Tag: Wealthsimple Trade

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Discount Brokerage Deals & Promotions – April 2019

One of the hazards of posting the deals and promotions update on April 1st is that readers might feel like they’re going to get pranked – especially this year with so many offers expiring at the outset of the month.

Alas, while it is true that at the start of this month there are significantly fewer offers available than there were last month, there are more than few reasons to be optimistic about promotions for online investors.

One of the primary reasons to expect the promotional offers board will continue to fill up is that those firms left on the board are getting much more attention and exposure by virtue of being present. Bank-owned brokerages such as BMO InvestorLine and CIBC Investor’s Edge are still in the mix with cash back bonuses which means they’re going to be serious contenders for DIY investors looking for this kind of offer with a big-name bank.

As detailed in the most recent Weekly Roundup, there is also another reason banking on change is a good bet. The landscape for promotional offers is likely to get even more interesting in 2019 thanks to the official launch of Wealthsimple Trade. Their commission-free trading structure means that we expect existing Canadian brokerages to respond in kind with rather creative, headline generating offers.

For now, however, we’re content to ease into the first full month of spring with a solid selection of deals and the prospect that the weeks ahead are bound to be filled with more than few surprises.

Expired Deals

Unlike a typical month, the passing of the RRSP contribution deadline at the beginning of March means that there is a high degree of turnover in the promotions section. There were offers from 6 different online brokerages that expired across March with most of them expiring at the end of the month.  Here is a list of those offers that didn’t make it into April:

  • RBC Direct Investing commission-free trade offer
  • Qtrade Investor Cash Back offer
  • Scotia iTRADE commission-free trade + cash back offer
  • Virtual Brokers RSP cash back offer
  • BMO InvestorLine Winter Campaign
  • TD Direct Investing Winter Promotion

Extended Deals

Like any avid chart watcher, it’s great to see the chart tick in your favour. In this case, there was an uptick in extended deals from CIBC Investor’s Edge, whose cash back offer is now pushed out to early May and Questrade’s massively disruptive transfer fee bonus offer – which has been extended through to the end of June.

New Deals

No new deals to report (yet).



Discount Brokerage Deals

  1. Cash Back/Free Trade/Product Offer Promotions
  2. Referral Promotions
  3. Transfer Fee Promotions
  4. Contests & Other Offers
  5. Digital Advice + Roboadvisor Promotions

Cash Back/Free Trade/Product Offer Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade 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. n/a Discounted Commission Rates none For more details click here none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive $88 in commission credits (up to 17 commission-free trades). Use promo code SPARX88 when signing up. Be sure to read terms and conditions carefully. $1,000 $88 commission credit 60 days Access this offer by clicking here: $88 commission-credit offer . For full terms and conditions, click here. none
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. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2019
Open and fund a new account with at least $5,000 at National Bank Direct Brokerage and you may be eligible to receive up to 50 commission free equity trades, which are good for up to one year. Use promo code: FREE50 when applying. Be sure to read offer terms and conditions for full details. $5,000 50 commission-free trades 12 months National Bank Direct Brokerage 50 Free Trade Offer April 30, 2019
Disnat Desjardins Online Brokerage is offering new clients 1% of assets transferred into the new account in the form of commission credits (to a maximum value of $1,000). Minimum qualifying deposit is $10,000. To qualify, individuals will have to call 1-866-873-7103 and mention promo code DisnatTransfer or email: [email protected]. See details link for more info. $10,000 1% of assets transferred in the form of commission-credits (max credits: $1,000) 6 months Disnat 1% Commission Credit Promo none
Open and fund a new account with at least A) $25,000; B) $100,000; C) $250,000; D) $500,000 or E) $1M+ AND place at least three commission-generating trades and you may be eligible to receive a cash back promotion amount of at least A) $188; B) $388; C) $688; D) $988 or E) $1288. Be sure to read offer terms & conditions for full details. A) $25,000 B) $100,000 C) $250,000 D) $500,000 E) $1M+ A) $188 B) $388 C) $688 D) $988 E) $1288 Cash back will be deposited by November 29, 2019 HSBC InvestDirect 2019 Winter Offer April 30, 2019
Open and fund a new qualifying account with CIBC Investor’s Edge with a deposit of at least A) $25,000; B) $50,000 or C) $100,00+ and you may be eligible to receive a cash back bonus of A) $100; B) $200 or C) $400. This offer is open to both new and existing clients. Be sure to read full terms and conditions for complete details. A) $25,000 B) $50,000 C) $100,000 A) $100 B) $200 C) $400 Cash back will be deposited on the week of September 2nd. CIBC Investor’s Edge Cash Back Promo May 2, 2019
Open and fund a new qualifying account with at least $25,000 and you may qualify for one month of unlimited commission-free trades and up to one month free of an advanced data package. Use promo code ADVANTAGE14 when opening a new account. Be sure to read terms and conditions for full details. $25,000 commission-free trades for 1 month + 1 month of advanced data. 1 month Active Trader Program December 31, 2019
BMO InvestorLine Open a new qualifying account or fund an existing qualifying account at BMO InvestorLine with new assets worth at least A) $50,000; B) $100,000; C) $500,000 or D) $1M+ and you may be eligible to a cash back reward of up to A) $100; B) $300; C) $900 or D) $1600. Use promo code SPARXCASH when registering to qualify. Be sure to read full terms and conditions. A) $50,000 B) $100,000 C) $500,000 D) $1M+ A) $100 B) $300 C) $900 D) $1,600 Cash back will be deposited the week of December 16, 2019. BMO InvestorLine Spring 2019 Campaign June 3, 2019

Expired Offers
Last Updated: Apr. 1, 2019 17:00 PT

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 B) $10,000 C) $25,000 D) $50,000 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) Refer a friend terms and conditions Code Number: 476104302388759 none
If you (an existing Qtrade Investor client) refer a new client to Qtrade Investor and they open an account with at least $1,000 the referrer and the referee may both be eligible to receive $25 cash. See terms and conditions for full details. $1,000 $25 cash back (for both referrer and referee) Cash deposited at the end of the month in which referee’s account funded Refer A Friend to Qtrade Investor none
Scotia iTrade 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) 60 days Refer A Friend to Scotia iTrade tbd
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $5,000 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. $5,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs 45 days after minimum 90 day holding period (subject to conditions). BMO InvestorLine Refer-a-Friend January 2, 2020

Expired Offers
Last Updated: Apr. 1, 2019 17:00 PT

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 no minimum required Transfer Fee Promo June 30, 2019
Transfer $15,000 or more into a new HSBC InvestDirect account and you may be eligible to have up to $152.55 in transfer fees covered. $152.55 $15,000 Confirmed via email contact with HSBC InvestDirect Rep. Contact client service for more information. none
Transfer $15,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details. $150 $15,000 Transfer Fee Rebate none
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $135 in transfer fees. $135 $15,000 Transfer Fee Rebate Details none
Transfer $20,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees. $135 $20,000 Transfer Fee Rebate none
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 contact TD Direct Investing for further details. $150 $25,000 Contact client service for more information (1-800-465-5463). none
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 information (1-800-567-3343). none
Disnat Desjardins Online Brokerage 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 Desjardins Online Brokerage account. You’ll have to call 1-866-873-7103 and mention promo code DisnatTransfer. See details link for more info. $150 $50,000 Disnat 1% Commission Credit Promo none
BMO InvestorLine Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account, by transferring in at least $200,000+ in net new assets and you may be eligible to have transfer fees covered up to $200. Use promo code SPARXCASH when signing up. Be sure to read the terms and conditions for more details on the offer. $200 $200,000 BMO InvestorLine Summer 2018 Campaign September 3, 2018

Expired Offers
Last Updated: Apr. 1, 2019 17:00 PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Disnat Desjardins Online Brokerage, in conjunction with MoneyTalks, is offering 3 months of the “Inside Edge” investor information service to Desjardins Online Brokerage clients. Use promo code DESJ2016 during checkout to qualify. Be sure to read full terms and conditions for more information. n/a MoneyTalks Inside Edge Discount none
Disnat 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. $1,000 Broker@ge 18-30 Promotion none
Scotia iTrade 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. $1,000 StartRight Free Trade offer none
Open and fund a new qualifying account with at least $5,000 at RBC Direct Investing and you may be eligible to receive up to 20 commission-free trades, which are good for up to one year. Use promo code MDFT8 to qualify. This promotion is being marketed towards healthcare workers, so be sure to review terms and conditions or speak to an RBC Direct Investing representative for full details. $5,000 RBC Direct Investing 20 Free Trade Offer Mar. 4, 2019

Expired Offers
Last Updated: Apr.1, 2019 17:00PT

Digital Advice + Roboadvisor Promotions

Robo-advisor / Digital advisor Offer Type Offer Description Min. Deposit Reward / Promotion Promo Code Expiry Date Link
Discounted Management Open and fund a new Questrade Portfolio IQ account with a deposit of at least $1,000 and the first month of management will be free. For more information on Portfolio IQ, click the product link. $1,000 1st month no management fees KDKFNBBC None Questrade Portfolio IQ Promo Offer
Cash Back Open and fund a new or existing SmartFolio account with at least $1,000 and you could receive 0.5% cash back up to $1000. Use promo code PROMO1000 when opening a new account. See terms and conditions for full details. This offer can be combined with the refer-a-friend promotion. $1,000 0.5% cash back to a maximum of $1000. PROMO1000 January 2, 2020 SmartFolio Cash Back Promo
Discounted Management Open a new account with BMO SmartFolio and receive one year of management of up to $15,000 free. See offer terms and conditions for more details. $1,000 1 year no management fees STSF April 30, 2019 SmartFolio New Account Promotion
Cash Back – Referral BMO SmartFolio clients will receive $50 cash back for every friend or family member who opens and funds a new SmartFolio account. Friends and family referred to SmartFolio will receive $50 cash back for opening and funding an account, plus automatic enrollment into SmartFolio’s mass offer in market at the time. See offer terms and conditions for more details. $1,000 $50 cash back (referrer) $50 cash back (referee) Unique link generated from SmartFolio required. None SmartFolio Website
Transfer Fee Coverage Transfer at least $25,000 into Virtual Wealth when opening a new account and you may be eligible to have up to $150 in transfer fees covered by Virtual Wealth. $25,000 up to $150 in transfer fees covered None None Contact customer service directly for more information.
Last Updated: Apr. 1, 2019 17:00 PT
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Discount Brokerage Weekly Roundup – April 1, 2019

And just like that, the first quarter of the year is now in the books. Of course, we all know that time flies, but just like the sci-fi world, for investors time and money are also bending – in this case – because of the yield curve inversion. If it sounds like the financial equivalent of the upside down, it is, and for DIY investors as well as for online brokerages, it portends some stranger things ahead.

In this edition of the roundup, we take a look at the rollover of the deals and promotions activity from March to April and relative quiet (perhaps too quiet) state of affairs regarding commission-free trading. From there we serve up a delightful bouquet of recent developments and trends that DIY investors and online brokerages will want to put on their collective radars. As always, we’ll collect the latest chatter from investors on Twitter and the forums to cap off a busy week in the markets.

Betting on a Better Deal

While the CUSMA or USMCA or whatever it’s called is still being ironed out, the good news for DIY investors is that there are still free trade deals to be found at Canada’s discount brokerages. As we approach the new month, and in particular this month, there is quite a bit of turnover in the online brokerage deals section.

