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portfolio strategy

A little holiday season project for investors of baby boom vintage or older: Download your online broker’s app for smartphones and play with it for a while.

Almost all online brokers now offer a mobile app that allows clients to monitor their investments and trade stocks or exchange-traded funds. For the hands-on DIY investor, mobile investing is a complement to managing a portfolio online and not a replacement. But what a useful complement.

Mobile apps are accessible wherever there’s cellular service and, for the most part, they’re quick and easy to use. Think of them as a way to bring next-level convenience to the process of managing your investment accounts.

I’ve been an online investor for 20-plus years and recently decided to get to know online broker apps better for the next Globe and Mail online brokerage ranking. I downloaded the apps from all the firms in the ranking that offer this feature and gave them a quick spin.

Partly, I was motivated by the usefulness of the many banking apps on my phone. More and more of my daily banking is done by app versus on the web, and I’m increasingly using Google Pay on my phone over plastic cards.

Another reason is that investing by app is a trend with momentum. Investor Economics, a division of ISS Market Intelligence, estimates that apps account for 30 per cent or more of online brokerage stock trades today, up from 18 per cent two years ago.

Commission-free stock trading apps such as Wealthsimple Trade and Robinhood, in the U.S. market, have generated a lot of attention this year because young investors have latched onto them in a big way. But traditional brokers are seeing a lot of app-based trading as well. TD Direct Investing has reported that mobile trading accounts for one in four trades, up from one in 50 a few years ago.

Mobile stock trading is a thing, boomers. Let me tell you what I learned about it so you can judge how to deploy it in your own investing.

Logging into your account is faster/easier

Most brokers have a biometric login option, which means you can get your account up on your screen by using your phone’s fingerprint reader. Compare this with the web-based login offered by brokers, which may involve both passwords and security questions.

If you’re in a hurry and want to get a trade through, you’ll appreciate the speed of the biometric option. The same applies if you find it a challenge – this may be an age thing – to type in passwords and logins on your phone without endless typos. But, if you prefer, you can use the traditional login and password.

Sandy Boucher, a cybersecurity expert at the consulting firm Grant Thornton, said a well-designed fingerprint reader is a definite improvement in security over older login and password arrangements, though not infallible.

In general, using a well-designed mobile app on your smartphone can be more secure than trading on your home computer, Mr. Boucher said by e-mail. “Although smartphones are absolutely hackable, there is still a lot less malware aimed at them than at our computers.”

Security tip: Use your cellphone provider’s network when using financial apps rather than WiFi, which is an easier target for hackers.

Trading is beyond easy

Find a quote, check the chart and swipe the trade button – that’s all there is to it. On mobile apps, most brokers’ stock quotes come in a compact display with basic information such as 52-week price range, market capitalization, dividends and price-to-earnings ratio. BMO InvestorLine, Qtrade Investor and TD Direct Investing are examples of brokers that include analyst recommendations as well.

Apps are newish technology, but some brokers make them feel old

Apps do not solve the design flaws found in too many online brokerage websites. These sites and their concurrent apps are fine at providing peripheral information such as what the stock market is doing and how much your holdings are worth at the moment. They’re near useless at quickly and cleanly telling you the thing you need to know most when you log in: How am I doing?

One exception is Qtrade, which topped the most recent Globe and Mail broker ranking in part because it gives you a dashboard showing how your portfolio is doing right when you log in. The app presents the same useful summary, which includes an asset allocation breakdown and a simple line chart showing performance over the past month, quarter or year.

Virtual Brokers also has a useful landing page for its app, while TD Direct Investing’s app has a “performance” button that brings up lots of useful info.

Apps are for monitoring and trading, not research

Online broker apps are basically mobile stock-trading platforms. They allow you place a trade, monitor your order status and check your holdings wherever you happen to be.

By and large, the most investing research you’ll do on your phone will be monitoring the watchlists that nearly all apps offer. These lists, and you can have several in most cases, let you pick a few stocks to track and flash current price, price change and volume.

The heavy work of investing continues to be an online task. Imagine using your phone to download multiple stock reports on your screen while juggling charts, news stories and an asset allocation breakdown for your portfolio. Right, you can’t.

Apps don’t solve the problem of ‘access risk’

Heavy demand from individual investors to trade stocks in 2020 highlights a downside to DIY investing that we’ll call access risk. It means that when demand by individual investors peaks as it has in the past year, online brokers may not be able to accommodate demand to trade on their websites and apps. Clients may be unable to trade or view their accounts at certain times, most commonly just after the market open and right before the close.

On Twitter, I recently asked people who invest using their online broker’s mobile app if they face the same access issues as online investors. The response was mainly positive about trading on mobile apps for a wide variety of firms.

Both apps and websites are subject to access risk, however. Wealthsimple Trade has tried to get out in front of the problem by setting up a status page that shows if its systems are operational or not.

Web-based investing isn’t going anywhere

The practicality of app-based trading means we’re going to see an increasing emphasis by brokers on using this channel. And yet, there’s no reason to worry that the popularity of apps will cause brokers to ignore clients who trade on their computers.

Several brokers are now in the process of refreshing stale websites – I’ll have more to say on this in the next Globe and Mail online brokerage ranking, to be published Jan. 29. Another validation of trading online instead of by phone is the fact that Wealthsimple Trade has introduced a web-based version of its service.

Ratings of broker mobile apps are worth a look

The rating firm Surviscor has ranked 11 mobile investing apps. Questrade takes top spot, while Wealthsimple Trade ranks last. (You can view all the rankings at bit.ly/2Iw2rKX).

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