Now that spring has sprung, it’s time to dive right into the next season head first. For online brokerages, after RRSP season comes tax return season. Judging by the response so far to the next busiest time of the year after RSPs, it seems like most Canadian discount brokerages are now shifting gears to figure out their next moves.

We kick off this edition of the roundup with a review of the deals and promotions scheduled to expire at the end of the month. From there we highlight some interesting email newsletters from a pair of online brokerages that prove that e-mail can still hold its own in a social media world. Next, we profile an important strategy document released by one of Canada’s regulators that maps out how to better protect senior investors. Finally, we close out the roundup with a review of the buzz on Twitter and in the DIY investor forums.

Deals Melting Away

The end of March is just around the corner. And, while it signals a positive sign for warmer weather, it won’t only be snow that’s melting away. At the end of March, there are three discount brokerage promotions that are set to expire as well as one from BMO InvestorLine at the beginning of April. Desjardins Online Brokerage did have their commission-free trade credit offer set to expire at the end of March however it has been extended out to May 31^st.

That will take the total number of advertised offers down to 19 if there are no replacement offers planned.

Here’s a list of deals that are set to expire at the end of March:

• HSBC InvestDirect Cash Bonus & Transfer Fee Coverage (expires March 30)
• Virtual Brokers Discounted Commissions (expires March 31)
• BMO InvestorLine Cash Bonus & Transfer Fee Coverage (offer expires April 1)

Interestingly, our internal data reveal that online investors are very interested in offers from Canada’s bank-owned online brokerages.  The two bank-owned online brokerages with current offers that are attracting attention from visitors are BMO InvestorLine and National Bank Direct Brokerage.

We’ll be watching to see what, if any, offers are replaced or extended heading into April.

It’s a good sign for DIY investors that Desjardins Online Brokerage has already extended their signature commission-free trade offer through to the end of May and, based on the data from early 2018, there’s a good chance that more extensions and new offers will not be far behind next month.

Trade the News-letter

Interactive Brokers Mines Shareholders for Clients

This week there were two interesting email newsletters from online brokerages that proved email marketing is still a viable method of reaching out to online investors, even in a world cluttered by social media feeds and fragmented sources of information.

The first interesting development was observed in a shareholder letter/newsletter from Interactive Brokers in which a letter from founder and CEO, Thomas Peterffy, provided some unique insight into why Interactive Brokers sought to go public.

According to the letter, Peterffy stated “We went public to raise our profile and as an adjunct to our marketing efforts, in the hope of gaining more customers who would help us become better at servicing them.” It does take quite a bit of effort and consumes resources to go public as well as maintain a listing – reasons perhaps why some of Canada’s non-bank-owned brokerages never saw the need to follow suit. What was particularly noteworthy about this e-mail, however is the direct appeal to become a client before considering to be a shareholder – which is a particularly bold move and perhaps very savvy marketing move.

For all sorts of reasons, the ability to reach out to shareholders is a clever marketing tactic that appeals, likely, to individuals who invest, who know the brand, who are willing to read the notice and who stand to benefit themselves if they also become clients. In terms of marketing and sales, this is a huge coup since the cost of trying to reach, let alone convert, online investors in the US market is quite high. So, not only did Interactive Brokers benefit from being able to raise their profile by being in public markets as a publicly traded firm, this also enabled them the opportunity to market directly to shareholders – many of whom would be ideal target clients and users of their service.

And, whatever Interactive Brokers is doing, seems to be paying off as they were also just crowned the best online brokerage in the US by Barron’s annual ranking of US online brokers.

As with all developments in the US online brokerage space, we often wonder whether something similar could happen with an online brokerage here in Canada.

Could an independent online brokerage like Questrade, for example, simultaneously tap the public markets by going public themselves and open up an entirely new and low-cost marketing channel by advertising directly to shareholders?

Whether or not they need or could efficiently deploy any capital raised from public markets is a separate question altogether, but the benefit of the capital would certainly help fund the scale required to compete against larger peers. And, if Interactive Brokers is any indicator, being public has enabled them to transparently showcase their success quarter after quarter which is the kind of marketing that investors of all stripes can get behind.

Scotia iTRADE Pushes Education

Also spotted in our inboxes this week was a newsletter from Scotia iTRADE which highlighted their shift to focusing more attention on their help/support and educational resources. In the world of DIY investor education, we typically break things down into two major categories of investor education, so it has been interesting to observe Scotia iTRADE build resource and capacity in the ‘education’ space.

The first type of ‘education’ is product orientation, which, simply put, helps clients understand how to use the tools, platforms and features of a particular online brokerage’s service offering. The second category is information about investing itself. So, this latter category refers to topics such as technical analysis, how ETFs or options trading might work etc.

