Tag: Weekly Roundup

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Discount Brokerage Weekly Roundup – August 14, 2015

This week provided yet another reminder to traders big and small of the value that data plays in the market place. From the news of the arrest of hackers taking advantage of press releases, to frustrations of receiving delayed (or worse) data to the growing chatter among DIY investors about algorithmic trading, the message is simple, better data gives marketplace participants an edge. Interestingly, this message also rang true for Canadian discount brokerages trying to navigate their own competitive landscape by getting better information as well as having to figure out how to ensure they’re providing ‘good’ data.

In this edition of the roundup, we’ll take a deep dive into a recent study by one bank-owned online brokerage into the state of Canadian investor psychology. Following that we’ll look at an interesting article from the US on an emerging trend among the new breed of DIY investors. Next on the list will be a fascinating look at the action on Twitter, a quick scan of the upcoming investor education events and finally the chatter from the Canadian investor forums.

Fear Factor

Some interesting results of a survey sponsored by BMO InvestorLine were released earlier this week that pulled back the curtain on Canadian investor psychology. What the survey found was equal parts fascinating and concerning all at once.

Despite a common perception of Canadian investors being largely the same from one region to the next, the data tells a very different story. One point of interest was how vastly different attitudes towards market volatility vary depending on where an investor resides.

For example, when looking at the percentage of individuals who reported being anxious about how market volatility would impact their portfolio performance, the difference in absolute terms ranged from a low of 21% (in Quebec) to a high of 46% (in Alberta) with a national average of 33%.

Fascinatingly, provinces west of on Ontario seemed to be much more sensitive to market volatility than the provinces east of it. In relative terms, however, these numbers suggest Western Canadian investors are nearly twice as sensitive to volatility as those east of Ontario.

The most interesting finding, however, is that despite the finding that investors are unanimously anxious (97% on average) and confused (90% on average) about investing, all of the individuals polled invested anyway.

While all surveys should be treated with some degree of caution, the picture these results paint are particularly puzzling and also a bit troubling.

Specifically, the question raised by these results is why would so many individuals invest despite being so anxious or as confused as they are?

Are they feeling compelled to invest out of fear, persuasion, social pressures or some other reason? Or, is it greed – a fear of a different kind – that perhaps they’re missing out? Perhaps experiencing “investment anxiety” or being “generally confused about investing” aren’t as bad as they sound?

Whatever the case, if (and it is a big if) the surveyed individuals are representative of the investing public, then this survey is bound to provoke some uncomfortable conversations.

In particular, these results force the investment industry as a whole to dig further into the issues uncovered. They may need to ask whether enough has been done to explain and educate the general public on what investing entails and what individual investors are getting themselves into.

Given the extent of the findings, it will be interesting to see how or if other investment industry observers respond. If the results of this survey don’t prompt further action, then that ought to be a cause for anxiety or, at the very least, confusion.

Pros & Quants

It seems that every day that goes by stories about advances with robots are becoming part of the normal news stream. In the world of online investing and trading, robots have made a big splash in recent years as high-frequency traders and now as advisors. While the latter has certainly made waves with the retail/DIY investor, algorithmic trading has largely been the focus of a small subset of DIY investor – the tech enthusiast – which may be changing.

An interesting piece from the Wall Street Journal this past week shed light on another facet in which robo-trading could start to make its way more and more into the ‘retail investor’ crowd. Specifically, the article explored the way in which individual investors (or small groups of retail investors) are setting up their own trading algorithms and trading bots via online brokerage firms to go up against the professional market wizards who are the subject of Michael Lewis’ Flash Boys.

For Canadian DIY investors, there are only a handful of brokerages that are really equipped (so far) to offer the kind of setup that enables this algorithmic (algo) trading. Among them are Interactive Brokers, Jitneytrade and, most recently, Questrade.

Although the evidence is scattered, the interest in the practice of DIY algo trading is growing and can be seen in this week’s ‘From the Forums’ section as well as in a nascent conversation threads on how to solve programming challenges for different brokerage APIs.

While Canadian DIY investors have largely been limited to the Interactive Brokers platform (which has had automated trading capabilities for quite some time) early ‘tinkerers’ are getting on board with Questrade’s new API.

Since most Canadian discount brokerages are still wrestling with the Robo-advisor question or working to update and modernize their websites or backend, don’t expect there to be a flood of traditional online brokerages offering up DIY robo-trading any time soon.

Innovation, it seems, may come from younger firms that are less beholden to legacy technology platforms.

For example, the rise of the robo-advisor firms in Canada has been possible because they can build new, streamlined IT systems from the ground up. Online brokerage Robinhood has gone from concept to international company in just a few years, and, could seemingly be capable of enabling technology to help supplement human trading. Even Interactive Brokers, one of the leaders in the DIY algorithmic trading space, could (and appears likely to) grow their business in this area by offering some interesting off-the-shelf scripts and algorithms.

While only time will tell, the emerging picture shows that those firms that have a head start in the DIY robo-trading space are likely to capture this very lucrative group of traders. It also seems to show that humans are going to have to adapt to a very different trading landscape to be able to trade around the growing number of machines on the playing field.

Discount Brokerage Tweets of the Week

Markets weren’t the only reason investors were seeing red this week. A couple of discount brokerages, Scotia iTrade in particular, found themselves having to put out some very public fires regarding technical issues. The interaction between Scotia iTrade and one options trading client of theirs was especially fascinating and instructive on a number of levels. For instance, the new service dynamic between clients and providers that exists on Twitter showcases in somewhat real-time and full view how exciting and/or deflating (there’s a Tom Brady plug in there) the client resolution experience can be. This is not only a sign of the times, but also a huge shift in the way that financial services firms have to run and manage client service.

Event Horizon

August 17

Scotia iTRADE – Bonds Investment Strategies

August 18

Scotia iTRADE – Day Trading with Pro Market Advisors

NBDB – Take Advantage of Margin Accounts – [Fr]

TD Direct Investing – Introduction to Fixed Income

August 19

Desjardins Online Brokerage (Disnat) – Trading ETFs

TD Direct Investing – Top 10 Retirement Mistakes

Scotia iTRADE – Taking Your Portfolio Around The World with iShares

August 20

TD Direct Investing – Building a Fixed Income Strategy

Scotia iTRADE – Combining Technical and Fundamental Analysis with AJ Monte

From the Forums

Refreshing Problem

In a world with high-frequency trading bots working to take advantage of every nanosecond, this post from RedFlagDeals.com’s investing forum about trading data speed almost seems quaint. While human traders can still navigate the markets, speed and accuracy of data are crucial to making the crucial decision to buy, sell or hold. It’s an interesting read for those considering the Interactive Brokers Trader Work Station (TWS) platform.

Importer Exporter

In another data-themed post, this time from the Financial Wisdom Forum, one user asked an interesting question about exporting of trading data from online brokerages. For those curious about how to get information out of their brokerage and which brokerages offer some data export capabilities, it’s a good read.

Into the Close

That’s a wrap for this week’s roundup. With this time in August roughly coinciding with the Perseids meteor shower, if you happen to be outside keep an eye out for any shooting stars. Of course, if you happen to be in Toronto, you may just be seeing a ball or two being knocked skyward. Go Jays Go!

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Discount Brokerage Weekly Roundup – August 7, 2015

What a week in and around the equity markets. While investors are starting to see more red than green show up, Canadians are also starting to see more action from the red, blue and now orange of the various political parties jockeying for supremacy in the upcoming election. Politicians aren’t the only ones thinking about gathering support and looking eagerly towards October – discount brokerages are also in the same boat as the road to supremacy in the fall begins with lots of campaigning (not so much baby kissing…yet).

In this edition of the roundup we take a look at a deal that one online brokerage has relaunched to keep things interesting through the final stretch of summer. Next, we’ll take a peek at some more data from a US discount brokerage that paints a promising performance picture for DIY investors. From there we’ll take a look at the latest cheers and chirps on Twitter, provide a highlight of the upcoming investor education events and close out with some very interesting forum thread discussions.

Stacking the Deck

As we had mentioned last week, August is slated to be a busy month for deals and promotions. This past week, Questrade added yet another offer into the crowded deals arena by re-introducing their prepaid Visa card promotion.