Offers from Scotia iTRADE, Virtual Brokers, RBC Direct Investing and Qtrade Investor all expired at the end of March. Encouragingly, CIBC Investor’s Edge have extended their offer through to early May which is just enough time for folks to take advantage of investing any tax refunds into the markets.

In addition to the turnover in deals, March has undoubtedly been one of the most eventful months in the online brokerage space in Canada in recent memory.

With the launch of Wealthsimple Trade, the conversation about promotions – especially commission-free trade ones – has forever changed. Of course, one of the interesting things about competitive markets (and the online brokerage space definitely counts as one) is how they respond to material developments.

Even though promotions have been an important method for online brokerages to compete with one another and attract new assets to their organization, what has been interesting to witness with the launch of Wealthsimple Trade is not what has happened, but rather what hasn’t.

Unlike the move in 2014 by RBC Direct Investing to lower their standard commission price to $9.95 per trade, the launch of Wealthsimple did not trigger an almost immediate repricing of commissions by existing online brokerages. There was not a domino effect of major online brokerages announcing they too would be dropping their trading commission structures to zero (although that still may come). Ditto for the deals and promotions – instead of more promotions or more enticing terms to steal the Wealthsimple Trade thunder, there has been nothing, which naturally begs the question, why not?

While it is likely that major Canadian online brokerages will eventually formulate a response, this certainly seems like a “wait and see” moment. Undoubtedly, there are individuals from other online brokerages who’ve signed up to test the experience of Wealthsimple Trade. That, combined with early feedback from consumers and the lack of registered accounts (like a TFSA or RRSP), seems to point to a lack of immediate concern by Canadian online brokerages for the zero-commission trading world now available to Canadian DIY investors.

Despite the lack of immediate movement by Canadian online brokerages with regards to the new entrant, it is almost certain that firms are already planning when the right time for a response will be and what that response will look like.

One of the potential benefactors in the meantime could be the deals and promotions section. Planning and deploying promotional offers can be quick and efficient and can give investors something extra to consider when kicking the tires on a new brokerage.

In addition to deals, there could also be tactical pricing adjustments that start to show up this year. With a whole suite of tech IPOs planned for 2019 featuring the likes of Uber and Slack, there is bound to be strong interest in participating in these now recognizable tech stories. Waiving or discounting forex fee markups on US trades could prove to be an interesting tactic to counter the current state of Wealthsimple Trade’s requirement for forex conversion to trade US-listed or USD-denominated securities.

So, while there will certainly be a noticeable downtick in the number of deals and promotions heading into the new month, we anticipate there will be more than a couple of surprises sprung on investors in the form of creative promotional or pricing offers. And, who knows, these new free trade offers might even offer better access to the US markets than the CUSMA does.

DIY Investing Potpourri

How you doin?

Although a catchphrase from the popular show Friends, it also appears to be an analogous way to cozy up to online investors – at least that’s what one popular US online brokerage is betting on. This past week, Interactive Brokers announced the launch of their new portfolio check up tool Portfolio Analyst which is aimed at simplifying the myriad of financial touchpoints that characterize modern day life.

In what appears to be a powerful, free tool that can integrate personal financial information ranging from banking accounts and credit cards through to investments, this is an exceptionally bold move from Interactive Brokers into the “traditional” banking space. Additionally, it represents an extremely potent way to get visibility into the whole financial picture of its users – a tool that has incredible marketing value for a firm like Interactive Brokers that is expanding its service offering into products like credit cards.

The Portfolio Analyst tool by Interactive Brokers also appears to be a part of a growing trend in the digitization of personal financial management. Increasingly, there are software tools being used to integrate information about an individual’s financial picture and then use that to communicate performance.

Recently in Canada, TD Direct Investing launched a tool called “GoalAssist” which pulls together information about the performance of a portfolio relative to stated investment objectives to help users determine how close or far they are from meeting their financial goals.

These portfolio and personal finance management tools are not new inventions, but it is interesting to see them start to show up in the online brokerage space. Increasingly, it appears that online brokerages are not going to be contained to just trade execution – they are likely gateways to digital wealth management platforms that take a holistic view of a person’s assets and financial goals.

Perhaps fortuitous timing, but another big name in the US online brokerage space, Charles Schwab, also announced last week that they will be launching a subscription-based approach to providing wealth management advisor access. While outside of the model of a pure discount brokerage, Charles Schwab provides a unique example of how an online broker took the path of diversifying their business to incorporate advice and advisory services into their ecosystem. As a result, they are playing for scale – to attract as much in terms of assets as possible, which in turn enables them to compete in a “zero commission” world much more effectively than their smaller peers.

Daytrading in TFSAs

Another important detail in the saga of individuals looking to actively trade their TFSAs was revealed this past week. The TL;DR version: the only one on the hook for paying potential taxes assessed against a TFSA deemed to be a “daytrading” (or trading for a business) will be the individual whose name the TFSA was in.

Prior to the update in the recent budget, both the institution that provided the account and the account holder were considered “jointly and severally liable” which means that institutions offering the TFSA could be held responsible for paying taxes if a client closed up their TFSA or transferred it to another organization before the CRA caught up.

It is interesting to see how this particular case will end up impacting the CRA’s rules about “day trading” for Canadian investors. Currently there is a very, very grey zone between “active investor” and “trader” – a source of much confusion, especially come tax time.

An individual making over 150 trades per quarter, for example, pushes the limit of what the original spirit of the capital gains tax exemption was probably intended to apply to. That said, there are incentives in place to do just that from online brokerages offering up discounted commission pricing on “individual” (read: non-business) accounts.

So, while online brokerages are abundantly clear about not offering tax advice, enabling individual non-registered accounts to trade beyond a certain activity threshold and calling them “non-business” accounts is a slippery slope that may ultimately attract the ire of the CRA.

Ultimately, choosing to go down the DIY or active investing route can actually lead to becoming viewed as a business in the eyes of the CRA. This is important for DIY investors to take note of as they get started with investing as there is very little that is explained about the tax implications of trading by online brokerages themselves. Certainly with the euphoria of early 2018 now about to play out in tax season, we fully expect there to be some tough lessons being learned by the “active investors” in cannabis and crypto stocks.

Discount Brokerage Tweets of the Week

 

From the Forums

Trading it In

One DIY investor has questions about the best way to move funds from one low-volume stock to another. Users on Financial Wisdom Forum provide helpful strategies and tips. Read more here.

Opposites Attract?

A Redditor seeks advice on how to create a balanced retirement portfolio with a partner who wants to keep their money off the markets. See what other users on Reddit suggest.

Into the Close

It’s hard to believe how quickly April has arrived. Keeping pace with the news cycle has been an endurance test to be sure, but that is something that the bearish market watchers should be used to by now. These past two weeks, however, it seems like their patience may finally be kicking in. With the inversion of the yield curve starting to raise the spectre of recession and another voice seemingly calling for a short on Canadian banks, the end of calendar Q1 for investors is ending on a somewhat ominous note. Not to be a party pooper, but the flood of IPOs coming to market this year might be one of those “top of the market” kind of events too where the final moments to tap positive investor sentiment are close at hand. All that said, spring is about growth and opportunity – regardless of the market direction, here’s hoping that you find a profitable way to play it.

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Discount Brokerage Weekly Roundup – March 25, 2019

Spring is officially here and what better metaphor for talking about growth than one that focuses so much about the promise of things to come. Ironically for many Canadian online brokerages, what’s to come may not be so favourable unless they learn to develop a digital green-thumb.

In this edition of the roundup, we take a look at some fees sprouting up early in the spring that DIY investors will likely encounter more of as the year rolls on. Staying on the floral theme, we also take a look at a potpourri of client experience developments that form a very interesting arrangement of choices for the online brokerage industry to confront when it comes to delivering client experience in a digital world. As always, we’ve also got some chirpy comments from Twitter and the DIY investor forums to close things out.

Additional Fee-tures

As the Canadian online brokerage market continues to adjust to a new competitor and new ways of competing, we anticipated seeing changes to the structure, scope and size of fees being charged for online brokerage services. Earlier this month we noted a small change to the fees being charged by BMO InvestorLine that are set to take effect at the beginning of April, whereby they’re increasing the transfer out fee from $135 to $150.

Among most of the big bank owned brokerages, the transfer out fees are $135 (the exception being Scotia iTRADE at $150 already) whereas at most non-bank-owned brokerages the transfer out fees are $150. Curiously, Wealthsimple Trade’s transfer out fee is $125 (as is Desjardins Online Brokerage’s).

While it might not be high on the list of criteria DIY investors use to choose an online brokerage with, it is always prudent to understand what it costs to get money into and out of any account, including and perhaps especially investing accounts. The slight raise in fees here by BMO InvestorLine might also trigger other bigger peers to do the same.

On the other hand, from a strategy perspective of the online brokerages, transfer fees might become an increasingly important lever with which to challenge other online brokerages when it comes to poaching customers.

Case in point: a recent transfer-fee promotion launched by Questrade.

While transfer fee coverage promotions are fairly standard, what made this promotion stand out was that there was no minimum balance transfer required to be eligible for a commission-fee rebate. This fairly aggressive maneuver could offer a favourable window to investors with assets under the usual $25,000 threshold to switch over and have their fees covered. Of course, the decision to switch online brokerages can certainly be challenged/impacted by the cost of doing so and if transfer fees were to increase, investors may think twice before switching away from a brokerage.

At Qtrade Investor, for example, there is a cost of $100 to a client who closes an account within one year of opening it. That kind of fee is uncommon at most Canadian brokerages but it is easy to see how a DIY investor who was contemplating or who tried Qtrade Investor, would need a compelling reason to leave and incur a charge of a $100.

With competition between Canadian brokerages now ratcheting up, hanging onto clients – whether it is through improving the service experience, or through charging more to leave – will likely be a more popular topic of discussion. As these exit costs do rise, however, the incentive to research online brokerages a little more closely also increases. So, before Canadian online brokerages go too far down that road, they should revisit the clarity of their value proposition for DIY investors and their plans for delivering a great client experience as falling short on those will also be why DIY investors would look to leave in the first place.

Client Experience Potpourri

When it comes to client experience for online brokerages, there are a couple of important moving parts. One is the traditional idea of “customer service” that DIY investors would come to expect from any financial services provider. Things like being able to contact an actual person when an important situation arises and have that interaction be effective and enjoyable are, in today’s digital world, becoming increasingly rare.

Interestingly, this past week, Fido, the flanker brand to Rogers, announced that they would be charging clients $10 for client service requests on live chat or via telephone that could have been done by the clients themselves online or in some other automated fashion.

Why this is relevant for the Canadian online brokerage space is because the “hands off” approach to service is a bigger trend that shapes expectations of consumers, especially younger and tech-savvier ones, and changes what “service” really means.

In the financial services space, there are an increasing number of digital-only financial services providers (e.g. EQ Bank) and with the launch of Wealthsimple Trade, this very “hands off” digital service experience has now found its way into the DIY investing realm. One of the items that wasn’t discussed in our coverage last week of the launch of Wealthsimple Trade was the customer service experience.

As it stands now, the only way to reach Wealthsimple Trade’s support (or “Client Success”) team is via e-mail. The following note on their support page was particularly instructive: “Note: Wealthsimple Trade is a self-serve platform! As such, our team is unable to submit any transactions on behalf of clients. This includes buy & sell orders, deposits, and withdrawals.”

