It's not a beauty contest, but the 17th annual Globe and Mail ranking of online brokers does put a lot of emphasis on looks.
The dozen firms in the ranking have converged on cost to a point where sub-$10 commissions for all are near universal. Most firms offer similar levels of research on stocks and exchange-traded funds, and most now offer tools to show how your account has performed since you set it up. Appearance is the biggest differentiator between firms now, and that means big changes in this ranking.
A few firms have upgraded their public and/or client websites recently and it's now becoming apparent how much better a well-designed website can make the process of choosing and using a broker. Accordingly, the client experience at each firm, including the usability of the website, has taken over from cost as the No. 1 factor in the ranking process.
This year's overall winner is Virtual Brokers. VB has reclaimed the top spot from Qtrade Investor, now sharing second place with hard-charging Questrade. In third is a name you haven't seen for a while in the upper echelon of this ranking. It's TD Direct Investing, which has introduced a strikingly good new client website. The pressure's now on the other bank-owned firms to catch up.
As ever, this ranking is designed for mainstream investors needing access to a variety of registered accounts and 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.
Here's some more detail on how the brokers are scored:
-The client experience (30 per cent): Much of the emphasis here is on having a clean, easy to navigate website that is simple and engaging to use, even for novices. This category also emphasizes the Web interface for trading stocks, the availability of U.S.-dollar registered accounts and the variety of investments offered online, including low-cost mutual funds, guaranteed investment certificates and investment savings accounts (great for holding cash). We also consider whether there is an option for online advice.
-Cost (25 per cent): Stock-trading commissions get the most weight in this category, with a small penalty applied for charging electronic communication network (ECN) fees for some trades. The availability of commission-free ETFs also has a major influence. Points also go to brokers who have simplified account fees by charging the same amount on all types of accounts and offer easily achievable ways to avoid these charges.
-Account reporting and maintenance (25 per cent): Brokers that score well here use graphics effectively to help you monitor your asset allocation and check how your account has done since you set it up. They also answer client queries by secure e-mail and provide an extensive online archive of account and tax documents.
-Research and tools (15 per cent): This category covers the variety of a broker's research, financial planning and stock/ETF/mutual fund screening tools. A useful ETF centre is emphasized.
-Innovation (5 per cent): Emphasizes a firm's recent innovation record, but also considers the long-term.
|Broker and final grade||The Client Experience||Cost||Account Reporting & Maintenance||Research & Tools||Innovation|
As ever, a strong choice
|Good features, obsolete website||Typical for bank-owned firms in offering stock trades for all at just under $10||Aced it||Fine||Losing momentum|
|CIBC Investor's Edge|
The cheap and cheerful broker
|Website letdown, Part Two. And, no US$ RRSPs||Best of the banks at a flat $6.95 per stock trade||Way behind||Great variety||Only on cutting stock commissions|
|Fresh new website helps some||Quite decent||Solid, but not fantastic||Fine||Not so much|
|Desjardins Online Brokerage|
|Good by the standards of years ago||Bank-like||Behind the competition||Strong||Not so much|
|National Bank Direct Brokerage|
They should promote InvestCube more
|Website letdown, Part Trois||Bank-like||Token effort||Strong||They have their moments, including a robo-like portfolio-building service called InvestCube|
Long a top choice in this ranking
|Hardly a detail out of place||Good overall, but they should lose the ECN fees on some stock trades||Solid||Fine||Strong|
They could own this ranking someday
|A new website promises to be impressive||Low, but ECN fees may apply; you can buy any ETF commission-free||Solid||Not a leader in this one category||Constant|
|RBC Direct Investing|
Canada's biggest bank should have a sharper product
|Website letdown, Part Four; clients should check out the trading dashboard for a sign RBC can offer a much better user experience||Bank-like||Really good||Adequate||They have their moments, like introducing $9.95 stock trades for all in 2014|
Good overall, but the pricing of stock trades rankles
|A pretty good package, but no US$ RRSPs||Some commission-free ETFs available, but this is a high-cost broker for small accounts with commissions topping out at $24.99||Aced it||Strong||Not much recently|
|TD Direct Investing|
Big Green is back
|Arguably the best client website in this group - they nailed the navigation. A small but smart detail: They refer to buying and selling investments, not trading||Bank-like||Aced it||Strong||The long hibernation is over|
The low-cost leader does enough other stuff well to take top spot
|The client website is bright and fun to use, and the public site is state of the art||Super cheap; stock commissions as low as a penny a share and all ETFs can be bought commission-free||Adequate||Improved to average levels||They never stop|
|Broker||Forex Comparison||Margin Comparison|
|Cost in C$ if a client bought $15,000 in U.S. stocks on the morning of Oct. 5, 2015 ($)||Here is the markup over the prime rate for mainstream customers (in percentage points)*|
|CIBC Investor's Edge||19,860||1.55|
|Desjardins Online Brokerage||19,938||1.25|
|National Bank Direct Brokerage||19,870||1.25|
|RBC Direct Investing||19,855||1.4|
|TD Direct Investing||19,647||1.55|