Weekly Roundup – Page 14

Posted on August 6, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – August 6, 2019

It’s definitely shorts weather outside as well as in the markets. And, what better way to celebrate a short week (at least for Canadian DIY investors) than with a brief update of what’s moving the needle for online brokerages here in Canada as well as in the US.

In this edition of the roundup, we take a quick look at the latest activity in the discount brokerage deals section that is bound to put a dent in some brokerages’ vacation plans. From there, we look at some important developments in the US online brokerage market that could help paint a picture of the future for Canadian online brokers and DIY investors. As always, we’ll be sure to toss in the latest investor chatter from Twitter and the investor forums.

Deals – Get ’em While They’re Hot

Heading into the long weekend at the beginning of August, we thought activity in the deals and promotions space would likely be on cruise control until closer to September, the month when activity typically picks back up. Instead, DIY investors were treated to a pleasant surprise, as there was one bank-owned brokerage that decided a dip into the deals pool for the month of August.

RBC Direct Investing just kicked off a month-long promotion that frequent watchers of the deals section will be familiar with. The offer is for 25 commission-free trades which are good to use for one full year, and requires a deposit of $5,000.

Like most things market-related, timing is key. It is interesting that the CIBC Investor’s Edge promotion was extended into early August from its original expiry date at the end of July. If Investor’s Edge decides not to extend their existing offer (or replace it), then RBC has the “lion’s share” of the spotlight for commission-free trading offers for the near term. Another brokerage that should be concerned with RBC DI’s latest maneuver is HSBC InvestDirect. Their promotion, which launched in July, offers 30 commission-free trades which are good for use for up to 60 days.

When an online brokerage the size of RBC Direct Investing jumps into the deals pool, they’re going to make a splash. Interestingly, the fact that the deal is set to expire at the end of August means this is a rare window for investors looking for a deal to actually get one from RBC Direct Investing, outside of the usual RSP rush in the late winter/early spring.

For DIY investors, a deal this early from a major online brokerage is a great signal of the level of competition between Canadian brokerages, which makes us believe there are more deals likely coming to market.

Quick Notes from the US Online Brokerages

Not all the news from across the border is acrimonious. In fact, for online brokerages, there are some bright spots in terms of performance updates, concept projects, and big business moves which show that the space is continuing to evolve around tricky macro conditions.

With the start of a new month, Interactive Brokers has published their latest set of performance metrics for July. As has been the case for a number of years now, metrics for the popular online brokerage continue to push higher with latest annual growth figures in client accounts clocking in at 17% and, on average, 276 (annualized) trades per client. Interactive Brokers is clearly managing to attract individuals with a tendency towards active trading. Even more interesting for the brand will be the next several weeks in which the VIX continues to flash volatility is at hand – something that can pull active traders into the mix to compete for big swings in price.

Another big growth story announced at the end of last month came from the largest online brokerage in the US – Charles Schwab – who (for the tidy sum of USD $1.8B) is acquiring about one million of USAA’s brokerage and managed accounts, and will become the exclusive wealth management service provider to USAA.

While these two firms differ substantially in size, they do help provide examples of what options confront the current Canadian online brokerage space in terms of pathways to growth. On the one hand, Schwab’s growth announcement illustrates that when a firm is in the wealth management space and wants to exit it, the bigger players are typically going to have an edge over the smaller firms. For Canadian online brokerages, there definitely seems to be a sentiment to deploy features to keep up with leading brands rather than to push the envelope on innovation. As a result, it is likely that upstarts, like Wealthsimple Trade, can hustle and out-compete existing providers, which in turn may prompt some existing players to exit the space the way USAA did in the US.

Another important takeaway is the power of building a best of breed trading experience and the impact on investors.

Interactive Brokers still has a lot of currency with active traders/investors and continues to grow as a result (see this recent forum post for example). The result of their investment in automation is clearly paying off, as they are able to offer much lower commission per trade pricing than many of their peers and still be a profitable enterprise. By comparison, the no-commission online brokerage, Robinhood, has managed to carve out their own niche with millennial investors, and has layered in paying for additional services as part of their way of balancing being accessible and sustainable. Incidentally, this past week, they also launched a new messaging feature that keeps their platform’s user base informed about important announcements in a way that looks and feels like it belongs within the Robinhood platform. Even more forward looking, TD Ameritrade flashed a sign of what’s to come with DIY investors potentially being able to place trades while driving.

For Canadian online brokerages, the fork in the road to growth is clear. Either win at creating an innovative product that customers rant and rave about, or start buying up other online brokerage providers who may be much slower to innovate. It’s already happening in the US and will almost inevitably happen here.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Man or Machine?

No one can deny the relentless level of automation that has taken over the financial world. This has people torn between human advice and robo-advice for managing their investments. See what individuals in this reddit thread have to say about the new age of robo-advisors.

Parent Trap

With the average amount spent raising a single child to adulthood being over $200,000, parents have to budget carefully. The individual in this reddit thread is going the extra mile, trying to set up an RESP for their newborn. Find out what advice fellow readers offered to help avoid the pitfalls of planning.

Into the Close

That’s a wrap on another week’s action in the online brokerage space. Now that August is here, we’re keeping our ear to the ground for what’s likely going to be a very busy fall in the online brokerage space. Perhaps figuratively and literally, the actual ground seems to be a little more palatable to listen to than what’s happening on social media anyway.

Posted on July 29, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 29, 2019

It’s not just temperatures that are rising anymore. Markets, tempers, and purses for eSports tournaments have all made headlines for reaching new highs. For online brokerages, even though trading might be growing, revenues may not be.

In this edition of the roundup, we continue our foray into US online brokerage earnings, with some big headline developments and a more ominous cloud forming on the horizon for the industry. From there, we’ve bundled in a couple of small but interesting stories from developments we spotted at Canadian discount brokerages. As always, we’ve got a healthy serving of chatter from investors in the forums and on Twitter to close things out.

Earnings Wake Up Call for Online Brokerages

Earnings season for the US online brokerages is now officially in the books for another quarter. Despite how competitive the online brokerage industry is in the US, one of the most interesting resources to gain insight into what’s happening behind the curtain is to tune into earnings calls for those publicly traded online brokerage firms. These calls typically feature senior executives – such as the CEO and CFO – sharing their highlights of the quarter as well as answering questions from analysts who are seeking to understand how best to price in the news being disclosed in the accompanying earnings reports.

The latest round of earnings calls provided a number of interesting insights about developments at specific brokerages, as well as about the industry as a whole that anyone who watches the space will certainly want to pay attention to.

Starting first with the biggest news announced by TD Ameritrade, their CEO Tim Hockey will be stepping down. While announcements of this nature are not uncommon, it did seem to catch the analysts off guard – perhaps a compliment to Hockey and the achievement of Ameritrade under his leadership. After all, “if it ain’t broke, don’t fix it,” or so the saying goes.

Ameritrade has experienced significant growth over the 3.5 years that Hockey has been at the helm, and he has seen them through a major acquisition and a number of digital transformation initiatives. So, naturally, the questions coming from most of the analysts on the call were mostly of the “what gives?” variety. They were trying to tease out whether or not the decision for Hockey to step down was driven by a difference in vision for the brand than what the Board had in mind. Fortunately, Hockey did a good job of helping to assuage speculation by clearly stating reasons that weren’t behind his stepping down, however, the shift in leadership at the top will undoubtedly cast some uncertainty onto the future of the franchise.

TD Ameritrade isn’t the only US online brokerage to telegraph a leadership change in 2019. Earlier this year, Interactive Brokers announced a change of leadership that will take place in the third quarter of this year as founder and CEO Thomas Peterffy steps aside on his 75^th birthday, and current president of Interactive Brokers, Milan Galik, takes over.

For comparison, however, Peterffy has been at the reins of Interactive Brokers for 42 years, while Hockey has been at the head of TD Ameritrade for 3.5 years. The kind of continuity and long-term strategic execution that comes with such a long tenure is evident in many founder-led enterprises.

The replacement for Hockey is going to be chosen by an executive search firm while by comparison, Interactive Brokers is hiring from within. In fact, the successor to Peterffy has been with the organization for 28 years and has been groomed for the position for the past four years.

Leadership turnover is something that will make waves with analysts, and both they and the competition will undoubtedly take great interest in who will wear the captain’s jersey next at Ameritrade. There is a strong precedent of achieving big things quickly at Ameritrade, so whoever is cast to lead them through their next cycle will have some especially challenging waters to navigate, given what else was uncovered in reviewing the recent earnings calls.

Headline news aside, there was one potentially ominous theme about the online brokerage space as a whole that emerged from the various reports, namely that revenues from trading were decreasing even in spite of higher trading activity.

Here’s what the various brokerages had to say:

Schwab: “Trading revenue declined 3% [y/y] to $174M due to a decrease in average revenue per trade, which more than offset higher activity.” (CFO Peter Crawford)
Interactive Brokers: Lower commission revenue which decreased $7M, or 4%, from the year-ago quarter. (source)
TD Ameritrade: Commission revenue, excluding order routing, was down sequentially on modestly lower client trading volumes and a slight decline in commission rates. (source) Average client trades per day increased 5.2% y/y, however, commissions and transaction fee revenue fell 2.7% y/y. (source)
E*TRADE: “Commission revenue of 121 million was down 1 million compared to last quarter, driven by 11,000 lower DARTs and a $0.03 lower CPT.” (source)

As can be seen in the table below, other than Interactive Brokers, the average commission per trade at the major US online brokerages is hovering at about $7 whereas at Interactive Brokers, it’s almost half that amount, just shy of $3.70. Since these prices are in USD, that puts most of the major online brokerages at about $9.20 per trade CAD and Interactive Brokers at $4.85.