The promotion offers up a $50 prepaid Visa for individuals depositing at least $5,000. Of course with all offers, it’s important to read the fine print as sometimes the larger print paints a different picture. In this case the landing page for the offer has the following pitch:

Source: Questrade.com

While Questrade states that there four steps to obtaining the $50 prepaid visa, there are few things that it conveniently left out when comparing these four steps to the full description on the terms and conditions.

Specifically, that individuals need to make at least one commission-generating trade in order to qualify for the prepaid Visa card.

Source: Questrade.com

Another step not mentioned is the wait time between the deposit and when the card will arrive.

Questrade now has 14 concurrently advertised offers on their promotions page, which is substantially higher than any other discount brokerage. Digging a bit deeper, the offers reflect a diversity of attempts by Questrade to appeal to different potential clients. From ebooks to contests to gadgets to the more traditional free trades and cash back offers, Questrade is certainly casting a wide net when it comes to promotional activity.

Other discount brokerages, especially the independent brokerages and less-popular bank-owned brokerages, have their work cut out for them in the promotional mix. Trying to compete against Questrade’s promotional machinery will certainly be a challenge given their experience in this area. At the other end of the spectrum, competing against the well-established brands of the larger bank-owned brokerages who not only have deeper pockets but also much greater followings, won’t come cheap.

With a busy September on the horizon for many brokerages, it would not be at all surprising to see other brokerages starting to launch multiple concurrent offers as they ante up alongside Questrade for getting DIY investors’ attention.

Trading the Trend

Many seasoned traders know the phrase ‘the trend is your friend until it ends’. For Interactive Brokers, it looks like they’re still pretty chummy with the trend pushing their business value up and to the right.

Once again Interactive Brokers published its performance figures for the month that just passed (July) and once again there was a solid year-over-year increase in trading metrics.

Aside from the fact that they saw a year over year increase in daily average revenue trades (DARTs) of 23% to 652 thousand, what really stood out was that they grew their account base to 314 thousand, up 18% year-over-year and 1% higher than the previous month. In other words, Interactive Brokers continues to crush it when it comes to growing their client base, especially amongst the active trader segment.

Here is a screenshot of their average commissions and order sizes for those willing to indulge in a little bit of commission-price envy:

Source: InteractiveBrokers.com

For Canadian DIY investors considering Interactive Brokers, it’s often a challenge to find coverage of them in many of the different rankings and ratings. Until somewhat recently, Interactive Brokers Canada did not offer registered accounts nor was the user base sufficiently high for many of the major rankings/surveys of Canadian discount brokerages. Going forward, however, there might be more coverage as a result of the new account offerings.

That said, there are indirect data points such as Interactive Brokers’ financial and performance metrics show that quarter after quarter, traders keep coming to Interactive Brokers at a rate faster than they’re leaving. That is a trend traders looking for an online brokerage may want to pay attention to.

Event Horizon

It looks to be somewhat of a quiet week ahead for discount brokerage-sponsored investor education events. Here are a couple of upcoming sessions that may be of interest to dividend enthusiasts, as well as those interested in technical analysis and trading strategies.

August 11

Scotia iTRADE – Dividends Are The Cake, Not The Icing with Horizons ETFs

NBDB – Introduction to Technical Analysis – Moving Averages – [Fr]

August 13

NBDB – Trading Plan and Investment Strategy for Mid and Short Term Traders – [Fr]

Scotia iTRADE – Using Volatility To Trade Options with Sarah Potter

NBDB – Introduction to Technical Analysis: Oscillators – [Fr]

Discount Brokerage Tweets of the Week

In this week’s discount brokerage tweets scan, it appeared that brokerages were offered a bit of a break from the usual barrage of technical and account issues. While there were still a few technical issues that got folks tweeting, the conversations seemed relatively tame and there were definitely fewer threats of people “going to take their business elsewhere”. Of interest, there was a posting from a recent winner of the Scotia iTrade selfie contest that offered a lucky break to the contestant. The original contest terms and conditions stated that there was only one movie pass to be awarded per person and it looks like they got two.

From the Forums

While Twitter may have been quiet there were more than a handful of very interesting posts from the Canadian investing forums. It was tough to cut any of the shortlist out so here is the “director’s cut” version of interesting reads.

Cookie Monster

If only the adorable Sesame Street monster were behind the scenes with browser cookies, the world would certainly seem like a less creepy place. Alas, in today’s online landscape nearly every digital touchpoint has some kind of tracking cookie or technology enabled. In this forum post from RedFlagDeals.com, Questrade is singled out as having a number of interesting tracking and measurement features that are keeping tabs on user behaviour.

Money in Motion

Qtrade Investor is not a name that a lot of forum users typically talk about, so it was interesting to spot this post from the reddit personal finance Canada section. What started out as a question about moving a large sum of money into the account turned into some intriguing insights as to why some investors look to Qtrade Investor as an online brokerage of choice.

Voicing a Concern

While we typically stay away from the drama filled commentary of disgruntled clients, sometimes it can be instructive to those looking around for an online brokerage to be able to separate the fact from the opinion with user reviews. Despite a relatively negative experience being shared about Questrade, it was interesting to see this post from RedFlagDeals’ investing thread in which the comments from other users of this online brokerage volunteer their satisfaction with this brokerage.

Into the Close

That’s a wrap for this week’s roundup. Timing in comedy and markets is everything. This past week was also the final show for one very great comedian and pundit Jon Stewart. As we head into yet another maelstrom of election nuttiness, his voice and vigilance for picking up on the nonsense will be missed. Here’s hoping we’ve all been good students to avoid learning some painful lessons.

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Discount Brokerage Weekly Roundup – July 31, 2015

Regardless of where you happen to be in Canada, it’s clear that the dog days of summer are here. The heat outside, however, pales in comparison to the heat felt by Canadian online brokerages to compete with one another.

With it being so close to the beginning of a new month, this edition of the roundup puts a heavy focus on just how competition is impacting the race to win over new clients with a deep dive on a newly launched promotion from one major online brokerage. Following that we take a look at a tactical move by another online brokerage to continue pushing into investor education and then review one discount brokerage’s strategy of taking advantage of low interest rates (while they’re still available). Finally we take a look at the discount brokerage tweets of the week and close out with a pair of fascinating conversations from the investor forums.

Let’s Make a Better Deal

As July winds down, the discount brokerage deals and promotions activity saw a slight uptick from two brokerages – BMO InvestorLine and Virtual Brokers.

Starting first with the latter, Virtual Brokers has decided to revive the deal that had technically expired at the end of June and extend it through to the end of August. The offer is for 25 commission-free trades that are good for use for up to one year.

At the other end of the deposit spectrum is the offer from BMO InvestorLine. In keeping with their nautical themed campaign imagery, BMO InvestorLine’s latest cash-back offer is a shot across the bow at the two other discount brokerages currently jockeying for clients with deposits of at least $100,000: Scotia iTrade and Questrade.

There’s a lot about BMO InvestorLine’s latest cash-back promotion that clearly signals they’re actively courting clients who have larger deposits/assets. First, the minimum deposit to qualify for this promotion is $100,000. The only other brokerage with an offer exclusively geared towards this deposit level is Questrade with their Apple Watch promo. That said, one of Scotia iTrade’s current cash-back promotions also has minimum qualifying tiers that match BMO InvestorLine’s almost exactly for deposits at or above $100,000. For that reason and because Scotia iTrade is a bank-owned brokerage, it is likely that the offer from BMO InvestorLine is going to compete with Scotia iTrade’s cash back offering rather than the Apple Watch .

With that in mind, comparing the BMO InvestorLine deal to the Scotia iTrade deal reveals that each discount brokerage seems to be trying to win particular segments of the marketplace (see table below).

While both are offering $1,000 cash back for deposits of $1 million or more, it appears that Scotia iTrade is offering a greater cash back offering at the $100,000 – $249,999 tier than BMO InvestorLine but at deposits between $250,000 and $999,999, BMO InvestorLine looks to be outbidding Scotia iTrade.

