Top Online Broker Survey 2010

The results for the Best Online Broker survey for 2010 were recently published by the Globe and Mail. I am beginning to think that there is some sort of a monetary link between the Globe and Mail and Qtrade (Top Dog in the Survey over the past 4 years).
Qtrade does have one of the best research platforms for customers; however, research alone is definitely not the win all for me or most other clients looking for a quality online trading platform. The research that Qtrade does provide is via Thomson Reuters and is available with most platforms so not really anything that outstanding.

When people are searching for an online broker I think the emphasis is on cost followed by better access. Most opening online brokerage accounts have simply come to realize that there broker does not really know all that much about the stock market, so why pay for him/her to throw the darts in the dark when you could do it for less yourself for far less money.

The supposed reasoning behind the Globe and Mails Online Broker Survey is to help new comers find “guidance” for picking an online broker. Sounds like the top ranked brokers will have the most business directed there way by the survey.

To me, this survey has turned into a marketing machine used to direct leads to the highest bidder and here I will explain why and then provided you with the results of the survey.
1) Almost all of the platforms are identical except for some simple rearrangements of where buttons on the screen are displayed. You can rearrange these to you own hearts content though people. I have used a number of the online trading platforms and it turned out all of them used the same system software.

2) Speed of Execution: For the most part they are all using the same ECNs so there should be no time difference. This may be different for some of the big banks.

3) Research is available for all, but some will charge a premium. Not like this research does you that much good when 99% of analysts couldn’t predict the beginning of the most recent recession.

4) Customer Service: some may hold your hand better than others, but this is near the bottom of my wants for an online broker list.

5) Account information is pretty much the same for all except some make it more difficult to figure out by keeping each of your accounts under a different password; not the end all for me though.

6) Website Security is very good for all. If it wasn’t they would be out of business very quickly indeed.

Before providing the results of the 11th Globe and Mail Online Broker Survey here is the list of question they aimed to answer:

• Costs: Account fees and mutual funds are considered, but stock-trading commissions get the most focus.

• Trading: How quickly and cleanly can clients place orders for stocks, as well as bonds and funds?

• Customer Satisfaction: Consulting firm Phase 5 contributed this portion of the ranking through the results of a survey of 1,380 online investors conducted in September. Scores are based on answers to six questions related to how happy clients were with their broker and whether they would recommend it to others.

• Tools: The resources a broker offers to help clients choose investments and develop an overall plan. There's an emphasis this year on helping the many newcomers to online investing.

• Account Information: Grades a broker's ability to allow clients to see how their accounts are doing and perform basic account maintenance.

• Website: Security and website utility are the focus here. It's a given that all brokers in this ranking are members of the Canadian Investor Protection fund, which protects client assets in case a firm goes bankrupt for amounts up to $1-million.

The Results:

1) Qtrade Investor

2) Credential Direct

3) BMO Investor Line

4) Scotia iTrade

5) RBC Direct Investing

6) TD Waterhouse

7) Disnat (classic)

8) National Bank Direct Brokerage

9) CIBC Investor’s Edge

10) Questrade

11) ScotiaMcLeod Direct Investing

12) HSBC InvestDirect

For me, Cost was the most important factor so I use Questrade since they have the lowest fees with no account minimums to get the best price.

For details about the 2009 survey please see the article Best Online Broker in Canada 2009
For details about the 2008 survey please see the article Online Broker Survey: Who Should You Invest With?
The 11th Annual Globe and Mail Online Broker Survey is available at: http://www.theglobeandmail.com/report-on-business/online-broker-rankings/the-11th-annual-online-broker-survey/article1348448/

Best Online Broker in Canada 2009 / 2010

Best Online Broker 2009 / 2010

I have written about the best online broker in Canada to use before and come to a different conclusion than the one I currently hold to be true; previously, I had made my decision based on reading the Globe and Mail's survey of online brokers. Their survey is great for the average investor—an investor who knows very little about the stock market and needs to have his or her hand held when walking down Bay Street or Wall Street.  I myself was very inexperienced with the ways of online brokers only a short time ago, but what I have learned over the past couple of years, by using a couple of the well know online brokers, is that price point, and execution are by far the most important criteria to differentiate the top of the pack from the bottom.

Let me be more specific by providing my experiences and then my decision for the top online broker in Canada.

My first experience with online brokers came via Qtrade.  According to the Globe and Mail they were and still are the best online broker in Canada.  I have to admit at first they did seem like a great online broker: my trading costs were much lower, the research platform is very good, and the customer service was very good.