Another interesting nuance to the earnings is in the operating efficiency of each organization. Interactive Brokers boasts an incredible pretax margin of 64% which handily beats out any of their competitors (who are at a not-too-shabby >40% level). This is crucial because Interactive Brokers charges less per trade and yet they are capable of keeping much more of the revenues they generate as profits than their competitors do. Nonetheless, despite their low rates, they too are not immune to falling revenue from commissions.

While it is difficult to map what’s going on in the US online brokerage space directly onto the Canadian market, it’s worth noting that commissions per trade at Canadian online brokerages still have lots of room to fall – especially at the major bank-owned online brokerages who, for the most part, continue to charge almost $10 per trade. Further, it’s clear that unless Canadian online brokerages commit to becoming exceptionally efficient from a technology and automation standpoint, they will have to explore other mechanisms to boost revenues (like digital advice services or premium features) otherwise, their profitability is going to suffer.

Without the pressure of being publicly traded, Canadian online brokerages are free to operate outside of the same kind of quarterly scrutiny that their US brokerage peers have to navigate. This means that the pressure to innovate is going to be largely driven either at the consumer end or internally.

For bank-owned brokerages, there may be some pressure to innovate and capture market share owing to their publicly traded parents, however at most of these brokerages, that pace of change is clearly not the same rate that exists in the US.

One other piece of news that will also help put the latest US online brokerage earnings into perspective is that Robinhood, the US online brokerage that doesn’t charge any commission fees per trade, announced this past week that they have raised US $323M in Series E financing, which puts their valuation at US $7.6B.

When compared against the market cap values for the publicly traded US online brokerages shown above, Robinhood’s latest valuation shows that they are clearly being priced as a material competitor to the incumbent publicly traded brokerages. It is also worth noting that Robhinhood has telegraphed their intention to go public at some point.

There’s lots more to say about the US online brokerage story relative to the Canadian online brokerages based on these latest earnings (if you’re interested in hearing about it, let us know here), but if there’s one key takeaway to reflect on in terms of product “innovation” in the US online brokerage space which has yet to fully take shape here in the Canadian space, it’s the offer of high (any?) interest on cash balances in online brokerage accounts.

Interactive Brokers has certainly paved the way for this in the US, with E*TRADE also following suit. Although they fumbled the initial roll out, even Robinhood is gearing up to win new business by offering up high interest savings for uninvested cash balances. As both a mechanism to attract new clients and entice existing ones to stick around, the evidence from the US online brokerages points to the strength of this feature in hanging on to existing clients.

Screenshot of earnings transcript from E*TRADE Q3 19 earnings call

With the final half of calendar 2019 now underway, the online brokerages in the US (and likely here in Canada) have already started developing their plans for 2020. For Canadian online brokerages, we fully expect some bigger and bolder feature releases to come to market to counter what is a clear trend towards lower commissions. In fact, as the next stories in the roundup show, it’s already starting to happen.

Regardless of where markets head into the back half of the year, things are going to get very interesting for Canadian DIY investors as online brokerages here set about the task of staying relevant in this new operating reality.

CIBC Investor’s Edge Rolls Out Mobile Trading Charts

This past week, we spotted a new feature announcement on the CIBC Investor’s Edge website: the launch of charting capabilities on their mobile trading app “CIBC Mobile Wealth.”

Officially launched in the middle of July, this latest update will undoubtedly be a welcome addition to how online investors track and seek out investing opportunities.

According to the information released on their website, the new charting feature is available for individual securities as well as for indices, foreign exchange, and commodities. In addition, users are able to change time frames, use a limited number of technical indicators, as well as choose from four different chart styles.

While we haven’t yet seen a lot of chatter about this new feature online, scanning some of the pain points that users of the app have mentioned in their respective download reviews, charting does surface as one of the limitations of the CIBC mobile experience. Fortunately for investors and Investor’s Edge, it appears this new feature will enable them to chart a new course in online mobile trading experience.

Questrade Chats with Investors

This past week, we noted that Canadian online brokerage Questrade rolled out an interesting new blog series entitled “The Investor Next Door.” According to the blog post, the Investor Next Door series talks to “everyday Canadians about their investment journeys” in a Q&A format post.

The first post interviews “Brendan Y” about the type of investor they are, their investment goals and style, as well as what their experiences are like in the markets and lessons learned.

After having a bit of a quiet spell on the Questrade blog, it looks like things are potentially coming back to life. There was a notable reboot of activity in February and March and so seeing signs of life, it appears that the team at Questrade is continuing to experiment with something a little different.

Why that is of interest is because Canadian online brokerages are still finding their footing with regards to producing “interesting” content for their clients and other online investors to consume. In many respects, Canadian online wealth providers have been struggling to catch up to Wealthsimple, who has certainly reshaped the landscape of financial content in Canada by featuring “celebrities” and their stories of money.

It is particularly interesting, therefore, that Questrade is launching their new series about “everyday Canadians” as a direct counterpoint to the celebrity stories. Whether the new content angle ultimately succeeds will largely depend on how compelling the stories of other investors’ performance/lessons are to readers.

With a crowded field for content, it’s going to be a challenge for this written series to stand out.

Questrade has done well with their marketing/advertising campaigns (“asking tough questions”) so it will be interesting to see where this content piece fits in, if at all, to their bigger picture strategy. Regular consumers of financial content online will be asking why they should spend even four minutes reading about Brendan Y or “everyday Canadians” – let’s hope that’s not a tough question for Questrade themselves to answer.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Investing in US Stocks with CAD

It seems like the recent boom in the US stock market has non-residents interested. This Canadian investor wants to invest their hard-earned Canadian dollars in the US stock market. Take a look at this Reddit thread to see what advice other individuals gave.

Stocks vs. Property

What’s the better bet to invest in? Whether or not stocks seem more risky than real estate these days is up for debate. See what people had to say about investing in property vs. stocks on this Canadian Money Forum thread.

Into the Close

That’s another trip around the online brokerage space wrapped up. The upcoming week will be full of shrug (and maybe even cringe) worthy moments online. Ironically, despite a rate cut forecast for this week, there’s going to be lots of interest in the US. Keep the popcorn handy for this one.

Posted on July 22, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 22, 2019

Seems like this summer, there will be more that one Maverick making waves on traders’ screens. The trailer for Top Gun 2 officially dropped this past week and even though we weren’t planning on a sequel, we just felt the need – the need for (a good) read.

In this maverick edition of the Roundup, we provide updates on the new shiny new TFSA account that’s ready to launch one hotshot Canadian online brokerage into the spotlight with a new generation of investors. And, if that wasn’t enough to take your breath away, there’s a look at the performance numbers of one US online brokerage who managed to get on analysts’ radar to figure out where they’re heading next.

Wealthsimple Trade TFSA Now Live for All

Well, that escalated quickly. The launch of Wealthsimple Trade’s TFSA account officially went live this past week, and with it, the timeline for the Canadian online brokerage industry to come up with something equally or more compelling than commission-free trades has also moved up.

In last week’s Roundup, we mentioned that there were rumblings around the DIY investor forums of the TFSA roll out, as well as press coverage of Wealthsimple Trade that happened to coincide with the soft launch of the popular registered account feature. At that time, however, the official word was that the launch would be coming at some point in the next month.

Fast forward a week, and the gloves are now off in a fight between brokerages to win over Canadian DIY investors as newcomer online brokerage, Wealthsimple Trade, opened up access to their TFSA trading account to the masses.

You asked, we listened. TFSA accounts now available on Wealthsimple Trade, so you can grow your money tax-free.

— Wealthsimple (@Wealthsimple) July 17, 2019

With the official roll out, there is now more information available about Wealthsimple Trade’s TFSA and, importantly, the benefits and current limitations of the account type. The clear benefit to all things Wealthsimple Trade is that trading accounts are commission-free, which now includes the TFSA.

For financially conscientious millennials trying to cut frills and costs, not having to pay trading commissions is not just a deal, it’s ideal. Of course, like most things in life, if it sounds too good to be true, then it probably is, and despite commission-free trading, there are some important caveats to the Wealthsimple Trade TFSA account. One of the big limitations right now is that Wealthsimple Trade’s TFSA does not support transfers into the account. Only deposits from an externally linked bank account will work as a funding source for the TFSA.

This means, for the time being, other Canadian online brokerages still have some time to figure out a game plan to appeal to investors already eyeballing the exits for a Wealthsimple Trade account. And as social media and forum chatter already are showing, the sentiment to move is real.

Of course, it’s not just what’s on the official page that offers some insight into the Wealthsimple Trade TFSA – the Wealthsimple Trade Twitter account is also filled with its share of useful nuggets. For example, while it was already stated that RSP accounts were on the list of features actively being worked on, the telegraphing of USD TFSA accounts was something we did not yet hear about in terms of development, especially considering Wealthsimple Trade makes part of its money from conversion fees.

While we wouldn’t have assumed Wealthsimple Trade to be standing still with their feature development, the mention of USD accounts being “in development” means that one of the major resistance points for joining Wealthsimple Trade is likely going to be removed in the not-too-distant future.

Another cause for concern for online brokerage providers is that DIY investors are clearly excited about the official launch of Wealthsimple Trade’s TFSA. This past week, there has been a significant amount of investor chatter taking place in the investor forums and on Twitter now that this feature is live. Suffice to say, there is nothing that other online brokerages in Canada have done yet this year that has captured the attention of the “digital crowd” the way that Wealthsimple Trade has.

