While April showers might bring May flowers, April is also about the time to start nervously watching the calendar for the ‘sell in May and go away’ moment. For many Canadian online brokerages, however, the hope is that wherever investors decide to go this spring, that they take their brokerage account along for the ride with a smartphone.
In this week’s roundup, we keep it nice and light (we have to enjoy the great weather sometime right?) and take a look at the latest online brokerage to release a new client website. From there we’ll take a look at a very handy resource for DIY and mainstream investors to enhance their own financial literacy. As usual, we’ll include a look the latest chatter from investors across social media and from the investor forums.
A Classic Move
Another week, another website release. Following on the heels of RBC Direct Investing’s announced rollout of a new website last week, this past week Desjardins Online Brokerage announced that they are launching a new client website for their Disnat Classic account type.
In 2015 Desjardins Online Brokerage unveiled their current website and their latest rollout of an update to the Disnat Classic website provides users with a consistent, clean look and feel. According to their description of the new website, the new ‘classic’ interface will create an easier navigating experience especially around account management.
Even though their branding has changed some time ago, Desjardins Online Brokerage still uses their original branding of Disnat for the two primary DIY accounts offered to investors: Disnat Direct and Disnat Classic.
While Disnat Direct is geared towards more active investors/traders, the Disnat Classic product is geared towards less active investors. And, as such, the new Disnat Classic interface does a good job of catering to the specific needs of the long-term or less active investor.
One of the great features of the new roll out is the support material that accompanies it. Desjardins has put together a solid selection of tutorials that walk users through the basics of navigating the new layout as well as performing key tasks (such as entering an order or managing accounts).
As far as interfaces go, the classic platform strikes a good balance between usability and features that investors/occasional traders use. In particular, there are handy research tools such as charting and analytics all within the same page and a ‘research’ tab offers more in-depth fundamental insights. While several of these tools (such as Recognia and Morningstar) are available with other brokerages
Similar to the rollout of their refreshed site just over a year ago, this new site for Disnat Classic users offers an interface geared towards modern investors.
The ability to access their new site across multiple devices and screens is even more appropriate for investors who want to stay informed about or manage their account on the go. What continues to be clear though is that Desjardins Online Brokerage continues to focus on user experience and it may just be a matter of time before more and more investors take notice of the efforts being made.
In the Loop
For individuals that are looking for a trusted resources to learn about current events impacting investors, there is a great resource in the newsletter from the Investor Office of the Ontario Securities Commission.
This week’s edition of their newsletter features a great selection of articles on topics such as the risks of binary options and understanding mutual fund series. In fact, there are a number of articles and alerts related to the dangers of binary options and binary options providers that most investors ought to read and stay on top of.
Launched at the end of October 2015, the Investor Office is specifically focused on providing quality information about finance and investing to ‘main street’ investors. And, while the content does definitely contain geographically specific information, the bulk of the material contained pertains to investors across Canada.
To sign up for their newsletter or to access previous issues of the Investor News, click here.
Discount Brokerage Tweets of the Week
Event Horizon
Spring has sprung, and it’s a spectacular week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts, yield hounds, and those who are new to investing. ETFs, technical analysis and trading strategies round out this week’s selection.
ETF providers may be more than a little green with envy as TD’s six new ETFs commanding quite a bit of attention this past week in a couple of posts (here and here) on redflagdeals.com. Worth a read for those considering what TD may have to offer with the ETF mix.
Small Potatoes
Every investor has to start somewhere. For this investor from reddit’s personal finance Canada section, using Questrade’s RESP for a couch potato portfolio required a little bit of help from the DIY community.
Into the Close
That’s a wrap on another crazy week. Wherever you happen to be when reading this week’s roundup, don’t forget to take some time out to relax from behind the screen to have a little fun. In the meantime, for those considering the ‘sell in May’, here’s an idea that can get you in the summer spirit. See you next week!
Welcome to April. While there may be pranks and gags to kick off the start of a new month and a new quarter, it seems like some Canadian discount brokerages are taking the chance to start anew a little too seriously.
In this week’s roundup we take a look at the latest deals action that shows some interesting changes to the makeup of the brokerage landscape. From there, we’ll take a look at a major online brokerage that sees nothing but upside as they bet big on technology. Technology also seems to be the focal point for many DIY investors on Twitter in this week’s tweets summary albeit for those brokerages that are still struggling with bugs. We close out the roundup with more interesting chatter about commission pricing from the investor forums.
Out with the Old
It looks like Canadian discount brokerages have taken spring cleaning seriously this year, especially when it comes to their deals and promotions.
Heading into a new month, the number of commission-free trade and cash back offers from Canada’s online brokerages saw a sharp decline, with a significant number of offers expiring at the end of March. While many of these deals were deployed specifically to capitalize on the seasonal interest in RSP accounts, only a handful of brokerages have standing offers that ran alongside RSP season and into what is now ‘income tax refund’ season.
That said, there are still 19 offers that we’ve noted, which still provides many DIY investors interested in an online trading or investing account some kind of incentive to try one brokerage over another. Of course, the big unknown for many brokerages is whether DIY investors are turning to more passive or automated strategies (such as Robo-advisors) or interest in markets is waning in favour of other more popular investment types.
While the firm numbers of account openings and assets brought into each firm will give the best idea of what’s going on, there is something that is definitely different about the start of Q2 2016 – especially in the deals and promotions space.
Specifically, what stands out as interesting is that one of the most active brokerages (historically) in offering commission-free and cash-back offers, Questrade, is not significantly present in this category at the launch of a new month and new quarter.
In addition, Virtual Brokers’ move to offer an as yet unrivaled commission-free trading offer means that the winds of change appear to be blowing in the discount brokerage deals space. In fact, the new promotions page on Virtual Brokers’ website also signals they’re likely to be more active in offering promotions which will pose a challenge to all other players on the field.
While 19 or so offers is still substantial, it is unlikely that the deals and promotions field will remain this thin for much longer. Whether brokerages are going to mix up their promotional offers to more partner or product offers (VR headsets anyone?) or rely on the tried and true commission-free trade offer, one thing is clear – there is all of a sudden a lot more room for brokerages to make a splash by offering up a bold offer to DIY investors.
The interview itself offers a great overview of Interactive Brokers’ focus on technology and automating as much of their process as possible in order to achieve efficiency and also cost advantages over their peers.
Three points from this interview stand out: the role of robo-advisors, mobile trading and technological preparedness.
With regards to robo-advisors, it’s clear that Interactive Brokers sees this as a significant enough trend to get in on. In particular, their acquisition of Covestor as well as their investor marketplace are both moves that diversify Interactive Brokers away from just the DIY investor client. In fact, many of the tools mentioned by Peterffy resemble the automatic or more passive investor strategies that don’t fit their typical ‘active trader’ client base signaling a clear interest in going after the ‘managed wealth’ space.
Another area in which Interactive Brokers is signaling they’re going to push into is mobile trading. This is particularly challenging to get right for active traders, many of whom are still trading on a desktop (with multiple monitors). That said, there is definitely a balance between form, function and features when going from one screen size and device to another.
The success and resonance of the Robinhood app with mobile users signals that thinking ‘mobile first’ tends to favour functionality over features. Interactive Brokers’ platforms, however, are appealing because they are so robust. Fortunately, smartphones now are powerful enough to handle heavy applications, however usability will ultimately determine whether a trader feels comfortable enough stepping away from their desk and letting their phone be their lifeline to the market action.
Finally, the most ominous (for competitor brokerages) comment came at the end of the interview where Peterffy was asked about the landscape of the online brokerage industry in the next five years to which he responded “Five years from now the industry will have fewer and technologically more advanced participants…” The pace of technological change and the associated costs of keeping up with that technology means that Canadian online brokerages who aren’t able to fund this technological arms race will likely be made obsolete.
Discount Brokerage Tweets of the Week
Even though the weather was improving outside, storm clouds were brewing on Twitter. From platform outages, to delayed tax slips and frustrations with reporting, Twitter users didn’t hold back when it came to the shortcomings of Canadian brokerages. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTrade, TD Direct Investing and Virtual Brokers.
