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Broker Rankings

The 11th annual online broker survey Add to ...

The one sure-fire, no-doubt bull market out there right now is the online brokerage business.

Stocks and bonds - who knows if they're headed up or down? With online brokers, the boom in new account openings that began as the stock markets crashed last fall has kept right on going. An informal canvas of a few firms found that account openings are up in the range of 19 to 26 per cent year over year, and that's not including the impact of the tax-free savings accounts introduced on Jan. 1. One firm said visits to its public website are up 53 per cent over last year's level, while online tour traffic is up 40 per cent.

People open online brokerage accounts for lots of reasons, including lower fees, a wide choice of investments, and dissatisfaction with an investment adviser.

What all newcomers to online investing have in common is a need for the kind of guidance they'll find in Globe Investor's Online Broker Ranking.

Read more:

  • The 11th annual online broker survey
  • Breaking down the brokers
  • Keeping tabs on costs
  • The good, the bad, the ugly
  • Investing with an online brokerage: Tips and tricks
  • Share your online investing tips and tricks

A dozen firms were evaluated for this 11th annual ranking and the winner for the fourth straight year is Qtrade Investor, an independent firm out of Vancouver with a track record of continuous improvement. Right behind are Credential Direct, BMO InvestorLine and Scotia iTrade.

As always, this ranking is aimed at the mainstream investor who holds stocks or exchange-traded funds and may have an interest in bonds and mutual funds.

Online brokers will take trades over the telephone, but the focus here is strictly on online services because they offer the lowest commissions and best range of tools for choosing investments and financial planning. Here are the ranking criteria:

  • Costs: Account fees and mutual funds are considered, but stock-trading commissions get the most focus.
  • Trading: How quickly and cleanly can clients place orders for stocks, as well as bonds and funds?
  • Customer Satisfaction: Consulting firm Phase 5 contributed this portion of the ranking through the results of a survey of 1,380 online investors conducted in September. Scores are based on answers to six questions related to how happy clients were with their broker and whether they would recommend it to others.
  • Tools: The resources a broker offers to help clients choose investments and develop an overall plan. There's an emphasis this year on helping the many newcomers to online investing.
  • Account Information: Grades a broker's ability to allow clients to see how their accounts are doing and perform basic account maintenance.
  • Website: Security and website utility are the focus here. It's a given that all brokers in this ranking are members of the Canadian Investor Protection fund, which protects client assets in case a firm goes bankrupt for amounts up to $1-million.

*Send feedback to OnlineBrokers@globeandmail.com

Now for the rankings:

#1: QTrade Investor

qtrade.ca/investor Ownership: privately held Comments: The little independent from out west beats the big boys of Bay Street yet again. The story here is that Qtrade is relentless in scoping out the best innovations of its competitors and nimbly adopting them. With Qtrade, clients make the fewest compromises in terms of their overall online investing experience. Recently, the firm has added more research on stocks and started allowing U.S. dollars to be held in registered accounts so clients can avoid expensive foreign exchange fees. Qtrade does get demerits for, in some cases, charging electronic communications network (ECN) fees in addition to posted commissions.

#2: Credential Direct

credentialdirect.com Owner: The credit union movement Comments: If only other brokers were as open to the helpful suggestions contained in these annual rankings. Last year, a dearth of useful stock research was identified as a weakness in Credential's generally very fine all-around service. This year, the firm has added a useful library of reports from the independent analysis firm Morningstar. Cost-wise, Credential isn't the cheapest firm when it comes to trading stocks, but it's hereby nominated as the broker least likely to exasperate and impoverish you with sneaky fees, commissions and such.

#3: BMO InvestorLine

bmoinvestorline.com Ownership: Bank of Montreal Comments: This is a firm that really seems to understand what the masses of new investors coming to online brokers need. There's a "getting started" corner, a "guided investing" corner and, well, you get the idea. Through its MyLink feature, InvestorLine also does the best job of helping clients keep track of what's going on in their accounts. The drawback with this firm might be described as a bank mentality that manifests itself through annoyances like a $50-per-year fee on tax-free savings accounts (unless you have at least $100,000 in total with the firm), as well as fees to buy and sell some mutual funds and an unwillingness to share BMO Capital Markets stock research with those who aren't their bigshot clients.

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