Cash Back Amount
Minimum Deposit Amount Scotia iTRADE BMO InvestorLine
$15,000 $50
$50,000 $100
$100,000 $250 $200
$250,000 $350 $500
$500,000 $500 $750
$1,000,000 $1,000 $1,000

Curiously, both bank-owned brokerages seem to have created an incentive structure with diminishing returns. That is, the more that an individual deposits in absolute terms, the less the individual investor actually gets back in proportional terms. Here is a graph that compares the relationship between deposit size to cash back. As the graph clearly shows, the more an individual deposits, the lower the percentage cash-back they receive.

It begs the question as to why the incentive structure was built this way, especially if brokerages want to attract deposits (in industry lingo – to increase their share of wallet). Usually consumers are given extra incentive to purchase at volume, not less. Under the current structure of these offers, DIY investors have greater financial incentive to move their business across several brokerages instead of consolidating assets at one in order to maximize their return. Here’s how.

Within the current promotions being offered, if an individual wants to maximize their incentive, and they had the assets (and desire) to do so, opening an account with Scotia iTrade AND BMO InvestorLine would net them more than opening an account with just one.

For example, individuals with $200,000 or more in assets who open an account at only one of these brokerages would net $250 (at Scotia iTrade) or $200 (at BMO InvestorLine). If, however, they split that deposit into two $100,000 deposits at each of BMO InvestorLine and Scotia iTrade, they would receive $450. For those keeping score, that’s 0.225% on $200,000 instead of either 0.13% (Scotia iTrade) or 0.1% (BMO InvestorLine).

For those looking to have their $1 million dollars go further, the following table shows that settling for $1,000 cash back at one brokerage is leaving serious money on the table.

Hypothetically, splitting the $1 million deposit across the following current cash back deals (from BMO InvestorLine, National Bank Direct Brokerage, Questrade AND Scotia iTrade simultaneously) would actually only require $900,000 and net $1650 back resulting in a return of 0.18% (in aggregate) as opposed to the 0.1% from either of the top tier offers from Scotia iTrade or BMO InvestorLine.

Discount Brokerage Deposit Amount Cash Back Rate of Return
Scotia iTRADE $500,000 $750.00 0.15%
BMO InvestorLine $250,000 $350.00 0.14%
NBDB $50,000 $300.00 0.60%
Questrade $100,000 $250.00 0.25%
Total $900,000 $1,650.00 0.18%

While dealing with multiple providers/brokerages might be an inconvenience for some, others look at spreading assets across multiple providers as a risk management strategy and as a way to get access to exclusive features each brokerage offers. There’s also nothing preventing consolidating those accounts at a particular brokerage in the future for additional benefit (once the mandatory balance holding period is complete).

Of course, moving accounts around to get incentives isn’t necessarily as lucrative as certain fixed income low-risk strategies. That said, for those in the market for a discount brokerage and who don’t mind being more transient, shuffling between providers can actually work out to being more lucrative than parking in one place.

Most discount brokerages will not be thrilled about clients constantly turning over however the fix seems somewhat straightforward – value the clients with higher deposits equal to or greater (on a proportionate basis) than smaller deposits.

Exploring Options

With exciting initiatives planned for this fall (more on that as we draw closer to September) Desjardins Online Brokerage is once again playing the investor education card to reach out to DIY investors.

In their latest offer, Desjardins Online Brokerage has teamed up with investor education firm Learn to Trade Global to offer discounted options education training. The team at Learn to Trade Global may be familiar to anyone attending the options education seminars from the Montreal Exchange (including options education day) as both Jason Ayres and Patrick Ceresna conduct seminars on behalf the exchange.

In this latest offering from Desjardins Online Brokerage, individuals who are clients (or become clients) of Desjardins Online Brokerage receive a heavily discounted (90% off) price for options education training. For $99 individuals are eligible to receive 3 months access to a number of educational materials related to options investing as well as model portfolios and trading ideas. In addition there are six live online “strategy labs” that clients can access live or watch archived versions of.

A strong focus on investor education has paid off in years past for Desjardins Online Brokerage especially in their partnership with Tyler Bollhorn from Stockscores. With this latest venture with Learn to Trade Global, it should be an interesting proposition for DIY investors looking for a structured approach to learning more about options trading from two very recognizable figures in this space.

Questrade Refinancing Debt

While low interest rates have been a headwind to the online brokerages in many respects, one Canadian online brokerage has taken the opportunity to refinance some of their higher interest debt to presumably better terms.

In an article published earlier this week in the Globe and Mail (for subscribers only), it was reported that Questrade had raised $10 million dollars at an annual interest rate of 10% and has recently repaid the original lender, Crown Capital Partners. According to the article Questrade’s CEO, Edward Kholodenko mentioned that the loan has been mostly refinanced to more favourable terms.

Questrade, however, is no stranger when it comes to accessing capital at rather hefty interest rates. Additional research on some publicly listed entities that have provided capital to Questrade reveal that Questrade has financed several million dollars at rates as high as 16%.

Given that Questrade is a private corporation, it is difficult to get a specific and transparent understanding of its financials. That said, some indirect indicators, such as these financing figures, their continued aggressive expansion into wealth management, their low client acquisition costs and building out service capacity in their online brokerage segment means that Questrade continues to push forward in becoming a contender in the Canadian wealth management industry, regardless of the short-term cost.

Discount Brokerage Tweets of the Week

This week’s tweets show once again how Twitter is increasingly becoming a medium on which individual investors are addressing customer service issues with Canadian discount brokerages. Questrade and Scotia iTrade were on the hot seat for a number of reasons whereas many of the other brokerages were largely inactive or not mentioned at all.

From the Forums

We Interrupt This Program

In this interesting thread about TD Direct Investing’s maintenance schedule, several users from the Financial Wisdom Forum voice their collective discontent with not being able to get online when they feel they should be able to, especially when looking at overseas markets.

Too Good To Be Free?

While many DIY investors are enjoying the benefits of fierce competition between online brokerages, there comes the point where it becomes natural to wonder how or if companies can afford to make money – especially when giving things away for free. In this post, one reddit user wonders aloud whether Questrade’s free ETF purchases are too good to be true.

Into the Close

That’s a wrap for this week’s roundup. After all that data it’ll be great to kick back and indulge in some regression of the non-spreadsheet variety. Have a great weekend and here’s a brief reminder of what we’re missing while beating the heat!

https://s3.amazonaws.com/static.sparxtrading.com/Pic_WeeklyRoundup_20150731_CloseBlizzard.gif

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Discount Brokerage Weekly Roundup – July 24, 2015

(source: giphy)

From spiking share prices of tech giants such as Google and Amazon to gold losing its luster with investors, this week showed that expectations about the future are what drive the rapid moves up and down in share pricing. Arguably, reputation is its own kind of currency and this week we saw examples of how Canadian discount brokerages are having to learn to navigate expectations of online investors via social media.

In this edition of the roundup, we continue with the lighter summer format by taking a look at some sneak peeks at what a couple of discount brokerages are up to over the summer. Next we look at who is facing the heat and why in the discount brokerage tweets of the week. From there we’ll take a look at the upcoming investor education opportunities on the horizon and cap the roundup off with some interesting forum chatter from the past week.

Trading Places

This past week, spent some time with several Canadian online brokerages in Toronto discussing what’s coming around the corner for this fall. Here’s a hint: there’s going to be more than a few big announcements that will get the attention of DIY investors.

Some of what can be shared comes a result of doing a walkthrough of the offices of two close competitors in the low-commission cost segment: Questrade and Virtual Brokers.

What was interesting about being able to go behind the scenes was the level of activity at each of the brokerages and the fact that they are both growing and planning for continued growth. Offices of both brokerages continue to expand and improve which is a testament to the interest these two firms have been receiving from commission-sensitive DIY investors.

As any good summer teaser would do, stay tuned in the upcoming weeks for more interesting content related to these latest adventures.

Discount Brokerage Tweets of the Week

The summer heat was definitely bearing down on social media this week as a couple of discount brokerages found themselves having to cool the nerves of some frustrated investors. In particular it was the bank-owned brokerages that seemed to end up in detailed back-and-forth conversations for issues such as delayed account openings and platform glitches.