From the Forums
A valuable lesson
Whether you focus on price or value is the job of marketing departments and sales staff being able to tell one story or the other. In this post from Reddit, there is definitely some debate over whether recent fee changes at Virtual Brokers represent an increase in price or an increase in value.
Sound Bites
An article on discount brokerage commission fees from the Globe and Mail’s Rob Carrick this past week stirred up a lot of strong opinions about the current perception of price and value across the Canadian brokerage landscape.
Into the Close
That does it for another week. Here’s a great little roundup of April fool’s day ideas that are surprisingly not all that far-fetched. Enjoy the sunshine if you’re lucky enough to have some this weekend!
People often look at springtime as a chance to clean house. And, for many of Canada’s discount brokerages, that is exactly what they did with the deals and promotions heading into April.
At the outset of this month, there are almost half as few deals being offered as there were throughout March which is a signal that online brokerages are stepping back as the summer season approaches.
Cash Back / Free Trade
Referral Promotions
Transfer Fee Promotions
Contests & Other Offers
Total
March
15
4
10
4
33
April
6
3
8
4
19
The biggest decline was seen in the number of cash back or commission-free trades being offered however at the time of publication, several brokerages, such as Scotia iTrade and Virtual Brokers, still had the expired offers listed on their website raising the prospect of a potential extension from someone.
What is interesting is who has managed to keep a promotion alive through the spring turnover. Specifically, Virtual Brokers’ commission-free trading offer has definitely been on the radar of many deal hunters and the two bank-owned brokerages in the mix, BMO InvestorLine and TD Direct Investing, have much more attention thanks to the exit of so many other players.
There’s a high likelihood that many brokerages will be assessing where they need to go next now that the busy first quarter of 2016 is officially over. With tax return (and for many, tax refund) season now underway, we anticipate that the deals and promotions activity will start to pick up again in April.
For DIY investors, 19 discount brokerage deals on the table still means that there are still lots of options to consider, however with any deal be sure to read the fine print to know exactly what strings are attached.
Expired Deals
The list of expired Canadian discount brokerages deals from last month is quite long. Here’s a quick list of what expired in March:
Questrade – Apple Watch ($500 Apple Gift Card)
Scotia iTrade – Free Trade Offer
Scotia iTrade – Refer a Friend
Virtual Brokers – RRSP 2016 Promotion
Credential Direct – Cash back offer
Questrade – 3 months free trading
Questrade – 3 months unlimited trading
NBDB – $500 or $1000 commission credit
HSBC InvestDirect – 30 commission-free trades
Extended Deals
Only one discount brokerage at the start of the month extended an existing offer. Desjardins Online Brokerage kept their $500 commission credit alive for another month extending the deadline for this offer out to April 30, 2016.
New Deals
No new deals to announce at the beginning of April.
A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package.
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully.
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive 3 months of commission-free equity trading and a $150 USD/mo credit towards Edge Trader Pro for 3 months. Use promo code sent at sign up to qualify. Be sure to read full terms and conditions for details.
Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000 or B) $250,000 in net new assets and you may be eligible to receive either A) $200 cash back and 100 commission-free equity trades or B) $600 cash back and 100 commission-free equity trades. Use promo code Spring1600 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer.
A) $100,000 – $249,999 B) $250,000+
A) $200 cash back + 100 commission-free equity trades. B) $600 cash back + 100 commission-free equity trades.
60 days for equity trades. Cash back will be deposited the week of Oct. 10, 2016. Commission rebates will be paid week of Oct. 10, 2016.
Open and fund a new account at TD Direct Investing with at least A) $25,000; B) $50,000 or C) $100,000+ and you may be eligible to receive up to A) 50; B) 100 or C) 200 commission-free trades. Be sure to read terms and conditions for full details.
A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000
A) 50 commission-free trades B) 100 commission-free trades C) 200 commission-free trades
Disnat is offering new & existing clients $500 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info.
Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements.
A) $1,000 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+
$25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back
Cash deposited into Questrade billing account within 7 days after funding period ends (90 days)
If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link.
A) $10,000 B) $50,000+
A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50)
If you (an existing Virtual Brokers client) refer a friend or family member to open a new account with at least $5,000 you may be eligible to receive $25 cash per referral. For 3 or more referrals Virtual Brokers will add a $50 bonus. Referred individuals depositing either A) $5,000 – $50,000 or B) $50,000+ may be eligible to receive A) $25 or B) $50 cash back. Be sure to read the full terms and conditions carefully for full details. Be sure to read the terms and conditions to this offer carefully for full details.
A) $5,000 – $50,000 B) $50,000+
Referrer: $25 per referral; $50 bonus for each 3 or more referrals. Referee: A) $25 B) $50
Cash to be deposited to VB account by August 15, 2016.
If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details.
$50,000
You(referrer): $50; Your Friend(referee): $50
Payout occurs after 45 days (subject to conditions).
Transfer $25,000 or more from another brokerage and Credential Direct will cover up to $150 in transfer fees. Use promo code SWITCHME when signing up to qualify for the transfer promotion.
Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to read terms and conditions for full details.
Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made.
$135
$25,000
confirmed with reps. Contact client service for more info (1-800-567-3343)
none
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees
Disnat is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info.
Qtrade Investor will reimburse your transfer fee up to $150 when transferring a balance of $10,000 or more. For reimbursement, please mail or fax a copy of your statement from the transferring institution that shows the transfer charge to Qtrade Investor at 604.484.2627 and indicate your Qtrade Investor account number.
Desjardins Online Brokerage is offering $50 in commission credits for new Disnat Classic clients depositing at least $1,000. See terms and conditions for full details.
Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details.
Open a new account with Questrade with at least $2,000 and you may be eligible to receive free tax software and the platinum bundle package form H&R Block. Use promo code HRBLOCK2016 when signing up to qualify. Read the terms and conditions for full details.
For those who can’t wait to see Old Man Winter actually leave, this weekend couldn’t come fast enough. But, rest assured, signs of spring abound and as #BirdieSanders showed, that offers something to smile about. Canadian discount brokerages also seem to be taking their cues from Mother Nature by doing a little spring cleaning of their own.
In this shortened week’s roundup, we take a look at the latest online brokerage to roll out a brand new website for DIY investors. Next we report on signs of life at one independent online brokerage that suggests they’re looking to be a more active presence in the brokerage space. As usual, we take a look at the latest chatter on Twitter and across the financial forums and highlight the upcoming investor education events for next week.
RBC Direct Investing rolling out new website
Spring is a great time to say goodbye to old and welcome in the new. For RBC Direct Investing, it looks like this spring will bring with it a dramatic update to their website.
The timing of RBC Direct Investing’s website roll out comes well after the big wave of updates that took place across 2014/2015 for many Canadian online brokerages. While going first means having to take a leap of faith in terms of design and whether or not users will respond (or cry foul) about certain choices, rolling out a ‘new’ website at this point RBC Direct Investing means that expectations for getting it right are likely to also be higher.
One of the biggest challenges for financial service providers, especially online brokerages and those closely linked to technology, is striking a balance between being innovative and being familiar. By having to also coordinate with their parent brand’s look and feel as well as with expectations from other service lines (like banking), there’s little wonder why redoing a website for a firm such as RBC Direct Investing would take considerable time and effort.
Of course, the time that it has taken to get their online presence to “appear” modern has not gone unnoticed. In this past year’s Globe and Mail online brokerage rankings, for example, Rob Carrick commented that “Canada’s biggest bank should have a sharper product.” And, while that comment likely reflects the expectations of a firm (technically the parent of RBC Direct Investing) that netted a quarterly income of $2.4B, Carrick’s remark that “The homepage for RBC Direct Investing’s public website is old school. O-L-D school” is particularly stinging.
Like many things in the online world, change is inevitable. Let’s take a look at some of the features RBC Direct Investing’s new website includes (for more info, check out the video below).
