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A quiet battle is underway in the world of digital investing between brokers that charge clients to trade stocks and ETFs and those with zero commissions.

Who’s winning depends on where you look. In the 2023 Globe and Mail digital brokerage ranking, the top firms charge close to $10 per trade. They justify the cost by equipping clients with the tools to be better investors.

Take the number one broker, TD Direct Investing, as an example. While many brokers still waste your time with a landing page after login that just shows you current account value, TD hits you with a five-fingered data punch that gets you up to speed on your entire portfolio and individual holdings.

Number two broker Qtrade Direct Investing is good at everything and peerless in producing improvements for customers year to year. Online stock trading costs at TD and Qtrade: a flat $9.99 and $8.75, respectively.

The zero-commission brokers in the ranking ranged from good to middling, which tells us something. It’s not economical right now for a no-cost broker to build up a website and app that set new standards.

For now, that is. An investment industry report in 2022 showed that zero-commission brokers punched above their weight in attracting new clients and generating trading volume. Investors seem wide open to the idea of picking a broker on the basis of cost.

The job of the 24th annual Globe ranking is to help investors find the best digital broker to meet their needs. If you’re a young investor who puts low trading costs first, the ranking will help you sort the choices. If you’re further along in life’s investing journey and need help managing what you already own, the ranking again points the way.

Thirteen brokers are included, with one extra mentioned peripherally. It’s TD Easy Trade, a junior partner to TD Direct Investing that targets a young audience of people who transact on their phones and like the idea of 50 free stock trades per year.

Commissions and fees play a big role in the ranking, but so does the design of websites and apps for mobile devices, portfolio management tools, and resources for researching stocks and ETFs. Also part of the ranking is the availability of high interest savings account ETFs and mutual funds. A few bank-owned brokers, TD among them, block clients from purchasing anything but in-house HISA mutual funds.

We know from the trading frenzy of 2021 that online investors sometimes need to reach their broker by phone. This year’s ranking includes an evaluation by the investment industry consulting firm Dalbar Canada of how responsive each broker is to telephone calls from clients.

Here are notes on the brokers in the 2023 ranking, listed alphabetically:

BMO InvestorLine

Owner: Bank of Montreal

Grade: B+

There’s a clean, efficient look to InvestorLine’s website and mobile app, which were both refreshed relatively recently. Log in to the website and you get concise presentation of need-to-know things about your account, including a performance chart with various time frames and a status update on open orders. BMO’s commissions are old school at $9.95 per trade, but clients can trade from a list of almost 100 exchange-traded funds from various issuers at no cost. All in all, a player.

CIBC Investor’s Edge

Owner: Canadian Imperial Bank of Commerce

Grade: B

Investor’s Edge is not in the top rank of digital brokers, but you could be happy here. Among big bank brokers, the flat $6.95 commission is at the low end and clients under 25 years old with a CIBC Smart Start account trade stocks for free. There’s lots of research on specific stocks from CIBC Capital Markets, Refinitv and Morningstar, and seniors and others who prefer paper statements and trade confirmations can get them for free. Most other brokers charge for this. Another way CIBC differs from some other banks is in allowing clients access to a full range of HISA mutual funds and ETFs. The mobile app is comprehensive – you can even buy GICs, which isn’t possible on other apps.

CI Direct Trading

Owner: CI Financial Corp.

Grade: B

Back several years ago, CI Direct took the other brokers to school with low stock-trading commissions, zero costs for buying ETFs (the usual cost applies when you sell) and a funky website that made its rivals look stale. But time marches on. Commission-free trading is now available from competitors, and there are brokers with websites that do a better job of empowering clients with informative dashboards and simplified navigation. The mobile app is quite competitive. A perk for CI DT clients is access to a fantastic portfolio analysis tool called Wealthscope.

Desjardins Online Brokerage

Owner: Desjardins Group

Grade: C+

A zero-commission broker with a strong research package that includes the Morningstar reports that near everyone else offers, as well as reports from Desjardins analysts. The formerly dreary website has been freshened in a way that improves the ambience, and the app is just fine. GICs are not available online, if that’s on your radar.

HSBC InvestDirect

Owner: HSBC Bank Canada

Grade: C-

Royal Bank of Canada has a deal to buy HSBC Canada, so it’s hard to say how much longer InvestDirect will be around. InvestDirect offers online access to several global markets, so take a look if that’s of interest. For everyone else, InvestDirect has plugged two giant holes that made it look hopelessly behind the curve. There are now U.S.-dollar registered accounts, and a mobile app for Apple devices. An Android app is coming.