Against this important digital trend, earlier this month Questrade announced that they had earned the DALBAR Seal for Service Excellence. This seal can be obtained “after a company undergoes a thorough audit of their customer service, and in order to qualify it must exceed stringent benchmarks in criteria covering all aspects of its customer service interactions. Criteria include both the interpersonal aspects of the customer relationship, as well as addressing important transactional aspects of the customer request.”

The other Canadian online brokerage to whom the DALBAR Seal for Service Excellence was awarded to this year was HSBC InvestDirect. And, as part of the DALBAR blog post in which that was announced, DALBAR stated “While the lowest fees or slick new platform features grab the headlines, when complicated issues arise, having a competent and engaged human being to talk to goes a long way.”

A final observation with regards to client experience in this increasingly digital age actually comes from a forum post on RedFlagDeals.com.

The forum post itself started off having nothing to do with client service directly – it was a thread about transfer fee coverage from Questrade (mentioned earlier). Quite interestingly the conversation between DIY investors in the forum shifted from being about the transfer fee and turned instead to another firm altogether (Qtrade Investor) and the observation of a slow-to-load web page that created some pan-worthy display about the quantity of expertise and assets under management by the parent firm Aviso. Why this matters is because even though the web page eventually displayed the correct number, one consumer was able to shift a conversation away from transfer fees and talk about digital experience in a way that reflects the holistic manner in which technical design impacts brand experience and perception. Things like a fast loading website actually matter and may have become the digital equivalent of customer wait times on the telephone.

For Canadian discount brokerages, this is clearly an interesting moment in their business model whereby “service experience” can mean something very different to different customer types.

Figuring out how to cater to those different customer needs is no easy feat but it’s clear that trying to shift too much of the service to “online only” means investing heavily in speed, reliability and ease of use. And, in that light, brokerages who offer a multichannel service (including being able to speak to someone on the phone) experience seem like they can then show DIY investors where their commission costs go to.

Discount Brokerage Tweets of the Week

From the Forums

Guaranteed Good?

Are some things too good to be true? One DIY investor wants to know more about portfolios that guarantee the value of their investment. See what other forum users on RedFlagDeals had to say here.

Drain the Swap?

While there were a number of changes in the most recent federal budget, there was one that rattled investors in swap-based ETFs. Find out what got DIY investors buzzing in this reddit post.

Into the Close

That’s a wrap on another eventful week. While spring officially rolled around this past week, the week coming up will undoubtedly be focused on someone who feels like they’ve just gotten sprung (aka the “Mueller Report”) by the “no collusion” report. Seems like there’ll be a whole lot more madness in the final stretch of March and almost certainly more uncertainty. Have a profitable week!

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Discount Brokerage Weekly Roundup – March 18, 2019

With spring around the corner and coming off St. Paddy’s Day weekend, green is definitely a theme colour for March. Of course, while investors are seeking a green of their own, Canadian online brokerages are also green with envy (perhaps even seeing red) with the official roll-out of a new competitor.

In this edition of the roundup, we cover THE story that has been waiting in the wings now for many months: the launch of Wealthsimple Trade. We’ll take a deep dive on the new platform and the early responses to see what DIY investors and online brokerages alike can expect with a zero-commission trading experience. For a little extra variety, we’ll also toss in some of the other things DIY investors were buzzing about on Twitter and in the forums.

Wealthsimple Trade Goes Live

The day that many of Canada’s discount brokerages were hoping would never come is finally here. Zero commission trading for Canadian DIY investors is now available thanks to the official roll out of Wealthsimple Trade.

Although it wasn’t clear exactly when this moment would come, it was just a matter of time, since Wealthsimple Trade was officially announced last year and beta testing has been taking place over the past few months. So, while it wasn’t necessarily a surprise, the official release brings with it the impetus for existing online brokerages to decide how (and how quickly) they want to compete with Canada’s newest online brokerage.

Now that Wealthsimple Trade is officially live, we can shine a spotlight on the new discount broker to see how it stacks up against existing online brokerages, and see what early reactions by consumers suggest are the strengths and limitations of the new provider.

Platform: Wealthsimple Trade is Mobile Focused

One of the first ‘features’ that is bound to be a source of contention with DIY investors and traders is that Wealthsimple Trade is only available (for now) on a mobile device – specifically those running either iOS 11+ or Android 7+.

Going mobile first with a launch is a radically different user experience for investors who are used to desktop (including laptop) environments to place their trades and manage their portfolios.

To be fair, the mobile-first approach does put a focus on making trading on the go or from other locations in one’s house, hotel or from wherever, a feature rich experience.  That said, the decision to go ‘mobile-first’ means that Wealthsimple Trade skews towards users who are generally younger and more comfortable interacting via smartphone instead of on a desktop/laptop, and who could conceivably spend hours on their phone researching and monitoring stock prices and news. So, in a nutshell, zero commission trading is probably great for your wallet but not so much for your posture.

Early responses from the respective app reviews show that there are mostly positive experiences, with iOS users rating it 4 out of 5 stars (based on 87 reviews) and Android users giving it 3.8 stars (out of 5) based on 34 reviews.

Security: Read the Fine Print

Another very interesting set of concerns raised by DIY investors out of the gate relate to security. While Wealthsimple Trade (like other online brokerages) is covered by the CIPF, it is actually funding the account where the trepidation lies.

To fund your trading account, Wealthsimple Trade requires that users provide their banking information to a third-party platform, Plaid, that is then able to authenticate and transfer funds into (and out of) a Wealthsimple Trade account.

Many initially curious users pointed out that by providing their bank details (i.e. their username and password) to this third party, their bank’s anti-fraud guarantee would no longer be valid.

This means that anyone who has provided Wealthsimple Trade their banking login information might be trading away their coverage in case of theft or fraud. For some, it is clearly a deal breaker – and seemingly unnecessary as other online brokerages (such as Questrade) do not require login information from a user’s funding source to deposit funds.

Of course, for others, the trade-off appears to be acceptable – perhaps a younger demographic is not as skeptical or cautious about third party vendors being part of Wealthsimple Trade’s process; the lure of commission-free trades is worth possibly waiving their agreement with their banking provider.

Interestingly, it is not possible at this time to be able to transfer funds in from either Wealthsimple or a Wealthsimple savings account, which means to get money into a Wealthsimple Trade account, it has to come from an external bank account.

Frequency: How Much is Too Much?

When it comes to commission-free trading, there is going to be one category of user that immediately perks up to take notice – the folks who typically generate a lot of commissions trading. That said, the idea of active trading or trying to outperform the market by trading securities rather than passively and over the long term appears a tad antithetical to the Wealthsimple approach. As a result, and perhaps to keep costs from spiralling out of control, Wealthsimple Trade imposes a somewhat ambiguous restriction on the frequency with which an individual can trade intraday.

Wealthsimple Trade’s official position on “day trading” (i.e. buying and selling a security on the same day) is that it is technically possible but the degree to which it is permissible is unclear. They state that “trading the same security in the same day can be flagged as inappropriate trading activity – as such Wealthsimple reserves the right to block transactions and accounts at our discretion.”

If there is one thing that spooks traders and markets it is uncertainty. With respect to traders, not knowing whether or not they will be able to execute certain trades makes it less likely that they will trust the platform as a ‘go-to’ for primary trading needs.

Yes, commission-free trades are nice but not being able to move on volatile stories – which are typically the most exciting for active investors – is a serious drawback. So, from a risk-management perspective, Wealthsimple Trade might not appeal to the active investor nor the day trader at this point until further clarification is delivered on exactly when the threshold of “inappropriate” is reached. Of course, there are some traders that just might try it out to see what happens but for many others, it will need to be clarified in writing first.

To truly appreciate the conundrum here it is important to understand that the most vocal advocates for Wealthsimple Trade would come from the active trading community online. After all, they are the ones who would stand to benefit the most from commission savings.

Active traders are typically on social media and reddit, and are the folks who would be influencing the demographic of interest that Wealthsimple Trade would be targeting. They (like most investors) would be interested in knowing where the ‘exciting’ trades are (e.g. in cannabis) and like most savvy traders or investors, they would be looking to minimize transaction costs in order to get the most bang for their buck. This hypothesis is supported, at least in part, by a recent post on Benzinga that revealed that during the beta testing phase, the three most traded securities on Wealthsimple Trade were all cannabis stocks (Aurora Cannabis, Canopy Growth, and Aphria).

As an aside, another feature which would make it challenging (perhaps even inadvisable) for active investors to trade using Wealthsimple Trade at this time would be that data for quotes is supplied on a delayed basis.

This means investors looking to make quick moves are receiving outdated pricing information when looking at a particular security. Again, if the stock is having a volatile day – such as Boeing did last week – then the price difference for a market order could be very different from the time a quote was viewed to the time the purchase was made.

Selection: Your Mileage May Vary

Another important category for DIY investors to have to consider when trading with Wealthsimple Trade is the selection of securities available. This is perhaps the most challenging area of the user experience that DIY investors will encounter in contemplating this platform because of the different conditions attached to which markets investors have access to, as well as the eligibility requirements for securities to meet in order to be traded.

Specifically, here are the conditions that Wealthsimple Trade currently has to be able to purchase a security:

  1. That is listed on the Toronto Stock Exchange (TSX); TSX Venture Exchange (TSXV); New York Stock Exchange (NYSE) or NASDAQ
  2. It can only be a stock or ETF – so options, preferred shares, mutual funds and other products are not available to be traded through this platform
  3. Must be CDS eligible
  4. Have a 52-week high that exceeds $0.50 (stocks only)
  5. Have an average daily volume that exceeds 50,000 shares (stocks only)
  6. Be the Canadian-listed security if dual-listed

Unlike at most of Canada’s other online brokerages, there generally aren’t stipulations on whether or not you can purchase a particular security because of its trading price or its liquidity.

Ironically, the notion of ‘buy low’ is somewhat challenged by the watermark on price having to meet that minimum threshold. For example, on the TSX Venture Exchange, there were almost 500 securities out of 1649 that would not be eligible to be traded based on this price threshold requirement.

Another ambiguous requirement is the average daily volume – it is not stated clearly on the help section as to what time frame that daily volume is calculated over (e.g. 10d, 30d, 60d, 90d are all possible choices). We have reached out to Wealthsimple Trade for clarification and they have stated 30 days is the time frame over which the average is calculated. Nevertheless, that window of time means that it would be possible that a security someone would be watching could be eligible to be traded and then lose eligibility based on a lack of activity – something that Canadian securities are prone to doing based on the size of our market.

Finally, based on the interest and popularity of cannabis-related stocks, it is interesting that the Canadian Securities Exchange is not on the list of markets that users can trade. With almost 500 securities listed on the exchange, if individuals wish to trade this market directly, they are currently not able to do it using Wealthsimple Trade.

Another part of the selection conversation that is important to consider is the account types that DIY investors would have access to in Wealthsimple Trade.

Currently there are only non-registered, cash trading accounts available. Individual investors who aren’t active traders would be more interested in accounts such as a TFSA or RSP accounts – vehicles that seem like they’d be better aligned with the structure of Wealthsimple Trade. Conversely, for active traders (and possibly one way to generate more revenue that comparable services like Robinhood have explored) margin trading isn’t available yet and as such, the scale of trading activity is limited.