Design/Aesthetics
The new RBC Direct Investing website appears to be designed to more than accommodate both desktop and tablet users. Like their parent banking website, there is a greater emphasis on panels/boxes so that tablet users can scroll and tap their way through sections of the new site. The switch in navigating styles will undoubtedly appeal to some more than others, however the use of boxes is a common trend among many more ‘tablet friendly’ responsive websites. That said, there as with the release of their banking site interface in January, there is bound to no shortage of strong opinions as people react to the new layout.
Placing an Order
Another significant change is the use of “Place an Order” instead of “Trade”. While it may take some getting used when existing users want to execute a trade, the new label is more meaningful and intuitive to new users.
Directing Attention
While there’s lots to say from a design and user experience perspective, what ultimately stands out about the design is the way in which the new tiled layout hopes to strategically meet user needs but also direct user engagement.
Areas like their “My Portfolio” section, for example, have much more visually noticeable and attractive elements (like pictures and illustrations) that naturally stand out against the very plain blue boxes. Those more noticeable elements, shown in the following screenshot, highlight where RBC Direct Investing would like to attract more deposits or engage more deeply in an article that undoubtedly positions RBC as a solution to a financial services need.
At first blush, the latest update to the website looks to make information easier and more intuitive to find. It is also readily apparent that they are turning a tiled design to optimize the user experience on tablets and mobile devices, however this may or may not go over well as it requires users to adapt their navigation style to include clicking on tiles.
Overall, like the roll out of any new product, it will ultimately have to face the test of time and users to see whether or not it hits the right mark with critics. That said, with the pace of technology and the entrance of new, more agile and web-savvy competitors, it is likely the website refresh will (have to) happen a lot sooner.
Green Shoots
Some other notable developments this week included Credential Direct posting yet another webinar geared towards personal finance/investing. While they generally have flown under the radar in the news cycle, Credential Direct has nonetheless been quietly building up their activity level on both social media (via their Twitter handle) and holding more interesting webinars/seminars. It shows they are not standing still despite having quite the uphill battle to fight in terms of pricing and user experience, neither of which will be cheap.
Tweets of the Week
For some brokerages, the weekend couldn’t come fast enough. Mentioned this week are BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE and TD Direct Investing.
Event Horizon
As March heads out like a lamb, it’s a wild and wooly week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts and those interested in short selling. Margin accounts, and tax-efficient investing round out this week’s selection.
For many passive DIY investors, the TD e-series funds are a popular choice. In this post from RedFlagDeals’ investing forum, users weigh in on one user’s question about the merits of going all in on the e-series.
On Borrowed Time
Whether or not to borrow to invest is something that is often debated by investors in the DIY forums. In this post, an individual asks for help weighing the pros and cons of borrowing to invest in an RRSP with Questrade. It’s an interesting read for those contemplating the ‘borrow to invest’ approach.
Into the Close
That’s it for this shortened trading week. Next week DIY investors can begin hunting for more deals and promotions as the deals area is about to get a major reset. Until then, however, Easter treats will have to suffice. Have an egg-stra special long weekend!
If you were like most folks this week, getting adjusted to the one hour less made things feel a little bit foggy. Of course, if you’re following what’s happening with the US elections, candidates are taking all kinds of swings at one another as the contest for presidency heats up. Here in Canada, discount brokerages, while keeping it polite, are nonetheless starting to raise the stakes with one another in a big way this week.
In this week’s roundup we start by first looking at one brokerage’s continued pursuit of mobile trading with the launch of their latest smartwatch trading app. Next we take a look at a small brokerage that seems poised to make a big splash in the deals and promotions pool with a newly launched offer. The event horizon makes a comeback this week and we round out with the latest comments from DIY investors on Twitter and forums.
Watching the Markets
This week Scotia iTrade unveiled their latest upgrade to their mobile trading experience: an Apple watch based app. Their latest addition to the mobile trading suite, which includes smartphone and iPad versions, enables Apple watch users to take a pulse of what’s going on in the markets as well as within their own portfolio.
While the Scotia iTrade Apple Watch app does not let users actually trade from the watch, it does enable users to get updates on balances, monitor watchlists and keep an eye on market activity. Given the dependency of the Apple Watch on the iPhone, however, the full set of trading features available on the iPhone app offers users much more functionality should they need it.
In celebration of their new release, Scotia iTRADE also held a mobile day at their investor centre in downtown Toronto.
When considering the mobile trading landscape, Scotia iTrade is certainly not alone in their pursuit of the smartphone and now smartwatch space.
Most Canadian discount brokerages have some kind of dedicated app or specific mobile site to accommodate smartphone users. In terms of smartwatches, however, there are three online brokerages that have Apple Watch apps specifically built for DIY investors, and two bank-owned brokerages who’ve bundled some of their online investing functionality into their overall banking app.
The three Canadian online brokerages with Apple watch trading apps are:
Interactive Brokers
Qtrade Investor and
Scotia iTrade
What is interesting about the online trading experience on mobile is that the smartwatch is typically limited to providing alerts and updates. In that sense, its role is mainly to monitor what’s going on.
With the Apple Watch in particular, because it is tethered to the iPhone, how an online brokerage’s iPhone-based trading app functions is something individuals interested in these products should also consider.
In the table below, it is particularly noteworthy that almost all Canadian online brokerages, whether they are bank-owned or are independent, have ranked poorly in terms of user reviews. The best rated online brokerage iPhone trading app, based on client reviews from the Apple App Store, turns out to be Qtrade Investor with 4.5 out of 5 stars (based on only 23 reviews). At the other end of the spectrum, Questrade’s IQ app garnered only a 1.5 out of 5 stars and it was based on the highest number of ratings (463) received by any online brokerages’ mobile app.
Online Brokerage
Overall Star Rating*
# of Ratings
Support for Apple Watch
BMO InvestorLine
2
63
No
CIBC Investor’s Edge
2.5
133
No
Interactive Brokers
2.5
179
Yes
Questrade iQ
1.5
463
No
Qtrade Investor
4.5
23
Yes
Scotia iTrade
3
105
Yes
Virtual Brokers
2.5
10
No
Notes
* based on all versions
What stands out in looking at these user ratings is actually how unfavourable consumer ratings are of the mobile experience provided by Canadian online brokerages.
In sharp contrast to the muted ratings received by most Canadian discount brokerages, was the rating of robo-advisor, WealthSimple’s mobile app, which received a glowing 4.5 star rating (based on 51 ratings).
As financial services firms cross the threshold from just being about services to really incorporating technology (ie. Fintech) as part of the service experience, the gap between the incumbent online brokerages and the new entrants into the wealth management space is starting to widen.
For added proof, one need not look further than US online brokerage Robinhood, whose mobile-first design approach has earned them incredibly positive design and user-experience recognition and a 4.5 star rating across 10,107 ratings.
So, while being able to get updates on the market might be nice, there is still a heavy reliance on the smartphone app trading experience and as such, there is clearly lots of work that many Canadian online brokerages need to do in order to win the hearts, minds and design accolades of the newer players in the space.
Virtual Brokers Goes All In on Trading Deal
For savvy traders, patience and timing are a virtue. In this case of deal watchers, this past week Virtual Brokers has launched a monster offer that has, surprisingly, not yet garnered much attention. We suspect that might change quite soon.
Earlier this week Virtual Brokers launched a promotion that offers 3 months free of their $150 USD/mo Edge Trader Pro trading platform which is part of their commission-free trading plan. The minimum deposit to qualify for this offer is $5,000.
What is remarkable about this offer is that it is actually one of the most aggressive free trade offers seen to date.
By signing up for this offer, it appears that an individual would be able to trade commission-free for 3 months with a deposit of $5,000. This seems to be the case since Edge Trader Pro is a required to qualify for the commission-free trading plan, however since the platform fee of $150 USD/mo would be waived, individuals could then trade commission-free (equities only and ECN fees/admin fees/handling fees still apply) for the period of the promotion. At least that’s what the terms and conditions of this offer seem to suggest.
Historically, the only brokerage that has consistently offered 3 months of commission-free trading has been Questrade however for to qualify for 3 months of commission-free trading, an individual would have to pony up a deposit of at least $100,000. Another interesting observation on Virtual Brokers’ latest deal is that there is no deadline stated in the terms and conditions despite it being marketed as a limited time offer.