In what is starting to feel like a volleyball game out of a Top Gun movie, it seems that team Maverick has made their move, in denim jeans no less, and now it’s up to Canadian online brokerages to serve something back over the net.

Interactive Brokers Makes a Gutsy Call

With summer in full swing, it seems like everyone is paying a bit more attention to the forecasts. No doubt the volatile weather has something to do with it. Similarly, with the latest earnings season results trickling out of the US online brokerage market, there’s a mixed bag of results highlighting some areas of potential volatility and opportunity in the DIY trading market as a whole.

While earnings reports are typically about “the numbers,” there are also lots of interesting nuggets that management shares about the current and future state of the company that adds considerable colour and context to the numerical performance.

In the case of the latest earnings call from US online brokerage Interactive Brokers, it wasn’t just the numbers from the earnings report that analysts were talking about, but rather, a bold new initiative launched earlier this month that had folks trying to digest exactly what Interactive Brokers is thinking.

Starting first with the numbers. Despite a year over year decrease in revenues of 7.2% and a rise in expenses of 8%, Interactive Brokers still managed to eke out another reasonably strong year. The electronic brokerage segment of the business managed to gain 7% year over year, which on the surface sounds like a win, however when peering under the hood, there are some important flags of weaker trading dynamics that are of particular interest to industry observers.

The primary area of concern is that Interactive Brokers reported a 4% decrease in commission revenue from the year ago quarter – a result explained by lower commissions per trade being executed by their clients. That is even more concerning in the face of the 4% increase in the total number of trades (year over year) and a 19% increase in the number of customer accounts.

The takeaway is that customers aren’t trading the way they used to. Were it not for the interest income, this would have been an even bumpier quarter for the online broker. What this points to (and is something other brokers have had to come to terms with) is that the online brokerage model cannot rely on just trading commissions alone to keep the business afloat. Assets and margin are key revenue drivers that will help buffer earnings at least until trading behaviour shifts. Which leads into the second really interesting thing about the Interactive Brokers earnings call this quarter.

Despite earnings missing expectations, the big topic of conversation by the analysts during the Q&A session with Thomas Peterffy, founder and outgoing CEO of Interactive Brokers, was the recently announced launch of their promotional sports betting platform. Most telling was that 8 out 15 questions from analysts were about the sports betting promotion.

Perhaps the most awkward moments came when Peterffy called out analysts who were questioning the platform as to whether or not they had signed up already (those asking the questions hadn’t yet). One research analyst Macrae Sykes from G. Research, LLC hadn’t yet tested the platform before asking about it to which Peterffy stated “You’re such a disappointment. I was so hoping that you would do that.”

Despite none of the analysts who asked about the platform having actually signed up for or tested the sports betting feature, Peterffy managed to share some very interesting insight into the strategy to tap into the sports betting market for potential new Interactive Brokers clients.

First, as we reported in last week’s Roundup, this initiative is clearly aimed to attract new online trading customers onto the Interactive Brokers platform. Peterffy confirmed this in the earnings call when he stated “driving new brokerage accounts is the primary purpose. I don’t want to speculate about what we may or may not do with this sometime down the road. So right now, our focus is to perfect the platform and drive new brokerage accounts.”

Second, analysts queried why Peterffy felt it would work as a strategy to onboard clients, and ultimately it came down to his experience in dealing with traders on the exchange floor. According to Peterffy, if traders talk about sports betting, it stands to reason that sports bettors might want to kick the tires on investing online.

Buried in that response, however, was probably the most interesting sound bite of the call.

As seen below, Peterffy expects that there could be in the order of millions of accounts that get created at Interactive Brokers as a result of this initiative. And, although he does not provide a timeline for those accounts to be created, it is nevertheless an incredibly lofty goal considering that they currently have just shy of 650 thousand client accounts.

It’s hard to dismiss Peterffy’s track record of success in building Interactive Brokers into the global powerhouse brokerage that it is, and yet there was clearly a lot of uncertainty on the part of analysts asking about the strategy to pursue sports bettors. Their challenge is how to value or model and predict the various scenarios that this kind of move could provide to the business as a whole. Of course, if they had a tough time getting the earnings estimate right this past quarter, they will have an even tougher time trying to track what impact the sports betting platform will have on new client acquisition.

Let’s hope they have better luck actually predicting outcomes of games using the platform, as they will undoubtedly be called to the mat about it on their next earnings call. You can almost bet on it.

Discount Brokerage Tweets of the Week

Discount
Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Free Trade Agreement

It’s finally here. Wealthsimple Trade has now made TFSAs publicly available and in doing so, captured the attention of many investors who now have the option of opening up no-commission registered accounts. Click here to see why this new addition has the Reddit community buzzing.

Weight and See

There’s never one right answer when it comes to creating a long-term portfolio strategy. With a 25+ year investment horizon, there’s always time to take on risk, but does that warrant a 100% asset allocation in equities? Find out what others have to say in this RedFlagDeals thread.

Into the Close

While summer weather is a great time to get outdoors, this week investors will be glued to earnings reports. Of course the hot air this summer might not just be from the weather. Politics and even a dangerous situation bubbling over in the Strait of Hormuz mean that we could all be on the highway to the danger zone. Here’s hoping cooler heads prevail and that you’re able to cruise through this turbulence right.

Posted on July 15, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 15, 2019

When it comes to summer, some people like soft serve and others like their serves to be anything but soft. Ironically, the world of professional sports is just one of the places we’ve found online brokerages wandering into, and certainly not the only place where they’re trying to get into the winner’s circle.

In this edition of the Roundup, we look at one online brokerage’s clever gambit that bettors may want to try their luck at stock trading. From there, we review yet another Canadian discount brokerage that managed to find its way into the media spotlight this month, conveniently ahead of a major feature launch. As always, we’ve served up some sizzling sound bites from DIY investors on Twitter and in the investor forums.

Bettor Safe Than Sorry

Of the many metrics that makes Interactive Brokers stand out relative to its peer firms in the U.S. online brokerage space, one in particular emerges: account growth. Despite the bumps in the market over the past decade, Interactive Brokers has managed to consistently grow its number of net new clients month after month, quarter after quarter, and year after year. It’s a streak that could put a Jeopardy champ like Ken Jennings or James Holzhauer to shame. Like all good things, however, the streak may not last forever, something founder of Interactive Brokers, Thomas Peterffy, telegraphed in the most recent earnings call.

In a strange twist of irony, however, the latest move by Interactive Brokers seems to be inspired somewhat by the same source of success as Holzhauer. As it turns out, Holzhauer is a professional gambler and applied the principles of betting to fundamentally change how Jeopardy has been traditionally played since, well, forever.

Earlier this month, Interactive Brokers announced a rather novel approach to attracting the kind of client that would fit their traditional mold, the speculative investor, by launching a new promotion linked to sports betting. Yes, that’s not a misprint.

As part of a new campaign labelled “bet, learn, win” Interactive Brokers is putting up to $1,000 in commission credits on the line for individuals who sign up for, and place bets on, Interactive Brokers’ new virtual sports betting platform. Again, not a misprint.

The cap on the number of individuals eligible to participate: 2.2 million. Which means that Interactive Brokers is embarking on a massive lead capture program that could help uncover a material number of prospective clients for the online brokerage side of the firm.

Peterffy and Interactive Brokers have spent a lot of time and resources expanding out their financial services ecosystem. Even so, at the heart of their story, they understand active traders, and if there’s one thing that many professional active traders like to do in addition to speculating on markets, it is to bet. On anything. So, it is a calculated venture that individuals who maybe have not yet traded in markets would give it a go after mastering a profitable winning strategy on Interactive Brokers’ sports betting platform. Also, what’s the downside for clients of other online brokerages who might want to give the new virtual platform a go?

Whatever winners win, they get to apply to an Interactive Brokers account in the form of commission credits, up to a maximum of $1,000. The conditions on this promotion are equally interesting. First, while open to just about anyone anywhere (save for a few locations around the world), individuals who are clients of Interactive Brokers prior to June 30^th aren’t eligible to apply those winnings for commission credits. This is clearly, then, a play to attract new clients into the Interactive Brokers ecosystem. Next, if you wipe out your virtual sports betting account, you can’t create a new one. So, unlike a lot of other trading simulators, there is no “insert more coins to continue” feature here.

Attracting new clients through the use of stock market simulators is nothing new – in fact just this past week, National Bank Direct Brokerage’s “Biggest Winner” competition in conjunction with Horizons ETFs just wrapped up.

What stands out as remarkable in this case is that Interactive Brokers is: 1. Offering up a promotional offer for commission credits and 2. Directly associating investing/trading with gambling/betting.

In terms of the former, seeing a firm like Interactive Brokers turn to commission credit incentive offers/promotions to attract new clients is a signal that the firm is going to now have to spend more in order to attract new clients to the firm.

Perhaps most interesting, however, is the unequivocal association of investing with gambling. If there has been any kind of taboo in the “marketing” world of investing, it’s to steer clear of any association of investing or trading with gambling. And, in this promotion, it is precisely the activity of gambling that serves as the gateway to trading. The implied message: if you’re really good at gambling, you’re probably good at trading too.

Canadians over the age of 21 who are not already Interactive Brokers clients are eligible to sign up and participate. We even spotted a 604 area code (Vancouver) on the help line numbers, to boot.