Innovations: Wealthsimple Trade Doing Things Differently

Up to this point it does seem that there are a lot of gaps in the Wealthsimple platform as currently offered. While it is likely that they will work to iterate and close these user experience gaps over time, there are also features about Wealthsimple Trade worth highlighting out of the gate that will undoubtedly influence the market as a whole beyond just forcing a review on commission price.

One of the biggest and most obvious features is that DIY investing has been ‘reimagined’ in a mobile-first and aesthetically pleasing manner. With Wealthsimple Trade, the interface looks and feels modern, and while its worth will ultimately depend on its reliability and ease of use, the design features alone set them apart from anything currently on the market. It is fast to set up, there are no account minimums, and it looks and feels nimble.

Another less obvious but very interesting feature is their system status reporting. Wealthsimple Trade is the first online brokerage to report the real time status of their trading and supporting systems, bringing to the DIY market a level of transparency that up until now hasn’t existed.

If for no other reason than cutting down on the confusion of a technical outage that in turn leads to lots of unnecessary Twitter posts (ahem Facebook and Instagram), there is actually a system status page that publicly details multiple moving parts of the Wealthsimple Trade experience such as trading or market data or login capability. If you’re at all concerned about technical stability of the platform, this would be an important touchpoint to verify what’s gone off the rails because they also report historical data too.

Finally, it is worth noting that with the roll-out of Wealthsimple Trade, there is a genuine buzz and excitement about online trading and investing that hasn’t really been generated by a Canadian online broker in quite some time. It seems that there are users who, for now, are genuinely interested in seeing the ‘zero commission’ model take flight and are willing to provide constructively critical feedback to help improve user experience.

In addition to grabbing the spotlight on commission-free trading, Wealthsimple Trade has also captured the imagination of DIY investors. The prospect of being interesting and innovative (even shiny and new) is now something that other online brokerages have to contend with. People are genuinely excited about what this platform will do next. Will it be registered accounts? Will it be connecting to new markets? Will it be margin trading?

Regardless of the development pathway, as long as Wealthsimple Trade continues to move forward and roll out improvements, they have an audience that online brokerages are fighting hard to connect with. For investors and online brokerages alike, it appears that right now everyone is watching to see where things go from here and for that reason, it seems like we’re on the cusp of a truly exciting chapter in the online trading story in Canada.

Discount Brokerage Tweets of the Week

From the Forums

Buzz on the launch of Wealthsimple Trade

We couldn’t do a spotlight edition the launch of Wealthsimple Trade without a snapshot of the forum chatter about them. Here are links to the various forum threads celebrating the launch of zero-commission trading in Canada:

  1. RedFlagDeals.com: Wealthsimple Trade – Free stock/ETF trades – Now available to all
  2. Personal Finance Canada on reddit: Wealthsimple Trade is Now Available to Everyone
  3. Canadian Investor on reddit: Wealthsimple Trade is live for everyone

Taking Stock

One investor has questions about holding US stocks in a TFSA. Other forum users on RedFlagDeals chime in with answers, advice, and some hard numbers. Read more here.

Strong Start

A newcomer to the investing world turns to reddit for advice on the best place to start. Fellow redditors deliver and provide a crash course in DIY investing. See more here.

Into the Close

Last week was an utterly tragic one for the people of New Zealand compounded by the perverse nature in which this tragedy was perpetrated and shared with the world. That it happened there, and here in Canada, are signs that the decisions we make, the words we choose and the people we elect matter. Being a fiercely proud Kiwi and Canadian, I am certain that collectively the people of New Zealand will move forward stronger as Canada and Quebec have. Learning to live together, peacefully, is something we often take for granted but in tragedies like the one that struck New Zealand, it is a stark reminder that the price we pay for indifference towards bigotry, discrimination and hatred is far too high.

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Discount Brokerage Weekly Roundup – February 11, 2019

Now that February is here, there’s all kinds of buzz surrounding the entertainment industry awards shows like the Grammy’s and the Oscars. For Canadian discount brokerages, this month also marks an important awards window with long anticipated online brokerage rankings getting published.

In this edition of the Roundup, we take an in-depth look at the latest Canadian online brokerage rankings from the Globe and Mail’s Rob Carrick. Of course, that wasn’t the only big news to drop this past week, as the last bank-owned online brokerage standard commission fee above $10 finally capitulated to join the sub-$10 party. As always, we’ve also got some interesting DIY investor chatter to share to round things out for the week.

Who is Canada’s Best Online Brokerage? Hint: It’s a Tie

It’s incredible how fast time flies. This past week Rob Carrick from the Globe and Mail, published the  20th edition of his popular online brokerage rankings (this is the longest running evaluation of Canadian online brokerages) that delivered its signature mix of insight, evaluation and a dash of sass to report the state of the Canadian online brokerage marketplace in 2018.

As arguably the most popular online brokerage ranking in Canada, there has been a lot that has changed in the industry since this ranking first launched two decades ago. Having witnessed and reported on it all, it is especially interesting to see what Carrick homed in on for this year’s rankings.

Canada’s online brokerages were analyzed and evaluated on the following categories:

  • Client experience
  • Cost
  • Investing experience
  • Tools
  • Website

In keeping with the more recent format, letter grades were assigned to brokerages (as opposed to numerical scores) and there was a mix of objective and subjective elements to the scoring. This year, there was also one less online brokerage on the list, as Credential Direct merged with Qtrade Investor, which resulted in 12 Canadian online brokerages being measured.

Of course, the first question everyone asks of the rankings is: who won best online brokerage? Interestingly, for 2018 it wasn’t just one firm that took home the prize as Canada’s top online brokerage. This year both Virtual Brokers and TD Direct Investing shared the top prize displacing last year’s winner Qtrade Investor from the winner’s circle.

While TD Direct Investing and Virtual Brokers couldn’t be more different in their size, scope of services and recognizability with investors, they nonetheless both took home top marks for their efforts in catering to the mainstream investor in 2018.

Comparing scores this year to last, it is interesting to note that a significant portion of the brokerage pool made strides to improve their overall appeal to mainstream investors. In fact, in the latest online brokerage rankings, there were five online brokerages who scored A- or better compared to only one last year (Qtrade Investor). This bodes well for DIY investors who now have a strong pool of firms to choose from when it comes to selecting an online brokerage.

Online Brokerage 2018 Rating 2017 Rating
BMO InvestorLine B B
CIBC Investor’s Edge C C
Desjardins Online Brokerage C- C
HSBC InvestDirect C- C
Interactive Brokers B+ B+
National Bank Direct Brokerage B- C+
Qtrade Investor A- A
Questrade A- B+
RBC Direct Investing B B
Scotia iTRADE A- B+
TD Direct Investing A B
Virtual Brokers A B

Firms who improved slightly were National Bank Direct Brokerage (C+ to B-), Questrade (B+ to A-) and Scotia iTRADE (B+ to A-). By comparison, both TD Direct Investing and Virtual Brokers improved by a whole letter grade going from B to A, albeit because of different features and improvements.

There were four firms that remained unchanged year over year: Interactive Brokers (B+), BMO InvestorLine (B), RBC Direct Investing (B) and CIBC Investor’s Edge (C).F

Finally, three firms did slightly worse than last year, including Qtrade Investor (A to A-), HSBC InvestDirect (C to C-) and Desjardins Online Brokerage (C to C-). It is worFFth noting that the drop in scores is likely more because of improvements at other online brokerages rather than something that these brokerages did i.e. the rest of the field just did better.

Of course, it helps that the detailed comparisons of features were also published so that we can more closely examine where some of the variation between last year and this year appeared. One of the first differences that jumps out is the foreign exchange conversion fees. While Interactive Brokers Canada remains first in terms of having the lowest fees for forex conversions (USD to CAD), Questrade slipped from 2nd to 12th. Interestingly, Qtrade Investor moved from 6th to 2nd and National Bank Direct Brokerage from 8th to 3rd. This volatility in currency exchange fees is an interesting observation however what hasn’t changed is the extent to which Interactive Brokers is ahead of other online brokerages in terms of this fee category.

Although not as drastic as forex fees, another category that had some interesting shifts compared to last year was the website experience. One of the most notable improvements from the last set of rankings was Virtual Brokers. In 2017 they scored 2.5 (out of 5) but moved up to 4.5, on par with Questrade and behind TD Direct Investing who maintained their 5 out of 5 score. Interestingly, there were a number of scores that declined – even in spite of changes made to their websites over the time between the previous rankings and the latest one. National Bank Direct Brokerage’s website experience score stands out with a score of 1 in spite of a website overhaul that took place in November 2018. Their previous site scored 2 (out of 5) so the drop is a particularly tough break.

As a group, it was also interesting to see how bank-owned brokerages fared. TD Direct Investing (5) and Scotia iTRADE (4) had the strongest website experience scores however their peers didn’t do nearly as well. In fact, the average score of remaining big five bank-owned online brokerages was 1.8, an indication that, according to Rob Carrick, there is still considerable room to improve.

When it comes to determining which online brokerage is best, it is always important to understand exactly how that title is defined.

The 2018 Globe and Mail online brokerage rankings are now in their 20th year and arguably Rob Carrick has one of the best perspectives and context on how the industry has evolved over the time he has been covering it. Even so, it is important for anyone shopping for an online brokerage to note that these are primarily his opinions of what brokerages are doing well (or not). One of the most helpful components aside from the rankings themselves is actually the comparison details which accompany the rankings and provide additional information on features each online brokerage offers.

What is also interesting about this year’s rankings is that they are open only to subscribers of the Globe and Mail.

By putting this highly coveted ranking behind a paywall, there are already ‘gripes’ from online readers who have come to expect this information to be available freely. Of course, the internet being the internet, the popularity of this content means it already has surfaced almost in its entirety on a forum thread for DIY investors.

Why this matters is because unless these rankings are made more publicly available, they will be restricted to the readers of the Globe and Mail (and savvy, forum dwelling investors), which in turn erodes the reach and impact of the ratings. Although this is not the first time this content has been put behind a subscriber paywall, it will no doubt challenge investors to wonder whether they really want to subscribe to the Globe and Mail just to access these rankings. For frugal, tech savvy DIY investors, that’s going to be a tough sell.

Scotia iTRADE Quietly Lowers Standard Commission Prices

If a commission price drops but nobody is paying attention, is anybody going to save? Despite what is an important development in the Canadian online brokerage space, there has been almost zero chatter, buzz or activity online related to the drop in standard commission pricing at Scotia iTRADE last week.

The standard commission price at Scotia iTRADE is now $9.99 per trade, down from the $24.99+ which it has managed to maintain since the wave of commission price drops kicked off by RBC Direct Investing back in February 2014 (for those keeping score, that’s five years ago).

The decision to remain defiant on dropping commissions for so long, however, has appeared to have taken its toll on the most vocal digital users – young investors. By effectively pricing out this group from adopting and potentially evangelizing this online brokerage, Scotia iTRADE is now forced to play catch up.

The issue, however, runs deeper than that. Scotia iTRADE’s $24.99 commissions routinely earned the ire of some DIY investors on Twitter, which means that there is also a lot of negative earned media that iTRADE has to overcome on top of trying to tell their story to DIY investors in a very crowded market.

In fact, it was an interesting decision to drop commission prices to almost exactly the levels other bank-owned brokerages are currently offering and not use this opportunity to introduce a lower standard commission price.