This week’s tweets offer a unique and instructive read for anyone interested in what challenges online trading can present and how online brokerages (including the big bank-owned brokerages) respond on Twitter.

Mentioned in this week’s tweets were Questrade, RBC Direct Investing, Scotia iTrade and TD Direct Investing.

Event Horizon

Despite it being near the end of July, there is a lot of activity for those interested in learning about investing. Check out some of the interesting sessions below:

July 27

TD Direct Investing – Planning Your Retirement | Tips for Winding Down Your RSP

July 29

TD Direct Investing – Introduction to Investing in Options

TD Direct Investing – Advanced Options

TD Direct Investing – Options as an Income Strategy

Scotia iTRADE – Concepts in Technical Analysis with Recognia

July 30

NBDB – Learn About Investment Basics – [Fr]

From the Forums

Wading Poll

Discount brokerages were on the minds of a few DIY investors this past week in the RedFlagDeals.com investing forum. An informal poll of users of the site asking them which discount brokerage they used provided the following results (based on 78 respondents). Interestingly, but perhaps not surprisingly, TD Direct Investing was the dominant online brokerage that voters mentioned (29.49% or 23 of 78 visitors) followed by Questrade (17.95% or 14 out of 78 visitors) and then BMO InvestorLine in third place (12.82% or 10 out of 78).

With small numbers of respondents, there are obvious limits to the kinds of conclusions that can be drawn. It was, however, noteworthy that Questrade was the second most popular answer and that other fairly well-known brokerages, such as Interactive Brokers, were not mentioned. User comments below the survey results also pointed out some of the gaps and interesting observations.

(source: redflagdeals.com)

Upside vs Downside

The decision to become an independent or self-directed investor is definitely an important one. Aside from the usual conversations regarding how much effort is involved, or even which online brokerage is best, the following post from the Financial Wisdom Forum on the downsides of using discount brokerages was a really interesting look at some perspectives of DIY investors on the downsides of the discount brokerages.

Into the Close

That does it for this edition of the roundup. Have a great weekend wherever you happen to be and congrats to the Canadian athletes for the strong Canadian showing at this year’s Pan Am games.

(source: giphy)
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Discount Brokerage Weekly Roundup – July 17, 2015

Whether it was tech giant Amazon cutting prices for prime day or the Bank of Canada cutting prime rates, this past week it seems that consumers’ economic engines are in need of a little priming to get them into gear. As Canadian discount brokerages know all too well, cutting prices or rates can only go so far in terms of stimulating interest. At some point, the path to growth requires getting creative.

In this edition of the roundup, we take a Pan American look at how brokerages here and south of the border are creatively approaching staying competitive despite some challenging market conditions. First we’ll take a look at the story of what seems to be powering one the largest online brokerages on the planet even higher. Next, we’ll scan through the social media banter from Canadian brokerages and then look at upcoming education events and what DIY investors were talking about in the forums. Of course, it wouldn’t be a true Pan American edition of the roundup without a questionable choice for a musical close out.

That’s Trillion, with a T (and a rillion)

One of the largest online brokerages on the planet got a little bit bigger this past quarter even against the backdrop of decreased trading activity and stagnant interest rates.

US online brokerage Charles Schwab reported their quarterly earnings this past week and the results are more than a little mind-boggling. In the quarter they managed to attract 280,000 new brokerage accounts (an increase of 16% y/y) and grow their total assets by 6% to $2.54 trillion (USD). By comparison, another popular brokerage in the US, Interactive Brokers, had a total of just over 300,000 total accounts (as of the end of April).

While most observers understand the sheer scale of the brokerage gives them quite a bit of clout in the online brokerage space, it was the recent entry of Schwab into the robo-advisor space that has gotten a lot of attention. After being launched in Q1, their robo-advisory has 39,000 accounts and $3 billion (USD) in assets.

Of course, as with most releases, a little bit of extra digging tends to turn something interesting – such as the following quote from CEO Walt Bettinger stating “we remain committed to expanding existing platforms in areas of strong client demand. We have broadened Schwab ETF OneSource™ to include over 200 commission-free ETFs as of month-end June. Investors can access a wide range of funds from 13 providers and 66 Morningstar categories with zero online commissions.”

What the latest results from Schwab show is that brokerages can get ‘creative’ with products that the investing public is clearly asking for. In this case, commission free ETFs and robo-advisor style management are what seem to be turning heads.

Within the Canadian space, there are already internal committees and groups within the larger bank-owned brokerages actively discussing a strategic opportunity to participate. These results are likely to add more fuel to the fire for the larger brokerage players and that is great news for DIY investors.

Discount Brokerage Tweets of the Week

In this week’s discount brokerage tweets of the week, technology looks to be the Achilles heel for a number of DIY investors and online brokerages. The technology minions don’t seem to care whether it’s a bank-owned brokerage or not, somehow, someway they find the chance to create a bit of mayhem. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing and Scotia iTrade.

Also, we’ve got updated coverage of the Scotia iTrade selfie contest that’s still running. Below is an update which includes this week’s selfie action, most notably from a marketer/promoter looking to drum up more exposure for the contest.

Event Horizon

Even though its summer and school is out, students of the market can always find time to learn. This week there are a number of interesting investor education events on margin trading, options, stock picking and more.

July 21

TD Direct Investing – Understanding Margin & Short Selling

Scotia iTRADE – How To Pick A Stock with Pro Market Advisors

TD Direct Investing – Options as an Income Strategy

July 22

TD Direct Investing – Understanding Margin & Short Selling

July 23

NBDB – Stop Orders: A Winning Solution Worth Knowing – [Fr]

TD Direct Investing – Introduction to Technical Analysis

From the Forums

#Whoops

Now that summer is here, there are lots of DIY investors who want to take advantage of the break or the weather to enjoy some time away from the markets. As this post from RedFlagDeals.com’s investing forum shows, however, don’t forget to close out the open orders or bad things can happen.

After Hours

No, it’s not the wild costume and crazy glow stick crowd (although trading outside of normal market hours can be equally as crazy) but after hours trading refers to trades made outside of the normal market hours. In this post also from RedFlagDeals.com’s investing forum, one member wonders aloud about the afterhours and there are a few polite acknowledgements and some strange looks given in return.

Into the Close

That does it for this edition of the roundup. As promised, here is but one of 21 creative earworms that still feel less questionable to indulge in than either Amazon prime day, yet another interest rate cut or Kanye West closing out the Pan Am games. Good luck to the Canadian athletes at the Pan Am games, and good luck keeping these tunes out of your head over the weekend.

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Discount Brokerage Weekly Roundup – July 10, 2015

Source: Twitter (@Sweetfacefergie)

Even though the official kick off to the Pan Am Games was today, in the week leading up to it markets have given traders more than enough diving, hurdles and nail-biting drama for weeks to come. For a handful of Canadian discount brokerages, this week proved to be equally eventful with contests and competitors going at it full swing. It looks like it’s game-on for the brokerages once again.

In this edition of the roundup we kick things off with a look at a major bank-owned brokerage tearing a page out of the Kardashian playbook with their new selfie contest. Next we’ll look at some big news from two Quebec-based discount brokerages that is sure to create a few sparks in that market for years to come. Also we’ll scan through the investor education events and take a look at some really interesting exchanges that took place on Twitter. Finally we cap off the roundup by looking at the forum chatter from DIY investors across Canada and close off with one funny/scary view of this week’s market glitches.

But First, Let Me Take a Selfie

In a quirky bit of timing, not long after the selfie aficionado Kim Kardashian was interviewed about her financial wisdom tips, Scotia iTrade launched their selfie-themed promotion. This latest contest, which runs during the month of July, involves people taking selfies at the recently launched Scotia iTrade investor centre at Scotia Plaza in downtown Toronto. The “eligible winners” will be awarded a movie pass for one (approximate retail value of $13).

While they’re not the first big bank to try and capitalize on the selfie (TD put a twist on it with their ‘housie’ campaign) Scotia iTrade might be the first Canadian online brokerage to run a selfie-themed promo. And, although contests are nothing new, this particular one shows some interesting quirks of mixing the world of personal finance with the worlds of selfies, millennials and Twitter.

