit transfer requirement altogether (for a limited time) is an aggressive move to get accounts that normally would not have qualified for transfer fee coverage to consider switching.

The second reason this offer from Questrade is a big deal is because it reflects their doubling down on a segment of the market that is largely underserved by their competitors. In response, Canadian online brokerages are almost certainly going to have to decide how valuable customer accounts with deposits less than $15,000 to $25,000 are worth, because it now is possible for online investors to ask their brokerage how much they’re prepared to offer to keep their business.

For DIY investors stuck paying fees at online brokerages because their balances are too low, this is an amazing exit opportunity. To be clear, Questrade also charges low balance/inactivity fees, however the threshold to have those fees waived is lower than at their competitors. Questrade charges inactivity fees of $24.95 per quarter on accounts with less than $5,000 in total assets and waives those fees for placing a commission generating trade in a quarter; for individuals under 25 years old; subscribers to a data package and to anyone depositing at least $150 per quarter.

Finally, one more interesting observation with regards to Questrade’s promotional offer is that this is the first time in many years that Questrade has launched a new mass market offer. Earlier on in their history, Questrade was the most active among Canada’s discount brokerages in terms of offering promotions however that activity essentially plateaued with Questrade keeping their same suite of commission-free trading offers. This uptick in their promotional behaviour is a signal that Questrade is revisiting their promotional offers which is one more thing that their competitors now have to factor in.

Also crossing the deals wire last week was Virtual Brokers, who launched a $50 cash back promotion tied to RSP season. Their latest offer, which also comes after having been on the deals sideline for some time, coincides with their being named as Canada’s best online brokerage by the Globe and Mail (alongside TD Direct Investing).

Virtual Brokers’ latest promotion is open to both existing and new clients and offers up a $50 cash back reward for a deposit of $10,000. In comparing the current cash back offers on the market, this is one of the most aggressively priced ones.

To start, they are the only online brokerage offering a cash back amount for a deposit at that level. The next available cash back offer requires a deposit of at least $25,000 – at which point there are three different offers to choose from. Interestingly, the aggressive nature of this offer really stands out when compared against Qtrade Investor, who is offering a cash back amount of $50 for a minimum deposit of $50,000.

Another feature of the latest Virtual Brokers deal that stands out is the timing for when the cash back award will be deposited. According to the terms and conditions of the offer, the cash back will be deposited “after July 1^st” which, compared to other offers, is a shorter payback time. To be fair, the exact date was not specified so it does leave considerable wiggle room for that repayment to be issued

Brokerage	Minimum Deposit	Cash Back Amount
Virtual Brokers	$10,000	$50
HSBC Invest Direct	$25,000	$188
CIBC Investor’s Edge	$25,000	$100
Scotia iTRADE	$25,000	$100
BMO InvestorLine	$50,000	$400
Qtrade Investor	$50,000	$50

 

It should be noted that Questrade does have a referral offer in place that is easily accessible for investors that would also be similar in value to Virtual Brokers’ offer (i.e. $50 cash back for a deposit of $10,000). Scotia iTRADE also has a referral offer however the process of accessing that offer is more difficult than entering in a code.

With over 35 offers now available for DIY investors to choose from, this is a record year for choices and incentives. Not only are there more offers in play for DIY investors to be able access but also the amounts of those offers have increased relative to last year – especially in certain deposit segments.

There have clearly been benefits to anyone who’s waited to see what the online brokerages would come forward with in terms offers. But, for online brokerages, has waiting until RSP season to launch a deal/promo been a good thing?

One hazard of waiting for the RSP season is that consumer expectations shift. If DIY investors look back over the past three to five years, there’s clearly a pattern of Canadian online brokerages offering deals and promotions in the new year or, more recently, from November onwards. Not unlike consumers and Black Friday, however, online investors may start to withhold their account opening or selection until they see the full set of offers available.

What we suspect will unfold is that online brokerages will want to establish a more regular or tactical approach to offering promotions through the year. At the very least, finding a way to stay on investors’ radar throughout the year will be important when it comes to the ‘high season’ of being able to stand out from all of the different offers that will go on display.

The most recent activity from Questrade and Virtual Brokers show, however, that if you’re going to be advertising a promotion later into the RSP season, that in order to get noticed, you will have to go big – which is a great development for DIY investors.

Qtrade Earns Top Customer Service Scores from Surviscor

Earlier this month, Qtrade Investor managed to notch yet another award win in an online brokerage ranking, this time in customer service. Financial services research firm Surviscor announced the results of their service level assessment of the Canadian banking and online brokerage sectors and found that in the brokerage segment, Qtrade Investor provided the strongest service experience.

The results of this year’s service level assessment provided some eye-opening scores, and will undoubtedly cause some furrowed brows across the Canadian online brokerage sector as many of the scores came up less than flattering. More on that in just a moment though.

At the top of the board, Qtrade Investor scored 84% and narrowly beat out RBC Direct Investing who came in second at 82% followed by Questrade in a distant third at 68%. For some context, the average score was 39% while the standard deviation was 27%, which means on a relative basis Qtrade Investor and RBC Direct Investing substantially outperformed the rest of the field.

With an average score of 39% however, this evaluation is indicating that Canadian online brokerages are struggling when it comes to providing what Surviscor defines as quality service. Laurentian Bank Discount Brokerage came in last at 4% while Virtual Brokers landed at 8%. Some big bank-owned-brokerage names also were included in the below average group: Scotia iTRADE, CIBC Investor’s Edge, National Bank Direct Brokerage, and (perhaps the most surprising) BMO InvestorLine (16%).

