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Globe Investor Which online brokerage is best in 2019? Rob Carrick ranks your options

The annual Globe and Mail ranking of online brokers has seen some battles over its 20 years, but never anything as tense as today.

A big divide has opened up between the middling to weak players and the elite. The top firms have cut fees in a few cases while adding new features to help clients build and manage portfolios. The also-rans continue to plod along as if they’re still basically waiters taking your order for stocks or funds to buy.

This year’s co-winners are TD Direct Investing and Virtual Brokers. TD earned its spot by surpassing other brokers with its website innovation and utility, particularly for planning portfolios. VB cut its fees sharply while also introducing a nimble new website and a state of the art tool for managing an investment portfolio.

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Just behind these two firms are Qtrade, Questrade and Scotia iTrade, all of them first-rate outfits that exemplify how far brokers have travelled in the past two decades.

As ever in this ranking, brokers are scored on services targeted at mainstream online clients as opposed to heavy traders. Here’s a breakdown of the ranking criteria:

The client experience: The emphasis here is on evaluating how easy it is to set up an account and contact a broker with questions or problems. An emphasis is placed on how well a firm reports the performance of client accounts.

Cost: Brokers are primarily graded on their trading commissions, the availability of commission-free exchange-traded funds and the intrusiveness of their account maintenance or admin fees.

The investing experience: A key measure is the availability of a full range of U.S.-dollar registered accounts and a wide range of services for mobile devices.

Tools: Primarily we’re comparing resources to help build diversified portfolios and manage them over time, but also stock and ETF research tools.

Website: A clean, navigable website helps clients get the most from time spent looking after their investments.

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Here’s how individual brokers stack up:

BMO InvestorLine

Owner: Bank of Montreal

Grade: B

InvestorLine is what you get when a bank builds a high quality online brokerage division and then coasts for 10-plus years. Once-sharp tools to help clients manage their portfolios look dull now, and the website is as wrinkly as a prune when compared with the freshness of leaders such as TD Direct Investing and Questrade. When you consider the moxy that BMO is showing in the exchange-traded-fund business, the stagnation of InvestorLine looks sad.

CIBC Investor’s Edge

Owner: Canadian Imperial Bank of Commerce

Grade: C

Nothing much changes with Investor’s Edge from year to year. You get comparatively cheap commissions and generous analyst research, but little to help you plan and monitor a portfolio to ensure it’s working. Another bank-owned broker with an absentee parent.

Desjardins Online Brokerage

Owner: Desjardins Group

Grade: C-

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CIBC and HSBC are similar to Desjardins in their mediocrity, but at least they give you cut-rate commissions. It is beyond time for Desjardins to modernize its online brokerage.

HSBC InvestDirect

Owner: HSBC Bank Canada

Grade: C-

Grade: The lack of U.S.-dollar registered accounts and a mobile app highlight how far behind HSBC is compared with the other firms on this list. But give this broker its due – it offers a pleasant-to-use website, cheap commissions and a platform for online trading of stocks on global exchanges.

Interactive Brokers

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Owner: Interactive Brokers LLC

Grade: B+

If you trade a lot and want to minimize costs, it’s your duty to check out IB. Stock trading commissions, interest rates on margin accounts and foreign exchange costs are all notably low, and there’s plenty of firepower for monitoring markets and setting up trades. Too hardcore for the rookie or casual investor.

National Bank Direct Brokerage

Owner: National Bank of Canada

Grade: B-

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This could be your broker if you’re a cost-conscious higher net worth investor focused on ETFs. Trade 100 shares or more of any Canadian- or U.S.-listed ETF and you pay nothing in commissions. NBDB isn’t bad on portfolio-building and monitoring, but the website is as stale as last week’s loaf of Wonder Bread. It might have looked good on your Commodore 64.

Qtrade Investor

Owner: Aviso Wealth

Grade: A-

Another year, another round of improvements from this online brokerage dynasty (check out the 20-year list of year-by-year top picks). Standout changes include the ability to set goals for a registered accounts, better tracking of dividend income and additional stock research. Qtrade does evolution better than revolution. That’s why it was edged out for top spot this year.

Questrade

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Owner: Questrade Financial Group

Grade: A-

This fast-growing independent is riding an improvement trajectory that will most likely put it on top of this ranking in the next several years. The latest upgrades of note concern the website, which has been sharpened and streamlined in a way that better helps clients get about their business. Portfolio-building and monitoring tools aimed at long-term, wealth-building investors should be next on the improvement list.

RBC Direct Investing

Owner: Royal Bank of Canada

Grade: B

On the broker innovation spectrum, RBC is somewhere between the inertia of BMO and CIBC and the slick modernity of TD and Scotia iTrade. RBC towers in its ability to help you plan a portfolio and keep it in line, but RBC stands out from the crowd in not offering low-cost Mawer mutual funds.

Scotia iTrade

Owner: Bank of Nova Scotia

Grade: A-

Scotia has fixed a gaping flaw in its commission schedule by extending $9.99 flat trading commissions to all, instead of those who meet various requirements for active trading or assets. Most other brokers did this ages ago, but let’s accentuate the positive. Scotia iTrade is now one of the most polished, well-rounded brokers out there.

TD Direct Investing

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Owner: Toronto-Dominion Bank

Grade: A

Once the king of complacency, TD now sets a ferocious pace of innovation. The first phase of an impressive new generation of portfolio building and monitoring tools has emerged, with more to come. Best overall website by far in this ranking, and they finally came through on the often-made, often-broken promise to add U.S.-dollar registered retirement income funds.

Virtual Brokers

Owner: CI Financial Corp.

Grade: A

VB has fought its way back to the top after slipping last year. The strategy goes like this: Cut fees, add features. The $9.99 flat commission has been replaced with a charge of 1 cent a share with a $1.99 minimum, while the website was upgraded and a powerful new portfolio analysis tool from an outfit called Wealthscope was added. VB has done more in one year than some brokers have in 10.


Click here to download an Excel version of the brokerage guide.

Source: Questionnaires completed by all brokers in the ranking




The 20-year view

Annual winners of Rob Carrick's online brokerage rankings

Year Winner
1999 E*Trade Canada
2000 Schwab Canada
2001 TD Waterhouse
2002 BMO InvestorLine
2003 BMO InvestorLine
2004 BMO InvestorLine
2005 BMO InvestorLine
2006 Qtrade
2007 Qtrade
2008 Qtrade
2009 Qtrade
2010 Qtrade
2011 Qtrade
2012 Virtual Brokers
2013 Virtual Brokers
2014 Qtrade
2015 Virtual Brokers
2016 Qtrade and Virtual Brokers
2018* Qtrade
2019 TD Direct Investing and Virtual Brokers

*starting in 2018, the ranking was published in January instead of the preceding December.

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