A little more math, however, puts this offer into further context as to why it is such a big deal.
With 3 months of fees waived, the annual spend for being on the commission-free trading plan with a reasonably standard application-based trading platform totals $1350 USD which breaks down to $112.50 per month (for 12 months). For traders of US equities this works out to about 11 trades per month at the standard commission of $9.95 + any ECN fees or special handling fees – a threshold that many active traders can easily hit.
So, many folks might be wondering what the catch is. For starters, to stay on this program, whether on purpose or by accident will still cost $150 USD/mo once the free trial period expires. What this means is that individuals should carefully consider whether this is the right fit for their trading needs. Another important detail in the terms and conditions is that the $150 USD/mo applies to the Edge Trader Pro platform only, the data plan for which might not really be enough for most very active traders. Finally, Virtual Brokers reserves the right to change the offer at any time during the process, so users need to ensure they monitor the terms of the offer for any modifications that may arise.
With all of the above in mind, how this plays out for other Canadian discount brokerages will be very interesting. Virtual Brokers’ latest offer feels like someone going ‘all in’ at the poker table. One thing is certain, however, and that is that Virtual Brokers’ latest deal will finally uncover how serious other Canadian brokerages are about acquiring the most coveted tier of client: the active trader.
Event Horizon
Spring is in the air, and it’s an exciting week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts and those interested in risk management. Technical analysis and registered accounts round out this week’s selection.
This week’s tweets show once again that clients are increasingly turning to Twitter as a customer service touch point for brokerages big and small. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing.
From the Forums
Eminent Domain
Well, this is not one you see everyday. In this post from Reddit’s personal finance Canada section, one disgruntled Virtual Brokers user decided to leave after receiving a warning regarding the domain name being used to access streaming quotes (from Quotemedia). Worth a read as more than one individual came across the same issue.
Plan B
Having an employer group RSP plan is a great perk, however savvy investors know that sometimes there are ways to stretch their investment dollar further. In this post from the Reddit personal finance Canada section, one investor wanted to know if it was possible to get the best of both worlds by taking advantage of Questrade’s commission-free ETF buying. Find out what other people had to say about their own experiences trying to do the same.
Into the Close
With spring just around the corner, and St. Paddy’s that just passed, green seems to be the theme heading into the weekend – especially if you managed to be the lucky winner of an increasingly large lotto jackpot. Of course if you’re still betting against Canadian Vancouver real estate, with the recent interest rate announcements in the US, you might be inclined to see red for a while longer. Regardless, have a great weekend and strap in for a wild start to the spring next week!
As week two of March comes to an end, there was one clear story that seemed to dominate the news cycle for Canadians – the visit of Prime Minister Justin Trudeau with US President Barack Obama. Of the many angles on the coverage of this visit, one of the most interesting was the theme of friendship between Canada and our neighbor to the South. The notion of friendship is something that Canadian discount brokerages also know a thing or two about, especially when it comes to trying to somehow rewarding clients for bringing their friends over to the same brokerage.
To kick off this week’s roundup, we take a look at the trading activity from a major US online brokerage who continues to gain market share with the most lucrative segment of online investors – active traders. Next, we provide a glimpse into an in-depth story on refer-a-friend promotions that we referenced in last week’s roundup. From there we’ll cover the conversations investors were having with Canadian online brokerages and with each other on Twitter and in the Canadian investing forums.
Interactive Brokers Trading Metrics
The machine that is Interactive Brokers continues to fire on all cylinders. Trading metrics from the month of February were released earlier this month and numbers across key company metrics continue to point to Interactive Brokers doing something right.
While trading volumes (measured as daily average revenue trades) were lower than last month by 8%, on a year over year basis, trading volumes of 767 thousand DARTs was a whopping 21% higher than the same period last year, reinforcing the fact that traders love volatility and traders tend to love Interactive Brokers. To that end, Interactive Brokers continued its monthly client growth chart with a 1% bump over January and 340 thousand clients now under their belt – with each client making an impressive 527 trades (on average) per year and an average commission per cleared client order of $3.78.
Another interesting observation of the Interactive Brokers Canada website is the requirement that individuals actually be an active trader to be their client. More specifically, the announcement on the Interactive Brokers Canada website section for RSPs and TFSAs, states that they require the following from customers:
“You must have executed at least 100 trades for any product type or 100 simulated trades in our real-time demo”
This qualification is especially interesting within a registered account, since many individuals look at the RSP account as a ‘long-term’ play and a place to let dividend investing work its magic (since it is exempt from the US withholding tax on dividends from US listed stocks). It could also be equally contentious for individuals considering actively trading in their TFSA, since there have been some stories of the CRA scrutinizing individuals who’ve managed to substantially grow their TFSA by trading.
Nonetheless, it is also a very interesting approach to qualify who it is they want as a client. Clearly Interactive Brokers’ stats show they appeal to and are built around a strong base of active traders. The move to either require a history of a relatively arbitrary 100 trade threshold or to have an individual not only sign onto their demo but also place 100 trades with it means that they’re actively funneling prospective clients into their system in a much more meaningful way than just giving a simple demo platform access away.
In short, it looks like Interactive Brokers is continuing to build their strategy and product around the active trader experience, and with this latest qualification to join them, they’re not only building their brand as one that traders have to aspire to (century club anyone?) but at the same time, they’re very cleverly qualifying who they want as a client and who they are ok with turning away.
That’s What Friends are For
This week we saw a great story about friends getting together on an international stage. Of course while much of the goodwill is also about great public relations, there is no discounting the fact that the recommendations and referrals that come from one leader to another will impact the decisions each leader makes.
On a much smaller scale, the value of referrals to financial services is a pivotal way in which online brokerages can lower their cost of acquiring new clients and also likely get better clients as a result.
As part of our continued look into the deals and promotions landscape, this week we launched the first in a two-part series that analyzes the current refer-a-friend promotions available from four popular Canadian discount brokerages.
Specifically, the first part of this series take a detailed look at what the incentives are like for those who refer a friend or family member as well as the incentives for those actually opening and funding the account. When comparing the different offers side by side, it is not only interesting to see just how different the offer amounts are, but what was especially interesting to discover was how each online brokerage is actually valuing clients who have more money/assets. Click here to read part one of the series & stay tuned for part two next week.
Extra Mileage
While PM Trudeau was busy making front page news, SparxTrading also got a great little plug from Canadian personal finance writer Rob Carrick in the Globe and Mail. Specifically SparxTrading.com made the list of his top web links, especially for those on the hunt for a new brokerage. For any Air Miles enthusiasts the article is a good read especially in light of that program’s recent announcement to retire miles. Judging by the comments and shares from that article, the announcement has made some serious waves for passionate collectors.
Tweets of the Week
From outages to outrage, this week DIY investors voiced their concerns that technical glitches continue plague Canadian discount brokerages this week. Mentioned in this scan were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTrade, TD Direct Investing & Virtual Brokers.
From the Forums
Which way to robo?
As readers may have already guessed, we love to compare things. In this post, from RedFlagDeals.com, one investor asks about some feedback on some of the more popular robo-advisor platforms currently available. Worth a read for those interested in seeing what folks are thinking about.
Questrade vs Virtual Brokers
It’s been a while since we’ve mentioned this ongoing debate between two of the long standing deep discount online brokerages, but this latest post on Reddit provide a good look at why people online have tended to stick up for Questrade more so than Virtual Brokers. Interestingly, Questrade’s community team rep also weighs in on the conversation.
Into the Close
Nothing takes the edge off losing an hour like the prospect of the opening bell coming an hour sooner. For those lucky enough to get some great weather this weekend, make the most of the extra sunshine! For those who need to fill their post-House-of-Cards binge Whitehouse cravings, here is some fun footage of President Obama and PM Justin Trudeau trading jabs at the state dinner. Have a great weekend!