Of course, while these rankings provide a snapshot of performance over the past year, what is even more interesting – and perhaps telling of a trend in the online brokerage industry – is comparing results year over year.

Online Brokerage	2017 Score	2017 Ranking	2018 Score	2018 Ranking	Score Change (y/y)
BMO InvestorLine	12%	13	16%	11	4%
CIBC Investor’s Edge	16%	12	30%	8	14%
Desjardins Online Brokerage	74%	T3	52%	5	-22%
HSBC InvestDirect	28%	T8	12%	12	-16%
Interactive Brokers	54%	6	62%	4	8%
Jitney Trade	28%	T8	24%	9	-4%
Laurentian Bank Discount Brokerage	4%	15	4%	14	0%
National Bank Direct Brokerage	28%	10	20%	10	-8%
Qtrade Investor	90%	1	84%	1	-6%
Questrade	36%	7	68%	3	32%
RBC Direct Investing	86%	2	82%	2	-4%
Scotia iTRADE	66%	5	38%	7	-28%
TD Direct Investing	20%	11	50%	6	30%
Virtual Brokers	8%	14	8%	13	0%

Looking at the year over year results, one of the first things that jumps out is that the top two firms are the same this year as last, however the absolute scores are lower. So, last year, Qtrade Investor took top spot with 90% however this year they fell by six percentage points to 84%. Similarly, RBC Direct Investing was in second place last year at 86% and declined to 82% in the most recent set of rankings. While still strong relative to the rest of the field it appears both of these firms took their foot of the gas pedal slightly in 2018.

Who did put more effort into service in 2018, however, was readily apparent. Questrade leaped by 32 percentage points from 36% for 2017 to 68% for 2018. Similarly, TD Direct Investing also shot up by 30 percentage points to 50%, moving from 11^th place up to 6^th. CIBC Investor’s Edge also showed double digit improvement, climbing by 14 percentage points to 30% for 2018.

In the other direction, the most remarkable drop off in service was from Scotia iTRADE, who fell 28 percentage points from 66% in 2017’s rankings to 38% in the 2018 analysis. Desjardins Online Brokerage, who was tied for third place last year with 74%, fell this year to 5^th place (which is still a strong finish) despite a drop of 22 percentage points to 52%.

For DIY investors hunting around for an online trading account, getting a sense of the service experience is partly an exercise in reviewing what other investors have to say about their own experiences as well as relying on rankings and ratings. The interesting contrasts in the service experience appear when compared with the Globe and Mail’s online brokerage rankings – specifically for firms such as Virtual Brokers (which took top spot in the online brokerage ranking this year) and bank-owned brokerage BMO InvestorLine (who also scored well). The wide difference in scoring suggest that there are some areas of the online trading experience where some firms are doing well and others where those same firms might be lagging their peers.

By the same token, for online brokerage firms that are doing well in different rankings/evaluations, this could be a strong indicator of a generally strong (positive) experience. Qtrade Investor, for example, scored well in Globe and Mail ranking as well as taking top honours in the Surviscor evaluation, which indicates that they will likely be a go-to consideration for DIY investors who use rankings/ratings to decide which online brokerages to choose.

Perhaps the most interesting takeaways from the Survsicor results relate to the performance of two particular firms.

The first is Interactive Brokers Canada. Largely relegated to the category of “active trader” online brokerage, this broker has often (anecdotally) been cited by investors as hands off and not providing much in the way of support or service. In the case of the latter, however, there is clearly a disconnect. Interactive Brokers scored fourth in terms of service in 2018, improving 8 percentage points over 2017. While bank-owned brokerages would be assumed to have a lock on offering quality service, in reality 3 out of the top 4 online brokerages in terms of service ratings are non-bank-owned online brokerages.

Another firm to watch, in terms of rankings performance, is Questrade. Rob Carrick stated that “This fast-growing independent is riding an improvement trajectory that will most likely put it on top of this ranking in the next several years.” The surge in performance in service quality rating for 2018 also seem to reflect this trend. So, in terms of driving feature development and client experience across the online brokerage space in Canada, Questrade appears to be taking a leadership position.

As for the firms out of the spotlight, or worse, in the bottom end of the service pack, it will be interesting to see whether the latest Surviscor ratings prompt any notable changes. Interestingly, if the service experience is as good or poor as reflected in the latest Surviscor results, there’s a good chance we will see the spillover in forum and social media posts.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Some Q-onfusion

For frequent watchers of the deals and promotions section, Questrade’s latest move to cover transfer fees is a significant event in the marketplace. In this post, from RedFlagDeals.com, there seems to be some confusion regarding the Questrade offer that just launched and a historical offer from different brokerage, Qtrade Investor, whose name tends to trip up forum posters who like to abbreviate.

Passive Aggressive

When it comes to passive investing, it seems like everyone in the business of providing ETFs is jumping on the passive train. In this post, from RedFlagDeals.com, it’s clear that BMO was not about to let some big moves in the ETF space go unchallenged. Check out the reactions to the launch of some new ETFs, ZGRO, ZBAL, ZCON and ZMI.

Into the Close

With another week in the books, it looks like the market storms that spooked investors in December are well behind us. One thing that hasn’t really gone away, however, is the consensus that volatility will be a big part of the market experience for the remainder of the year. As this weekend’s NBA All-Star game showcased, it’s best to be prudent when it comes to the markets. Even though certain trades might seem like a slam dunk, your portfolio can still end up in the loser’s circle by trying to get too fancy.