Given the absence of excitement about this move in the DIY investor space (and even nothing on the iTRADE website itself), it is clear that Scotia iTRADE is going to now have to throw some significant marketing dollars to inform investors that standard commission prices have dropped to what everybody else is already offering (and others are offering even lower pricing).

And, they’ll have to do it at a time when their bank-owned brokerage peers and independent competitors are heavily advertising as well. So, unless they can generate some positive buzz, getting the word out and getting people excited are not going to be cheap.

Suffice to say, Scotia iTRADE lowering standard commission pricing is a positive development for DIY investors. A major bank-owned brokerage with a strong platform, commission-free ETFs and (now) competitive pricing means that fellow bank-owned brokerages will be working a little harder to attract clients with less than the $50,000 in assets that the standard commission rates impacted.

The big hurdle for Scotia iTRADE now will be overcoming the years of negative press and doing something bigger than a giant Lego banana that will make DIY investors pay attention (in a good way).

Discount Brokerage Tweets of the Week

From the Forums

Chatter on the Rankings

Readers of the investor forums weighed in on the latest online brokerage rankings from the Globe and Mail. See what users had to say about the winners and other brokerages in this post from RedFlagDeals.

Sorry to Bug You

With any big technology roll out, there are bound to be a few hiccups. When it comes to handling peoples’ investments, however, the chatter around the rollout of Wealthsimple Trade reveals some simultaneously fascinating and frightful scenarios of glitches being detected. Check out this reddit thread to see what DIY investors encountered with their shiny new accounts.

Into the Close

It’s time to roll the credits on another edition of the roundup. The week ahead should be interesting as marketing departments from award winning online brokerages will find clever ways to showcase their accomplishments as investors head into the last few weeks before the RSP contribution deadline. Also coming up this week is Valentine’s Day, which is timely given that investors have been showing the market lots of love to start of 2019 – which may (or may not) change with all of the big earnings announcements also poised to be published this week too. As any seasoned trader knows, however, it’s best not to get emotional over (or fall in love with) any stock, no matter how attractive it might seem. Have a great week!

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Discount Brokerage Weekly Roundup – January 7, 2019

Welcome to 2019 and Happy New Year! The arrival of a new year brings with it the promise and opportunity for change and so, we’re happily announcing a change of our own to the Weekly Roundup, now moving to a new day and time, launching on Monday mornings. Of course, we’re not the only ones starting off the new year with some big changes – as Canadian online brokerages and financial services providers ring in 2019 with some interesting moves of their own.

In this edition of the roundup, we take a look at the latest new discount brokerage promo to cross our radar and what it means for DIY investors looking for a new online brokerage account. Next, we dive into another possible game changer from a wealth management firm that is doing its best to reshape the conversation about investing in 2019. Of course, some great traditions in the weekly roundup persist into the new year, including our lineup of DIY investor tweets as well as what investors were talking about in the forums.

BMO InvestorLine Launches New Promo Offer

There’s nothing quite like starting off the New Year with a win. And for DIY investors, despite the market volatility, the good news is that BMO InvestorLine has launched a new cash back promotion.

Launched on January 3rd (and through February 28th) the new cash back promo offers between $400 and $1600 cash back for deposits ranging from $50,000 to $1M+. The offer is open to new and existing clients so long as the qualifying deposit amounts are “net new assets” to BMO.

There are several interesting observations about this latest promotion from BMO InvestorLine that are worth noting for anyone watching the Canadian online brokerage deals activity.

First, this cash back offer, in absolute terms, the highest cash back offering currently available. With $1600 now being offered for deposits of $1M+, BMO’s offer outbids Scotia iTRADE’s offer of $1500 for the same deposit tier. Interestingly, when compared to last year, the cash back amount for this deposit level is 33% higher. Last year around this time, the highest cash back amount being offered for that tier of deposit was $1200 from Scotia iTRADE.

It got us curious, however, to see how other deposit tiers for cash back offers stacked up against last year’s analysis so naturally we compared them to see how things have changed – and that was super interesting.

 

Upon closer inspection, another important point about that jumps out about the latest cash back offer is that it reflects a change compared to last year in terms of who else is offering up these kinds of promos. Last year there were five online brokerages: BMO InvestorLine, CIBC Investor’s Edge, Questrade, Scotia iTRADE and TD Direct Investing. This year, however, TD Direct Investing elected to go with a commission-free trading offer instead of a cash back so in terms of cash back offers, it’s BMO InvestorLine, CIBC Investor’s Edge, Questrade and Scotia iTRADE. Questrade is being included in this set even though their offer is part of a referral campaign (see below for further explanation).

Another interesting observation of last year’s cash back offers compared to this year’s, is that there aren’t as many areas in which there are at least two brokerages tied for the best cash back offer. In fact, this year only at the $25,000 deposit level is there a tie between CIBC Investor’s Edge and Scotia iTRADE (both of whom are offering $100 cash back).

When it comes to online trading account deals at the outset of 2019, it appears BMO InvestorLine has come out swinging and has the best cash back offer at the $50,000 deposit level and from $250,000 and up.

What is particularly interesting about the cash back promo from BMO InvestorLine is that the amount being offered at $50,000 deposit level is double what the best offer was last year ($200 from CIBC Investor’s Edge). This year also, BMO InvestorLine’s cash back offer at deposits of $50,000 to $100,000 are double that of their bank-owned brokerage peers CIBC Investor’s Edge and Scotia iTRADE and more than four times that of Questrade’s offer of $100.

Another substantial increase (80%) compared to last year was noted at the $250,000 deposit tier. BMO InvestorLine’s offer of $900 cash back is much higher than last year’s offer of $500 cash back from TD Direct Investing. This year, however, Scotia iTRADE isn’t that far behind at this price tier with an offer of $800 on the table – a signal that competition for this level of assets has jumped dramatically.

It wasn’t all good news for DIY Investors hunting for a cash back offer this year. In the deposit tiers between $10,000 and $25,000 there was a decrease of 50% compared to 2018. Last year, TD Direct Investing’s offer of $100 gave it the best cash back offer in these deposit tiers however this year, Questrade is the lone standout in this segment via their referral offer of $50. It should be noted that BMO InvestorLine, Qtrade Investor and Scotia iTRADE also have similar cash back referral offers in place but theirs are not as accessible as are Questrade’s and for that reason they are not included in the table below.

Overall, the cash back promotions reveal that competition for investors with certain levels of assets is increasing in 2019. For DIY investors with at least $50,000 in assets, there’s clearly a battle going on between a couple of bank-owned online brokerages to win clients in this segment.

Interestingly, for cash back promotions, the segment of investors with less than $25,000 have been largely overlooked. This is a curious circumstance as it creates a perfect storm for any online brokerage that is targeting younger/millennial investors to get significant attention with that segment (see who might be interested in our next story below).

Given how competitive the online brokerage space is, there’s a strong likelihood that many online brokerages will not want to leave the sub $25,000 client on the sidelines or subject to just commission-free trade offers. And, we’re wagering that it won’t be left to the sidelines for very long as RSP season is now upon us. Stay tuned.

Wealthsimple Makes Online Investing Human

As the world of online investing gets more digital, there’s an interesting paradox playing out by those who are providing those service, namely they’re trying to shift the focus of the experience to being more human.

Ironically, last week the poster child for robo-advice, Wealthsimple, revealed that they are launching a mutual fund investment firm, with actual humans providing advice and managing clients. Even so, this story isn’t about their move into the human world of advising, but rather with Wealthsimple’s latest blog post which once again casts a light on how they’re changing the wealth management conversation in Canada.

This blog post, in which they’ve revealed their latest ad campaign, showcases nothing about finance yet capture exactly what “personal finance” is intended to support: living life.

Their blog post goes into more detail as to their intention behind this series of commercials, including who they chose to collaborate with when putting these spots together. It’s worthy of a read to see just how different it looks and feels when compared to almost anything else that’s being produced at Canada’s online brokerages.

The choice to talk about life instead of numbers or features is a gamble in such a fee-driven space, but it is precisely that which sets them apart their peers.

Even though the management of money ought to be rational and free from emotion, in the real world, money is an emotional subject. In these commercials, do you learn about Wealthsimple’s fees? No. Do you learn about robo-advisors? No. Investing? Zilch. Client experience? Nada. In fact, nobody is heard saying anything – the scenes speak for themselves and more importantly, and powerfully, these scenes speak to just about everyone.

These are commercials about hope and the future – which taps into what people invest for. Just like the name of Ellen DeGeneres’ new comedy special on Netflix, these commercials from Wealthsimple are relatable.

Another financial services brand, Questrade, has also been ramping up its use of “real life” situations to convey the broader point of the human side of their digital wealth solutions. Although not as artistic, they are impactful. Their series of “difficult conversations” about money have provoked many reactions on social media – Twitter in particular – a sign that they’ve successfully struck a chord with investors.

Why this is important is because when it comes to online investing and trading, yes commissions and pricing matters, but how consumers feel about what a brand stands for also matters. For online brokerages in Canada this is a glaring gap that Wealthsimple is clearly hitting into. And, even though Wealthsimple isn’t a discount brokerage just yet, their zero-commission Wealthsimple Trade product will, for all intents and purposes, compete with Canada’s online brokerages.

That also raises another important point: semantics. The notion of who is managing money is getting blurrier now that robo-advisors or digital advice is a thing. For DIY investors, it started with “discount brokers” however a “discount brokerage” is inherently associated with price. The base case: it’s cheaper to manage your own investments than to have someone do it for you.

The language shift over the past five years has been subtle, however, as “discount brokerage” has given way to “online brokerage” and recently “direct investing” or “self-directed investing.” Regardless of which label is used, in many respects the experience at the “discount brokerages” still feels transactional and commoditized whereas the new breed of wealth management service providers appear to be appealing to more human-centered themes.

There are lots of online brokerages in Canada competing on commission price, but very few online brokerages competing on values.

Yes, larger bank-owned brands do have very deep corporate social responsibility initiatives, but they also have all of the friction that being a large financial organization brings with it in terms of communicating authentic values. Challenger brands, like Wealthsimple or Robinhood and even Questrade in their earlier years, get attention precisely because they don’t represent the status quo.

What will be interesting to watch for 2019 is whether Canada’s online brokerages will be able bring a more human side to their business and whether they will be able to tap into the hearts (and wallets) of DIY investors.

Ultimately, choosing a discount brokerage (and any financial services provider really) shouldn’t be emotionally driven. That said, emotion is always going to be part of the financial services equation. For DIY investors, however, it is wise to use that emotion to help pose one fundamental question: “How well will my needs be looked after?”

Wealthsimple’s latest campaign is clearly demonstrating to consumers that “they get it” when it comes to the journey. To Wealthsimple’s credit, this new campaign is likely going to break through the noise of a lot of other advertisements and get people’s attention and curiousity. The next challenge will be following through on the promise to help investors through their ‘tomorrows’ which, given the state of today’s markets, will be a formidable challenge.

As for other Canadian online brokerages, they have been dealt one more hurdle to figure out for 2019, which is how to go beyond “price” and stand out by standing up for something. This year, if there’s one thing that shouldn’t be discounted, it’s that there are people on the other side of the screens.

Discount Brokerage Tweets of the Week

From the Forums

Margin Caller ID

As consumer experiences in other parts of the digital world shape expectations for DIY investors, one forum user shares how one online brokerage’s notification of a “margin call” type event could end up leading to them switching. Find out more in this post from RedFlagDeals.com

Dipping into a New Pool

One DIY investor took to the forums to test the waters on switching brokerages for a no fee service from Questrade. See what these forum users had to say in this post from Canadian Money Forum.