*Update Mar. 18* While there were lots of offers available to DIY investors from Canadian online brokerages into the RRSP contribution deadline, there were definitely fewer than last year. Volatile markets and Canadians signaling their reluctance to contribute to an RRSP this year might have contributed to the pullback in participation by brokerages however there may also be signs that the Canadian discount brokerage landscape may be gearing up for the inevitable shakeup.
Heading into this new month there are two big stories. First, Virtual Brokers has started to offer referrals for ‘friends and family’ which now enables Virtual Brokers’ clients to earn a cash referral fee for a new account signup.
The second exciting story is that we’re refining the way in which discount brokerage promotions are being reported and expanding the types of promotions we’re covering. One of the primary objectives of SparxTrading.com is to help simplify the process of choosing an online brokerage and that includes sifting through the deals and promotions being offered.
With so many offers currently on the market things have gotten a bit unwieldy and so we’ve decided to split the deals and promotions into the following four categories for easier comparison and review:
Cash Back/Free Trade/Product Offer Promotions
Referral Promotions
Transfer Fee Promotions
Contests & Other Offers
The Cash Back/Free Trade/Product Offer category of promotions includes those offers from brokerages that typically consist of a user either getting cash back, free trades or trading credits (either through waived commission fees or commission reimbursements) and product offer promotions where a discount brokerage may be offering up a tangible item or equivalent gift card which has a definable market value.
The referral promotions cover the affiliate programs that a brokerage may be offering. These would typically include the “refer-a-friend” style promotions as well as any affiliate program codes that SparxTrading has access to (and for which we may receive any compensation for).
The transfer fee table will remain unchanged and it covers the fees that online brokerages are typically willing to cover when transferring between one brokerage and another.
Finally, the ‘contests & other offers’ covers any additional promotion that a brokerage might be running that is advertised to new or existing clients or even to the general public (as most contests are generally open to more than just clients).
We’re excited by the update and look forward to seeing where things go from here as there are 19 offers at the time of writing but 11 deals and promotions that are scheduled to expire in March which should make this month an exciting one. As always, if there are promotions that you’re aware of that we haven’t included, let us know and we can share it with all of our readers.
Expired Deals
Only one offer officially expired at the end of February: Questrade’s 25 commission-free trades for a year offer. That said, there are two offers that expire at the end of day (11:59 ET) on March 1st: Questrade’s 3 months of commission-free trading (code RSP2016) and BMO InvestorLine’s 2016 combined free trade and cash back offer (See extended deals section for update). Questrade also has another promotion scheduled to expire on the 4th of March.
Extended Deals
*Update Mar. 2: BMO InvestorLine has extended their combined free trade and cash back offer through the end of May. See table below for updated deadline date and promo code.*
No deal extensions were noted at the time of publication.
New Deals
*Update Mar. 18: Virtual Brokers has just launched another new promotion and it is a big one. They are offering up 3 months free of their Edge Trader Pro trading platform which then qualifies a user to trade on their commission-free trading commission plan. In short, this offer lets users trade for 3 months commission-free (on equities only) since the $150 USD/mo platform fee associated with this plan will be credited for 3 months. The minimum deposit required to qualify for this promotion is $5,000 CAD. Be sure to see the table below for more details.
*Update Mar. 2: Qtrade Investor has a transfer fee promotion that will cover transfer fees from another brokerage for a deposit of at least $10,000. See table below for more details.*
Virtual Brokers is the only Canadian online brokerage to start off March with a new promotion. They are launching a referral program – albeit for a limited time – that offers $25 cash back for a referral from a friend or family member of an existing Virtual Brokers account holder. Interestingly, and similar to Questrade’s referral promotion, individuals referring 3 or more new accounts to Virtual Brokers receive an extra $50. For individuals referred to this program, there are tiered rewards depending on deposit level. Individuals depositing at least $5,000 (and up to $50,000) can receive a $25 cash back offer; individuals contributing more than $50,000 can receive a cash back bonus of $50.
This new offer is interesting on a number of levels, not the least of which is actually the detail with which the terms and conditions spell out who is considered a ‘friend’ for the purposes of this promotion. See the table below for more details.
A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package.
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully.
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive 3 months of commission-free equity trading and a $150 USD/mo credit towards Edge Trader Pro for 3 months. Use promo code sent at sign up to qualify. Be sure to read full terms and conditions for details.
Open and fund a new account with Virtual Brokers with at least A) $15,000; B) $25,000 C) $50,000; D) $100,000 or E) $250,000+ and you may be eligible to receive A) 25; B) 50; C) 100; D) 150 or E) 200 commission-free equity (stock & ETF) trades. In addition, qualifying applicants will also be entered into a draw for a $500 Apple gift card. Use promo code 200APPLEWATCH when signing up to be eligible. Be sure to read the terms and conditions for full details.
A) $15,000 – $24,999 B) $25,000 – $49,999 C) $50,000 – $99,999 D) $100,000 – $249,999 E) $250,000+
A) 25 commission-free trades B) 50 commission-free trades C) 100 commission-free trades D) 150 commission-free trades E) 200 commission-free trades
90 days (cash for commissions to be credited back Aug. 2, 2016)
Open and fund a new National Bank Direct Brokerage account with at least A) $20,000 or B) $100,00 and you may be eligible to receive up to either A) $500 or B) $1,000 in commission credits. Use promo code CashBack2016 when registering for an account to qualify. Be sure to read full terms and conditions for additional details.
A) $20,000 – $99,999 B) $100,000+
A) $500 in commission credit B) $1,000 in commission credit
Open and fund a new account at Scotia iTrade with at least A) $25,000; B) $50,000; C) $100,000 or $250,000+ and you may be eligible to receive up to A) 75; B) 150; C) 300 or D) 500 commission-free trades. Use promo code TRADES-RSP16 when opening account to be eligible. Be sure to read terms and conditions for full details.
A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000+
A) 75 commission-free trades B) 150 commission-free trades C) 300 commission-free trades D) 500 commission-free trades
Open and fund a new account at TD Direct Investing with at least A) $25,000; B) $50,000 or C) $100,000+ and you may be eligible to receive up to A) 50; B) 100 or C) 200 commission-free trades. Be sure to read terms and conditions for full details.
A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000
A) 50 commission-free trades B) 100 commission-free trades C) 200 commission-free trades
Disnat is offering new & existing clients $500 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info.
Open or fund an eligible account with at least $100,000 and make at least one commission generating trade and you may be eligible to receive a $500 gift card for the Apple Store. Use promo code APPLEWATCH when signing up. Be sure to read terms and conditions carefully.
$100,000
$500 Apple Store gift card
Gift card will be sent within 30 days of client meeting eligibility requirements.
Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000 or B) $250,000 in net new assets and you may be eligible to receive either A) $200 cash back and 100 commission-free equity trades or B) $600 cash back and 100 commission-free equity trades. Use promo code Spring1600 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer.
A) $100,000 – $249,999 B) $250,000+
A) $200 cash back + 100 commission-free equity trades. B) $600 cash back + 100 commission-free equity trades.
60 days for equity trades. Cash back will be deposited the week of Oct. 10, 2016. Commission rebates will be paid week of Oct. 10, 2016.
Open and fund a new qualifying account (registered or margin) with at least A) $2,000; B) $25,000 or C) $50,000 and receive either A) 1 month; B) 2 months or C) 3 months of commission-free trading. Use promo code RSP2016 when registering. Be sure to read terms and conditions for full details.
Open and fund a new qualifying account (registered or margin) with at least A) $1,000; B) $25,000 or C) $50,000 and receive either A) 1 month; B) 2 months or C) 3 months of commission-free trading. Use promo code UNLIMITEDW16 when registering. Be sure to read terms and conditions for full details.
Open a new qualifying account with HSBC InvestDirect and you could be eligible to receive up to 30 commission-free North American equity trades. Be sure to read terms and conditions for full details.
Open and fund a new account (or existing clients can transfer in new assets) at Credential Direct with at least A) $15,000; B) $50,000; C) $150,000; D) $500,000 or E) $1,000,000 and you may be eligible to receive at least A) $75; B) $125; C) $200; D) $500 or E) $1,000. Applicants need to use code CASH2016RSP and fund account in order to qualify for cash back offer. Be sure to read terms and conditions for full details.