Here are a couple of interesting observations.

First, there are the contest’s terms and conditions. At about 2300 words long this is one of the longest scrolling workouts folks are going to have before they fully know what they’re getting themselves into.

Once in the terms and conditions, however, there are some interesting finds such as this phrase: “Take a selfie of yourself at the branch”.

Not only has ‘selfie’ made it into the vernacular of the financial world, the way in which its used is like the Hugh Grant moment in Mickey Blue Eyes (the la Trattoria).

And, while it may seem mildly comical, as it turns out, the details actually matter. According to the Wikipedia definition of a selfie, it is “a self-portrait photograph featuring the photographer”. That would make the following image submitted by @carr71 for the promo technically seem to not count (it looks like a photo of a person that was taken by someone else).

Unfortunately, it looks like @Scotia_iTrade didn’t accept either of @carr71’s submission(s) and she got directed to read those rather lengthy terms and conditions.

With 10 days now gone in July, it looks like the contest has yet to gain significant traction. Of the 3 photos submitted thus far one may not be a selfie, one appears to have been disqualified (not sure why) and one went unacknowledged (at least publicly) so it’s not clear by looking at it if it counts. That’s a tough batting average a third of the way through the contest window.

Of course, figuring out what will or won’t work on Twitter is all about experimentation. Like most things on Twitter, it’s difficult to predict where things will go and the timeline for events to happen. The fact that Scotia iTrade is willing to get creative on social media is a good sign and it should hopefully spur other discount brokerages to flex their creative muscles. We’ll keep watching to see how the contest unfolds.

New Pricing at Desjardins Online Brokerage

After numerous commission price adjustments by Canadian discount brokerages, Desjardins Online Brokerage has updated their standard commission pricing for the active trader-focused Disnat Direct service.

Instead of a standard rate of $19.95 for less active traders (i.e. those who traded less than the 10 trade per month threshold to qualify for lower commission pricing) Disnat Direct account holders can now qualify for the best commission rates of between $5 and $9.95 per trade. Standard options trading has also been adjusted to $1.25 per contract (down from $1.50) and the minimum per options trade is now $8.75.

The actual commission paid still depends on the combination of the volume of shares purchased/sold, the currency of the trade and the price of the stock. This means that there is still some extra effort involved to keep track of what a transaction will cost however for the less active traders, this is definitely a smaller price to pay than the higher upfront fee.

Some other fees were also announced to be changing. The platform fees for individuals not meeting the trading threshold look to be rising by between $5 and $8 depending on the platform (see table below). The new fees are scheduled to take effect on October 1st.

Trading Places

For many professional sports players, the off-season is where the major trades take place. This past week the Canadian discount brokerage space also saw a rather dramatic trade (of sorts) happen.

As mentioned in this article in the Globe and Mail (for subscribers only), the general manager of Desjardins Online Brokerage, Laurent Blanchard, will be leaving Desjardins and assuming the role of president of National Bank Direct Brokerage. Blanchard has been instrumental in working with Desjardins’ online brokerage unit since its early days and had been the general manager since 2012.

The rivalry between NBDB and Desjardins Online Brokerage is amicable but nonetheless present. Both are quite well known within the Quebec market and both have been especially close in the competition for the J.D. Power Investor Satisfaction Survey award over the past several award cycles.

As both firms will now be seeing transition at the top, it should be interesting to see where the competition between these online brokerages goes next.

Event Horizon

July 13

Scotia iTRADE – Trading Weekly Options As An Income Strategy with Sarah Potter

July 14

NBDB – Introduction to Technical Analysis : Supports and Resistances – [Fr]

Scotia iTRADE – Technical Analysis and Seasonal Investing with Horizons ETFs

TD Direct Investing – ETFs 101

July 15

TD Direct Investing – Investing Idea: An Introduction to REITs

Scotia iTRADE – Preparing for Rising Interest Rate Environments with iShares

July 16

TD Direct Investing – Introduction to Investing with Options

Scotia iTRADE – Risk Management Trading with the 1% Rule with AJ Monte

Discount Brokerage Tweets of the Week

This week on Twitter, Questrade continues to field requests for features while the larger bank-owned brokerages were being kept busy with client service questions. What was most interesting, however, were a couple of conversations between traders regarding the pricing and functionality of certain discount brokerages.

From the Forums

The hard sell

For most DIY investors it’s challenging enough to keep Mr. Market from taking back trading gains. In this post from reddit’s personal finance Canada subreddit, it was interesting to note the report of one large bank-owned brokerage deciding to use outbound sales calls to see if users of their discounted mutual funds would consider also using some premium products.

Son of a glitch

This past week has seen a major airline and a major stock exchange have technical difficulties cause some mayhem. For one user of the Financial Wisdom Forum, their online brokerage experience got a little nerve-wracking when they had login difficulties. Check out this post for a great example of the some of the stranger technical difficulties that can occur while trading online and on-the-go.

Into the Close

That’s a wrap for this week’s roundup. With so much going on in the markets (China, Grexits, interest rate hikes, computer glitches and more!) it’s enough to make anybody’s head spin. Thankfully with the sun shining for most Canadians this weekend, there are lots of fun ways to not have to worry about it (at least for a little while) starting first with the big opening to the Pan Am Games in Toronto. Good luck to all the athletes on and off the GTA highways this weekend!

Source: Twitter (@TorontoPolice)
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Discount Brokerage Weekly Roundup – July 3, 2015

With both Canada Day and Independence Day arriving at the beginning of July is the kind of month that should literally come in with a bang. Once the fireworks die down, however, it’s also the time when you can hear the crickets chirping. Oddly enough, this characterizes the Canadian discount brokerages heading into July where, at least on the surface, it seems things have quieted down some.

We continue with the summer edition of the roundup with a quick look at the new deals/promotions lineup for July as well as some interesting news from discount brokerages in the US in terms of trading activity and interesting initiatives for older clients. From there we take a look at upcoming investor education events as well as the week for Canadian discount brokerages on Twitter. Finally, we close out with investor chatter on the forums and an interesting video in honour of the leap second that made July that much later this year.

Deals on Tumbleweed

This past week, the latest selection of discount brokerage deals were posted and things are looking a little, um, spacious.

The downward trend in the number of deals continues heading into July with 14 offers distributed over seven different brokerages. Interestingly a significant chunk of those promotions (six) are from just one brokerage – Questrade.

While summer is typically less busy than earlier portions of the year (such as the lead up to the RSP contribution deadline), the forum chatter continues to show that money doesn’t sleep nor does it take a vacation for the summer. There are still plenty of people out there curious about brokerages and their offerings.

It’s an interesting strategy to pull back going into the summer, especially considering the competitive landscape.

One of the challenges many of the bank-owned brokerages have is how DIY investors will differentiate between these brokerages. In a forum thread on Canadian Money Forum earlier this week, a user by the name of CalgaryPotato nailed it by saying:

“Most of the big banks are pretty similar with their do it yourself investing accounts”

While the discount brokerage rankings might argue otherwise, there’s clearly a growing perception that a bank-owned online brokerage is a bank-owned online brokerage.

With that in mind, it was interesting to see brokerages such as BMO InvestorLine back away from the $100,000+ deposit segment for the moment by retiring a deal geared towards that group and replace that deal link on their homepage with one that describes all of the recent discount brokerage ranking awards they’ve won. That leaves Scotia iTrade as the sole bank-owned brokerage that has a (non-referral) promotion for that segment.

Compared to the past few months, there’s a definite dip in discount brokerage promotion activity at the outset of this month (and it is still early in this month). The fact, however, that a dozen or so brokerages have to find ways to get investors not only to know that they’re out there but also to get excited suggests (and perhaps necessitates) bigger, bolder moves on the promotion horizon.

Interactive Brokers on Data-Driven Roll

With the rollover into a new month, Interactive Brokers has once again published their trading stats for the previous month (June). While Interactive Brokers has historically provided a great deal of information about its trading activity, recently there have been additional disclosures that provide a very interesting window into the world of online trading in the US as well as the inner workings of a discount brokerage.