Into the Close

That’s a wrap on what was an eventful first week of 2019. Falling apples have typically been symbolic of gravity, and poetically describe markets out of the gate in the new year. Of course it might be precisely because things are more unpredictable than normal that the theme of 2019 will be volatility and everyone will trying to figure how best to capitalize on it. One thing you can bet on, it won’t be boring.

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Discount Brokerage Weekly Roundup – December 21, 2018

In addition to frenzied shopping, and trading platforms flashing more red than Rudolph’s nose, if there’s one thing to look forward to in the end of year hustle, it’s blockbuster releases. And, here at SparxTrading, we did not want to disappoint.

This final edition of the roundup for 2018 ends on a high note with a review of the launch of our special series: the Canadian online brokerage look back on 2018 and preview to 2018. We’ve been teasing this launch for a few weeks now and we’re very excited to have rolled out the blog version earlier this week. To give loyal readers of the Weekly Roundup a little thank you for reading, this roundup also has a first look at the full magazine version here before it goes live on our blog (yay presents!). Of course, that’s not the only gift in this roundup. In time for Christmas, there’s also a new online brokerage deal to announce from one of Canada’s largest online brokerages that will be sure to excite investors shopping around for a new trading account. Also, we’ve got a great stocking stuffer with the latest set of Canadian online brokerage rankings and ratings. Finally, it wouldn’t be a proper roundup without the discount brokerage tweets as well as chatter from investors in the forums.

Look Back & Look Ahead: 2018 Online Brokerage Review & Preview to 2019

After lots of anticipation, coffee, trimming, cutting and wrapping it’s finally here (and just in time for Christmas)! The much-awaited third edition of SparxTrading’s exclusive Canadian Online Brokerage Look Back / Look Ahead series for 2018/2019 is now live.

This year’s edition features nine of Canada’s online brokerages big and small, who’ve shared their milestones for 2018 as well as what’s around the corner for 2019. And wow, are there ever some interesting announcements.

To recap, the annual look back & look ahead series is an opportunity for Canada’s online brokerages to directly, and in their own words, share with DIY investors what it is they’ve been up to and where they see the priorities for the year ahead.

The format we’ve developed is a unique one in the Canadian online brokerage space. Unlike the structure of a review or rating, this compilation provides a good look at what online brokerages accomplished in the year as well as their vision for their priorities into the next year. Given the highly competitive nature of the industry, it is a challenge and somewhat rare to find online brokerages providing as much detail as we saw this year – so this is a definite score for readers. To be clear, there were still several intentionally vague answers about what 2019 holds for some brokerages, however, judging by both the activity in 2018 as well as from those brokerages who have telegraphed what they’re going to doing in 2019, the industry is definitely not standing still. In fact, quite the opposite.

Among the themes that we review in this year’s piece, is the influence of millennial investors on so many different elements of the online brokerage industry. This digitally savvy segment of the market has forced a reimagining of online investing. From mobile-first design, to expectations about performance,  pricing and user experience to the access they demand to investment products, catering to the requirements of this increasingly important demographic is pushing technology teams at online brokerages into overdrive.

Another major theme that appeared to be a driver of online brokerage strategy is buffering against commission drops and the entrants of competitors, like Wealthsimple Trade.

While Wealthsimple Trade has rightfully grabbed the spotlight for their commission-free trade announcement in the summer of this year, a black swan competitor appears to be poised to challenge existing online brokerages. Jitneytrade, which was acquired by Canaccord Genuity earlier this year, announced that they are launching a mainstream-investor focused online brokerage trading experience.

After years of catering almost exclusively to professional or highly active investors and traders, Jitneytrade announced their intent to launch a more mainstream service. Without giving too much away, some of the features of their new brokerage offering will include free ETF trading, young investor pricing, digital account openings and mobile applications to name but a few. This feature set would put them on par (if not possibly ahead of) many other mainstream-investor-oriented online brokerage offerings from their competitors.

The result of consolidation and acquisitions in the Canadian discount brokerage space is that the bigger and better capitalized entities are able to make bolder bets on the Canadian DIY investor. These bets may be driven, in part, by a wager that even DIY investors will be open to having portions of their wealth in a ‘managed’ format.

From a big picture perspective, Canaccord Genuity, CI Financial and Desjardins via Aviso Wealth have collectively introduced serious competition for share of investor wallet to the standard bank-owned brokerages’ wealth management practices. In particular, they are equipped to provide a suite of services historically dominated by bank-owned brokerages. In the case of CI Financial and Aviso Wealth, there is the full spectrum of wealth management – including robo or digital advice – that investors can access.

While the launch of InvestEase by RBC, the coming digital wealth management offering by TD Direct Investing and digital advice programs at BMO, Questrade and HSBC, it is clear that those online brokerages that don’t currently have a digital advice product live, are likely in pursuit of getting this offering on a roadmap to launch soon.

And, speaking of what’s coming around the corner, there were several interesting clusters of developments that emerged as priorities for Canadian discount brokerages in 2019.

One of the clearest areas in which online brokerages appear to want to improve and focus efforts on is the mobile investing experience. Firms such HSBC InvestDirect, Jitneytrade and Qtrade Investor have each mentioned this as an area in which they would be looking to enhance their current online trading offering.

A second important area of focus for online brokerages will be content. From educational offerings, to product and platform orientation to market intelligence and personal financial planning, financial content production appears to be ramping up in 2019. In this regard, the larger bank-owned online brokerages have an edge as they have deep talent pools of analysts and existing stock market research that they can leverage and turn into content investors, especially DIY investors, would be hungry for.

Finally, one of the most interesting things that we noted in this year’s look back and look ahead series comes from what was NOT said – namely pricing. None of the online brokerages who participated in this series mentioned dropping their commission prices (yet) however it’s hard to imagine that online brokerages aren’t already planning out how to navigate in that (soon to arrive) commission-free trading world.

The sum total of activity reflected in the submissions of Canada’s online brokerages about 2018 and 2019 indicate that they are working quickly to build strong value drivers. While order execution may be something that can be commoditized, user experience and account management can’t. Similarly, great service, attention to details and support are also things that clients may be willing to pay a bit more for.

For DIY investors, 2018 saw brokerages make substantial enhancements that will start to pay off with more stable, scaleable technology experiences in 2019. Competition for DIY investor business continues to drive commission prices for online trading lower as well as introduce interesting incentives (such as deals), valuable resources and a concerted effort by online brokerages to win over (and keep) investors. In spite of market volatility, heading into the new year, this could be the best year yet to be a DIY investor hunting for an online brokerage account for the long haul.

TD Direct Investing Launches New Promo in Time for the Holidays

Just in time for the holidays, the online brokerage arm of the big green bank, TD Direct Investing, delivered some festive cheer in the form of a new commission rebate promotion. There were several interesting observations about this promotion that stood out – especially against the landscape of current offers – that might signal a subtle shift in how discount brokerage deals are run.

First, however, let’s take a look at the details of the offer. This is a commission-rebate offer which means that trade commissions that meet eligibility requirements, will be rebated by a certain point after the trades are placed. In this particular offer the number of trades that can be rebated are between 25 and 200. To qualify for this offer a minimum deposit of $15,000 is required.

In terms of the window of time that trade commissions can be rebated, the deadline to place eligible trades is before July 1st, 2019. This means that users that open accounts sooner derive more benefit from this offer than those who open an online investing account later, in that early birds have more time to use the commission rebate.

It is noteworthy that of the discount brokerage offers that are currently live, TD Direct Investing has elected to stick to commission rebates (e.g. a form of commission-free trading) rather than compete directly with cash-back offers. This pits TD Direct Investing’s offer against the other commission-free trading or commission rebate offers from National Bank Direct Brokerage, Desjardins Online Brokerage and Scotia iTRADE. Of course, TD Direct Investing enjoys a massive advantage in terms of recognition and market share so relatively speaking, they don’t have to bid as aggressively to win new assets.

Another very interesting feature of this offer is that individuals need to register first in order to qualify to be eligible. While other online brokerages, such as Questrade, RBC Direct Investing or Scotia iTRADE have attempted something similar, they have often disclosed codes in their terms and conditions which means that filling out a form is optional. In the case of this offer from TD Direct Investing, filling out the webform is one of the mandatory conditions attached to this offer. From a marketing point of view, this means that users who submit their information into TD’s system then become prospective clients that TD can follow up with. Though subtle, it is one way that TD may be able to improve their success rates at DIY investors opening an account with them.

Finally, the timing of this offer indicates that TD is once again focusing its promotional campaign squarely on the RSP season rush. 2018 was a big year for new account openings, spurred at the outset by strong momentum in cannabis and cryptocurrency stocks. With the recent volatility across markets, however, this should be an interesting RRSP season for online brokerages. With this offer from TD Direct Investing now going live, DIY investors have the best selection of deals that they’ve had since last RSP season, however they’ll have to weigh these incentives against the choppiness in the market. Either way, a new deal to choose from just before the holidays is a great present for all DIY investors.

2018 Online Brokerage Rankings from Surviscor Released

The latest online brokerage rankings from financial research firm Surviscor were released this past week. The big takeaway according to founder and president of Surviscor, Glenn LaCoste, who appeared on BNN Bloomberg, was that there was not much of interest that took place in the industry since the last ranking.

One thing that did stand out as a negative, according to the Surviscor analysis, was deteriorating service. According to their mystery shop data, response times for online enquiries at Canadian discount brokerages slipped, with no firm apparently responding faster than 12 hours.

Taking top spot again this year was Qtrade Investor followed by Questrade and BMO InvestorLine. At the bottom of the pool was HSBC InvestDirect. Interestingly, this set of rankings included Interactive Brokers which placed 7th out of 12 brokerages analyzed.

Discount Brokerage Tweets of the Week

From the Forums

Miss Understanding

With the changing representation of the DIY Investor in social media and some Canadian online brokerages recently (e.g. National Bank Direct Brokerage – who recently overhauled their website with a more balanced inclusion of women) there seems a shift happening in the visual identity of the “typical” online investor. Nevertheless this shift is not happening as quickly in the real world. One unhappy forum user shared on Personal Finance Canada this week her experiences with poor service and misinformation about ETF’s that suggests perhaps some people are reluctant to get past gender stereotypes at the expense of compromising customer satisfaction.

Flying in Coach

A newcomer to Wealthsimple – whose tagline is investing on Autopilot – took to the forums this week asking for advice on automated auto-rebalancing and fees. Wondering whether they should “copy the portfolios” themselves or put it in the hands of the online brokerage, the user put the two options up for debate.

Into the Close

That’s a wrap on a very eventful roundup on top of a very eventful year. With Christmas just around the corner, good luck to all the brave souls who live for thrill of the last minute gift chase! It’s been a great year here at SparxTrading.com so thanks to all the loyal readers and site visitors for making this year our best yet. We’re thrilled at what’s coming around the corner in 2019 and so to prepare we’ll be using the “down time” over the holidays to be doing some retooling and work behind the scenes.  On behalf of the whole team here at Sparx, have a very safe and merry Christmas and a happy New Year! Have a great weekend and we’ll see you again in early January.

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2018 Canadian Discount Brokerage Review & 2019 Preview

What a difference a year makes. In December of 2017, “investors” were HODLing for Bitcoin and weed stocks and were tripping over one another to open up new trading accounts as well as overloading trading systems and customer service lines at online brokerages across Canada.