No stranger to taking calculated risks, it seems that Interactive Brokers has definitely stacked the odds for success (in the form of attracting new customers) in their favour. As Jeopardy champion Holzhauer would no doubt endorse, approaching the game from a different angle and being willing to make some big bets is one way to get to the winner’s circle.

Wealthsimple Trade in the Spotlight Ahead of TFSA Launch

Two points a trend does not make, but it’s certainly enough to get our curiosity piqued. As we reported on last week, BMO InvestorLine was in the spotlight in the Financial Post, a major financial publication, showcasing the upcoming launch of their new website. Also in the news that week was another online brokerage that is on the minds of many investors (and online brokerages) because of their rock-bottom online trading commissions.

Wealthsimple Trade, the newest online brokerage to step onto the Canadian DIY investing field, was featured in an article (for subscribers only) in the Globe and Mail by Canadian discount brokerage industry expert Rob Carrick.

Unlike the Financial Post coverage piece on BMO InvestorLine, Carrick’s article provided an overview of the newcomer brand, highlighting how it stacks up compared to other Canadian discount brokerages, and what features Wealthsimple Trade currently offers. Also interesting about Carrick’s feature is the reference to the latest J.D. Power & Associates Investor Satisfaction survey comments about vulnerability of the traditional online brokerages to losing millennial clients – especially because of mobile app experience, an area in which Wealthsimple excels relative to many existing brokerages.

One of the interesting things about Wealthsimple Trade is that as of the writing of the Globe and Mail article and this post in the Roundup, registered accounts (like RRSPs and TFSAs) are not fully available. That said, there was chatter on Reddit, as well as an interesting note on the Wealthsimple Trade help page, that indicates that TFSAs are already being rolled out to select clients and that TFSAs will be on track to be fully available at some point in August. RRSPs are still TBD.

For all the features that currently don’t exist at Wealthsimple Trade, the lack of registered accounts is something that has likely held many DIY investors from taking a serious look at the new online broker. That, and a lack of awareness/trust that usually accompanies the new kid on the block.

Nonetheless, they are on the scoreboard, so to speak, with 25,000 client accounts and have a tactical advantage with their user experience on mobile. Millennial investors may not care so much about “historical reputation” as they would about “engaging experiences.”

So, whether it is a coincidence or just great timing, talking about Wealthsimple Trade just ahead of a big feature roll-out is fortuitous. The fact that discussion about this feature showed up on Reddit, a digital channel where Canadian millennials interested in personal finance invariably end up, is a positive signal this feature will be a hit with the target demographic. Of course, with the Globe and Mail also on top of this new player, it seems like older investors will soon catch on to what the cool kids are up to as well.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Is Like, 30 Too Old?

These thirty-somethings are contemplating whether or not it’s too late to start an RRSP. Like most individuals, they want to know as much as possible before making such a crucial decision. Click here to see what others have to say.

Ruh- Ruh- Recession?

The yield curve has been inverted for over 30 days now, and this has many people contemplating what precautionary steps to take (if any). For more bearish thoughts, check out this Reddit thread filled with bruised bruins.

Into the Close

That’s a wrap on another week’s worth of action. In spite of the vitriol and political turmoil in the U.S., stock markets powered higher, proving that a steady (invisible) hand continues to steer the ship. Of course, with summer heating up, it’s hard to tell if it’s just the heat or if investors on the sidelines are starting to feel the heat of a little FOMO set in. Regardless, if you’re looking for a bit of shade this summer, apparently that’s going to be easy to find. Stay hydrated & have a profitable week!

Posted on July 8, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 8, 2019

The deal that everyone has been talking about finally transpired. Of course, the Kawhi trade isn’t the only deal getting attention this past week, as a pair of Canadian discount brokers decided to also step back onto the court with some promotional efforts of their own. So much for a lazy, hazy July.

In this week’s roundup, we lead off with updates on the latest deals and promotions activity and why this is a bullish signal for DIY investors now and heading into the latter part of the year. From there, we take a look at how one bank-owned online brokerage is shifting digital gears and taking their online marketing game to the next level ahead of a big web refresh. As always, we’ll dish up a healthy serving of chatter from DIY investors on Twitter and in the forums.

Guess Who’s Back

After what seemed to be a lull in June, the lazy days of summer in the discount brokerage deals section are officially done. Just a few days into the new month and the summer season, and the deals section has seen activity level pick up with one new offer come to market, as well as the extension of a transfer offer that stirred excitement earlier this year.

The first deal to cross our radar came from an unlikely source – HSBC InvestDirect. As a bank-owned online brokerage that typically doesn’t get a lot of spotlight, the launch of a summer offer is both unexpected and excellent timing.

The offer itself is a commission-free trading offer which gives investors up to 30 commission-free trades to use over the span of 60 days. There are no required deposit minimums to qualify for this offer, so in that regard, it’s definitely appealing to individuals who might not otherwise qualify for the other offers currently available which have higher deposit requirements.

While the value of the offer is somewhat limited, the timing of the launch of this offer is very much on target. With a pull back in offers by other online brokerages, HSBC InvestDirect gets a bigger portion of the deals spotlight and does so at a big discount to other points in the year when they might have to go to market with a much pricier option (such as a cash back offer).

The other competitors in the commission-free trade space right now consist of Questrade, Desjardins Online Brokerage and CIBC Investor’s Edge. Only the latter firm has a comparable set of terms as HSBC InvestDirect with regards to deposit requirements, however, the CIBC offer is slated to expire at the end of July, which would leave HSBC InvestDirect as the only bank-owned brokerage with a commission-free trading offer.

Another interesting observation about this promotion is that it is being positioned cleverly as 60 days of commission-free trading, which in one interpretation, suggests 60 days of unlimited trading commissions (which is definitely not the case). Although subtle, it is a unique way of making the offer seem more appealing that it otherwise would if it simply stated the number of trades.

If nothing else, the extra attention that the current promotion will give to HSBC InvestDirect will help them become better known to DIY investors.

The other big deals development this month (so far) has been the extension of the Questrade transfer fee coverage offer.

As we have reported on earlier in the year, this offer is by far the best value offer for DIY investors with less than the usual minimum deposit requirement of $15K to $25K who are looking to transfer accounts.

Interestingly, over the past year and in particular over the past several months, the transfer fee promotion area has seen increasing competitive activity. Questrade’s offer aside, we’ve observed both the increase in the amount that brokerages are prepared to cover in terms of transfer fees (now with two brokerages offering up to $200 as opposed to the previous standard range of $125 to $150) and the decrease in the minimum deposit amounts required to qualify for this offer (3 brokerages have now lowered their minimum deposit requirement to $15K).

For DIY investors, the latest two moves are a good signal of the health of the competitive online brokerage market and are a positive indicator of things to come. With stock markets pushing new all-time highs, there’s a reasonable chance that more investors currently on the sidelines will be pulled into the markets, meaning it’s likely they’ll be looking to open a new account or start putting capital to work. Lucky for them, there’s at least one more brokerage ready willing to offer an incentive to sweeten the deal.

Banking on Buzz: BMO InvestorLine Previews New Web Platform

If there’s one thing that online brokerage rankings offer Canadian discount brokerages, it’s more time in the spotlight. Not everyone makes it into the winners circle, however, and what is interesting to take note of is how those who don’t make the top of the podium still manage to make headlines. In the case of Qtrade Investor, the reaction was fairly swift, as they published a news release shortly after the announcement of the latest MoneySense rankings in which they highlighted their strong position as a top online brokerage (even though they didn’t land the #1 spot per se).

Another online brokerage which is typically also very savvy at managing the marketing around the rankings is BMO InvestorLine. This go-around, however, instead of positioning themselves as a top bank-owned online brokerage as part of the rankings, they elected to get people talking about their services with a profile of their new platform in an interview with the Financial Post.

Unlike a traditional news story, however, the latest profile of BMO InvestorLine had components that included the familiar format of a written story as well as promotion on social media and, a new twist, video of the interview with the president of BMO InvestorLine on YouTube.

Having covered numerous website redevelopments and relaunches from online brokerages over the past several years, it wasn’t so much that there is a new website coming – which in and of itself, is worth talking about, given the associated technical and user experience challenges. Instead, it was the way in which the roll-out of the new website is being telegraphed.

This new omnichannel approach to spreading the message about an upcoming feature release signals a shift in the way online brokerages are likely to develop and talk about innovative improvements.

First, for an online brokerage to telegraph the launch of a new website this far in advance is unusual, although not unheard of. With RBC Direct Investing’s launch of their new interface, for example, there were early test versions to ensure that things went smoothly, and news of the upcoming change was sent to clients well in advance to let them know. Unlike independent brokerages, for bank-owned brokerages, continuity between the banking brand and the online investing brand experience (including what it feels like to switch between the two) is important to consider (and to get right).

InvestorLine is revamping its online investing experience with a focus on three C’s: Customer, Clarity and Control. Find out how @Silvio_Stroescu is leading this evolution in a recent interview with the @FinancialPost: #InvestSmart

— BMO (@BMO) July 4, 2019

Another interesting facet of this story is that the Financial Post was given a “behind the curtain” view of the nerve centre of the InvestorLine development hub. In that way, readers of the story – some of whom might be InvestorLine clients (and probably a few competitors) are given a sense of how the team operates and what the brand is doing to keep up with trends – and in some cases even get ahead of them.

As we have identified in the annual look back and look ahead article, one of the most important indicators consumers are likely to gauge an online service by is how “innovative” they are – i.e. how prepared for change are they? And how quickly can they change?