A) $15,000 – $49,999 B) $50,000 – $149,999 C) $150,000 – $499,999 D) $500,000 – $999,999 E) $1,000,000+
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc
$1,000
$50 commission credit
none
none
none
Referral Promotions
Company
Brief Description
Minimum Deposit Amount
Incentive Structure
Time Limit to Use Commission/Cash Offer Deposit
Details Link
Deadline
Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements.
A) $1,000 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+
$25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back
Cash deposited into Questrade billing account within 7 days after funding period ends (90 days)
If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link.
A) $10,000 B) $50,000+
A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50)
If you (an existing Virtual Brokers client) refer a friend or family member to open a new account with at least $5,000 you may be eligible to receive $25 cash per referral. For 3 or more referrals Virtual Brokers will add a $50 bonus. Referred individuals depositing either A) $5,000 – $50,000 or B) $50,000+ may be eligible to receive A) $25 or B) $50 cash back. Be sure to read the full terms and conditions carefully for full details. Be sure to read the terms and conditions to this offer carefully for full details.
A) $5,000 – $50,000 B) $50,000+
Referrer: $25 per referral; $50 bonus for each 3 or more referrals. Referee: A) $25 B) $50
Cash to be deposited to VB account by August 15, 2016.
If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details.
$50,000
You(referrer): $50; Your Friend(referee): $50
Payout occurs after 45 days (subject to conditions).
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc
$1,000
$50 commission credit
none
none
none
Last Updated: Mar. 1, 2016 21:30 PT
Transfer Fee Promotions
Company
Brief Description
Maximum Transfer Fee Coverage Amount
Minimum Deposit Amount for Transfer Fee Eligibility
Details Link
Deadline
Qtrade Investor will reimburse your transfer fee up to $150 when transferring a balance of $10,000 or more. For reimbursement, please mail or fax a copy of your statement from the transferring institution that shows the transfer charge to Qtrade Investor at 604.484.2627 and indicate your Qtrade Investor account number.
Transfer $15,000 or more to a new Virtual Brokers account from another brokerage and Virtual Brokers may reimburse up to $150 in transfer fees. See terms and conditions for more information.
Transfer $25,000 or more from another brokerage and Credential Direct will cover up to $150 in transfer fees. Use promo code SWITCHME when signing up to qualify for the transfer promotion.
Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to read terms and conditions for full details.
Transfer at least $25,000 or more in new assets to Scotia iTrade when opening a new account and Scotia iTrade may reimburse transfer fees up to $150. Be sure to read terms and conditions for full details.
Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made.
$135
$25,000
confirmed with reps. Contact client service for more info (1-800-567-3343)
none
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees
Disnat is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info.
Desjardins Online Brokerage is offering $50 in commission credits for new Disnat Classic clients depositing at least $1,000. See terms and conditions for full details.
Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details.
Open a new account with Questrade with at least $2,000 and you may be eligible to receive free tax software and the platinum bundle package form H&R Block. Use promo code HRBLOCK2016 when signing up to qualify. Read the terms and conditions for full details.
Time flies when you’re up against a deadline. That seems to be the theme for many Canadians looking to take advantage of the RRSP contribution deadline for 2015 coming up this Monday. For Canadian discount brokerages, however, it seems that at the end of RRSP season may be signaling the start of an even stormier season ahead.
In this week’s roundup, we take a look at what’s around the corner for deals and promotions as we head into a new month and how we might be seeing the first signs of troubled waters for Canadian brokerages as they try to keep pace with one another. Next we take a look at a recent BNN interview with one ranking agency that highlights how tricky it can be to pick an online brokerage without doing some homework first. From there we take a look at the latest discount brokerage tweets and close out the roundup with a look at what investors were talking about on the forums this week.
Peak Deal?
As the RRSP deadline is fast approaching, Canadian investors will be busy trying to calculate their contributions and limits to ensure they can qualify for the 2015 tax year – at least those who intend to make a contribution. This recent survey from H&R Block stated that only 18% of Canadians surveyed intend to contribute to an RRSP this year. Whether it’s the volatile markets or because of other factors, it is against this backdrop that Canadian discount brokerages have had to figure out how best to encourage DIY investors to sign up for an online brokerage account. Clearly they’ve had their work cut out for them.
For Canadian discount brokerages, the RRSP season is typically among the busiest all year and so it is interesting to reflect on who did (or didn’t) post a promotion this year and what that could mean for deals landscape looks as the next big season i.e. tax return season takes effect.
Looking back at last year, there were 24 deals and promotions being advertised in February with that number shrinking slightly to 20 or so by the time March rolled around. This year, however, there are only 18 offers that have been advertised for February and four of those are set to expire within the first week of March.
So, could this be a signal of firms playing defense because of the DIY investing climate or could this be the first real hint that the Canadian online brokerage landscape may soon be thinning out?
Consider the following. Two big bank-owned brokerages, CIBC Investor’s Edge and RBC Direct Investing, opted to sit out the promotional race RRSP season this year despite having run promotions around the same time last year. While it is not clear if other means they’ve used to fuel the interest in their DIY investing products and services have worked the fact remains that this year, they’ve yielded what little market share there is to be had to big bank-owned competitors as well as independent brokerages who have been running promotions.
Another interesting observations between last year and this year is that some brokerages are running promotions that offer lower value incentives year (or higher barriers to qualify) despite the increased competition.
Virtual Brokers, for example, had an offer last year of 50 commission-free trades which required deposits of $5,000 whereas in 2016 that same number of commission-free trades requires a deposit of $25,000.
All is not doom and gloom, however.
Desjardins Online Brokerage upped their commission-credit offer for new clients to $500 from $300 and Credential Direct entered the deals race earlier this year than they did in 2015. Also, encouragingly for investors, Questrade has continued to put forward more incentives and promotions than other Canadian brokerages which implies that they’re committed to providing incentives to get DIY investors’ attention and ultimately business.
Looking at the big picture, with online brokerage margins being squeezed, a turbulent economic situation and now an added factor of robo-advisors competing for client assets, getting more clients or more assets per client will likely be as important as improving operating efficiency. In either case, offering a promotion or incentive enables them to do both.
There are already whispers from several brokerage sources that making deals and promotions a bigger part of their planning in 2016 is in the cards. Of course, just like in any market, when the value becomes compelling enough, the buyers step back in so for Canadian discount brokerages, the next two months will be their chance to make their case.
Know Thyself
As seasoned or new DIY investors continue to kick the tires on their online brokerage options, what it takes to make a good choice still remains somewhat tricky. After all, almost all brokerages are willing to accept a client’s money however finding out what makes a great ‘fit’ is not something brokerages look at the same way as clients do. What is clear about DIY investing and perhaps about wealth management in general is that nobody will care for your money more than you do.
For DIY investors, the reality of choosing the right online brokerage comes back down to knowing what kinds of services and costs are appropriate for their particular needs. This past week, the president of financial services research firm Surviscor Glenn LaCoste was on BNN offering viewers tips on what to look out for when choosing a brokerage.
Three questions that were highlighted as important for DIY investors looking for an online brokerage to ask were:
Do I know what I am getting myself into?
What kind of account am I looking for?
Do I need the firm to offer both online & mobile options?
Of course, the online brokerage industry is constantly evolving and the differences between firms are narrowing which highlights why DIY investors need to know more about what they want and need since relying on rankings and ratings may cause some confusion.
A good case in point of just how fluid the results of a top online brokerage ranking may be was also illustrated in that same interview.
Of the five brokerages listed as “top picks” (BMO InvestorLine, Scotia iTrade, Questrade, RBC Direct Investing and Qtrade Investor) there were other brokerages that seemed to score higher on Surviscor’s recent rankings that were left off the list. So, for example, RBC Direct Investing was ranked 6th (along with TD Direct Investing) in Surviscor’s 2015 Online Discount Brokerage Review and behind Credential Direct who ranked 5th. Further, in Surviscor’s most recent Service Level Assessment analysis RBC Direct Investing and Questrade ranked 13th and 14th (out of 14) respectively. As such, it was interesting to note that despite scoring higher than RBC Direct Investing on various Surviscor rankings, these top picks did not include Credential Direct (who placed 4th on the service level assessment) and underscores the point that measuring and recommending discount brokerages is always a moving target.
