Best online brokers in Canada for 2020

A penny saved, as they say, is a penny earned. That’s certainly the case for Canada’s self-directed investors, who are embracing the ultra-low fees offered by online brokerages and turning those savings into higher investment returns.

While pricier full-service investment options provided by financial advisors and bricks-and-mortar firms have their place—as do robo-advisors with their affordable hands-off portfolios—DIY investors who want the greatest selection of assets at rock-bottom fees can’t do better than online brokers. Of course, with a growing number of online brokerage services now available in Canada, it’s hard to know which one is best for your needs. 

That’s where the annual MoneySense Best Online Brokers ranking comes in. Now in its eighth year, the ranking again relies on an analysis provided by Surviscor, a leading Canadian research and consulting firm specializing in digital and direct financial services’ customer experiences. Customized for MoneySense to include hundreds of data points—including price, customer service, product offerings and mobile capabilities—Surviscor’s deep-dive into the Canadian online brokerage marketplace is second to none.

This year, Surviscor’s president and CEO, Glenn LaCoste, who is also co-founder of the ranking, has not only contributed his 30-plus years of industry knowledge to the analysis, he has also penned the rest of the package below, offering his take on the winners and valuable advice to you, the investor. 

What are online brokers?

Online brokers allow self-directed investors to pick, buy and trade assets such as stocks, bonds, and exchange traded funds (ETFs) on their own, without the guidance or assistance of an advisor or trading agent. Because online brokerages cut out the middleman, the trading fees don’t have to account for a professional’s commission, so you pocket the difference. This significant cost savings is the reason why online brokers are also known as discount brokers. 

While all Canada’s dozen or so online brokers provide roughly the same basic DIY investing and trading services, the platforms, fees and access to investing information can differ. For example, this year we’ve seen a further reduction in fees and an increase in supporting tools to make self-directed investing easier.

What’s special about our ranking?

The scoring methodology and the depth of the analysis makes the review the most comprehensive and investor-relevant study in Canada. We tell it like it is, and don’t suggest that only the top firms should be considered. 

On that front, you may notice a few firms missing from our ranking. We left out Interactive Brokers because it is not designed for an average investor and it simply has not fully Canadianized its offering; Canaccord Genuity Direct (formerly Jitney Trade) as we need more time to assess its post-rebranding services as the past brand was not doing business for most of 2019; and Wealthsimple Trade, which has been wrongly labelled by many as an online brokerage firm as it only offers a mobile application with limited functionality, resources, account types, product, market information and services expected of a Canadian discount brokerage firm. No doubt, $0 commissions are attractive but we do not see why a novice investor would even consider the platform as the cost savings of dollars per trade, in our opinion, is not worth the lack of guidance, education and market depth, to name a few, required by a novice or average DIY investor.  

 Our goal is to provide you with the facts to help you make an informed choice of a potential discount brokerage. If you already use an online broker and have noticed a change in the relationship or longer wait times for service, don’t feel sorry for them. Instead, challenge yourself to explore other firms’ offerings, as there are many. 

 Whether you’re new to self-directed investing or a seasoned veteran, the Best Online Brokers in Canada for 2020 will give you valuable insight into Canada’s ultra-competitive discount brokerage industry, and help you get the most out of DIY investing.

Go here for our full comparison tool of all 12 online brokers to see how they stack up.

Canada’s best online brokers

Here’s a closer look at the top three overall winners.

1. Qtrade Investor

Our No. 1 overall pick in 2018 and runner up in 2019, Qtrade Investor has reclaimed the top spot this year with a score of 25 points. Its superior user experience (made even better this year with a new suite of portfolio analytics tools) and market analysis for ETF investors also makes this online broker the leader in our UX and ETF categories. And, although Qtrade does not place first in every category, it consistently fares well across the board. Fees are competitive, but not the lowest around.

Things we like:

✔ Industry-leading customer service responsiveness

✔ Depth and breadth of market data

✔ Online user experience

✔ ETF investing process

✔ Industry influencer (progressive; dedicated to improving the service for customers) 

Needs improvement:

X Mobile platform could use a refresh 

X Fees and commissions

2. Questrade*

Last year’s overall winner, Questrade, is this year’s runner up with a score of 23 points. Still an excellent option—not to mention our top choice in the categories of mobile experience, initial impression and customer service (be sure to read the reviews below)—Questrade still lags when it comes to the market data it provides. Also, while Questrade’s free ETF purchases appeared on our “things we like” list last year, some competitors have upped the ante with free ETF sales as well, so that’s now a “needs improvement” item.

Things we like:

✔ An industry-leader in customer service responsiveness

✔ Initial impression (transparency on offerings and fees, account opening experience, etc.)

✔ Mobile accessibility

✔ Industry influencer (progressive; dedicated to improving the service for customers) 

 Needs improvement:

X Uses an electronic communication network (ECN), which adds extra per-transaction fees 

X Charges commissions on ETF sell orders

X Depth and breadth of market data

Learn more about Questrade Accounts* >

3. TD Direct Investing

TD Direct Investing, the largest discount brokerage firm in Canada, rounds out the top three for the second year in a row, with a score of 22 points. (Note that the No. 4 broker on our list earned 17 points, followed by a steep drop to 11 points and under for the rest of the firms.) TD’s major strength is the depth and availability of the market data it provides (it’s also our winner in that category), including quotes, charts, technical analysis, research and market notifications. 

Things we like:

✔ Initial impression (good integration of discount brokerage service within bank-based site)

✔ Depth and breadth of market data

✔ Industry Influencer (progressive; dedicated to improving the service for customers) 

Needs improvement:

X Confusing banking/brokerage integration (once user delves beyond the initial impression) 

X Fees and commissions

X Customer service responsiveness

Best online brokers by category

Some online brokers excel in areas that may be important to certain customers. Explore each category below:

• Best online broker for fees
• Best online broker for user experience
• Best online broker for ETFs
• Best online broker for market data
• Best online broker for mobile experience
• Best online broker for initial impressions
• Best online broker for customer service
• More resources
• See our full online broker comparison tool
• Methodology

Best online broker for fees

Much of the marketing you see for online brokerage firms tends to focus on fees—and with good reason. Given that most charge somewhere between $5 and $10 per trade, it’s a massive savings over the $80 to $150 per trade that full-service brokers once charged their clients. 

Unfortunately, those advertised fees don’t always tell the whole story, since they might exclude additional charges that can occur when trading. For example, many low-cost firms charge an ECN (Electronic Communication Network) commission fee of $5 to $40 per 100-share trade. Then there are platform fees for enhanced quote data, which can run investors an extra $30 per month. 

To get a clearer picture on fees, we analyzed more than 13,000 individual trades using 10 different investor profiles. Those profiles were split into five account asset levels, and five levels of monthly trade frequency. We compared fees for stock, options and ETF trades, and also looked at account interest rates and general account fees. 

Of course, it’s important to understand that lowest isn’t always best when it comes to fees. You should also consider what you’re getting for your money. Even if you’re a conservative or passive investor, paying a few extra dollars (or pennies, as the case may be) per trade is worth it the service includes access to free tools and resources such as unlimited quotes and depth of data. Even at $10, an average trade of 500 shares of a bank stock could be hundreds of dollars cheaper than with a full-service advisor, so weighing your “extras” is the key.

1. Desjardins Online Brokerage

Category winner Desjardins not only ranked in the top five for commissions, interest rates, and fees in all the areas we reviewed, it also boasts the best average options commission structure across the 10 investor profiles: $6.95 base + $1.25 per contract. That $6.95 base also applies to equity and ETF trades, but could be as little as $0.75 for more active investors. 

2. National Bank Direct Brokerage

Staying with the Quebec-based firms, National Bank is the runner-up in this category thanks to its aggressive ETF fee structure: zero commissions on all ETF buy and sell orders in both Canada and the US. (Other online brokers either charge commissions on ETF sales and/or have a limited number of inactive ETFs to choose from.) National Bank also offers competitive equity commissions, interest rates and account fees, but it is less economical for options traders.

Best online broker for user experience

User experience, also referred to as UX, covers a broad range of factors that influence how it feels for investors to use an online brokerage service. This includes website/app design, customization features, account management, navigation, notifications and placement of trade orders. 

We’ve found that independent firms, who have more autonomy in building and designing their sites, are typically leaders when it comes to UX. Bank-owned firms, on the other hand, tend to overlook the fact that paying a bill and placing a trade are very different experiences. Moreover, their newest designs seem to be less intuitive and more directed at driving cross-sales, instead of improving overall account management, trading experiences and educational content for DIY investors.

1. Qtrade Investor

Despite an older design, Qtrade Investor is the UX winner given its breadth of data, ease of both locating and using the information, strong trading experiences, easy-to-find usage policies and exceptionally good account management tools. The newest addition to the Qtrade Investor platform, which deserves mention, is its portfolio analytics lineup, Portfolio Score, Portfolio Simulator, and Portfolio Creator.   

2. Questrade

Questrade, our runner-up in UX, has an intuitive online platform with industry-leading customization features and functionality, so investors can tailor their experience to their personal preferences. It’s also a leader for transactional experiences, making it easy for investors to buy and trade equities, ETFs and options. 

Best online broker for ETFs

For decades, Canadians turned to mutual funds for diversification. As regulations changed and fees became more transparent, exchange trade funds (ETFs) became the security of choice. Like mutual funds, an ETF is a basket of investments, but one that tracks an entire market instead of relying on fund managers to select the assets they think will perform well. As a result, the fund management fees (called a management expense ratio, or MER) for ETFs are much lower than for mutual funds. 

Now, with a number of online brokers offering no-fee ETF purchases and/or trades, ETF investing is even more popular. The difficult part, of course, is choosing the right ETFs for your needs, since they range from broad index ETFs, tracking a market index such as the S&P 500; to newfangled work-from-home ETFs, which group together assets expected to perform well during the COVID-19 lockdown, including consumer staples, video games, semiconductors, pharma and biotech. (For a comprehensive guide to choosing ETFs, check out MoneySense’s Best ETFs in Canada for 2020.) 

For this category ranking, we looked at the overall experience of investing in an ETF, including the availability of free product, research (such as screeners and market information) that can help investors with their decisions, and the general experience of placing a trade.

1. Qtrade Investor

Qtrade Investor tops the ETF category mainly because it provides investors with a complete analysis of the ETF market so they can make more informed decisions. It also offers free purchases and sales on a list of 100 ETFs, but these tend to be thinly traded ETFs rather than the most popular ones.

2. National Bank Direct Brokerage

On the flip side, runner-up National Bank Direct Brokerage is more competitive than Qtrade with its free offerings: no-commission buying and selling of all North American ETFs (with minor trading restrictions, including a minimum amount of 100 shares, placing non-phone trades and subscribing to electronic statements). The drawbacks, again in direct contrast to Qtrade, are its research tools and general trading experience.   

Best online broker for market data

We are often asked why we place so much value on market data in our assessments of online brokers. The answer is simple: for DIY investors, everything starts with a quote. When an investor decides its time to buy or sell a security, its price determines the trade contract.

Our evaluation considers the overall experience of obtaining relevant market information, which includes the depth of a quote, general market information, analyst views, supporting charts, industry research as well as both fundamental and technical analysis.

1. TD Direct Investing

Market data has always been a strength at TD Direct Investing, as far back as the 1980s when it forged the path in Canada’s discount brokerage industry as TD GreenLine. Today, an investor can expect superior depth of information for quotes, charting and technical analysis, research, and industry-leading market notifications or alerting. The availability of market data for both individual securities and overall market analysis makes TD our top choice in this category.

2. Qtrade Investor

Our market data runner-up, Qtrade Investor, provides exceptional quote depth and fundamental stock information along with strong interactive charting, technical analysis, and equity research.

Best online broker for mobile experience

The Canadian discount brokerage industry was late to the financial services mobile party, and it still lags behind both its Canadian banking counterparts and discount brokerage firms south of the border. 

With the current sophistication of mobile devices, investors expect to have the same experience on their phones as they would on a desktop or laptop. The days of satisfying mobile users with access to quotes, basic account information and trades are over. Some progressive online brokers do have a near-full account experience via mobile, offering all the same tools and analysis investors would find on their computers. But, in general, most Canadian firms are far from that level.