In the conservative world of traditional finance, change has historically been a dirty word, but in the new world of fintech, change is not just a constant but an objective. At the crux of the interview with BMO InvestorLine’s president, Silvio Stroescu, is that BMO InvestorLine is changing and preparing themselves to change with the evolving needs of their clients. With the competition to entice clients to switch heating up, it makes a compelling argument to stay put if your online brokerage is constantly pushing out new features and if those features are delighting customers like you. Two very big “ifs” that a few other online brokerages have demonstrated time and again work when done right.

Taking a big picture perspective, BMO InvestorLine has invested considerable energy and capital into the development and launch of a new web platform. A website three years in the making is an eternity in the internet age, which changes at a timescale now measured in weeks – or as agile teams know – in two week sprints.

For BMO InvestorLine to telegraph this launch, and go through the motions of a lead up that included video, social media and an article, means that when things go live, they’re hoping it will make an impact with consumers. And to ensure it does, they’re committed to marketing it aggressively.

What this latest tease from BMO InvestorLine shows, however, is that something has fundamentally changed about how Canadian online brokerages – including highly competitive bank-owned brands – are prepared to compete.

BMO InvestorLine has demonstrated a fine balance between keeping the project under wraps for long enough that competitors might not catch on, but revealing it ahead of time to build curiosity and interest and demonstrate a level of transparency about the new feature that other brokerages haven’t really been able to do. While it’s not quite a “come at me bro” moment, it’s fairly close.

Perhaps the most interesting thing about this new web platform release is that for the first time in a long time in the online brokerage space in Canada, there’s a genuine curiosity about what will happen next. In addition to launching a website refresh, BMO InvestorLine might have just touched off a new battle in multichannel marketing.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Million Dollar Baby

A new DIY investor seeks advice on how to invest a large inheritance. See what advice fellow forum users provided in this Canadian Money Forum thread.

Tax Free as a Bird

One DIY investor has questions about how to incorporate a TFSA into their current portfolio. Click here to see what answers the Reddit community provided.

Into the Close

It wasn’t just the ground in California that seemed a bit shaky heading into the end of the week. In spite of the good news on the jobs front, the stock markets in the U.S. were starting to look at the odds of an interest rate cut in much the same way Raptors fans were thinking about Kawhi sticking around the 6ix. Alas, we know how one of those ended. Regardless, with markets trading near all highs, the week ahead should be filled with even more drama than Kawhi-watch. Here’s hoping you don’t get hooped by the volatility this week!

Posted on July 1, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – July 1, 2019

Happy Canada Day! It’s great to be back in the saddle again and happily there’s great news to report since the last update a couple of weeks ago. With U.S. markets touching new highs, summer is off to a strong start. Interestingly, so too are a couple of Canadian online brokerages, to the point where other online brokers may not be getting time off to just kick back and relax because they’re going to be playing catch up.

In this edition of the roundup, we wade back into a much shallower deals pool for July and profile the latest turnover in offers for DIY investors. From there, we take a look at a popular online brokerage ranking that was recently released and highlight a dark horse contender that is showing signs of becoming a mainstream brokerage of choice for more Canadian investors. In keeping with roundup tradition, we cap things off with a dollop of chatter from the investor forums as well as from DIY investors on Twitter.

Deals & Promotions on Cruise Control

With the new month comes the usual check-in on the deals and promotions front. This month, it seems like Canadian discount brokerages are gearing down and preparing for what will likely be a very competitive fall and winter. For DIY investors, it means that the deals and promotions in July are more of a lazy river rather than wild water adventure of savings.

There were no big deals to announce at the outset of the month (although technically it was Canada Day so often times promotional news gets delayed because of holidays), however, it is noteworthy to see who is left on the field with promotions during July.

Unlike RRSP season where practically all Canadian discount brokerages were offering some kind of incentive offer, this month there are just two major bank-owned brokerages with cash back or commission-free trade offers: CIBC Investor’s Edge and BMO InvestorLine. In the case of Investor’s Edge, their commission-free trade offer is set to expire at the end of July, whereas for BMO InvestorLine, their promotion extends through to the very beginning of September. Aside from these two firms, the other two noteworthy firms with offers of commission-free trades are Desjardins Online Brokerage and Questrade.

In terms of cash back offerings, what is particularly interesting is something we had mentioned in a previous roundup regarding BMO InvestorLine, namely that their latest tiered cash back promotion has a much higher minimum deposit requirement than previous offers or peer offers. A minimum deposit threshold of $250,000 prices quite a few investors out of that offer, but does signal that BMO InvestorLine is interested and willing to create incentives for individuals with sizable portfolios to give BMO InvestorLine a try. What is also interesting about the upper level of this offer, namely the $2M+ deposit range, is that there aren’t any competitor offers at this level and it is likely the first time that there is a cash back offer for a deposit of this size. Previously the high-water mark was deposits of $1M+ so anyone bringing over more than that would simply have to make do with the bonus offered at the top end of the tiered range.

For those intent on opening an account with less than $250,000 there are still a couple of strong offers from either Questrade or CIBC Investor’s Edge that offer up free trades or cash back.

That said, even though we are not anticipating a watershed of deals to hit the market this summer, it is hard to imagine the field of Canadian online brokerages allowing only four main players to remain unchallenged until September. The resurgence of interest in Bitcoin, a healthy IPO market, and signs of a “melt up” in the stock markets mean that investors may find another reason to step off the sidelines and into the markets this summer. Further, based on the performance of several online brokerages in the latest MoneySense rankings (see next story), there is now greater impetus for follow up promotion activity.

For now, however, we’re on the lazy river ride – so best to kick back and relax for as long as possible until the competition picks up again.

Best Canadian Online Brokerages for 2019 Announced

With the return of summer, it’s also time again for the annual MoneySense magazine Canadian online brokerage rankings for 2019. As with previous years, financial services research firm Surviscor provided the analysis for these rankings, and provided seven different categories in which different online brokerages were considered to be “the best online brokerage” for something.

This year, the best online brokerage overall according to these rankings was Questrade, which was a close second in last year’s rankings. While the numerical scores weren’t released this year, it was interesting to note how close the two firms were last year. Interestingly, it wasn’t necessarily who came out on top this year, but rather who entered and exited the top five.

MoneySense Best Online Brokerage Rankings: 2018 vs 2019
Rank	2018	2019
1	Qtrade Investor	Questrade
2	Questrade	Qtrade
3	Scotia iTRADE	TD Direct Investing
4	BMO InvestorLine	Interactive Brokers
5		BMO InvestorLine

The table above shows the best online brokerages for 2018 compared to the best online brokerages for 2019 and while the selection is largely the same (albeit in a different order), this year saw Scotia iTRADE exit the top group and Interactive Brokers enter. In fact, for the 2019 rankings, Interactive Brokers managed to come in at fourth place, ahead of BMO InvestorLine.

There are two important takeaways from the shift observed in this year’s rankings. First, despite Scotia iTRADE lowering their standard commission rates to the widely adopted ~$9.99 level, they nonetheless were displaced from the rankings by a lower-cost competitor. Second, and perhaps most importantly, Interactive Brokers has now started to become a part of the mainstream investor rankings.

After years of having to sit on the sidelines because it was perceived to be an online brokerage for sophisticated or active investors only, Interactive Brokers Canada is starting to be considered a “mainstream” choice. Although not a whole lot about the Interactive Brokers interface has become any simpler per se, the addition of registered accounts like a TFSA and RSP have made them a viable option for many Canadian DIY investors willing to roll up their sleeves and learn how to navigate the Trader Workstation.

One very interesting observation from this year’s online brokerage rankings is that when it came to designating the best online brokerage for customer service, while Questrade scored first, there was a three-way tie for second between Qtrade Investor, RBC Direct Investing and Interactive Brokers.

Based on historical performance and assessment of customer service, it is nothing short of stunning to see Qtrade Investor in a tie with Interactive Brokers, as the two firms could not have more opposite reputations in terms of client service. In terms of Qtrade Investor, there is a well documented trail of accolades of its commitment to service, and almost the same is true for the absence of “hand holding” service from Interactive Brokers. So, to see both of these firms tie for second best in terms of service will definitely raise eyebrows across the industry.

With the inclusion of Interactive Brokers in the Globe and Mail online brokerage rankings, and now cracking the top five in the MoneySense magazine rankings, it’s becoming clear that the online brokerage field in Canada will have to contend with Interactive Brokers’ feature set and pricing more so than at any time in the past.

For DIY investors looking for assistance in making a decision on which online brokerage is best, these rankings are of mixed value.

On the one hand, there is a short list of five firms that have been considered to be “the best overall,” implying that all things being equal, these firms are not necessarily a bad choice. Conversely, with seven categories of best online brokerage, it highlights how certain brokerages do certain things better than others.

Looking at firms who appeared in multiple categories, to Questrade’s credit, they were either the top or in the top two spots in five of the seven categories. Qtrade Investor also appeared in a top two finish in four categories. Curiously, Interactive Brokers earned a top two finish in three categories compared to TD Direct Investing which earned a top two finish in two categories. Nonetheless, TD Direct Investing outranked Interactive Brokers. This last point is especially relevant when considering the progress Interactive Brokers has made in becoming more of a “mainstream” contender, because it suggests that Interactive Brokers may be very close to a top three (or higher) finish overall unless something very innovative is launched by a competing online brokerage.