A brokerage that does well or poorly on a ranking or rating in one period may do worse or better on a relative basis when measured at another time frame. Further, even rankings that might measure similar components (such as customer service)will do so in different ways and thus yield different results. In fact, this was the focus of an article published in 2013 that still holds true today: when looking at a rating, ranking or recommendation for a brokerage it is important to understand how and what’s being measured to get a clear picture of what the ranking means. For those shopping around for a brokerage account, the lesson appears to increasingly point to knowing what you want and need before making any decisions on a provider.
Discount Brokerage Tweets of the Week
This week technology strikes again as brokerages big and small work their way through some digital hiccups. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTrade, TD Direct Investing & Virtual Brokers.
From the Forums
A DRIP of this, a dash of that
The power of compounding is an essential ingredient for the long term dividend investor. In this post from RedFlagDeals’ Investing thread, one user was curious how to get up and going with setting up a DRIP at RBC Direct Investing.
Adjust Cause
Tax time is here and with it come the flood of questions from investors trying to make heads and tails of the proper method of tracking their buys and sells. In this post on reddit’s personal finance Canada section, one user has a question about the adjusted cost base calculation for shares purchased in US dollars.
Into the Close
That’s a wrap for this week’s roundup. For the movie buffs, this is the big screen equivalent of the super bowl as some of hollywood’s best and brightest will be walking down the red carpet for the Oscars. Of course, in 2016 in addition to the glitz and glamour, there’ll also be many entertaining (and sometimes NSFW) tweets to go along with it all. Here’s a highlight (or lowlight) reel heading into the big show. Have a great weekend!
Having had such a terrible start to the trading year, this past week offered a reprieve from the bad news. Of course the recent stock market performance has many skeptics shouting from the rooftops but, as it always is, it will be the market that has the last word.
For Canadian discount brokerages, the market they need to be paying attention to is DIY investors. Specifically listening to what they’re asking for and finding a way to deliver it. While many brokerages are looking for ways to innovate, it’s clear that what investors want will ultimately drive popularity and this past week we saw some interesting developments take shape.
In this week’s roundup we take a look at the latest promotional offer from an online brokerage getting creative with ETFs. Next we take a look at a recent review and ranking of online brokerage service and why Canadian online brokerages received a failing grade. As usual, we’ll take a look at what DIY investors were chatting about online and showcase upcoming investor education events.
Canadian ETFs go commission-free at National Bank Direct Brokerage
ETFs continue to make headlines and waves with retail investors and several Canadian online brokerages are looking to leverage this attention.
National Bank Direct Brokerage has once again opened up commission-free ETF trading, making them, at least until the end of June, the fifth Canadian online brokerage to offer up some form of commission-free ETF offering. The offer is open to both new and existing clients and no promotional code is required to take advantage of the commission-free ETF trading program however there are some important conditions.
One of the important distinctions between National Bank Direct Brokerage’s offer and that of the other brokerages is that NBDB’s promotion is limited to Canadian ETFs only. Given the rise in popularity of ETFs, the list of Canadian ETFs numbers somewhere close to 510 (as of December 2015), which technically speaking, would be the highest number of completely commission-free ETFs (i.e. buying and selling are commission-free) being offered by any Canadian brokerage (see table below). So, even though investors may be missing out on trading some of the approximately 1600 US ETFs commission-free, there’s definitely lots for investors to choose from. With the Canadian dollar also being where it is relative to the US dollar, not having to worry about the currency factor is also another bonus of having access to such a wide range of commission-free ETFS, a few of which are US currency hedged.
Online Brokerage
commission-free ETF buying only
commission-free ETF buying AND selling
# of fully commission-free ETFs
Notes
National Bank Direct Brokerage
No
Yes*
511**
*Canadian ETFs only; minimum purchase 100 units;
**estimated as of Feb. 2016
Qtrade Investor
No
Yes
60
Questrade
Yes
No
n/a
Scotia iTRADE
No
Yes
50
Virtual Brokers
Yes
Yes
150
Another important detail for investors considering this offer to take note of is that there is a minimum quantity of 100 units to be purchased in order for this offer to qualify as commission-free. Thus, the offer may be less appealing for investors who fine tune and rebalance their portfolio with small (or odd lot) quantities of purchases and sales.
Finally, the list of ETFs eligible for this promotion is the one published by the Canadian ETF Association found here. The most recent list (at the time of publishing this piece) was from December 2015 however it appears that the list is generally updated monthly (for the previous month’s total) around the middle of each month.
For Canadian DIY investors, having another online brokerage offer up commission-free ETFs is certainly a big plus. If there is a limitation to this offer, however, it is that it is only offered up for a short amount of time.
This is not the first time NBDB has run a promotion offering commission-free ETFs nor are they the only Canadian online brokerage to offer the same kind of promotion (CIBC Investor’s Edge also ran a similar promo last year). Given how fiercely competitive the online brokerage space is, and factoring in the rise in popularity of robo-advisors, if this offer proves to have traction with DIY investors, it seems fair to assume that this won’t be the last time we see National Bank Direct Brokerage (or one of their competitors) roll out an ETF-based program such as this.
Service Shuffle
At a time when client service is starting to become a bigger focus at Canada’s financial services firms, it seems that providing speedy resolution via email is out of focus at Canadian discount brokerages according to the latest assessment by financial services firm Surviscor. Ironically, while email has been the de facto method to communicate online since the internet turned mainstream, today’s investors have so much access to so many digital touch points that it has become a challenge for brokerages, big and small, to keep pace with where there clients are. As a result, the notion of what constitutes ‘service’ has become a much more fluid concept for investors, rankings agencies and brokerages to agree on.
Earlier this month Surviscor announced the results of their latest Service Level Index (SLI) ranking, formerly known as the Customer Email Responsiveness program. This analysis program measures the speed with which different online brokerages respond to online requests for support (via ‘mystery shop’ requests) and uses that as a measure of how strong (or weak) a firm’s service response levels are.
To help provide additional context, Surviscor also applies a tiered rating system according to how quickly a response is received from a brokerage. The rating system ranges from Platinum, which is awarded to firms with a response time of under 2 hours to Bronze which is awarded to those with response times of 8 to 12 hours.
In Surviscor’s latest assessment, which took place over the full year (2015), Qtrade Investor earned the best “Service Level Index” score whereas Desjardins Online Brokerage had the best response time of the brokerages listed. Both firms were close in score, separated only by 2 percentage points however Qtrade Investor scored highest with 88%.
Unfortunately, there were no online brokerages that achieved either a ‘platinum’ or ‘gold’ standard ranking this year meaning that none of the firms assessed had a consistent response time of faster than five hours via email.
What was particularly interesting, however, was just how poorly most brokerages ranked on this assessment. The average ranking for the group worked out to be a meagre 45% with 9 out of the 14 brokerages studied falling beneath that average, with RBC Direct Investing earning a grade of 10%.
In short, according to the Surviscor assessment, “2015 was not a banner year for self-direct brokerage firms….” It seems that according to the numbers shown above, that might be an understatement.
Of course with most of the rankings, ratings and reviews of Canadian online brokerages, these numbers don’t tell the whole story. Specifically, the method used to gauge these service levels may not be the only nor the best way to reach an online brokerage representative for support.
For example, Questrade, who ranked 13th (out of 14) on Surviscor’s SLI assessment, has both live chat support during business hours and also has a Twitter handle which is well monitored (as shown on numerous occasions in our weekly roundups). They also have their own forum on which individuals can submit questions and support requests and they are the only online brokerage to be actively responding and covering popular investor forums, including Reddit.
No other Canadian brokerage, including firms that ranked above Questrade assessment have so far shown the same kind of breadth of coverage.