1. Questrade

The seamless integration between its online and mobile platforms makes Questrade our top choice in the mobile experience category. This platform integration makes the service as robust on a smartphone as it is on a desktop, providing the transactional, account and market data tools and experiences that are missing from most firms’ mobile offerings.  

2. BMO InvestorLine

Despite having an older and sometimes troublesome design, BMO InvestorLine is our runner-up for mobile experience—which perhaps speaks to the industry’s shortcomings as a whole in this area. BMO InvestorLine was one of the original firms to provide mobile capabilities and it continues to be a leader, especially when it comes to strong account and market data via mobile.

Best online broker for initial impressions

As the saying goes, “You never get a second chance to make a first impression.” The same is true for online brokers, who are hoping to capture new business when investors visit their sites for the first time. 

But, how clearly and accurately does a firm portray itself on its public website while trying to sell you on its merits? That’s what this category measures.

We look for informative public sites that fully explain: what an investor can expect if they become a customer, whether they provide free insight into the markets, what the fees are for various trading level and, most importantly, how the process for opening new accounts works. One would think that each firm has the same message, but only a handful of firms really excel in terms of providing clarity and transparency on this critical initial experience. 

1. Questrade

Potential clients who visit Questrade’s site will walk away with a full understanding of the service’s promised experience, making it our category winner. The account and pricing information is clear and easy to navigate, the account opening experience is straightforward and fully digital (no handwritten signatures required), and there are free resources for non-clients, including practice accounts. Questrade’s main drawback is the lack of market information.

2. (Tie) TD Direct Investing and National Bank Direct Brokerage

Sometimes a race is too close to call. Both TD Direct Investing and National Bank Direct Brokerage have done a great job at integrating a discount brokerage firm offering within a bank-based information site, so they tie for runner-up in the initial impression category. Unfortunately,  

National Bank’s account opening process could use some improvement.

Best online broker for customer service

If you ask me, customer service is the key differentiator between firms and should never be taken lightly. In most cases, online investors are not looking for face-to-face interaction, but rather quick responses regarding both general and secure service questions. 

In our analysis, we focused on firms’ average response time to service enquiries over the 12 months ending May 31, 2020, the various types of contact and hours of service provided, as well as service levels for a three-month period (March to May) during COVID-19, to provide a better picture for you.    

(While one could argue that COVID-19 has had a major impact on the current and future state of customer service, our research over the past decade indicates that service levels were dropping well before the world stopped moving.)

1. Questrade

In a repeat of last year’s results, Questrade is again our top choice for customer service. It has shown its commitment to clients with a consistent track record of responsive service (typically under four hours) even through the COVID-19 crisis to date. In addition, Questrade offers live chat and correspondence via social media for investors who prefer those channels.  

2. Qtrade Investor

Runner-up Qtrade Investor nearly tied with Questrade for the category’s top spot; both firms are clear and undisputed leaders for customer service in the discount brokerage industry. You can expect a quick turnaround of three to five hours when you correspond with Qtrade Investor, as compared with 75 to 110 hours for bank-owned firms such as BMO InvestorLine and Scotia iTRADE.

More resources

Looking for more information? You can find detailed reviews of each of the 12 firms on the Surviscor site: just click on the highlighted firm’s name. 

This list is presented in alphabetical order:

BMO InvestorLine

CIBC Investor’s Edge

Desjardins Online Brokerage

HSBC InvestDirect

Laurentian Bank Discount Brokerage

National Bank Direct Brokerage

Qtrade Investor

Questrade

RBC Direct Investing

Scotia iTRADE

TD Direct Investing

Virtual Brokers

Methodology

Surviscor representatives completed a features and functionality questionnaire of nearly 4,000 questions for each firm in the survey, while performing hundreds of typical investor tasks on each individual online platform. They also analyzed the firms’ cost of services over 10 different investor profiles, and reviewed more than 160 service interactions over a 12-month period ending May 31, 2020. 

Each firm was assigned a score based on its ranking within the seven sections of review (5 points for 1st, 4 for 2nd, 3 for 3rd, 2 for 4th and 1 for 5th), and the overall score was the sum of the awarded sections.