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12:23 Rob Carrick: Hi Kerry. If you look at the commission schedules for some firms, you'll find a notation that "ECN and exchange fees" may apply in addition to posted commission rates. These fees are related to the use of certain electronic trading networks and, for the most part, they're absorbed by brokers and not passed on unless you're an active trader who wants a say in which networks are actually used. The actual amounts these fees can add to your transaction can range from a few cents to several dollars -- it really depends on what size trades you're doing. Suggestion: jot down a few prospective trades you might make and then ask any broker you're thinking of dealing with how much ECN fees would add to regular commissions.

12:24 [Comment From Michael: ]ello Rob, and thank you. Why do place so much emphasis on 'research and planning tools' within an online broker when there are so many other outside independent sites a person can use ? Then you can just go to the broker with the lowest fees.

12:29 Rob Carrick: Michael, there's some interesting background behind your question. I've spoken to several online broker executives over the years and a common theme is that clients don't much use many of the research and financial planning tools they offer. I don't think it's because there are good tools elsewhere on the Internet. Rather, it's because people tend to forget about basic portfolio building and focus instead on buying and selling investments. They shouldn't, though. Before you buy the stocks and funds, you need a portfolio blueprint. It's my view that portfolio planning tools are most likely to be used if they're well located on an online broker's website. If you know of great tools on other sites, then you're quite right. You can certainly go to the broker with the lowest fees.

12:30 [Comment From Deni: ]I have been considering using an on-line broker but am confused with the fees schedules. I am not a big time investor so for my non RSP investments I would be starting at maybe 5K. I'd like to break that up into a few various sectors so maybe 3 investments. Should I be considering this at all or should I be sticking with buying mutuals from my finacial advisor or bank. Who would I be considering for an online broker and what should I expect to be paying.

12:37 Rob Carrick: Deni, this is a good question because it highlights how commissions at online brokers differ widely for small and large accounts. First, though, I should point out that the low-cost leader, Questrade, charges a minimum of $4.95 no matter how much money you have in your account, or how often you trade. Most other firms charge $20 to $29 per trade until you have $50,000 to $100,000 in your account (some firms let you aggregate several of your accounts, while others let you aggregate the accounts of family members). Commission costs are key if you trade quite a lot, but less so if you're going to make only a few trades and then hold onto what you buy.

As far as whether you should use an online broker or stay with your advsier and the mutual funds he or she sells, that's a very big question that depends in large part on your preparedness to manage your own money. You can generally save on fees with an online broker, but it's a false economy if you don't know what you're doing.

12:37 [Comment From john: ]My hypothetical question is what if an online brokerage firm goes under, what happen with my investment with the firm? Has that ever happened in Canada?

12:41 Rob Carrick: Hi John. Since the financial crisis began a little more than a year ago, I've been asked this question dozens of times. Good thing, too, because it shows investors are asking the right questions about the firms they do business with. No, I have not heard of an online brokerage firm going bankrupt. Frankly, I think a firm's assets would be bought up by a competitor before bankruptcy was to occurr. But let's say it did. If the firm was a member of the Canadian Investor Protection Fund (CIPF), account assets would be protected for up to $1-million. Note: all the firms in the Globe Investor ranking of online brokers are CIPF members. I wouldn't look twice at a firm that wasn't.

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