Another example of alternative support channels can be seen with TD Direct Investing. Unlike most of their bank-owned brokerage peers, TD Direct Investing has dedicated coverage on its support forum TD Helps, it also has its own Twitter feed (although this is a recent development) and both of these appear to be relatively quick methods to get resolution or a proper response to an inquiry, as shown just this past week in the following Twitter interaction:
Interestingly the parent bank of TD Direct Investing placed second in Surviscor’s assessment of the banking services levels showing that the customer service experience in one channel (i.e. banking) might create high expectations for other areas that the bank may be involved with, making it all the more important for bank-owned brokerages to create a consistent brand experience.
The take home message for DIY investors is simply this: that with any ranking or rating it is important to know what is being measured.
In the case of “service” it is even more important to be clear on exactly what that term means since different interpretations of what comprises “service” are (quite evidently) possible, especially in a world where online investors turn to multiple online sources for support.
It would be fair to say that based on Surviscor’s latest ranking of service levels, overall email response times could stand to improve at most Canadian brokerages.
Unfortunately for consumers, with so many brokerages ranking so poorly, it seems that email-related service experience would not be something DIY investors could really expect a strong positive experience with. That said, for those brokerages that have done well, their commitment to providing quick turnaround times via email stands out even more this year and may continue to be an investment that pays off with existing and prospective clients.
Discount Brokerage Tweets of the Week
This week there was a good cross section of responses from DIY investors on Twitter. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing, Virtual Brokers. Interestingly, the Twitter push from CIBC Investor’s Edge seen last week was surprisingly silent.
Event Horizon
The days are getting longer, and it’s an illuminating week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts and yield hounds. Short selling, trading strategies, and a market outlook round out this week’s selection.
Saying good-bye to a brokerage is a common occurrence for many DIY investors. Regardless of the reason, sometimes the exit is not nearly as seamless as investors like. In this post on Reddit, one Questrade user submitted their frustration with the process. Interestingly (especially given the story above) Questrade replied. Worth a read for those considering a switch.
Next stop…the world
Which brokerages will let DIY investors trade internationally? It’s a question that more and more investors are asking yet surprisingly fewer brokerages are answering the call for. In this post, also from Reddit, one user was curious about online brokerages that offered international trading. Of course there were also some alternatives provided which were interesting approaches to international exposure.
Into the Close
Even though the trading week was short, it seems that markets favoured the long trade. But, all may not be as it seems as the bears still have quite a bit of support heading into next week. And, don’t forget, bears are resilient bunch. This story of the ‘water bear’ (tardigrade) coming back to life after surviving being frozen for 30 years might offer some food for thought – especially to all of those in parts of Canada that feel more like Antarctica and of course, those holding onto losing positions in their portfolio. Have a great weekend, keep warm but stay frosty into the week ahead!
This week there was some serious talk about gravity. From the astrophysicists cheering the official confirmation of Einstein’s predicted gravitational waves to the basketball fans in ‘the six’ hoping to observe the NBA’s best and brightest defy gravity at the upcoming All-Star game, this has been an exciting week. Unfortunately for most investors, watching the markets succumb to the pull of gravity has been a tough lesson in the physics of how markets react to uncertainty. For Canadian discount brokerages, there also appear to be distant forces at work which could cause commission prices to feel the gravitational pull on pricing.
While the news around the Canadian discount brokerage industry this past week did not prove or disprove any of Einstein’s theories, there appear to be interesting forces at work for the discount brokerage industry on the horizon. In this edition of the roundup, we take a look at the growing trend of commission-free trading and how it might be poised to take the world by storm. Next, we take a look what DIY investors were talking about both on Twitter and in the investor forums. Finally, we close out the roundup with a look at the upcoming investor education events.
From Zero to Hero
Somewhat akin to the running of the 4-minute mile or the existence of ‘gravitational waves’ the idea that online discount brokerages could offer “zero commission” stock trading seemed impossible until somebody went ahead and showed it could be done.
With firms like Robinhood, in the US, not only has commission-free trading gone from unthinkable to reality, much like the 4-minute mile, there are now multiple firms offering up zero commission trading and potentially many more looking at the model with some notion that they too can do the same.
Earlier this month, a piece in the Investors Chronicle, profiled the rise of the ‘uber discount broker’ in Europe, with the firm iDealing becoming the first online brokerage in Europe to offer commission-free trading as of December 2015. While limited in scope to a handful of smaller markets, it looks like zero commission trading has officially spread to and landed in Europe.
Interestingly, even though ‘commission-free trading’ is being met with mixed reactions in the US, it seems that Europe could be shaping up to be a bit of a battleground for commission-free trading.
We recently noted a hiring post on Robinhood’s career website signaling they too are eagerly looking to bring their commission-free trading model into Europe and perhaps the UK, which would put them in direct competition with iDealing. While there appears to be a number of regulatory challenges for both iDealing and Robinhood to overcome before being cleared to launch in the UK, it seems like a matter of time before either one or both are cleared to enter and massively disrupt the DIY investor market in Europe.
So what does all of this mean for Canadian discount brokerages?
One of the common threads amongst these new “uber discount brokerages” is the use of technology to drive down the operational costs of being a brokerage. They are often small in size and agile in the use of technology to do the heavy lifting. Interestingly, these firms are increasingly being viewed as tech or ‘fintech’ companies first and financial services companies second. In fact, looking at the continued success of Interactive Brokers and the extent to which technology has helped keep operational costs low, there is clearly a case to be made for focusing on IT development.
For the larger bank-owned online brokerages, this poses a significant challenge as they not only have to deploy a competitive trading experience, but they also have to ensure they live up to client expectations of a seamless experience between the banking and the investing touchpoints. A failure in one element of the business is enough to send many Canadians looking to a provider who can get these pieces to work.
With many of Canada’s largest discount brokerages still struggling to create user friendly, intuitive and convenient online experiences, it would be a significant disruption to the Canadian online brokerage landscape should a firm, such as Robinhood, decide to launch within Canada.
Yes, there would be barriers to overcome and trust to be built. What firms like Wealthsimple and other robo-advisors, as well as the relatively young Virtual Brokers have shown is that sometimes it doesn’t take that much time for a lower cost alternative to get noticed.
Another reason for the disruptive nature of zero-commission trading is that not only would ‘commission-free trading’ brokerages have a head start on operating within a no-commission framework, but they are also able to leverage their technological agility and talent pool to have a significant “technology edge” over their counterparts.
While it seems inconceivable that yet another discount brokerage could enter and succeed in the already crowded Canadian DIY investor market, the fact that the wave of zero-commission trading is already starting to spread globally means that it is likely a matter of time before the idea takes root here in Canada. And, just like the four-minute mile barrier being broken, it is now possible for investors and providers alike to envision a world in which zero-commission trading is possible.
Event Horizon
Love is in the air, and it’s an enticing week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts, those who are interested in trading strategies and new to investing. ETFs, technical analysis and risk management round out this week’s selection.
There were cheers and jeers this week on Twitter. On a positive note, it looks like changes to user interfaces are paying off at a couple of brokerages while outages during trading hours took their toll on others. Mentioned this week were BMO InvestorLine, CIBC Investor's Edge, Credential Direct, Questrade, Scotia iTrade and TD Direct Investing.
From the Forums
Tailored Switch
In this post from the Personal Finance Canada thread on reddit, one user requested the community’s input on transferring from Tangerine to Questrade and whether or not this was the ‘smart move’ to make. Worth a read for those interested in the passive investing/CCP strategies.
Seeking Clari-fee-cation
In this post from the RedFlagDeals.com investing forum, one user has a question about stepping into the world of investing within a TFSA at Questrade. There’s some good information for those considering Questrade and the explanation of how ECN fees are incurred
Into the Close
That’s a wrap on this lighter-than-usual roundup. As a reminder to all the traders out there, the Canadian stock markets will be closed on Monday in observance of Family Day in Ontario. Markets will reopen for trading again on Tuesday. In addition to Family Day, it’s also Valentine’s Day and the NBA All-Star game this weekend so whatever your reason to celebrate, you’ve got a great setup to make this weekend a slam dunk!