While it didn’t catch everyone by total surprise, the online brokerage industry in Canada awoke in January to the undeniable reality that investors, in particular younger investors, are an important (and vocal) driver of the growth of online investing space in Canada.

The rise of the millennial investor in 2018 is one of the most important themes that emerged in the DIY investing space in Canada and underpins many of the milestones referenced in the latest series of submission from Canada’s online brokerages for the 2018/2019 edition of the ‘look back and look ahead’ series.

From the desire to participate in exciting online investing stories to the technology and experience that these digitally savvy and untethered investors expect, to prices they’re willing to pay for trading commissions, the impact of millennial investors to the online investing industry is staggering.

Canada’s discount brokerages certainly have their work cut out for them.

They have to balance catering to a very important group of older clients who have different preferences than another group of younger, and not yet as affluent, clients. All the while, they have to do so in the face of falling commission prices, increasing competition and higher technology spends.

So, how did Canada’s online brokerages fare in 2018 and what are they saying about 2019?

Theme 1: Digitization is Accelerating

Looking back on 2018 and into 2019, it is clear that Canadian online brokerages are moving more quickly and efficiently at creating a fully digital experience for online investors.

Online account opening has been a game changer for those discount brokerages who’ve rolled this feature out and has become a priority feature to deploy in 2019 for those yet to do so. Increased spending on technology, as well as creating agile teams mean online brokerages are starting to function more like tech companies in their pace and approach to change. As a result, they’re starting to catch up to the robo-advisors that have, up until recently, enjoyed the unencumbered digital edge that comes with building technology enterprises from the ground up.

Theme 2: Barriers are Dropping

Another way in which the rise of the millennial investor has impacted online brokerages in 2018 is the improved accessibility to online investing. Aside from technology improvements, there have concerted efforts to deliver accessible (and original) content about investing, notably from the largest players in the space, TD Direct Investing and RBC Direct Investing, as well as reductions in pricing for trading commissions.

Bank-owned brokerages, like CIBC Investor’s Edge, introduced young investor pricing on trading commissions while others, like National Bank Direct Brokerage, lowered the threshold to qualify for their commission-free trade offer down to $5,000.

Although it may not have been a direct catalyst in 2018, Canada’s online brokerages are also actively bracing for commission-free trading coming from Wealthsimple Trade. As this edition goes to publication, Virtual Brokers just launched a new, lower standard commission rate, which makes theirs one of the lowest for Canadian DIY investors.

Theme 3: Go Big or Go Home

If pressures to innovate with technology, and deliver more for less are headwinds, the counter to those is scale. Specifically, when it comes to being able to provide a robust online brokerage experience, size is beginning to matter.

Consolidation in the online brokerage space in late 2017 and through 2018 saw several important online brokerages merge or be acquired by larger entities. The result, independent or non-bank online brokerages became much better funded and are now even more formidable competitors to larger bank-owned brokerages.

In 2018, Jitneytrade was acquired by Canaccord, and in an exclusive announcement in their submission, they’re announcing a new direction and push towards mainstream investors, including a feature set that would put them on par with many existing online brokerages (and perhaps ahead of others).

The merger between Qtrade Investor and Credential Direct under the umbrella of Desjardins-backed Aviso Wealth has created an exceptionally strong competitor that has the scale and focus to hold its own in the bank-owned brokerage market.

CI Financial’s acquisition of BBS Securities, parent to Virtual Brokers, and robo-advisor WealthBar has created a significant online investing product suite for other online investing firms to now contend with.

Finally, Wealthsimple’s launch of Wealthsimple Trade that will let investor’s trade commission-free was a massive bet that this “no cost” model could work in much the same way as it has for Robinhood in the US. Backed by Power Financial, this challenger-brand in the managed wealth space is now hoping to disrupt the DIY market as well.

Although subtle, it is also interesting to note that unlike in previous years, online brokerages this year were much less shy to disclose or advertise how many online trading accounts they have as well as the assets under management present at their firms. Online brokerages like Questrade, CIBC Investor’s Edge, and TD Direct Investing, for example, shared a bit more openly the size and scale of their online brokerage client base.

Shift Happens

While the old paradigm in financial services was about permanency the new paradigm appears to be adaptability.

It is our view at SparxTrading that as financial services companies continue to digitize, they will undoubtedly also adopt a technology company-like approach, communicating about (and subsequently delivering on) improvements and enhancements will increasingly be the metric of choice for younger investors looking to choose an online brokerage.

In other words, how “innovative” an online brokerage is will start to matter more as pricing comes down and competition increases. In a constantly and rapidly changing landscape, the challenge to Canadian online brokerages is whether they evolve with it without reducing the perceived quality.

Before diving in to this year’s submissions, we’d like to thank all of the online brokerages for sharing their updates and forecasts for Canadian DIY investors. This look back on 2018 and preview to 2019 offers a unique window into each of the organizations who participated and gives DIY investors another important set of data points with which to make their decisions around who to choose when opening an online brokerage account.

Now without further ado, below is the list of Canadian online brokerage’s who’ve participated in the look back to 2018 and look ahead to 2019. Click on the links to go directly to each submission or use the page numbers to navigate between them.

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Discount Brokerage Weekly Roundup – December 14, 2018

If there’s one place in Canada that should be prepared to handle the rain, it’s Vancouver. And yet, even on the We(s)t Coast, this past week has shown that sometimes, when it rains, it really does pour. As it turns out, if you’re an otter, however, Vancouver is shaping up to be a pretty sweet place to hang out. CFO’s of major Chinese telecom companies, however, not so much. Like this past week in Vancouver, there has been a torrential downpour of information across the online investing world and it looks like there’s even more coming.

So, even though we can’t boil the ocean, in this edition of the roundup we nonetheless wanted to provide a solid run down of what crossed our radar this week, sprinkle in some analysis and for the faithful readers of the roundup, provide an exclusive preview of the look back/look ahead piece. As usual, there’s also an interesting selection of DIY investor tweets and forum posts to round things out.

Virtual Brokers Drops Commission Prices

There’s no question that things are busy across the online brokerage space heading into the end of the year. In the midst of all that flurry, however, there was a very important change that took place at Virtual Brokers at the close of market on Thursday (December 13th) and the start of trading on Friday, rain wasn’t the only thing coming down, commission prices did also. Namely, the commission structure for Virtual Brokers has now changed to as low as $1.99 commission per trade (technically per ticket – more on that in a moment).

That’s right Virtual Brokers now offers one of the lowest (until Wealthsimple Trade goes fully live to the general public) trading commissions for equities and options trading. The new pricing structure is $0.01 per share with a minimum charge of $1.99 per ticket up to a maximum commission charge of $7.99 per ticket. For active traders, defined as those who made 150 or more trades in the past quarter, the price changes to $3.99 flat per ticket

While it does benefit passive or minimally active traders, this is a huge development for very active traders. To understand why, it’s important to know the difference between “trades” and “tickets.”

A ticket refers to a collection of trades on the same side (either buy or sell) on the same day for the same stock. An example can help clarify.

Let’s say trader of TSLA purchases 3 separate orders of 200 shares a piece of the stock at multiple points in the day. Those 3 trades amount to 600 shares. Assuming they were all routed through the same market, those 3 trades would be on the same ticket because they’re the same stock, same direction, same day. At $0.01 per share x 600 shares, that’s $6.00 in commission charges. If on that same day a trader wanted to then sell 100 shares, that would be 1 trade which would also be one ticket at the $0.01 per share – which works out to $1.00 however the minimum commission charge is $1.99 so the final commission charge would be $1.99.

Unlike almost all other online brokerages (with the exception of Jitneytrade for example), using tickets instead of trades means that clients have to do a bit more math to truly understand the commission costs.

That said, if there’s one thing active or day traders are not afraid of, it’s a little order tracking, especially for a flat fee of trading that could be as low as $3.99 for an unlimited number of shares. In fact, for ETF swing traders the math is even more compelling – purchases of ETFs are free at Virtual Brokers so long as they are held for a minimum of one business day, which means anyone who is on the standard plan would only pay a max of $7.99 for a round trip on an ETF trade (assuming all units were sold same day). For passive rebalancing – especially for smaller accounts, this is also a great score as selling 200 shares of an ETF costs $2.00 in commission charges.

Clearly, in the commission price pool, Virtual Brokers has just made a massive splash.

Unlike lesser known online brokerages, Virtual Brokers has the benefit of having been featured in the Globe and Mail’s online brokerage rankings, including having achieved top online brokerage or a high finish for several years in a row.

Although prior to this move Virtual Brokers’ popularity was waning, they are certain to get the attention of investors of all stripes – but especially the active ones – who will now likely take a serious look at an online trading account with a provider that has professional grade platforms and the pricing to match.

It will only be a matter of time until word spreads among investors and if/when Virtual Brokers decides to advertise this widely – other brokers will be racing to figure out how to catch up.

Back to the Future: A Preview of the Look Back on 2018 & Look Ahead to 2019

From outages & outrage in early 2018, online account opening landing at TD Direct Investing, new website roll outs at BMO InvestorLine, Questrade and National Bank Direct Brokerage, and so many interesting promotions and deals, there was a lot that took place at Canada’s discount brokerages this past year.

We could go on (and on) about these developments (which we will next week!) but for the moment, we’re excited to hand over the spotlight to Canada’s online brokerages themselves to see what they had to say about 2018 and what they’re doing next in 2019.

Readers of the roundup will get a first look at this amazing edition of the Look Back/Look Ahead. Why is it so amazing? Without being too biased, firstly it offers a unique window into hearing from Canadian online brokerages themselves, in many cases directly from the leaders of the organizations that Canadian DIY investors entrust their business to. It helps to know and understand the vision these organizations have for building online brokerages that are suited for today’s world as well as tomorrow’s.

Second, this is a chance to spot interesting trends in the year that past as well as in what is coming around the corner at many online brokers. With RRSP season about to ramp up, consumers will be very hungry for information that helps them better understand the decision to work with a particular online brokerage. While there are rankings or ratings, those are generally focused on past performance. The look ahead component this year offers a fascinating window into what 2019 is going bring for DIY investors in terms of new features, technology enhancements, pricing (potentially) and more.

Finally, this particular edition has exclusive information on how the landscape of online brokerages will have another competitor to contend with this year. That’s right, one of the biggest stories in this year’s series is the upcoming launch of a ‘dark horse’ competitor. It’s not Wealthsimple Trade – who’s commission-free trading is certainly going to make waves, but rather an existing online brokerage who has some very ambitious plans. Who is this mystery online brokerage? Tune into Sparx next week to find out!

To provide some more intrigue, here is the list of online brokerages who we received submissions from and who will be featured in this upcoming year in review & preview to next year piece:

Also new for readers this year will be a digital magazine format that provides another way to experience this informative and unique piece. Here’s a preview of the cover art:

This format is the first from SparxTrading and is also a reflection of our growing team and focus on delivering great DIY-investor information about Canadian online brokerages.

Since you’ve read this far here are some early teasers from three firms covered in the look back on 2018 & look ahead pieces for 2019:

  • CIBC Investor’s Edge: Invested in online education content, young investors and trading platforms in 2018; for next year (and beyond) enhanced trading & reporting features
  • Qtrade Investor: Listening to clients helped drive improvements in service & support, financial planning tools and access to premium market research; coming up, big technology enhancements including mobile improvements
  • National Bank Direct Brokerage: Enhancements to the website, promotional offers and special educational events provided improved user experience; coming in the new year are new trading features and improved online account opening experiences.