For the rest of the online brokerage field that did not achieve a top ranking in one of the seven categories, it appears that there is going to be a challenge to overcome the value propositions already on the table. Change in the online brokerage space is largely evolutionary rather than revolutionary, and even with a zero-commission player on the field in Wealthsimple Trade, there are still other brokerages being considered to be better for fees.

The big picture emerging for DIY investors is that services, features, and value will have to improve at firms not ranked in the top five. Those firms will have to move decisively to win over customers who are starting to hear more and more positive rankings and ratings from firms who previously were “outsiders” like Questrade and Interactive Brokers. We’re very much looking forward to seeing which online brokerages start to step up their game in response to a shifting power structure in the Canadian online brokerage market.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Golden Years

A poster on RedFlagDeals seeks advice on ways to help their parents save for retirement in a few years’ time. Click here to see what strategies fellow forum users recommended.

Striking a Rebalance

A newcomer to the DIY investing world has questions about the best way to rebalance a portfolio. See what advice other investors provided in this Reddit thread.

Into the Close

That’s a wrap on the Canada Day edition of the roundup. This will be an interesting week for traders given the holiday for Canadians to kick things off, and the holiday for U.S. Independence Day later on the week. One thing is for sure, there will undoubtedly be fireworks – whether it’s because of what’s going to happen now that the tariff standoff is starting to thaw or because of where Kawhi Leonard decides to go next. Have a great week!

Posted on June 10, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – June 10, 2019

Never mind the trade tariffs being on or off, or the Formula 1, there are more than a few Canadians on edge for the Raptors to take the NBA championships. The optimist can taste the victory and the pessimist says don’t count the dino eggs before they hatch. One thing is for sure, it’s not only courtside seats that have climbed in value, as online brokerages here in Canada are also courting some premium clientele.

In this edition of the roundup, there’s more than a few sports metaphors layered into a first story that provides an update on the latest promotional offer to cross the deals wire – and what it might mean for the other online brokerages through the summer. Next, we recap some fascinating highlights from a conference in New York which featured a glimpse into the playbook of online brokerages south of the border. As usual, we’ll serve up a healthy dose of DIY investor chatter from Twitter as well as the investor forums.

New BMO InvestorLine Promo Bets Bigger is Better

If you thought courtside Raptors tickets were going to cost a pretty penny, the newest promotion from BMO InvestorLine has managed to make those tickets seem like a bit of a bargain.

Earlier this month, BMO InvestorLine launched a bigger, bolder cash back promotion for the summer that offers between $500 and $2,000 for deposits that range from $250,000 all the way to $2M+. If those numbers seem a little high, it’s because they definitely are. First, on the cash back side, the $2,000 cash back is certainly a new high for cash incentives to bring in new business. Earlier this year, we witnessed Qtrade Investor pony up $1,500 cash back for a deposit of $1M but now that we’re at the $2,000 threshold for a deposit bonus, one gets the feeling that there’s certainly further to go from here.

On the business end of that deal, the requirement for a $2M deposit puts BMO InvestorLine into rarefied air, as there haven’t been any deals in recent memory that have reached a deposit tier at that level. Historically there has only been a very select group of online brokers that had an advertised promotion that included a deposit tier of $1M, and doing so has usually been met with a certain degree of skepticism from DIY investor forums as to the ROI for bringing over that scale of business.

As such, it will be interesting to watch how other online brokerages respond to this, especially as we saw RBC Direct Investing’s cash back promotion officially expire last week. That leaves BMO InvestorLine as the sole bank-owned online broker with a cash back promotion going and the only brokerage currently with an offer catering to higher net worth clients.

To beleaguer a tired sports metaphor, the ball really is now sitting in the court of the other online brokerages as far as promotional offers are concerned. BMO InvestorLine’s latest offer provides great marketing sound bites to get people curious, so it will be up to peer firms to step up their deals game or risk getting sidelined for the summer. With BMO going after the higher net worth individuals specifically, this could be a summer of blockbuster deals, so long as you can afford the price of admission.

Brokerages in the Big Apple

Last week, many of the big names in the US online brokerage space converged in New York city for the annual Sandler O’Neill & Partners Global Exchange & Brokerage Conference. The theme of this year’s conference was “growth” and featured several in-depth interviews with senior leaders in the industry.

Of particular interest were interviews with Karl Roessner, CEO of E*TRADE Financial, Thomas Peterffy, founder and outgoing CEO of Interactive Brokers, and Joseph Moglia, Chairman of TD Ameritrade. Each of these interviews offered a unique perspective on the particular state of each organization and how these leaders saw opportunities for growth as well as the specific challenges confronting their industry as a whole.

One of the points that came up in both the conversation with Peterffy (Interactive Brokers) and Moglia (Ameritrade) was reference to Robinhood and how to compete against a provider of “zero commissions.” In the case of Interactive Brokers, Peterffy provided a pointed answer to the real cost of zero commission trading, and noted that retail investors who don’t ask why their commissions don’t cost anything up front are capable of being sold a lot more than just free commissions (and not in a good way). Ultimately, according to Peterffy, with commission-free trading (and even in many cases in US conventional trading), retail investors’ orders end up being sold to high frequency traders who in turn compensate online brokerages. In contrast, Interactive Brokers does not sell order flow to HFTs and so Peterffy’s position on the “Robinhood” model is that ultimately he is confident enough in the trajectory and value that Interactive Brokers can offer to active traders that he is not too concerned about Robinhood.

Also on the topic of Interactive Brokers, Peterffy also revealed that the super-top-secret-game-changer for Interactive Brokers is due out next month. While this is purely speculative, the “hints” that were dropped related to efforts to restore IB’s lagging growth rate. To clarify, Interactive Brokers has been a growth juggernaut in the US online brokerage market but Peterffy related at this conference that growth in accounts is now down to tracking 16% compared to the well over 20% to 30% year/year growth. So, this so-called new feature is intended to help bring customer growth to over 20%.

In terms of what E*TRADE saw as a path to growth, there is definitely a focus on higher touch wealth service experiences that would compliment the existing self-directed investor market. What was most interesting about the conversation with Roessner was the reiteration that the notion of an online broker simply sticking to order execution is not grounded in the realities of the market. What that means is that online brokerages have had to get more into other realms of the financial management space than was the case when they first opened shop. In the case of E*TRADE, it has meant a move into providing some traditional banking services, including offering a high interest savings product for investing clients who want to park cash within E*TRADE rather than at a different firm. Further to that direction, Roessner also mentioned that E*TRADE would be rolling out a line of credit product that uses the value of the client’s portfolio as collateral. Another important point highlighted by Roessner is that banking and finance is about cultivating strong relationships, something that, ironically, Peterffy disagreed with (he preferred to focus on automation and price). Nonetheless, relationship building is a core component with clients that E*TRADE is actively trying to pursue.

Finally, when it came to TD Ameritrade, this was a fascinating discussion to track the historical evolution of Ameritrade and to get a higher level view on the business and the industry. Moglia provided a particularly interesting point about Ameritrade’s trajectory to focus on a few key factors, one of them being assets under management (Ameritrade now has over $1 trillion in AUM) and staying true to client-focused principles. Having grown Ameritrade through several key acquisitions, this conversation provided a unique vantage point on how this firm has managed to bulk up and bolt on new companies so that it can handle a wide spectrum of business conditions while remaining competitive (such as zero commission trades). Probably the most fascinating is that Moglia, who was once CEO of Ameritrade, recounted that zero commission trades have been a concern since 2001 and provided a much calmer read on the “common sense” of cutting commission costs to zero.

What these interviews highlighted was that, at least in the US, online brokerages are not standing still and are being pushed by other competitors as well as by shifting consumer expectations to evolve quickly. The playbook for Canadian online brokerages is pretty much being spelled out – offer DIY investors high interest savings and more services that a typical bank-owned broker would offer, focus on gathering assets to weather the competitive storm, and be prepared to invest substantially and strategically in technology. Expansion for each firm was a hot topic, and over the course of the summer it will be fascinating to see potentially game-changing new features come to market.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Life on the Outside

A DIY investor living outside of Canada has questions about the tax implications of investing with Canadian currency. See what fellow forum users had to say in this RedFlagDeals thread.

Tricks of the Trade

One longtime DIY investor wants to know if the advice they’re getting from advisors is sound, and other Redditors chime in with insights of their own. Read more here.

Into the Close

That’s a wrap(tors) for this edition of the roundup. The roundup will be going on a hiatus for a few weeks as there will be a new, game-changing arrival to the Sparx (aka my) family. We’ll keep tracking stories and developments, monitoring social conversations & trends in the meantime. Here’s hoping there’s lots to spark joy about in the coming weeks!

Posted on June 3, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – June 3, 2019

June is finally here and although the song of Fire and Ice may now be a fading memory (shout out to Game of Thrones fans), the stock markets are caught in between the opposing forces of their own, with fear and greed causing all sorts of uncertainty for investors.

In this edition of the Weekly Roundup, we recap the latest moves taking place in the deals and promotions arena, including some stealthy activity at one brokerage that is bound to prevent their peers from taking the summer off to relax. From there we review a pair of interesting and opposing forces that reflect the changing nature of investment products and services available to DIY investors at either end of the risk spectrum.

Recap of Canadian Discount Brokerage Deals Action

Between the action on the court for the Raptors and the constant uncertainty weighing on markets, if you’ve got any nails left, chances are you’ll be biting them during the first week of June. To add to the excitement, the Canadian discount brokerage deals and promotions section is going to see a fair bit of turnover during this period as a couple of heavyweight players have deals that are set to expire in this time.

