Table Of Contents

    Key points

    What do shows like Big Bang Theory, Dancing with the Stars and Sons of Anarchy have to do with Canadian Discount Brokerages? Well, if you guessed fall ratings then Bazinga! Finding the right metric to judge the ‘best TV show’ is easier in some respects than finding the “best online brokerage”. As we move into […]

    What do shows like Big Bang Theory, Dancing with the Stars and Sons of Anarchy have to do with Canadian Discount Brokerages? Well, if you guessed fall ratings then Bazinga!

    Finding the right metric to judge the ‘best TV show’ is easier in some respects than finding the “best online brokerage”. As we move into the unofficial ratings season for the brokerages, however, prepare for all kinds of plot twists.

    In this week’s roundup, we take a look some of those twists, first by reviewing the latest online brokerage rankings to be published. Next we take a look at the interesting news coming out of the wealth management space with a major move by one online brokerage stepping out of the frying pan and into the fire. Finally we take a quick tour through the investor education events being held in late November and close out with a couple of interesting brokerage-focused forum discussions.

    Best Online Brokerage Rankings Kick-Off

    For consumers, when evaluating who Canada’s best online brokerage is, it is essential to understand the ranking system used. As we’ve highlighted in the past, there are several rankings and ratings that each measure and define “best online brokerage” or some variation of “best” (like “top” or “#1”) in many different ways.

    Surviscor 2014 Rankings of Canadian Online Brokerages

    This past week, financial services ratings firm Surviscor released their latest edition of rankings of Canadian online brokerages. BMO InvestorLine ranked the highest according to the Surviscor criteria (earning a score of “90%”), followed by Scotia iTrade (“84%”) and then Credential Direct (77%). As we’ve done with other rankings and ratings of Canadian online brokerages, we drilled down into the the scores and stats for a better picture on what these results tell us.

    One of the first things that jumped out was how everyone else did in the rankings. The average score of the group was 68% with the standard deviation coming in at just under 16%. What does all that math mean (no pun intended)?

    The rankings for the whole field show there are many companies clustering around the average score. We interpret this to mean that most of these companies are pretty close to one another except for some very clear outliers (to the downside): Laurentian Bank’s discount brokerage and HSBC InvestDirect (which interestingly placed near the top in Dalbar’s rating for client service but near the bottom when evaluated by Surviscor).

    When we dropped these two firms from the rankings, the distance between first and last narrowed substantially and the differences between the online brokerages became even less numerically significant. For example, the difference between 3rd place and 8th was a difference of 7%.

    With a race this close, small changes in features, especially those that impact the heavily weighted categories within this evaluation could have an outsized effect. For example, account services, cost of services and getting started are collectively responsible for 60% of a firm’s result.

    Also, with changes happening constantly taking a snapshot of who the “best” online brokerage is (or was) as of a certain point in time of the year doesn’t necessarily hold true several months down the road.

    So, while BMO InvestorLine did score well in this analysis, their victory may be short lived. There are already changes within their own firm as well as with their competitors that could disrupt those results at any moment.

    Handling Change

    While they were alluding to something big last week via social media, this past week Questrade officially launched their new wealth management division and reconfigured their website in the process.

    Questrade has officially added managed wealth into their service mix, and in doing so, has definitely got the attention of brokerages big and small.

    There are many angles to this recent announcement that can’t be squeezed into the roundup – so stay tuned for more perspective on Questrade’s recent move. One that stands out is that Questrade has been incredibly busy pulling together information for this launch, which has seen them go on an all out social media blitz on YouTube, Twitter and Reddit.

    So, even though the headline here is definitely the shift into a new service line, one of the more curious aspects is their marketing and communications.

    Questrade has assembled a lot of videos and content related to their products and services, as well as positioned themselves across many online (and traditional) channels. The scale of this effort is something that even the larger bank-owned brokerages are having trouble contending with.

    What this means for online brokerage consumers is that they will likely be seeing Questrade in more places than ever before. The challenge, however, is going to be establishing and communicating what Questrade should now be known for as the shift away from being known for DIY investing exclusively has pitted them against an even wider field of competitors.

    Event Horizon

    November closes with an flurry of educational events. Enjoy.

    Nov 25. (Tue) NBDB – Introduction to technical analysis: Trends – [Fr]

    Nov 25. (Tue) Scotia iTrade – Leveraged and Inverse ETFs with Horizons ETFs

    Nov 25. (Tue) NBDB – Technical analysis – [Fr]

    Nov. 26 (Wed) NBDB – Day Trading – [Fr]

    Nov. 26 (Wed) Scotia iTrade – Introduction to Canadian ETFs and ETF Options with Montreal Exchange (online)

    Nov. 26 (Wed) TD Direct Investing – Introduction to Fundamental Analysis

    Nov. 26 (Wed) Desjardins Online Brokerage (Disnat) – Trading ETFs with Desjardins Online Brokerage

    Nov. 26 (Wed) TD Direct Investing – Options as an Income Strategy

    Nov. 26 (Wed) TD Direct Investing – Do-It-Yourself Investing for Women

    Nov. 27 (Thur) NBDB – Introduction to technical analysis: Supports and resistances – [Fr]

    From the Forums

     On Cue

    Although this is not one of the most popular comparisons, it was worth mentioning for two reasons. First, it’s an example of brokerages being compared head to head but also of where one brokerage is prepared to venture into so that they can reach those interested in their brand.  Check out this post for an interesting comparison of Questrade vs Qtrade and the comments (and commentators) on each.

    Calculated Move

    So, it seems like everyone is talking about Robo-advisors.  And, as they start to make their presence felt here in Canada, this post from the reddit personal finance Canada thread showcases one attempt to start comparing them.  Again, it looks like Questrade is all over this Reddit section with their newly released portfolio IQ figures in hand.

    That’s a wrap for this week’s roundup.  It’s been an exciting week all around and for those who’ve made it this far, here’s a little treat from 30 Rock’s Tracy Jordan on how to handle this (and every) week ahead.  Have a great weekend!