Stay tuned!

Lightning Roundup

Here are some interesting online brokerage stories that crossed our radar this week.

Robinhood Online Brokerage Launches Banking Feature

The US-based zero-commission online brokerage continues to make waves in the online investing and financial services space. This week they took a literal swipe at the banking industry by launching checking & savings accounts that pay 3% interest to users. That, according to CNBC, is more than 30x the national average. Check out this interesting interview that has an ironic moment talking about technical glitches.

CI Financial Acquires Wealthbar

After acquiring BBS Securities, parent of Virtual Brokers, CI Financial is again going shopping just ahead of the holidays with an acquisition of Vancouver-based robo-advisor Wealthbar. This acquisition provides an interesting spectrum of services for CI Financial as they will now be equipped to provide direct online investing as well as digital advisor services.

Scotia iTRADE Movie Deal

With more foot traffic passing through downtown Toronto’s underground PATH, it was an opportune time for Scotia iTRADE to launch a short promotion for 2000 SCENE points for a deposit of $5,000. We’ve spotted ice cream in the summer, popcorn in the fall and now hot drinks with winter around the corner.

Questrade Spreading Holiday Cheer

We’ll end the lightning round with a feel-good move by Questrade. Spotted on their Twitter feed this week was a message stating that Questrade will donate a meal to the Daily Bread Food Bank for every retweet the message gets until the end of December. In addition, Questrade has also committed to providing a day’s worth of meals for every account opened with them in 2019. This is a great example of corporate social responsibility in action and gives DIY investors who open an account with Questrade something extra to feel good about while they’re doing it.

 

Discount Brokerage Tweets of the Week

From the Forums

Questwealth Query

One user took to the Personal Finance Canada forum on reddit this week with a question on growth portfolios for their RRSP. With the user considering a switch to Questwealth, read what helpful advice was given on how to dissect some “complicated” portfolios.

Checking in on Wealthsimple

Robinhood’s recent announcement of checking and savings accounts with 3% earnings and no fees, led the discussion on to whether Wealthsimple Trade, the commission-free trading Canadian analogue, would also follow suit as their “next logical step”. Read more in this thread from Personal Finance Canada forum.

Into the Close

That’s another rocky week in the bag for the bulls. Ironically the Christmas colours of red and green are flashing red as major support levels are being challenged. Of course, it’s all a matter of perspective at this point as bargain hunters continue to get more and more excited for interesting entry points. Speaking of interesting entry points, if you’re out holiday shopping in the malls, may the parking gods be forever in your favour! Have a great weekend!

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Discount Brokerage Weekly Roundup – December 7, 2018

Only in the stock market does everybody get more when everybody gets less. The cuts in oil supply provided a much-needed relief to an otherwise dour stretch into the final month of the year. With most of the gains of 2018 now erased on major indices and selloffs despite good jobs news, the good news is, it could be worse.

Fortunately, there is actually good news for online investors to be had. In this edition of the roundup we review the latest crop of deals that will add some Christmas cheer for DIY investors hunting for a great deal on an online trading account. Of course heading into the end of a year, it’s also a timely opportunity to review a portfolio – which is what we do by taking stock of the year that passed and what’s coming around the corner (hint: it’s exciting!). As always, we capture the reactions and questions of online investors on the forums and on Twitter.

December Deals

It’s the holiday season, and, true to form, there are lots of presents and still a few surprises left for Canadian DIY investors. December kicked off with a healthy count of 25 discount brokerage deals and promotions ranging from cash back deals and commission-free trades to transfer offers.

The big stories in this month’s deals section include the return of Desjardins Online Brokerage’s commission credit offer (along with some festive imagery befitting the season); the promotional offer accompanying the launch of RBC InvestEase as well as the return of Scotia iTRADE to the deals section with a cash back or commission-free trade offer.

With participation by Canadian discount brokerages at a healthy level, DIY investors hunting for a bargain on an online trading account certainly have a lot to choose from.

Of course, December wouldn’t be complete without a few surprises. There are already whispers of two online brokerages keen on launching some interesting promotions. Whether they get here in time for Christmas is a bit of a jump ball at the moment, however it’s a safe assumption that those brokerages currently on the sidelines without a commission-free trade or cash back offer won’t be staying off the promotions field for too much longer.

As a segue into the next story, it’s important to remember that last year at this time, the world was going crazy about “investing” in cryptocurrency and marijuana stocks. It’s likely that the enthusiasm for trading these was amplified across the holiday season with friends and family gathering to talk about these “investments” – so there’s still a good chance that, in addition to talking turkey, there’ll also be talk of investing.

We’re also really excited to see what happens to the promotional landscape next year as Wealthsimple Trade starts to roll out live trading accounts. Competing against commission free trading will be a challenge for the incumbent online brokerages, however our bet is that many DIY investors would still be open to cash back offers and incentives which is something Wealthsimple Trade may find difficult to match (since they’re already taking a hit on commission fees). Making a few trades a year (even at a “nominal” cost) may not be worth as much as the cash incentive on the way in.

In light of that, one interesting scenario that could play out in 2019 is that strong cash back (or better commission credit offers) could majorly slow the roll of Wealthsimple Trade. At that point it will be a faceoff between low pricing and design technology (i.e. user experience) and a mature functionality in the form trading platforms with news, research, screeners and more.

Looking Back & Looking Ahead

With just about three weeks until the end of 2018, it’s an opportune moment to reflect back on the year that was and where things are going in 2019 for online investors.

Last year at this time we were knee deep in crypto mania; it’s a good thing weed has been legalized because there are some people who are going to definitely want/need to chill after the drop in both cannabis and crypto stocks over the past few months.

Also around this time last year, SparxTrading pulled together a collection of 9 voices from across the Canadian online brokerage space to provide a platform for them to share what the year was like in their own words and what DIY investors could look forward to in 2018. In that piece, we highlighted three important themes that seemed to emerge from all of the submissions:

  1. There’s a technological arms race
  2. Delivering more value to DIY investors
  3. Focus on better trading experiences

Although these three items are interrelated, we saw evidence of distinct activities to address these themes over the course of the year.

From multimillion-dollar investments in the technology stack from firms like TD Direct Investing, to the adoption of youth or ‘student’ friendly pricing at major bank-owned online brokerage CIBC Investor’s Edge to trading platforms to roll outs of upgrades of custom-built trading platforms at Questrade there were numerous examples of these themes unfolding at many of Canada’s online brokerages.

One thing that also stood out over the past year was the consolidation of the online brokerage market.

After the merger of Qtrade Investor and Credential Direct under the umbrella of Aviso Wealth, the acquisition of BBS Securities by CI Investments and the acquisition of Jitneytrade by Canaccord Financial, the war chests of non-bank owned online brokers have gotten much stronger. The industry as a whole seems to be in a ‘rebuilding’ phase – with investments in their business and technology taking place to enable them to serve investors of the future. Case in point, the launch of robo-advisors/digital advice platforms at RBC and the announced roll out of one at TD clearly signal this as a product line ‘must have’ for 2019 and beyond. They’ll have their work cut out for them, though, as Vanguard is also reportedly pursuing a launch of a robo-advisor as well.

Coming up next week we’ll launch the online brokerage look back on 2018 and look ahead to 2019 and this is definitely (and literally) going to be a page-turner.

With an exciting new look and rendering for this unique piece, interesting new themes on where online brokerages are focused as well as the unique opportunity to hear what online brokers have to say about themselves and what they’re looking forward to in 2019, we’re thrilled to be rolling this out. Be sure to follow SparxTrading on Twitter for exclusive sneak peeks at this year’s set.

Lightning Roundup

There were more noteworthy developments that took place this past week in the online brokerage space here in Canada as well as in the US.

Interview with Interactive Brokers Founder

Earlier this week, founder and CEO of Interactive Brokers, Thomas Peterffy was interviewed at the Goldman Sachs Financial Services Conference. In this informal fireside chat, there were a number of very interesting nuggets shared by Peterffy.

The first was his perspective on the “zero commission” trading trend emerging in the US online brokerage market. He specifically mentioned Robinhood and JP Morgan in this respect but he had some rather ominous words for the latter. Peterffy mentioned that JP Morgan’s decision to also do so was “a big mistake” and that ultimately “they will regret this.” Within that conversation about commission-free trading, he also laid out the simple truth to online brokerages which is that they need to make money or break even in order to exist so the money will have to come from somewhere – including with administration fees. This could be an important consideration for those online investors contemplating platforms like Wealthsimple Trade or who might be hoping for online brokerages to lower their trading commission pricing.

Another major development shared by Peterffy is that as of January 1st 2019, Interactive Brokers will be paying interest out to accounts with balances underneath $100,000. Specifically, the interest paid on an account will be indexed against the $100,000 threshold so that investors who, for example, have a cash balance of $50,000 will get an interest rate that is half the rate of an account with $100,000 or more in cash. This will definitely spur a larger segment of investors to consider kicking the tires on Interactive Brokers who simply want a better deal on their uninvested cash.

Mobile Trading Apps Spinning Their Wheels

Interactive Brokers was once again in the spotlight but this time in Canada where financial research firm Surviscor released the findings of their mobile online brokerage experience study. The mobile trading experience at Interactive Brokers blew the doors off its competitors according to the Surviscor study.

According to the rankings, Interactive Brokers’ mobile trading experience scored a 94% followed next by Questrade at 64% and then BMO InvestorLine at 57%. Perhaps most surprising is the number of firms who scored under 50% (8 out 11 firms). Desjardins Online Brokerage’s mobile trading experience ranked last with a score of 24%.

Glenn LaCoste, President and CEO of Surviscor cautioned that while the scores may appear shocking, that “it is important to understand that they do not reflect the overall merits of any of the firms. The take-away is that most industry firms fail to provide a seamless mobile accessible experience for the base online offering.”

Earlier this year, a similar sentiment was echoed by J.D. Power in their Canadian Self-Directed Investor Satisfaction Study in which Mike Foy, Senior Director of the Wealth Management Practice at J.D. Power stated “Investment firms in Canada, in general, are significantly behind the curve when it comes to their mobile app offerings, capabilities and customer engagement.”

From the Forums

Robo-Wars

Vanguard Canada is the latest wealth manager to join the robo-advisor phenomena. The news hit the forums this week as one user kicked off a discussion on the global investment company’s choice to compete in the growing market. Check out the discussion points here.

Passive or Active Retirement

One forum user took to personal finance Canada on reddit this week, wondering if a DIY investment approach would be the way to go after years of a passive strategy. With a personal aversion to financial matters at the age of 60, this proves an interesting post both for those looking for advice on what to do with their finances after retirement and for those who are curious to know if they’re on the right track.

Discount Brokerage Tweets of the Week

Into the Close

With just over two weeks to go before Christmas, the procrastinators among us are still not worried about getting that great gift in time for the holidays. For the traders, however, that deadline day for making trades in 2018 is coming. Circle December 27th as the final day to make trades in Canada that will settle in 2018 (Dec. 31st). Speaking of settling and end games – now that the weekend is here, it’s a great time to relax and marvel at the great indoors, starting with a trailer for the Avengers Endgame. Have a great weekend!