Although most of their metrics of interest are slightly off last month’s pace, one of the most interesting ones that is up is new accounts. Interactive Brokers gained 18% on a year over year basis and 1% on a month over month basis to come in at 310,000 accounts. While that might pale in comparison to the number of accounts at some of their bigger competitors, those accounts placed an average of 447 (annualized) trades per account which works out to about 37 trades per month. Also interesting to note is their average commission for stock trades is $2.66 with an average order size of 2795 shares. Clearly these aren’t the typical buy and hold types.

On a year over year basis, however, the figures are still fairly impressive: 21% higher trades cleared, 22% higher client equity and 23% higher margin loan balances.

While it is unfortunate for Canadian DIY investors that this kind of transparency and granularity doesn’t exist with discount brokerages here, what these numbers paint a picture of is an online brokerage that continues to grow and win new clients who are active traders.

Rankings and ratings may help the cause of getting attention, but these kinds of figures reflect individual traders voting with their dollars and they have been for some time now.

Protecting Seniors

An interesting article on the potential for fraud or mishandling of seniors’ funds via brokerage accounts highlights the current landscape facing older adult DIY investors in the US are facing.

The groundswell of an aging population combined with the proliferation of technology that makes financial transactions so effortless means that brokerages may find themselves in the position of having to police their client’s trading habits.

The demographic shift has not been lost on the discount brokerage (and wealth management more generally) industry.

About a year ago, BMO InvestorLine published results of a study they commissioned on the rise in wealth transfer that could accompany an aging population. More recently, BMO Wealth Management also published a series of papers on caring for aged parents as further recognition of the impact that aging individuals will have on the financial services requirements of older adults and those who care for them. Also, Canadian Securities Administrators have placed a special emphasis on educating and empowering individuals and especially seniors about recognizing fraudulent investment opportunities.

As more investors start aging, however, the questions being debated now in the US will inevitably come up regarding Canadian investors. Given the extent to which policies in the U.S. tend to shape decisions here in Canada, this will be an interesting issue to follow in the months to come.

Event Horizon

This upcoming week there are a flurry of investor education opportunities. If you’re looking to learn about options, the technical indicator MACD or some basics on options or short selling, check out one of the sessions below.

July 7

NBDB – Introduction to Technical Analysis: Trends – [Fr]

Scotia iTRADE – Trading Options in 3-D with Pro Market Advisors

TD Direct Investing – Chart Smart – Using the MACD

July 8

TD Direct Investing – Introduction to Investing in Options

July 9

TD Direct Investing – Understanding Margin & Short Selling

Discount Brokerage Tweets of the Week

This week on social media there were a number of interesting glitches on data feeds that got the attention of a few DIY investors. Mentioned this week are BMO InvestorLine, Questrade, Scotia iTrade, TD Direct Investing and Virtual Brokers.

From the forums

Dress Rehearsal

Diving into the world of investing head first is something most beginner DIY investors should probably rethink. On the other hand, wouldn’t it be nice to be a total expert before putting real money on the line? Of course folks have to take the plunge at some time, however it is always better to learn the ropes with a safety net in place. In this post from the reddit Personal Finance Canada section, there are a number of interesting suggestions put forward to one reddit user who wanted to get the hang of investing before playing for keeps.

Coming up Short

When it comes to trading online, there’s probably one law that every DIY investor (and perhaps discount brokerage too) should keep in mind: Murphy’s Law. Yes, a healthy dose of paranoia is always in order when considering just how many moving parts there are to executing a trade and just what can go wrong in the process. With that scary prelude out of the way, this post from the RedFlagDeals investing forum highlights what went wrong for one investor trying to go short.

Into the close

That’s a wrap for this week’s discount brokerage roundup. In case you missed it, June was extended by an extra second (the ‘leap second’) and if that doesn’t seem like much, here is something interesting to watch that showcases some spectacular leaps that can happen in much less than a second. Hope you find lots of great reasons to jump for joy this weekend!

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Discount Brokerage Weekly Roundup – June 26, 2015

Heading into the last weekend of June, it looks like trading action is everywhere. NHL’ers & NBA’ers are trading players, politicians are trading blows and it even looks like Vancouver and Toronto have traded weather. For all the trading going on everywhere, Canadian discount brokerages are hoping DIY investors feel inspired to trade during the typically sluggish summer season.

This week’s roundup will be an aptly attired short edition. On the grill will be a look at one brokerage’s ongoing ‘quest’ to beat other discount brokerages at the deals & promotions game; a quick look at some headline making brokerages and trading technology from the US; some of the interesting social media observations, and finally, what DIY investors are talking about in the investor forums.

Questrade Launches Deal for Canada Day

Whether it was in anticipation of all the deals set to expire at the end of June or if it was timed just around Canada Day, Questrade continued to keep the deal produce fresh by rolling out their latest ‘Canada Day’ themed promotion. In their latest promo, Questrade is willing to provide 25 commission free trades which are good for use for the rest of the year or about six months for individuals who deposit at least $25,000.

The clever copywriters in the Questrade marketing department have pitched the offer as ‘trade free for the rest of the year’. And, while it is definitely not the first time this hook has been used, it is also a good example of a ‘made you look’ message. Questrade is not alone in this department as other discount brokerages try to grab the headlines with large numbers of free trades or cash back offers for very large deposit amounts. Remember, always check the fine print.

With eight deals set to expire at the end of June, it should be interesting to see which, if any, promotions will be extended and whether other discount brokerages will be looking to make a summer splash with an offer in July. Stay tuned.

Wrist vs. Reward

As an informal scientific poll, the next time you happen to be walking down the street – have a look around at how many folks are holding onto or even looking down at a screen. (If you happen to be reading this while on one of those screens, don’t forget to look up and around every once in a while!) Chances are pretty good that most younger folks are attached to some kind of smart device.For the more tech-savvy or tech-addicted traders and investors, the new ‘wearable’ technologies that are emerging will add yet another layer to how investors scan, research, monitor and buy/sell securities.

In this article from thestreet.com, there is an interesting breakdown of the possible impact of watch-based trading platforms on investors as well as some interesting data on how investors are using the different devices now available to them. While most Canadian brokerages have yet to deploy a dedicated Apple Watch trading app, there are some interesting lessons to learn from the early winners and losers in the race going on in the US.

Blunder Down Under

Endeavouring to become a truly global discount brokerage is an ambitious undertaking. Sometimes, however, things can go slightly off the rails as they did for Interactive Brokers in Australia. This past week Australia’s securities regulator halted Interactive Brokers from trading currencies because they did not have the appropriate licensing to do so. While not a large part of their overall business, going offline in any market is no fun for anyone involved and a lesson to DIY investors to do some extra legwork to ensure their provider isn’t on anyone’s naughty list – least of all the securities regulator.

Event Horizon

Just as many elementary students are going into summer vacation, the investor education offerings also have thinned out considerably going into the upcoming holiday week. Investor education event coverage will pick up again going into the 2nd week of July where there is much more activity to look out for.

Discount Brokerage Tweets of the Week

This week on Twitter, the chatter from DIY investors about discount brokerages highlighted some of the hiccups that mobile trading technology can face. Sometimes it’s just one person, other times it’s a much bigger issue. It looks like Questrade had a minor issue with their mobile trading however they weren’t the only brokerage to be bit by a technology bug. A user on Scotia iTrade’s app also found a bit of glitch with accuracy of quotes. Interestingly this week there were a few discussions on price – with CIBC Investor’s Edge getting a nod as well as the independent brokerages Questrade and Virtual Brokers. Click below to read more.

From the Forums

Advisors Getting the Boot

With the upcoming changes to the way in which financial advisors will have to start disclosing their fees to clients, there were a couple of interesting posts that might be ‘canaries in the coal mine’ for many advisory services. In this post, from Canadian Money Forum, one user was curious to know whether going it alone on CIBC Investor’s Edge was worthwhile and in this post, from reddit’s Personal Finance Canada section there was a detailed explanation behind the pros/cons of going it alone.