What was interesting heading into the new month of deals is that there were two big players in the Canadian online brokerage space that appeared to be taking a quick dip in the deals pool, and doing so somewhat quietly.

As mentioned earlier in May, RBC Direct Investing has come to market with a cash-back promotion that appears to be targeted at new customers, and will only be available until June 7^th. Although not unheard of, short promotions are relatively rare, but do demonstrate that even large institution players now can be much more agile with their offer strategies than they were several years ago.

Another relatively short-term promotion from CIBC Investor’s Edge also came to market at the end of May. Unlike the RBC offer, the promotion from CIBC Investor’s Edge was a commission-free trade deal with an offer of 100 commission-free trades and no minimum deposit requirement, a major promotion compared to other commission-free offers on the market.

In both cases, these deals were not widely or loudly advertised the way other offers from these two firms have been. This is a signal that there is some target activity taking place – perhaps even some early testing to measure the popularity of and market sentiment around these types of offers.

Another curious, and quiet, development was the increase in transfer fee coverage by RBC Direct Investing to go from the standard ~$150 coverage range to now $200. Other than the current Questrade transfer offer promotion (which is for a limited time and expires at the end of this month) which requires no minimum deposit, RBC Direct Investing’s increased transfer fee coverage with a minimum deposit of $15,000 makes it the highest transfer fee coverage offer on the market.

This latest move by RBC Direct Investing will likely force other online brokerages to step up their transfer fee coverage amounts. Historically, there are only a very small handful of online brokers who generate an industry-wide response to new features or pricing, and RBC Direct Investing is definitely one of them.

So, while there were no new deals that launched as of the first of June, the first few days of the month will definitely have us watching to see if new offers launched last month get extended, as well as to see what might be in the works for BMO InvestorLine. The important takeaway here is that the conversation has started to focus back onto the online brokerage features and promotional offers at the big bank-owned brokerages and away from their competitors – a signal in and of itself of who might be steering the direction of the industry over the course of the summer.

Aggressive & Passiv

Over the past two weeks, there have been some interesting developments for products that DIY investors can use to trade the markets with.

The first was an announcement from Horizons ETFs of an active product that targets the marijuana sector, specifically two ETFs that enable investors access to greater leverage (2x) on the long trade of cannabis (HMJU) and a chance to bet against (1x) the sector with an inverse product (HMJI). Like all things related to cannabis, there is a lot of “buzz” attached to the sector, and cannabis, along with cryptocurrency, has been one of the stories to get DIY investors excited about online investing again. According to Horizons’ press release, these two new ETFs seek to replicate the performance of the North American MOC Marijuana Index. The inverse product, HMJI, appears also to be a world first in being able to take a more pessimistic view of the cannabis story.

Shifting gears to the other end of the investor spectrum, last week there was an interesting announcement from a fintech firm, Passiv, focused on passive investing that crossed our radar. Designed to be an “autopilot” style experience for helping individuals rebalance a portfolio, Passiv works with Questrade’s API to do the heavy lifting of keeping track of asset allocations, when to rebalance, and interestingly, also is able to do the rebalancing by executing trades automatically.

This is a hybrid experience between an online brokerage and robo-advisor. It takes the “decision making” layer that investors typically struggle with and pairs it with the “order execution” layer that online brokerages typically offer. It also means that rather than paying fees to a robo-advisor to do this, you can pay for the trading commissions as well as the software fee, something that could be appealing to a niche segment of the online brokerage market. Nonetheless, there is now a solution live and functioning that offers an alternative to robo-advisors for DIY investors.

Helping investors with asset allocation and maintaining a “balanced, diversified portfolio” is by no means a new service. What is new, however, is the appetite for innovation with respect to who is delivering this asset allocation, how much they are charging, and how they are doing this work. Enabling third party vendors to connect to an API means that passionate and motivated entrepreneurs can take their ideas and build a platform that ultimately can add functionality that an online brokerage would have to develop in-house.

The trend of helping DIY investors manage the process of keeping things balanced or in line with their personal financial situations continues to surface through the year. Earlier in 2019, TD Direct Investing launched their GoalAssist feature to help investors with their financial planning. The latest integration announcement with Questrade shows that figuring out how to make DIY investing easier is one way to reduce the reluctance of investors to trade – regardless of where they are starting out financially.

As markets evolve, so too do the products servicing DIY investors. From cannabis stocks to the (intentionally) boring passive management approaches, it is interesting to see how the landscape shift at both ends of the passive vs. active debate can generate solutions for investors. One of the most telling takeaways from this story is that innovation could happen based on the underlying asset or it could happen on the way that asset is accessed. Generally, this is good news for online brokerages. It provides DIY investors with ideas that can be used to make trades with, so we would expect to see more informational resources start to show up related to cannabis investing as well as APIs being something even more brokerages begin to deploy.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Take it or Leave it

A Canadian Money Forum poster wants to know if they’ve got FOMO when it comes to gains on long-term holds. See what insights fellow forum users provided here.

Walk the Line

A DIY investor holding a Canada-US dual citizenship searches for an investment strategy to help them make the best of both worlds. Read on to see the advice they received in this Reddit thread.

Into the Close

That’s a wrap on another bizarre week in the markets. Never fear, however, because just when things seem to get strange, there’s another shoe that drops to make everything be just a little more strange. For DIY investors, however, another yield curve inversion as well as lots of unhelpful economic policy emerging from the U.S. means that despite the heat coming up in the summer, it’s going to be very important to stay frosty (or simply sit it all out, let a robot handle it and enjoy a good frosty).

Posted on June 1, 2019 by user — Leave a comment

Discount Brokerage Deals & Promotions – June 2019

June is here, and for many Canadian DIY investors, their attention is fixed on the Raptors’ amazing journey to the NBA finals. As we cross into a new month in the deals and promotions section, however, it appears that there aren’t going to be nearly as many slam dunks in here to start off the month as there will be on the court.

Even so, the deals section has started to see a very interesting uptick in activity in what is usually a pretty quiet season for Canadian discount brokerages. While there were no new deals that launched at the beginning of June, there were a pair of intriguing offers that crossed our deal radar in May.

The first, which we noted in an earlier edition of the Weekly Roundup, was a new cash back offer from RBC Direct Investing. This offer was not one that appeared to be advertised as widely as previous offers from one of the largest players in the space – which is a curious maneuver that signals this being more a targeted test than a full-throttle push. Importantly, it was also for a very limited time, as this offer is set to officially expire in early June.

The other interesting deal that surfaced in May was from another bank-owned brokerage – CIBC Investor’s Edge. This was a commission-free trading offer which, like the offer from RBC Direct Investing, was also quietly rolled out and for a very limited time. The latest promotion from CIBC Investor’s Edge is unique in that it is not a tiered promotion, and the offer is for 100 commission-free trades. It is also not a fee rebate offer, so there is no waiting for reimbursement for a trade commission. These two elements make it an especially compelling offer coming from a bank-owned brokerage where this kind of structure is uncommon.

So, the good news for DIY investors shopping around – especially those doing some searching for offers at the beginning of June – is that there are a couple of extra offers still on the board this month.

June will be an exciting month to keep watching the deals action because there are several offers set to expire in the first week. It’ll be worth tuning in between Raptors games to see what unfolds next.

Expired Deals

HSBC InvestDirect’s cash back offer is now officially “on vacation.” We’ve noticed promotional activity from HSBC InvestDirect start to pick up over the past two years so though their current offer has expired, there still may be other promotional offers coming later on in the year.

Also, with summer just around the corner, it was time to do a little spring cleaning. The Moneytalks offer in conjunction with Desjardins Online Brokerage no longer appears to be advertised/active and as a result we are removing it from its place in the other deals/promotions section.

Extended Deals

*Nothing new to report here yet*

New Deals

Though technically not new, it is something that we are adding into the deals section for transfer offers. Although not advertised, BMO InvestorLine does have a tiered transfer fee rebate offer available, with a maximum coverage of $200. To access it or find out additional information about qualifying deposits and rebate rates, contact customer service.

Also updated, RBC Direct Investing’s transfer fee coverage amount has moved up to $200.

Discount Brokerage Deals

Cash Back/Free Trade/Product Offer Promotions
Referral Promotions
Transfer Fee Promotions
Contests & Other Offers
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
	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 a new qualifying account with CIBC Investor’s Edge and you may be eligible to receive 100 commission-free trades. Eligible trades include equity, ETF and options trades (per contract charges still apply). Commission-free trades are good for up to 90 days after account opening date. Use promo code EDGE28 when signing up. Be sure to read terms and conditions for full details.	n/a	100 commission-free trades	90 days	CIBC Investor’s Edge Free Trade Promotion	July 31, 2019
	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
	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 eligible RBC Direct Investing account with at least A) $25,000; B) $50,000; C) $100,000; D) $250,000 or E) $500,000+ and you may be eligible to receive a cash back reward of A) $100; B) $150; C) $200; D) $500 or E) $1,000. Use promo code CASHB when registering. Be sure to read terms and conditions for full details.	A) $25,000 B) $50,000 C) $100,000 D) $250,000 E) $500,000+	A) $100 B) $150 C) $200 D) $500 E) $1,000	Cash back will be deposited by December 16, 2019	RBC Cash Back Offer	June 7, 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
	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: June 1, 2019 22:00 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
	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
	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: June. 1, 2019 22:00 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 to RBC Direct Investing and they will pay up to $135 in transfer fees.	$200	$15,000	Transfer Fee Rebate Details	none
	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 $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
	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
	Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account and you may be eligible to have transfer fees covered up to $200. Contact client service for more details.	$200	Contact client service for more information	Contact client service for more information (1-888-776-6886)	none
Expired Offers
Last Updated: June 1, 2019 22:00 PT

Other Promotions

Company	Brief Description	Minimum Deposit Amount Required	Details Link	Deadline
	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
	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
Expired Offers
Last Updated: June 1, 2019 22:00 PT

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: June 1, 2019 22:00PT

Posted on May 27, 2019 by user — Leave a comment

Discount Brokerage Weekly Roundup – May 27, 2019

From Game of Thrones, to now a game of throws. Ironically, with the Toronto Raptors making it all the way to the NBA finals, getting onto the iron throne might actually be a tad easier than finding good tickets to the Raptors games. Of course, basketball fans aren’t the only ones with a reason to cheer this week, as DIY investors are also in for some good news of their own.

