Skip to main content

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.

Story continues below advertisement

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.

Story continues below advertisement

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

Story continues below advertisement

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

tdwaterhouse.ca

Owner: Toronto-Dominion Bank

Comments: Far and away the dominant online broker in Canada, TD seems to have been coasting for years. On balance, that's not a big problem because they know a thing or two about running an online brokerage at TD (they were pioneers under the name TD Green Line). Still, there's a staleness to parts of TD's service that you might only be aware of if you've tried other brokers. Now, finally, TD seems to be getting serious about making improvements. Example: the new Portfolio Manager feature, which will help clients create personalized account performance reports when it's introduced next month.

5. Credential Direct

Story continues below advertisement

credentialdirect.com

Owner: The credit union movement

Comments: Credential is a likeable broker with a low-cost, egalitarian nature. Unlike many bigger firms, it does not charge smaller accounts up to $29 as a minimum to trade stocks and larger accounts as little as $9.95. Instead, there's a $19 minimum fee that applies unless you qualify for active trader discounts. Credential's great for funds - no buy or sell commissions or short-term trading fees - and it also does well in client account reporting and in providing a more diverse bond inventory than many others. A weak spot: Could use more equity and fund research.

6. RBC Direct Investing

rbcdirectinvesting.com

Owner: Royal Bank of Canada

Comments: If they keep up the recent pace of improvements, these guys will close in on the upper tier of online brokers. Already, RBC may just be the firm with the most innovative and unique set of investing tools around. Example: The "Community" feature, which searches blogs and websites for mentions of particular stocks. Where RBC lags the best is in providing a decent accounting of how clients are doing with their accounts. Serious traders would also appreciate real-time updates of the buying power in their accounts.

7. CIBC Investor's Edge

investorsedge.cibc.com

Owner: Canadian Imperial Bank of Commerce

Comments: You say you're a CBIC client who wants to invest online? You could do better than Investor's Edge, obviously, but you could do worse as well. Truth is, Investor's Edge is the classic mid-pack broker. It has some neat features like its database of stock and fund research, and there's a good inventory of bonds and GICs to round out a portfolio. On the down side, the firm's best deal on stock-trading commissions requires you to prepay a lump sum in advance.

8. Disnat

disnat.com

Owner: Groupe Desjardins

Comments: Disnat used to be among the worst brokers out there (eNorthern, recently purchased by Questrade, prevented it from ever hitting bottom), but it's on a definite upswing now. In the past year, for example, Disnat has joined the club of brokers who let clients trade for just under $10 if they have combined assets of $100,000 in all their various accounts with the firm. Next steps for Disnat: add a security guarantee (almost everyone else has), and do a better job of client account reporting.

9. ScotiaMcLeod

Direct Investing

scotiamcleoddirect.com

Owner: Bank of Nova Scotia

Comments: The lamest of the big, bank-owned online brokers. The good news for clients is that they stand to benefit from the acquisition of E*Trade, which is a cheaper and better service in all areas but one. Where SMDI has it over E*Trade, and many of its competitors, is in its well-packaged library of stock and fund research. Plug these resources into E*Trade's current service and you've really got something.10. National Bank

Direct Brokerage

nbdb.ca

Owner: National Bank of Canada

Comments: This broker needs to get with the trend toward lower commissions for trading stocks and mutual funds. Example One: You need $250,000 to qualify for a $9.95 stock-trading commission, compared to $50,000 to $100,000 elsewhere. Example Two: The $44.95 fee to buy and sell some no-load mutual funds. In other respects, NBDB is reasonably well rounded.

11. HSBC InvestDirect

investdirect.hsbc.ca

Owner: HSBC

Comments: InvestDirect does a good job on keeping costs down and in providing services for investors with a global outlook. You can trade Hong Kong-listed stocks online, and look up real-time quotes for both Hong Kong and the London Stock Exchange. You can also hold accounts denominated in 10 foreign currencies. Otherwise, this is a low-rent operation screaming for a makeover.

12. TradeFreedom

tradefreedom.com

Owner: Bank of Nova Scotia

Comments: TradeFreedom is a firm for active traders that is trying to lure more mainstream clients as well. The main attraction for the average investor: $9.95 commissions for trades of up to 1,000 shares. Note that Scotiabank bought this firm last year and has pretty much kept things as they were.

13. Questrade

questrade.com

Owner: Privately held

Comments: Questrade is similar to TradeFreedom in that it's mainly aimed at aggressive traders. Whether it's of interest to mainstreamers depends on what they're looking for. If it's lots of resources, plus the comfort of dealing with a name-brand bank, then forget it. If it's commissions as low as $4.95 for stock trades and the option of holding U.S. dollars in an RRSP (a unique offering), then give Questrade a look.

HOW WE DID THE RANKINGS

Here's a rundown of each of the six criteria in which the 13 brokers in our survey were ranked.

Costs

The emphasis here is on stock trading commissions, but fees for trading mutual funds are included along with fees for registered retirement accounts, inactivity fees and such.

Trading

The focus here is on the utility of a broker's website for trading stocks, although fund and bond trading is also considered.

Customer satisfaction

Here, we've enlisted the help of consulting firm Phase 5, which has shared data culled from a survey in which 936 online brokerage clients were asked about how happy they were with the service they received. The survey was completed last month, which means investors had a chance to vent their frustrations over using broker websites on high-volume market days.

Tools

Includes stock and fund research as well as financial planning tools.

Account Information

Looks at how good a broker is at telling clients how their accounts are performing.

Website

Having a security guarantee that protects clients against fraud is a major aspect of this section, while other factors are overall website freshness and the presence of any communications designed to calm clients unsettled by market conditions.

BREAKING DOWN THE BROKERS

The Globe and Mail's 10th annual online brokerage ranking evaluated 13 different firms in six different categories. Here are the results:

Rank Broker Costs (/25) Trading (/25) Tools (/20) Customer satisfaction (/15) Account info. (/10) Website (/5) Total
1 Qtrade Investor 21 22 16 12.1 10 3 84.1
2 BMO InvestorLine 15.5 17 18 11.5 9.5 5 76.5
3 E*Trade Canada 23 18 14 11.5 4.5 3 74
4 TD Waterhouse 16.5 15 19 11.8 7.5 4 73.8
5 Credential Direct 17 18 11 12.1 9.5 3 70.6
6 RBC Direct Investing 17.5 14 19 11.3 5.5 3 70.3
7 CIBC Investor's Edge 17.5 15 17 11.2 4.5 3 68.2
8 Disnat 16.5 17 11.5 11.9 6 0 62.9
9 ScotiaMcLeaod Direct Investing 10 17 16 11.1 3 3 60.1
10 National Bank Direct Brokerage 10.5 15 15.5 10.9 4.5 3 59.4
11 HSBC InvestDirect 17.5 13 10.5 10.9 2.5 3 57.4
12 TradeFreedom 18 14 7 11.2 4 3 57.2
13 Questrade 21 15 4 11.8 5 0 56.8

KATHRYN TAM/THE GLOBE AND MAIL

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter