Canada’s Best Discount Brokerages

In our first-ever survey of the bank-owned giants and the independents, we help you pick the best online brokerage—no matter what type of investor you are.

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by Dan Bortolotti
May 1st, 2013

From the June 2013 issue of the magazine.

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computer_hand_322Not many years ago, trading stocks or bonds meant using a full service brokerage and paying hundreds of dollars for the privilege. This “full service” often included the advice of a stockbroker who was less concerned with service than with generating commissions.

Discount brokerages changed the game 30 years ago by removing advice from the equation: you made your own buy and sell decisions and phoned the order desk to place your trade. In return, these brokerages charged much less.

Investors now make most trades online and commissions are lower than ever: typically $10, and as little as $0.99 if you trade a lot. But low cost isn’t the only feature to look for in a discount brokerage. Except for some deep discounters, account fees and commissions are surprisingly similar. With $25,000 to invest, you have many options for opening accounts with no administrative fees and low trading costs. But online brokerages differ dramatically on other key features.

Unfortunately, they’re hard to compare. It’s impossible to know in advance how attentive customer service reps will be, how quickly stock quotes are updated, or how easy it is to navigate a brokerage’s order screens. These important differences aren’t obvious until you’ve been a client for weeks or months.

That’s why MoneySense partnered with Surviscor for our first-ever survey of the Best Discount Brokerages in Canada.

A business analysis company based in Oakville, Ont., Surviscor publishes semi-annual reviews of online brokerages (available at www. surviscor.com). President and lead analyst Glenn LaCoste has 22 years’ experience in the brokerage industry, and he helped us create a methodology truly reflecting investors’ experiences. He and his team took a microscope to 14 online brokerages, scoring them on hundreds of measures, from how easy it is to open an account, to the amount of time they take to answer email, to their access to global markets. That gave us a rich set of hard data. We also recognize some unique features are hard to quantify, so we used human judgment when number-crunching produced very close scores.

Not all investors want the same thing. Hard-core traders want foreign currencies, options, fast trading platforms and sophisticated research tools. Beginners want few hassles and first-rate support. If you’re a dividend junkie, a Couch Potato who uses ETFs, or a retiree, your needs are different again. So our survey addresses the needs of five distinct investor profiles.

We started with 20 categories, each including multiple data points. Important categories apply to all five profiles. We assume everyone values certain features: a straightforward account-opening process, clearly explained security policies, efficient money transfers. We also rewarded brokerages for making it easy to manage your accounts online, without having to phone for help. For most categories, however, we adjusted the weightings to reflect the needs of different investors. You can find our top picks, runners-up and brokerages at-a-glance chart in the June issue of MoneySense on newsstands May 13 or by buying the digital download below.

8 comments on “Canada’s Best Discount Brokerages

  1. Why is there no date on this article? Why didn't you publish the issue in the byline? I've been a suscriber for years, and while I appreciate you need to sell content to the freeloaders on the internet, you need to make sure that those of us who have been loyal subscribers can find the content without paying twice.

    Thanks.

    Reply

  2. Enjoyed the article in the magazine.

    I have accounts with three online discount brokerages for "historical" reasons – TD, CIBC and Scotia iTrade.

    Of the three, my preference is Scotia iTrade for two reasons not outlined in the story. First, they make it very easy to access level two quotes – indeed, I sometimes will have iTrade open for the level two quotes when I am making a trade in my TD RRSP.

    Second, Scotia's research on individual stocks is presented on a single page in a standard format that is easy to read, that shows historical data such as dividends, price/earnings, and in the case of REITS, the percentage of AFFO that they are distributing. The text is consise and tight, giving me all I need to know at a glance.

    Reply

  3. I have tried different discount brokers. Like TD & Interactive Broker. Use to be a customer of Etrade, who had excellent service for active traders. Scotia Itrade quality & level of service for active traders has not been the same. They are still trying to catch up. Now they are dropping pro platform. For active traders the Scotia Itrade FD is lame as compared to Pro platform.

    Reply

  4. I left TD Waterhouse many years ago because of their hefty commissions at that time (29$) and did the same by leaving Scotia McLeod even though I am customer of Scotia Bank for my mortgage and cheque account. I have tried Questrade, Disnat, Virtual Brokers and QTrade. I liked the interface and tools of QTrade, they seemed like a solid company and professional. I get replied to my emails no later than next business day. I am using this account for my RRSP in CAD and USD. USD is not available by all brokers. I don't know why the article in MoneySense states you cannot get personal rate of return with QTrade since I have this data available by quarter, year and since inception. I can easily compare against popular benchmark (TSX60, DOW, S&P500, etc). They have great selection of funds way more I was getting at Scotia McLeod.

    For my active trading I chose Virtual Brokers. I compared the rates and it has the lowest cost on the market so I opt in for that broker for my daily and swing trades. They have different commission plan so choose the one best for your type of trades. My plan charges 1c per share up to 9.99. Many other brokers start at 9.99 straight. Not good when making many trades a month. Again the MoneySense article is half wrong when saying that Virtual Brokers charges Exchange fees since my plan does NOT charge them. There are other plans that may charge ECN/Exchange fees though. I am using Windows desktop app (AxisPro) for my trades which is OK for me at this stage. I always get replied the next business day. I have called a few times their help desk and you need to get straight to the point with these guys. Very short talks but I get what I want.

    I hope my comments can help others.

    Reply

  5. Hi Stefania,
    Did you mean this document "Canada’s Best Discount Brokerages (PDF)|$2.99" is included in June 2013's MoneySense issue? I haven't received the June issue yet, hence asking or will buy it here.

    Thanks,

    Reply

  6. Yes, it is included in the June 2013 issue of MoneySense which should be arriving on your doorstep any day now. No need for subscribers to buy! If you have an iPad, you can download/read the issue even before it's mailed.

    Reply

  7. Why should we have to purchase an iPad to download and read articles if we already subscribe to the magazine?

    Reply

  8. You don't! The complete Best Discount Brokerages package is in your June 2013 issue of MoneySense. Cheers and thanks for reading.

    Reply

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