The best online brokerage firms are the ones that have travelled the farthest since their early days as order takers for investors who wanted to trade stocks for cut-rate commissions.
With commissions mostly in the $5 to $10 range, cheap stock trading is still a big part of the appeal of investing through an online broker. But the best firms offer much more than that. Think of them as a personal assistant for investments that helps you set goals, choose stocks and funds, monitor performance and make adjustments as required.
Online brokers are strictly prevented from providing advice, but the best of them give you the tools you need to make your own smart decisions. The broker that best exemplifies this is Qtrade Investor, which takes top spot in the 19th annual Globe and Mail ranking of online brokers. The next tier of firms includes Questrade and Scotia iTrade.
Skip ahead to see the brokers' final grades
Skip ahead for an in-depth comparison of brokerages
The rankings are based on the services brokers provide online for mainstream clients as opposed to heavy traders. Brokers are scored on:
-The client experience: Among the factors considered are how well a firm reports the performance of client accounts, the availability of paperless account opening and call-centre hours.
-Cost: Trading commissions are an important part of this category, but the availability of commission-free ETFs is big, too. Account maintenance fees are considered, as are fees for sending paper account statements.
-The investing experience: A big factor here is the availability of a full range of U.S.-dollar registered accounts and a wide range of services for mobile devices.
-Tools: What's available to help investors build and monitor portfolios, choose investments and manage their accounts?
Appearance also counts. Clunky old websites, and there are a lot of them in the online brokerage business, tend to prevent investors from getting the most from their broker.
Heavy trading volumes in early 2018 caused some broker websites to slow or bog down entirely. Clients of TD Direct Investing and RBC Direct Investing were particularly affected. For current information on which brokers are having technical problems with their website, consult CanadianOutages.com.
Here's how the brokers stack up for 2018:
BMO InvestorLine
Owner: Bank of Montreal
Grade: B
Another year, another failure by this once-dominant firm to upgrade the design of its website. There is a lot of goodness packed into this firm's online service, including useful tools for both building and rebalancing portfolios. Pricing is competitive, and there are U.S.-dollar registered accounts of all types. But the dreary-looking website overhangs everything.
CIBC Investor's Edge
Owner: Canadian Imperial Bank of Commerce
Grade: C
What the online brokerage world could use more of is firms that differentiate themselves from the pack. Investor's Edge is a value leader. Stock trades at a $6.95 flat rate represent a 30 per cent savings from most other firms. There's also one of the better reservoirs of stock research – the same Morningstar reports pretty much everyone offers, plus CIBC World Markets and more. Most other features at this firm are routine.
Credential Direct
Owner: Credential Financial Inc., part of the credit union movement
Grade: D
The $8.88 flat commission rate is the big draw at this increasingly outgunned firm. The website for clients is rudimentary by current standards and offers little to make you feel more in control of your investments. Adding to the sense of a broker falling behind is the lack of any U.S.-dollar registered accounts. Almost everyone has that now.
Desjardins Online Brokerage
Owner: Desjardins Group
Grade: C
Covers all the bases, but with a website from a bygone era. Lots of numbers to look at, but what are they telling you? The best firms help you make sense of what you're seeing. A good selection of analyst research is a plus.
HSBC InvestDirect
Owner: HSBC Bank Canada
Grade: C
It's alive! After a long dormancy, HSBC InvestDirect is refreshed. A clean, new website has much improved the client experience, and so has the new flat $6.88 stock-trading commission. No U.S.-dollar registered accounts yet, but they're being reviewed for deployment in 2018. The differentiator here is online trading on several global stock exchanges.
Interactive Brokers
Owner: Interactive Brokers LLC
Grade: B+
New to this ranking, IB is like a pro-grade power tool for serious investors. Why add the firm to this group of firms that cater to mainstream investors? Because readers have asked, because IB reached out to see whether it could be included, and because the firm offers strikingly cheap stock trades and foreign exchange rates. The casual investor who wants a quick and simple trading experience and tools for portfolio planning isn't suited for IB, but serious investors should give it a look.
National Bank Direct Brokerage
Owner: National Bank of Canada
Grade: C+
This firm has a great offer for investors with large accounts who trade exchange-traded funds: Buy or sell an ETF listed on Canadian or U.S. exchanges and pay no commission if your order is for 100 shares or more (and you're signed up for electronic documents instead of paper). Otherwise, NBDB is part of the club of brokers offering all the key services through a blah website.
Qtrade Investor
Owner: Desjardins Group
Grade: A
The way Qtrade designed its landing page for clients who have just logged in helps explain its dominance in this ranking. There's a line graph to show how your portfolio has performed over the past month, quarter or year – you choose the view. There's also an asset allocation pie chart and a tally of your RRSP and TFSA contributions. Overall, there's an attention to client-friendly detail at Qtrade that other brokers don't match. Costs are competitive, but stock research is limited.
Questrade
Owner: Questrade Inc.
Grade: B+
Questrade has become the fastest growing online brokerage firm by offering a service with wide appeal for serious, casual and young investors. Costs are among the cheapest – stock trades as low as $4.95 (electronic communications network fees may bump up the cost), commission-free ETF purchases and easily avoidable maintenance fees on small accounts. The website is sharp and steadily getting better. One drawback is no online bond or GIC trading.
RBC Direct Investing
Owner: Royal Bank of Canada
Grade: B
BMO and RBC are the Blues Brothers of brokers. Their old-school websites, upholstered liberally in their respective corporate blue colours, do a disservice to some really good tools to help investors manage their accounts. RBC could be the best at helping clients build personalized portfolios (the model ETF portfolios are particularly helpful) and keep them on track, but they're hidden in the thrift-shop ambience.
Scotia iTrade
Owner: Bank of Nova Scotia
Grade: B+
How can Scotia score well against its big bank peers when it still – still! – does not offer U.S.-dollar registered accounts and inflicts $24.99 stock trading commissions on some small account holders? The answer is that Scotia has managed more than all but one of its bank competitors (see below) to design a website that helps clients get to where they need to go. To log into your iTrade account is to feel comfortable and in command of your investments. Note: Scotia is targeting 2018 for adding U.S.-dollar registered accounts.
TD Direct Investing
Owner: Toronto-Dominion Bank
Grade: B
TD introduced a thoroughly redesigned website for clients two years ago and not a single competitor has yet caught up. Where TD trails is in providing tools to plan and maintain portfolios. A description of what they're working on in this regard sounds promising – let's see if they can deliver. While on the subject of delivery, we're still waiting for TD to introduce U.S.-dollar registered retirement income funds. This feature is now slotted for the second half of 2018.
Virtual Brokers
Owner: CI Financial
Grade: B
Virtual Brokers began life as a punk upstart offering stock trades as low as a penny a share and a nifty website that looked different than everyone else. VB still rocks, but it's starting to slip in this ranking. The guts of the website are looking creaky, and the move to a flat stock-trading commission of $9.99 a couple of years ago killed its strong pricing advantage. You can still buy ETFs with no commissions, though (the usual charge applies when you sell).
Data management for the online brokerage ranking was provided by Megan Marrelli