House of Shorts

The old adage of being greedy when others are fearful and fearful when others are greedy comes to mind when listening to the hype around Canadian real estate. While its not normally something we cover here, the conversation has shifted to how some investors would look to short Canadian real estate in the same way that some folks did in the US prior to their housing bubble bursting. Check out this interesting post on reddit’s Personal Finance Canada section for more.

Into the Close

That’s a wrap for this edition of the roundup. For the traders out there, remember that Canadian markets will be closed on July 1st (Wednesday) in observance of Canada day and that US markets will be closed on July 3rd (Friday) in observance of Independence Day. In the words of the new (and well played marketing ploy) Eh Moji’s:

 

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Discount Brokerage Weekly Roundup – June 19, 2015

As June quickly draws to an end, there is something that a lot of the little kids out there may be celebrating or dreading. No, it’s definitely not dinosaurs nor is it Donald Trump announcing his candidacy for US President. Nope, if there’s something that discount brokerages and students can commiserate about at this time of year it is getting report cards.

In this week’s roundup we take a look at some the interesting moves being made by two online brokerages in separate social media spaces. Following that we take a look at a recent report card on mobile trading platforms that was less than flattering for almost all Canadian discount brokerages. Of course, with all the fun that summer entails, we close out the roundup with a quick spin through the upcoming investor education events, discount brokerage tweets of the week (there are some interesting ones in there) and of course the forum chatter. Oh and a cute animal video just for kicks at the end.

The Missing Link

Over the past several weeks, we’ve been tracking some of the interesting developments of brokerages on social media. This past week, social media was again on the radar with two discount brokerages making some important moves on LinkedIn and YouTube respectively.

Earlier in the week, Scotia iTrade announced on LinkedIn that they are winding down their company page on July 6, 2015 and instead publishing company updates and content on their showcase page.

Screenshot from Scotia iTrade LinkedIn page.

For most self-directed investors, there will likely be no noticeable difference between the two however, for Scotia iTrade, the switch may be a lot more noticeable.

With three weeks to go before they switch over, the difference in follower count between the two different pages is almost ten-fold. Scotia iTrade’s soon to be shuttered company page has amassed 1767 followers (at the time of writing) whereas their new showcase page has 143. As a financial services provider, building a community of followers online, especially on social media, is no easy feat.

There are several active competitors on LinkedIn which each have similar content strategies. BMO Wealth Management, Credential, National Bank Direct Brokerage, Qtrade Financial and Questrade are also actively producing and sharing investor focused content. As in the ‘real world’ the social media space is a lot more crowded than it was just a few years ago.

I Screen, You Screen

The other online brokerage ramping up production of investor-focused content is Qtrade Investor. Just this week they officially launched a YouTube account and published their first video – an investor education piece on ‘how to diversify your portfolio beyond Canada.’

While Qtrade Investor is not the only discount brokerage to have a YouTube channel (see table below), their choice to focus on investor education out of the gate is an interesting one. Typically, other online brokerages have been using YouTube to share information about their services, post commercials and a few have actually provided education-only videos.

As with other social media sites, the table below shows that Questrade is out in front by a wide margin on YouTube. They have been on the medium longer, have a larger subscriber base and have more views that the other brokerages combined. That said, they have also produced and released more videos than their peers.

One of the most interesting observations for the data shown in the table is that for the amount of time and resources spent, there aren’t a lot of folks eagerly waiting and watching to see what a brokerage puts out next. And that’s basically the challenge confronting most brokerages when it comes to building content. Most discount brokerages, and financial services providers, are much better at focusing on providing brokerage services than they are at consistently producing content that investors are drawn to.

While Qtrade Investor is likely not the last to step into the social media pool, especially on YouTube, the challenge in front of them will to be to keep things fresh, frequent and most importantly, interesting.

Select Canadian Online Brokerages on YouTube
Brokerage Subscribers Total Views Year Joined # Videos
Questrade 2788 1140720 2007 150+
Scotia iTrade 312 61594 2010 39
Qtrade 2 14 2015 1
Virtual Brokers 70 40518 2010 24

A Platform for Change

This past week BMO InvestorLine’s mobile (i.e. tablet and smartphone) platforms were recognized by financial service rating firm Surviscor as being ‘the best’ amongst the Canadian discount brokerages.

As this was the first year this analysis was performed, it was interesting to note just how far apart first place was from everybody else.

BMO InvestorLine scored a 91% on the ranking whereas 2nd place Scotia iTrade was given a 57%. The company that fared the worst in this ranking was National Bank Direct Brokerage which Surviscor rated at 14%. In fact, the average score for the 11 discount brokerages measured worked out to 42% with a standard deviation of about 22%. For the stats keeners, there’s definitely something strange in the mobile trading neighbourhood.

Surviscor Canadian Discount Brokerage Mobile Trading Ratings
Brokerage iPhone iPad Android SmartPhone Android Tablet BlackBerry Touchscreen Score Rank
BMO InvestorLine B+ A B+ B+ B+ 91% 1
Scotia iTrade C+ B- C+ C+ C+ 57% 2
Questrade C+ C+ C+ B- C+ 54% 3
RBC Direct Investing C+ C+ C+ C+ C+ 51% 4
Qtrade Investor B- C+ B- D B- 49% 5
TD Direct Investing C+ C C C+ C 43% 6
CIBC Investor’s Edge C C C C C 33% 7
Credential Direct B- N/A C+ N/A C+ 25% 8
Virtual Brokers C- C- C- C- C- 25% 8
Desjardins Online Brokerage C+ D- C+ D C+ 21% 10
National Bank Direct Brokerage C D- C D C 14% 11
source: Surviscor

As we’ve mentioned on several occasions with all brokerage rankings and ratings, the importance of understanding what is being measured and the method by which it is measured is key to really understanding what these numbers mean.

In the case of these latest rankings & ratings, it is the presence or absence of certain features and functionality on smartphones and tablets. Exactly what those features were was not elaborated on in the press release or Surviscor site, however, the following “categories” were assessed:

  • Getting Connected
  • Application Design
  • Customer Support
  • Market Intelligence
  • Mobile Transactions
  • Mobile Resources

According to the figures presented, BMO InvestorLine’s app is somewhat of a black swan in the pond of other mobile trading apps. An alternative interpretation would be that there’s something particular about the test construction that is rendering these results. In fact, it may be a combination of the two.

BMO InvestorLine may have a feature-rich app, however individual investors may not consider having all of the features important – especially if the app becomes an intensive user of device resources (i.e. battery life). Surviscor’s assessment, on the other hand, bases the scoring of the mobile experience in large part on what’s available on a brokerage’s full website. As such, some brokerages may be designing their mobile experience to be intentionally different than the full web experience which would, in turn, help account for some of the differences observed between the mobile and desktop website.

In reality, some discount brokerages and DIY investors may believe there are certain features that are better suited to bigger screens. There is only so much filtering, charting or technical analysis one can effectively do with ones thumbs or with swiping. Thus, a distinction should be made between having a feature (which is a yes or no question) and having it work effectively (which is matter of degree).

While it is undeniable that many DIY investors are embracing the ability to stay on top of their investments ‘on the go’ or simply without having to power up a laptop or desktop, exactly what makes for a quality mobile experience, especially for DIY investors, is still a moving target.

Given how fast the definition and technologies associated with “mobile” are changing, it will likely be the responsiveness of brokerages’ IT departments as well as their websites or apps that determines who will lead the pack.

Event Horizon

June 23

Scotia iTRADE – Introduction to Bonds with Scotia McLeod

TD Direct Investing – Understanding Margin & Short Selling

TD Direct Investing – Generating Income in a Low Rate Environment

June 24

Scotia iTRADE – Options Fundamentals with Montreal Exchange

June 25

TD Direct Investing – Introduction to Technical Analysis

#DiscountBrokerage Tweets of the Week

The chatter about and to discount brokerages on Twitter this week featured BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTrade and brief mention of TD Direct Investing.

From the Forums

Taking an Interest in GICs

With talks of interest rates rising on the horizon, it will be ‘interesting’ to see if/when more folks start asking about GICs. In this post from RedFlagDeals’ forum, one user wants to find out whether a big bank-owned online brokerage or independent brokerage offers direct access.