Interactive Brokers

Owner: Interactive Brokers Group

Grade: B+

IB is graded here for people who think of themselves as traders more than investors. If you’re in this group, it’s a no-brainer to give IB a look as a trading platform. Costs are at the low end for brokers that haven’t gone commission-free, forex is comparatively cheap, margin rates are highly competitive and large accounts actually earn interest. Most other brokers pay little or no interest on cash balances. If you’re a mainstream investor who trades only now and then, IB is like taking a Ferrari to the corner store for milk.

National Bank Direct Brokerage

Owner: National Bank of Canada

Grade: B

How other bank-owned brokers must dislike NBDB for being the first of their little clique to eliminate commissions on trading of stocks and ETFs. Desjardins followed, and then crickets. NBDB doesn’t have the attention to detail of, say, a TD Direct Investing. But if your want list includes zero-commission trading, a zippy, pleasant-to-use website and access to analyst research, then for sure give NBDB a look. The mobile app only works on iPhones (as of publication), with Android to be added in 2023.

Qtrade Direct Investing

Owner: Aviso Wealth

Grade: A

For commissions at a flat $8.75, this consistently top-ranked broker gives you one of the better websites and apps for looking after your investments. More than many others, Qtrade has created a mini-me app that reflects the high level of utility in the website, including a quickie chart that shows portfolio results over the past year. Online, there’s a Portfolio Score tool that slices and dices your holdings to provide insights on returns, fees, downside risk, income and environmental, social and governance (ESG) factors. Unlike some brokers, Qtrade never coasts. The latest improvements include expedited transfers of money from your bank and a more useful database of analyst opinions. A negative for GIC investors buying online: The minimum purchase is $30,000 for one year and $15,000 for longer terms.

Questrade

Owner: Questrade Financial Group

Grade: B+

Spot on for young investors who may not value the dividend income trackers and full-body portfolio scans offered by other brokers. You get trades as cheap as $4.95, commission-free ETF buying (normal commissions to sell), a well-executed app for mobile and no-cost access to a service called Passiv to help you set goals and manage your portfolio. Love the Questrade trading screen on the app – it guides you through the process of making a trade in way that makes you feel totally in control. Note: Electronic communications network (ECN) fees can add to the cost of some trades.

RBC Direct Investing

Owner: Royal Bank of Canada

Grade: C+

RBC is a member of the old guard of bank-owned brokers that refuse to retreat on the just-under-$10 stock-trading commission. Where RBC differs from others in this group, say BMO and TD, is in not backing up those high-cost commissions with premium design and utility. RBC is big on interspersing freshly redesigned website components with old ones that remind you that they stopped short of a top-to-bottom reno. Part of the newer stuff is a trading dashboard that looks good, but offers a three-ring circus of customizing options. Guys, build us something cool that’s good to go. Note: RBC is part of the terrible trio, including BMO and TD, that blocks clients from buying HISA ETFs and third-party HISA mutual funds.

Scotia iTrade

Owner: Bank of Nova Scotia

Grade: B

Another bank-owned broker in need of new upholstery. The frame underneath is more than fine for managing a portfolio, researching stocks and tracking dividend income, but anyone under the age of 40 will find the website looking a bit worn. The app is better, having been refreshed recently. Two good things to note: Scotia iTrade doesn’t get in your way if you want to choose a HISA ETF or mutual fund, and it offers 100-plus commission-free ETFs. This feature is oddly hard to find when you log in – you have to access the list of applicable funds through the ETF screener.

TD Direct Investing

Owner: Toronto-Dominion Bank

Grade: A

TD’s shrewd approach on commissions is to offer 50 free stock trades per year on its TD Easy Trade app (unlimited free trades for TD ETFs), and charge $9.99 flat on its website. Fair enough. While a couple of years old now, the TD Direct website is state of the art in getting you up to speed on your portfolio from the second you log in. From there, you can dig into your portfolio diversification, project your dividend income, do a detailed performance analysis and delve into a strong database of market data and research. TD Direct’s mobile app is fine, but Gen Z and millennial investors are directed to Easy Trade.

Wealthsimple Invest

Owner: Wealthsimple

Grade: B

For boomers, this digital disruptor rates a D. There’s really nothing there to help manage portfolios and validate ideas with views from analyst research, and it doesn’t sell GICs. Where Wealthsimple excels is in offering a platform for young investors to invest in a way in which all their money goes to ETFs or stocks, with nothing lost to commissions. Also, fractional shares are available. On the downside, you have to subscribe to a $10 per month upgrade for access to U.S-dollar accounts, as well as instant deposits of up to $5,000. This is an app-first broker, but the website is surprisingly good to use.

Brokers under the microscope

Source: Rob Carrick. Data management for the online brokerage ranking by Audrey Carleton.

Click here to download as an Excel spreadsheet.

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