In this edition of the roundup, we review the latest deal to cross our radar and (teaser alert) it’s from a bank-owned brokerage who managed to make it back onto the deals board after a very short hiatus. Speaking of breaks, our second story spotlights one fintech firm that has charted a course to break the bank (model) and got a sizable endorsement to further that aim. Finally, we’ve also included a healthy dose of Twitter chatter and investor queries from the forums.

No More Tiers: CIBC Investor’s Edge Launches Commission-Free Trade Offer

After a few weeks of relative quiet, it looks like the deals section is ready to spring back to life with the entry of CIBC Investor’s Edge’s latest promotional offer. And, what better way to make waves in the deals pool than with the equivalent of a cannonball commission-free trade offer that has no tiers or advertised minimum deposit to qualify. Oh, and did we forget to mention that this is for 100 commission-free trades?

After reading the official terms and conditions for this offer, we were admittedly amazed that an offer of this magnitude has now come to market and that the usual strings that get attached to offers of this size didn’t show up in those “T&Cs.” Also surprising was the brevity of the terms and conditions. It’s unusual to see terms and conditions of a promotion that are this light. However, very little gets past compliance teams, so here’s hoping that it sticks as is.

In terms of important information about the offer, the promo runs until July 31^st and offers clients 100 commission-free trades that are good to use within 90 days of an account opening. This commission waiver offer applies to both equity and options trades, however, to clarify it does not apply to the per contract fee that is associated with options trading.

When it comes to commission-free trading offers, what is nice for investors considering this deal is that this is not a “rebate” of commission fees, but rather a waiver when the trades are made, so there is no waiting for a rebate. What this also means is that there isn’t a minimum time required to keep the account open or a requirement to keep the account in good standing to qualify for this offer.

With the end of May now just around the corner, the addition of the CIBC Investor’s Edge deal will help to smooth out the expiration of the HSBC InvestDirect cash back promotion at the end of the month. Shortly after that, there’s also a BMO InvestorLine promotion that’s set to expire. So, like the stock market lately, the deals and promotions section will likely see some volatility.

Big picture though, with CIBC Investor’s Edge coming back into mix with a fairly sizeable and aggressive commission-free trade promotion, they’re going to make a big splash in the deals pool. With RBC Direct Investing’s offer also in play, our quick math shows three of the big five Canadian bank-owned brokerages with active offers. This should send a little peer pressure across the space, and we expect that at least one or two Canadian online brokerages will step forward with their own offers to increase their visibility during the summer months.

Strategically, there is very little downside to keeping an offer for DIY investors during the summer months. At best, investors will discover an offer that sways them into an online brokerage and at worst, the online broker gets to maintain visibility with DIY investors who happen to be looking around for an online broker during the summer months. Either way, this summer is looking to be a bit sunnier for DIY investors interested in getting into the markets for a hot IPO season.

Allianz Banking on Wealthsimple

This past week there was some Canadian fintech news that is having a ripple effect around the financial world. No, we’re not talking about the cryptocurrency, but rather a literal wave of interest/concern that is sure to force digital teams and strategies at many of Canada’s online investing firms back to the drawing board. It happened when global insurance giant Allianz decided to invest $100 million into Wealthsimple, a move that enables them to garner exposure (and unique access to) the increasing digitization of financial services.

Recently, it was reported that Power Corp now holds an 89% stake in Wealthsimple having invested over $230 million dollars into the robo-advisor, which may have something to do with Wealthsimple achieving a dominant stake (~78%) in this space. Though that is impressive, to put things into perspective, Wealthsimple is reported to have $4.5 billion dollars in assets under management and 130,000 customers, which shakes out to $30,000 per customer. So, while Wealthsimple has carved out a small foothold in the Canadian wealth management space, there are many much bigger rivals in the sandbox.

Nonetheless, this latest move by Allianz begs the question: why now? It seems like their decision to invest is a clear endorsement that the wave of digitization in financial services is poised to drastically alter the way in which those services are sought out and ultimately accessed.

Like any good investment, thinking about what the world will look like in five years and working backwards to today, it might be readily apparent that the world is moving towards “digital wealth.” In particular, finding a scalable, technology-driven solution to connect with millennials is incredibly valuable – something both Power Corp and Allianz are banking on. The service providers of tomorrow need to figure out how to work with (and delight) the consumers on the cusp of being very wealthy but who have little desire or inclination to navigate the financial markets in an expensive manner. The list of service providers who do that well is remarkably short.

The level of capital being invested in and partnerships being forged with Wealthsimple mean they are looking well beyond just “investing” and are taking aim at more traditional financial services too – including banking. In fact, CEO of Wealthsimple Michael Katchen was quoted saying as much in a recent article on CNBC.

Something similar appears to be taking place in the US as well with Robinhood Financial – the online brokerage firm best known for their commission-free trading. Although the savings feature faltered out of the gate in December, they have made no secret of their intent to go after the traditional “savings” account (and perhaps more banking services). Thanks to its own funding round, at latest reporting, Robinhood is being valued at over $7 billion (USD). Interactive Brokers also has now built out an ecosystem of financial services beyond their online trading business which is aimed to keeping clients (and specifically their assets) within the Interactive Brokers tent. IB has also telegraphed “something big” in the works for this year so there’s still another shoe to drop in their business evolution. Here in Canada, Questrade also made an interesting acquisition outside of the “wealth management” space by purchasing a mortgage lender.

Putting those pieces together, the picture is starting to emerge that “traditional” banks are being targeted for disruption on many fronts.

Despite being well-capitalized, funded, and wielding enormous influence, the large Canadian financial service providers must get their entire enterprises future-proofed if they are to withstand this onslaught. Wealthsimple has been able to grow to where it is because it has been a challenger-brand; it is not entrenched by tradition, maybe not even familiar, which makes its growth in the financial services space to this point all the more impressive. As Wealthsimple is starting to emerge as a Canadian fintech success story on the global stage, the principle guiding their growth might be best summed up by another Canadian great, Wayne Gretzky (ironically also a brand ambassador for TD), when he advised skating to where the puck is going.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

A Bid of an Ask

One DIY investor wants to know what other forum users ask themselves when choosing investments. See what the big questions are in this Canadian Money Forum thread.

Bearly Optimistic

A DIY investor with a pessimistic outlook seeks advice on where to invest. Read on for insights and counterpoints from fellow forum posters in this Reddit thread.

Into the Close

With markets in the US closed on Monday for Memorial Day, it’s likely to be a quieter trading volume day, which is probably OK because when the end of the week rolls around, it will be a lot louder for Raptors fans (and anyone in Toronto). Hopefully there’s just as much to cheer about further up on Bay Street as there is at the bottom of it.

This one is for you, Jurassic Park pic.twitter.com/oec0CNIBy1

— ESPN (@espn) May 26, 2019

Deals – Get ’em While They’re Hot

Quick Notes from the US Online Brokerages

Discount Brokerage Tweets of the Week

From the Forums

Man or Machine?

Parent Trap

Into the Close

Earnings Wake Up Call for Online Brokerages

CIBC Investor’s Edge Rolls Out Mobile Trading Charts

Questrade Chats with Investors

Discount Brokerage Tweets of the Week

From the Forums

Investing in US Stocks with CAD

Stocks vs. Property

Into the Close

Wealthsimple Trade TFSA Now Live for All

Interactive Brokers Makes a Gutsy Call

Discount Brokerage Tweets of the Week

From the Forums

Free Trade Agreement

Weight and See

Into the Close

Bettor Safe Than Sorry

Wealthsimple Trade in the Spotlight Ahead of TFSA Launch

Discount Brokerage Tweets of the Week

From the Forums

Is Like, 30 Too Old?

Ruh- Ruh- Recession?

Into the Close

Guess Who’s Back

Banking on Buzz: BMO InvestorLine Previews New Web Platform

Discount Brokerage Tweets of the Week

From the Forums

Million Dollar Baby

Tax Free as a Bird

Into the Close

Deals & Promotions on Cruise Control

Best Canadian Online Brokerages for 2019 Announced

Discount Brokerage Tweets of the Week

From the Forums

Golden Years

Striking a Rebalance

Into the Close

New BMO InvestorLine Promo Bets Bigger is Better

Brokerages in the Big Apple

Discount Brokerage Tweets of the Week

From the Forums

Life on the Outside

Tricks of the Trade

Into the Close

Recap of Canadian Discount Brokerage Deals Action

Aggressive & Passiv

Discount Brokerage Tweets of the Week

From the Forums

Take it or Leave it

Walk the Line

Into the Close

Expired Deals

Extended Deals

New Deals

Discount Brokerage Deals

Cash Back/Free Trade/Product Offer Promotions

Expired Offers

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