It's either a display of incredible acumen or investing's equivalent of the charge of the light brigade.
Amid a ferocious bear market, people are rushing to open accounts at online brokers. TD Waterhouse, the country's largest online broker, reports an incredible 80-per-cent increase in applications in the past couple of weeks over the same time last year. At Qtrade Investor, the increase is 91 per cent, and at RBC Direct Investing it's 70 per cent.
This 10th anniversary edition of The Globe and Mail's annual ranking of online brokers appears at a time when stock market conditions are as volatile as many people have ever seen them. And yet, investors want in.
Are they about to scoop up stock market bargains like we haven't seen in ages, or will they be sideswiped by unpredictable markets? It's too early to say, although one thing is clear already. At a time when fear rules the markets, it's quite the validation of online investing to see a big surge in new account openings.
Now to the question of which brokers are best. Qtrade Investor, a small firm out of Vancouver, has taken top spot for the third straight year, while BMO InvestorLine, E*Trade Canada and TD Waterhouse also scored well. Qtrade is an example of a broker that does almost everything well. Whether it's keeping costs low, providing tools that help investors make smart decisions or offering a sturdy trading platform, Qtrade has it covered.
As usual, this year's ranking focuses strictly on the mainstream investor, not aggressive traders, and it considers only services delivered over the Internet, where costs are lowest and services for clients are plentiful. Brokers report they're doing almost nine in 10 trades online these days.
1. Qtrade Investor
qtrade.ca
Ownership: Privately held
Comments: Some online brokers are slacker operations that do little more than take up cyberspace. Qtrade is the opposite. It's as aggressive as any firm out there in marching forward year by year to bring clients a better product. In 2008, the firm has added new equity research, improved client account reporting, added online ordering of guaranteed investment certificates and introduced a new kind of stock order called a trailing stop (useful for protecting against falling markets). Qtrade's also good on costs, and its customer satisfaction ranking is strong. If you're thinking of joining the rush to open an online brokerage account, be sure to consider Qtrade.
2. BMO InvestorLine
bmoinvestorline.com
Ownership: Bank of Montreal
Comments: Here's a little story that tells you something about InvestorLine. On Oct. 9, while the financial system seemed to be unravelling, the firm posted a letter from CEO Connie Stefankiewicz for clients to read after they logged in. The letter addressed investor nervousness head on and mentioned the Canadian Investor Protection Fund, which protects client assets from a brokerage firm's insolvency for up to $1-million (all brokers in this ranking are members). This reassurance was exactly the right thing to show clients, and almost no other firm offered anything like it. That's InvestorLine - focused more than any other firm on helping people invest effectively and successfully, whether it's by calming clients, providing tools for portfolio building or offering detailed accounting reporting. On the negative side, they could be a little more fee-friendly to small accounts and fund investors.
3. E*Trade Canada
canada.etrade.com
Owner: Bank of Nova Scotia
Comments: Scotiabank recently closed its deal to buy E*Trade Canada, which means the firm could cease to exist in its current form at some point. That would be a major loss to investors because E*Trade is a low-cost leader that pretty much single-handedly led the movement to drop trading commissions to just below $10 from the $25 to $29 range for investors with sizable accounts. E*Trade also offers fee-free mutual fund investing, and it's one of the few not to have administrative fees for small registered retirement accounts. E*Trade also offers the Cash Optimizer investment account, a parking spot for money that pays 3.05 per cent. For now, anyway.4. TD Waterhouse