For Better or Worse

Now that summer is here, RRSP season may be in the rear view mirror but for a lot of folks it also happens to be ‘wedding season’. In this post, from Canadian Money Forum, spousal RRSP contributions are the focal point at one bank-owned online brokerage.

Into the Close

That’s a wrap for this week’s roundup. For all the dads out there, here’s to a very happy Father’s day filled with tools, ties, socks and stocks! (ok maybe not that last one). Have a great weekend – although perhaps not as great as this little rascal.

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Discount Brokerage Weekly Roundup – June 12, 2015

It happened in Toronto. It happened in Vancouver. Transit ground to a halt at the worst possible moments. And, if you read the tweets and forum posts from active investors and traders, it occasionally happens to discount brokerages, major data providers and stock exchanges across the information superhighway. When technology that carries people or financial information goes offline, it seems that the new normal is for people to turn online (are you taking notes #SnoopforCEO?). For many discount brokerages, the issue of how to navigate this tech-fueled new normal filled with hyperconnected ‘millennials’ as well as their expectations of how things ought to run is an all too familiar challenge. Alas, there is no turning back.

In this week’s roundup we try to get things ‘on track’ by first looking at one discount brokerage-sponsored investor challenge that wrapped up and what it means for investors looking to learn about investing. Next, we take a look at an important announcement from the Federal Government on their strategy for improving financial literacy. Following that, we report on the quick scan of the small screen that yielded some interesting segments on ‘guys chatting about investing’ followed by the conversations about DIY investing in the discount brokerage tweets of the week. Finally we close out with the upcoming investor education events, forum chatter and one very cool internet video that highlights the importance of paying attention to the big picture.

And it was supposed to be a slow month…

It Pays to Play

Successfully timing the market has always been met with some degree of skepticism. That’s real life. Still it is a fascinating exercise to observe what happens when contestants using ‘virtual money’ are challenged to perform as best as they can.

This past week, the “Biggest Winner 5” trading competition from Horizons ETFs and National Bank Direct Brokerage announced that Calgarian Daniel Tsang was crowned the champ for netting a 20.99% return over the course of the six-week contest. First prize in this ETF-only virtual stock market challenge was $7,500 followed by the second prize of $2,500 which went to Nancy Kelly of Cobourg, Ontario who reached a healthy 18.68% return.

So what was the secret to scoring the quick wins? According to Howard Atkinson, President of Horizons ETFs, it was the “effective use of leveraged ETFs.” Indeed, when the focus is short term, it is the combination of luck, timing, volatility and leverage that many professional traders recognize govern their fortunes. Of course it also helped that junior’s university fund was not on the line when making some of the big directional bets on oil and natural gas that provided a large portion of the results.

While the prize money and recognition were potent incentives, it was great to see that over 1600 individuals took part, including a continuing trend of increased participation by women investors.

It would have been interesting to see what the average performance was over that time, especially considering the performance of various benchmark indices, as well as what the distribution was of the 20,000 or so trades that were made.

Regardless of the outcome, the good news for DIY investors is that paper trading is a great way to learn and practice different investment strategies. Several discount brokerages such as Interactive Brokers, RBC Direct Investing, and TD Direct Investing (specifically the US Trading Platform aka ThinkOrSwim) even offer practice accounts which can be used to test and learn. That said, the Biggest Winner contest offers up a number of cash prizes which just makes getting it right that much more fun. Congrats to the winners and participants!

Making Financial Literacy Count With #CountMeInCA

This past week the Federal Government formally announced the launch of their National Strategy for Financial Literacy called “Count Me In”.

As has increasingly been the case since 2009, resources are continuing to be committed to improving financial literacy across the general population and specifically to vulnerable populations. While the formal commitment by government agencies has taken time to mobilize, other organizations and individuals have been filling the void.

Fortunately many of the resources have been organized into a database on financial literacy (explained also in the following video).

For quite some time and to this day, however, DIY investors have relied upon Canadian investor forums such as the personal finance section of Reddit, RedFlagDeals, Canadian Investor Forum or the Financial Wisdom Forum as well as sites such as GetSmarterAboutMoney.ca and a host of independent personal finance writers to help navigate the world of investing online.

Discount brokerages have also recognized the need and opportunity in providing investor education on specific areas of interest related to investing. Four of the biggest providers of investor education include Desjardins Online Brokerage, National Bank Direct Brokerage, Scotia iTrade and TD Direct Investing.

Fortunately, the number of resources for learning about investing (as a component to personal financial literacy) continues to grow and with the appointment of a Financial Literacy Leader and the formation of a concrete strategy, it appears even more resources will be mobilized and coordinated to bring the awareness of personal financial literacy into the everyday purview of most Canadians.

Given the high levels of personal debt, irrational housing prices and demographical shifts there is clearly a need and urgency to better educate and empower Canadians to manage their finances wisely.

It comes as little surprise, therefore, that the three primary goals of the National Strategy on Financial Literacy are to help Canadians:

  1. Manage money & debt wisely
  2. Plan & save for the future
  3. Prevent & protect against fraud and financial abuse

For those beginning on their journey into learning about personal finance and investing, or for those who get asked by beginners about some good resources, it is encouraging that in addition to the good books about investing, forums and websites that there are now going to be some better resources to turn to.

To keep track of the latest developments of the “Count me in” strategy, follow the hashtag #CountMeInCA or visit the Financial Consumer Agency of Canada website here.

Channel Surfing

There’s just something about two guys talking about investing – or so it seems that it was the case with a pair of video clips that caught our attention.

The first is a commercial for Interactive Brokers’ new ‘marketplace’ which we mentioned in last week’s roundup. In the commercial there’s an amusingly scenic moment of two guys fishing in a river set to some wholesome ‘folky’ music.

Getting back to the theme of financial literacy, the second clip is from a BNN interview featuring Doce Tomic, President & CEO, Credential Financial discussing financial literacy tips for millennials.

Over the past few years and increasingly over the last few months it seems that “millennials” has become the buzzword of choice to describe a new category of being. Like the Gen Y’s, Gen X’s and Baby Boomers, the millennials have become a talking point, especially in the world of finance, where there has been lots of energy expended trying to understand, cater to and capture the business of this demographic cohort.

The Google Trends graph below shows just how ‘hot’ a topic millennials have become. Interestingly, the stock charts of several companies that cater well to this demographic also seem to follow a similar trend, which may help explain why the discount brokerages and financial services firms are hoping to find the right recipe for connecting to this group very quickly.

#DiscountBrokerage Tweets of the Week

In this week’s tweets, there was an interesting shift in the pattern of the past few weeks. While there were definitely a handful of questions relating to customer service issues, there were a number of not so flattering conversations that Scotia iTrade found themselves the center of. While the social media representative handled the exchanges professionally, it was revealing to see what some of the concerns were with this online brokerage.

Event Horizon

Here are the upcoming investor education seminars and webinars for the week ahead:

June 16

Scotia iTRADE – Volatility – Friend or Foe with Pro Market Advisors

June 17

TD Direct Investing – Technical Analysis – Candlestick Charting

TD Direct Investing – Introduction to Fundamental Analysis

Scotia iTRADE – Building Diversified Portfolios Using ETFs with iShares

June 18

TD Direct Investing – Introduction to Investing in Options

Scotia iTRADE – Charts and Patterns 101

From the Forums

Shorts Weather

In this post from the Canadian Money Forum, one user highlights some of the challenges encountered with going short on a stock at Scotia iTrade. Check out what the community had to say about some of the other alternative discount brokerages mentioned and why having a brokerage that has a big inventory can make the difference on a quick trade.

Interesting Gambit

One of the more popular techniques for exchanging Canadian funds into US funds is via Norbert’s Gambit. This past week there were a couple of interesting threads concerning the importance of keeping track of any interest charges that may be incurred as well as the shift that might be taking place with one bank-owned brokerage now potentially charging a little more to get that done.

Into the Close

That does it for this edition of the roundup. Hard to believe that the middle of June is almost here but with it come the (gasp) finale of Game of Thrones for another season. Of course, there’s lots to do outside but for those that would rather watch other people outside do entertaining things, this tribute to television theme songs is good training for that day you end up on Jeopardy. Have a great weekend!