The 18th edition of The Globe and Mail online brokerage ranking finds this sector facing its greatest challenge ever.
The old binary world of full-service and do-it-yourself investing is dead. Robo-advisers have created a midway point, and it's a safe bet that innovations to come will offer even more choice. This ranking is designed to highlight the brokers that are most effectively adapting to a more competitive world.
There are two sections to this year's survey, the first being a chart showing how each of the 12 firms scores on 40 attributes of a great broker. The emphasis here is on features that help people build and manage their portfolios effectively, notably user-friendly websites.
The chart is designed to help readers find brokers that meet their needs, and it's part of the analysis that goes into the final grades for each broker. The grades also reflect how well brokers make the case that investors should deal with them instead of competitors both in and out of the online brokerage business. Brokers offering some kind of 'wow' factor rank ahead of those that simply offer a platform for buying and selling investments.
This year's co-winners are Qtrade Investor and Virtual Brokers, both of which have been strong performers for years. In an evolving world, they keep adapting to better serve clients. Some of the bank-owned firms are right behind, the most notable of them being TD Direct Investing.
As ever, this ranking is designed for mainstream investors needing tools for portfolio-building and researching investments. All brokers included here are members of the Canadian Investor Protection Fund (CIPF), which protects account assets of up to $1-million if a firm goes under.
Part one: Forty attributes of a great online broker
Use this grid to find the brokers suited to your investing needs. Tap or click the arrows for additional brokerages
Part two: Rob Carrick's grades and comments
Based on the grid above and additional analysis
Carrick's take: A good overall broker, but the website for clients dulls you into a stupor. BMO, it's time to spend some money to revitalize a franchise that once led the industry. The wow factor at InvestorLine is near zero.
CIBC Investor's Edge
Carrick's take: Nothing flashy here, just an awesome library of stock and ETF research, a flat stock-trading commission of just $6.95 and, starting in January 2017, U.S.-dollar registered accounts. An old-school website, but it somehow works.
Carrick's take: The website is clean, clear and sensibly laid out, and there's also an $8.88 flat commission for stocks and ETFs. A serviceable broker for the undemanding client.
Desjardins Online Brokerage
Carrick's take: A traditional, reasonably well-rounded broker with no spark or flair to speak of.
Carrick's take: The broker that time forgot. Hasn't done much to shake things up since the mid-2000s, the last time it was a force in this ranking.
National Bank Direct Brokerage
Carrick's take: An improving broker that has demonstrated some innovative thinking by adding commission-free ETF trading (conditions apply). The next step is to fix the website – it's pretty bad.
Carrick's take: Bulletin: Qtrade no longer charges electronic communications (ECN) fees in addition to trading commissions in some situations. This was one of few flaws in an otherwise fresh, clean and client-friendly package.
Carrick's take: How can Questrade score well overall, while failing to tick a lot of the boxes on the list? For confident investors who know what they want to buy, this is a slick and ever improving broker. The minimum $4.95 commission is also a draw (watch out for ECN fees on some trades), as are commission-free ETF purchases.
RBC Direct Investing
Carrick's take: The website has recently been refreshed to standards that would have been state of the art a decade ago, but overall this broker offers a lot of features investors will appreciate. A continuing irritation is that low-cost Mawer mutual funds are not offered.
Carrick's take: Seriously? A global outfit like Bank of Nova Scotia can't offer its clients the choice of holding U.S. dollars in registered accounts? That's lame, and so is the fact iTrade still finds a way to charge some small clients $24.99 to trade stocks or ETFs. Lots to like if those issues aren't deal-breakers.
TD Direct Investing
Carrick's take: The lack of U.S.-dollar RRIF accounts is disappointing, given the attention to detail that went into last year's website redesign (TD says this feature is coming in 2017). The site feels like the comfy chair in those TD Bank ads. It might be the best out there.
Carrick's take: The more polished 2.0 version of Virtual Brokers replaces the ultra cheap penny-a-share commission structure with a flat fee of $9.99. Clients benefit from more stock research, and an improved website that breaks new ground in briefing them about what's happening in their portfolios.