Our 2019 ranking of Canada’s Best Online Brokers is live—click here to read.
The MoneySense annual ranking for Canada’s Best Online Brokers is produced in a partnership with Surviscor Inc., a leading research and business intelligence company. Glenn LaCoste, the company’s CEO, assisted in putting the package together.
The rise of consumer awareness of the impact of high investment fees and commissions has driven the growth both of Exchange Traded Funds (ETFs) and of online or “discount” brokerages. So it’s no coincidence that over the last six years, MoneySense has delivered the definitive annual surveys of both the best ETFs (see MoneySense ETF All-Stars 2018) and Canada’s Best Online Brokers (see our updated MoneySense Best Online Brokers ranking for 2019 and use our updated tool to compare the features of 13 online brokers).
Keep in mind the evolution of discount brokerages. In the early days, the raison d’être was to offer investors a way to avoid the very high commissions used by full-service brokers routinely on the purchase and sale of individual stocks.
Younger investors conversant with ETFs and ETF-focused robo-advisors may not have ever experienced the costs of old-time traditional stock brokerage. Today, most discount brokerages charge between $5 and $10 a trade and of course the deal is that comes with no explicit advice. You won’t get access to a human advisor to talk you out of buying a stock that might torpedo your portfolio.
It’s a competitive space and the online brokers have improved their offerings, technology and service over the years. All manner of research and tools have been made available to make better decisions and at least help investors protect themselves from their own worse enemies—themselves. Products, too, have improved; we witnessed the rise of low-cost diversified ETFs, and the introduction of lower-cost “D” series mutual funds.
For this sixth annual report, we looked at 12 firms, covering the gamut of the big bank-owned brokerages to independent online outfits. Note that Credential Direct is now part of the Qtrade family and current Credential clients will be asked to open Qtrade accounts by the fall. (Desjardins, the CUMIS Group and Canada’s five provincial credit union centrals agreed last year to merge their Credential Financial Inc., Qtrade Canada Inc. and NEI Investments subsidiaries.)
Best Overall Online Brokerage
Qtrade Investor and Questrade continue to be neck-and-neck for the coveted number 1 overall position. In 2017 Qtrade edged out Questrade because of a few improvements, and the same result occurred this year. As you go through the separate categories you’ll see both firms often place in the top three spots: five for Qtrade and four for Questrade this time around. Qtrade was first in two categories, second in another two, and third in one; while Questrade was first in one category, second in two categories and third in one.
Critically, Qtrade was number one in customer service (now called Service Interaction) and has no real holes in any of our categories. It was second in “Best at ETFs,” while Questrade didn’t place in the top three in that increasingly important category. Surviscor president and CEO Glenn LaCoste describes Qtrade as a progressive firm committed to continual improvement.
But Questrade is right up there, starting with the top spot in Initial Impressions, second in the key “fees and commissions” category, and third in customer service. It also came second in our new category of Mobile Accessibility, edging out Qtrade, which was third in the category.
For a quick overall take on the best and worst features, we direct the reader’s attention to the Best Features and Buyer Beware rows near the bottom of our Full Table.
- Qtrade Investor – 22 pts
- Questrade – 21 pts
- iTRADE – 14 pts
- BMO InvestorLine – 14 pts
Of course, as it is with everyday banking, Canadians often have a tendency to default to using the online brokerage operation of the bank with which they do their day-to-day banking business. That’s the case personally, as one of the two bank-owned discounters we use is also our primary bank: it’s certainly convenient to move funds between investment accounts and your chequing account, and I don’t feel we are missing too much.
Even so, without the baggage of long usage and familiarity, there’s little doubt someone looking at the whole online brokerage universe from scratch can probably do better than defaulting to whatever bank you currently do business with. Not all these firms provide commission-free ETFs, for example, or robo-advisor services.
Certainly they don’t all provide access to low-fee actively managed mutual funds like Leith Wheeler, Mawer or Steadyhand, which don’t pay the brokerages trailer or “service” commissions. If access to those low-fee funds is important to you, ask specifically if they are available through the firm you are considering using. It should be noted that the discount firms are no longer allowed to provide ‘robo’ services under their self-directed umbrella but some do continue to offer ‘guidance’ portfolios that have been around for many years.
Go to the web site of any of our 12 firms – below we provide full links to the Surviscor pages on each – and they will be quick to tell you what they’re offering, but not always what they are NOT offering. That’s the role MoneySense and Surviscor strive to take here.
They don’t call the target customer of these firms DIY (Do It Yourself) for no reason; to a large extent, online users are on their own in their day-to-day trading activities, although most of the firms do have help lines when facing particular issues, often tax- or currency-related.
That’s why customer service is still an issue, and Surviscor’s survey shows a wide disparity in service. Early this year, it was a major issue when the popularity and trading volumes on marijuana stocks and cryptocurrency issues jammed access, resulting in opportunity losses in at least one or two of the major bank-owned discount operations. Delays of a few hours can cost investors plenty.
READ: Best U.S. ETFs for 2018
Whether your chosen vehicles are investment funds or individual securities, or a combination of both, Canadian investors have a solid dozen alternatives when it comes to choosing an online or discount brokerage. Of course they also have the full-service brokerage route available to them, as well as Investment Counsel or using an investment adviser who sells mutual funds.
Canada’s banks dominate this sector, as they do so much of the rest of the economy and financial services industry. If convenience and one-stop shopping is what drives you, we can understand the argument for choosing the discount brokerage offered by your particular financial institution. But as Surviscor’s extensive research demonstrates, there are many reasons to consider some of the independent brokerages that placed highly in this report.
Also, consider that there’s no rule saying you can choose only one such firm. At least one of this report’s authors uses two and if the glitches that occurred at the start of the year clearly demonstrated, there is some risk in having all your investment eggs in a single brokerage basket. If you’re in this category, perhaps in a bank-owned operation, this report can serve as your portal into diversifying into one of the many fine independents.
The survey methodology is based on MoneySense-specific categories based on Surviscor’s latest mobile and online reviews. There are seven main categories reviewed, with 43 separate criteria, with industry rankings in each based on Surviscor data. Customer service data was logged between April 2017 and March 2018, a total of 169 records.
The MoneySense results are based on a 5-point rating system that awards 5 points to the first-place finisher in a category, 4 points for second, 3 points for third, 2 points for fourth, and 1 point for fifth place.
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
- RBC Direct Investing
- Scotia iTRADE
- TD Direct Investing
- Virtual Brokers
We have tweaked some of the questions to stay relevant, particularly as they relate to ETFs and robo-adviser or robo-like services. And we’ve added a new category on Mobile Accessibility, which reflects the rising trend to trading on mobile devices. In some categories, we have reworded the survey questions that were posed the previous year but they cover similar material: for example, “Getting Started” from 2017 now reads in 2018 as “Initial Impression.”
Good luck and happy online investing!
MORE ABOUT ETF ALL-STARS 2018:
- Best ETFs 2018 – One-stop portfolios
- Best international ETFs for 2018
- Best fixed income ETFs for 2018