Did I just say their customer service is very good? What I meant to say was their customer service is very good unless you need to dip below the $1000 minimum account balance.  I ran into a bit of a shocker when I asked to dip about $200 below the minimum account balance to pay a bill before my pay cheque came in the next day.  Because they would not let me move below the minimum balance in my account for a single day I decided to close all 3 of my accounts and look for a better online broker.

This time I did my own research. I reviewed a number of online brokers: Qtrade Investor, E*Trade Canada, TD Waterhouse, BMO InvestorLine, Credential Direct, RBC Direct Investing, ScotiaMcLeod Direct Investing, Questrade, Trade Freedom, Disnat, CIBC Investor’s Edge, National Bank Direct Investing, HSBC Invest Direct, eNorthern. Just in case you didn’t guess it, this is the 2009 list from the Globe and Mail from top to bottom of the online brokers in Canada.

You have to start somewhere right.  I did my research on each myself, but don’t worry I won’t bore you with the gruesome details here.  What I decided in the end was that #8 on the list of 14 was the best for me.

#8 is Questrade.  By a long shot Questrade has the lowest fees of all the online brokers and has the best sign up process—all documents can be filled out online and then all you need is an online banking transfer and an email of your Driver’s License and SIN Card.  The process was seamless.  The trading tools are identical to the other online brokers; they all use the same software and just reorganize a little. Also, they have a 10/10 in customer satisfaction.

Trade Costs: $4.95 minimum to a $9.95 maximum no matter how many shares you trade. It’s based on $0.01 per share up to the maximum. So If I trade 100, 200, 300, or 400 shares I pay $4.95. At 500 I pay $5, at 700 - $7, at 1,200,000 shares I pay $9.95 flat.

So where are they lacking? Let’s be honest here and just say, there research sucks. They don’t give you the keys to an onslaught of analyst reports like many of the other brokers; however, if you are at all serious about investing then you should be able to find this info very easily through the web since there are tons of sites that give that info away for free.

I have used Questrade's protrader platform with streaming live quotes and their webtrader addition.  I now use the web trader without streaming live quotes because they are extra unless you make over 20 trades a month.  As I am now considering myself more of a long term trader, the webtrader system seems very fine indeed.

Don’t just take my word for it though.  Just remember most of the online brokers are begging for your business so try and get something out of them. Questrade offers a $50 credit in free trades if you are referred and gives the referee $100 in free trades. The catch though is that you must use the credit within 3 months or it vanishes. Unless the person referring you trades a lot there is no way they are going to use their credit.  If you don’t know anyone that is currently trading with Questrade and you want a referral, post a comment with your name and email and I will send you a referral and not post the comment.

Online Broker Survey: Who Should You Invest With?

The online brokerage business has been growing rapidly within Canada and the United States. The Big Banks are not the only major players as there are many independent Brokerages participating and this has lead to dramatic cost cutting and improved services.

According to the latest Globe and Mail Survey of the online brokers dated October 6, 2007, more and more brokers are now charging under $10 a trade as long as the investors account has a minimum of $50,000 to $100,000; this is a huge reduction in costs to investors who were previously paying $24 to $29 per trade.

This Globe and Mail Survey evaluated the online brokers based on 7 points: Costs and Fees, Customer Satisfaction, Tools and Research, Website Utility, Website Security, Trading Platform, and Investment Selection. The survey results were interesting because the top two brokerages were independents followed by the cash rich banks.

The online brokers surveyed included 14 and ranked as follows:

1. Qtrade Investor
2. E*Trade Canada
3. TD Waterhouse
4. BMO InvestorLine
5. Credential Direct
6. RBC Direct Investing
7. ScotiaMcLeod Direct Investing
8. Questrade
9. TradeFreedom
10. Disnat
11. CIBC Investor’s Edge
12. National Bank Direct Investing
13. HSBC InvestDirect
14. eNorthern

In this ranking, the target audience considered is mainstream investors who have RRSPs, are interested in more than stocks and the focus for the evaluation was online service.

To determine if opening an online direct investment account if right for you answer the following 5 questions:

1. Have I acquired the amount of investment knowledge to invest successfully?

2. Do I know where and how to research stocks, bonds, options, futures?

3. Do I know what types of investments are RRSP eligible?

4. Do I have the time to research investments to make informed decisions?

5. Will the cost savings outweigh the time and effort required for me to invest effectively?

If you answered no to any of the above questions then opening an online brokerage account is not the best method for you to invest. Under this scenario an investors is better served by receiving guidance from an investment professional such as an investment advisor. Why face the ‘sink or swim dilemma’ when there is a boat?

Personally, I have toyed with the idea of opening an online brokerage account; however, I feel that I get a lot more out of employing an investment advisor who can provide me with lots of great ideas and opportunities that I otherwise would not encounter; further, I feel spending my time on my career and family is more important than saving $50 a trade.