In last week’s roundup, we mentioned that there has been a shift in the way DIY investor education has been delivered by Canada’s online brokerages. In many respects, there’s been a pullback in the resources online brokerages are allocating to orientation and education, and the kind of resources now available are typically video recordings or documents rather than live help sessions or in-person seminars.

As such, it was interesting to see Scotia iTRADE’s latest newsletter on investor education as it is a clear signal that unlike many of their peers, they are continuing to invest in marketing their educational offering as a cornerstone feature to their brand.

In both instances with Interactive Brokers and Scotia iTRADE, it’s clear that email communication with clients is still very much alive and well as a channel to choose from however (and this applies to social media too) being consistent and reliable with producing this content isn’t easy. Scotia iTRADE is making strides in the right direction when it comes to marketing itself and highlighting some of their key differentiators. For their existing clients, this is an important thing to do to keep clients from peering over the fence at what other brokerages are doing. More interesting for Scotia iTRADE, however, is for those clients who do have additional accounts elsewhere to see how competent and interesting Scotia iTRADE might be at delivering updates and talking about feature enhancements.

Strategy for Senior Investors

This past week, the Ontario Securities Commission published its Seniors Strategy (OSC Staff Notice 11-779) that outlines the securities regulator’s vision for evolving the regulatory landscape to better service a growing segment of the Ontario (and Canadian) population – older adults.

The strategy document is fairly comprehensive in its approach, drawing on extensive research of literature and best practices from countries around the world, as well as from research conducted in Canada on the financial profile of older and aging Canadians and by consulting with many experts and seniors advocacy groups. The result of this work is a lengthy but important document that will help to inform the approach of securities regulators and the financial services sector in Canada in doing more to provide important safeguards for older investors.

Some of the concrete steps recommended in this report include:

1. Requiring that registered firms and their representatives make reasonable efforts to obtain the name and contact information for a client’s trusted contact person if there’s a concern about a client’s behaviour or transactions in a client’s account;
2. Enabling registered firms and their representatives to place a temporary hold on disbursements from a client’s account.
3. Enhancing outreach activities to provide tools and resources for older investors, their families and caregivers who support them.

Importantly the report recognized that labels such as ‘seniors’ aren’t reflective of a homogeneous set of attributes and there is a lot of complexity that accompanies the intersection of aging and financial well-being.

It was an interesting week for this report to get published as this week also saw the publication of a somewhat scathing report from the Financial Consumer Agency of Canada (FCAC) regarding the lack of sufficient controls at Canada’s biggest banks to ensure clients are getting their best interests served ahead of the banks that the front line employees represent.

This is especially important given some of the data published in the report, in particular that:

“Low financial knowledge makes the roles of registered firms and their representatives even more important to helping older Canadians meet their financial goals. Investing As We Age found that a majority of investors aged 65 and older work with at least one registered firm; research has also found that registered firms and their representatives have a significant influence on their clients’ investment choices, and that investors working with a registered firm place significant trust and confidence in that firm and its representatives.” P17

For Canada’s online brokerages, it is an interesting prospect to consider how they can more effectively and appropriately consider serving older adult clients.

For starters, understanding that clients have differing needs means that the attributes of a clients will factor more prominently into how services are delivered and potentially what kinds of products or services individuals may have sent to them (e.g. via marketing emails).  Additionally, how materials are prepared, the user experience in the online platforms, the statements and account performance summaries and potentially even the stock screeners, picks and trades that individuals can execute (or allow to be executed on their behalf) could see changes made based, in part, on the findings and recommendations from this study. Could ‘safety’ settings, for example, be in place on stock screeners or cautionary labels be put in place that would apply specifically to older investors?

For DIY investors, the strongest recommendation still continues to be caveat emptor when it comes to choosing an online brokerage. While some folks take the position that there isn’t that big of a difference between online brokerages to entail worrying over which one is the best, the data show that the ‘right’ brokerage is one that meets an investor’s needs rather than one that tries to sell a client on features they do not.

As such, an important step in the DIY investor journey is to determine what those needs are prior to signing up for an account. The forum post below provides an interesting example of this for one DIY investor looking to switch online brokers. For observers, the difference between online brokerages might not be important today, however as this report outlines, as needs change, it is important to be with a service provider that can keep up and keep the client in mind.

Discount Brokerage Tweets of the Week

With tax season now upon us, there was an uptick in tweets about getting accounts and documentation in order. Mentioned this week by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

Discount
Brokerage Tweets – Curated tweets by angeloAtSparx

From the Forums

Market Order

Many investors firmly believe that buying the basket of stocks listed on major indices, such the S&P 500, is an easier approach than trying to pick individual stocks. Of course, picking individual brokerages might not be as easy. One way to figure out which one discount brokerage to choose when attempting this strategy is to crowdsource. This post, from reddit’s Personal Finance Canada thread, highlights several discount brokerages online investors use to keep fees low when buying the market.

Investor Scorned

There are threads about choosing an online brokerage, and then there are threads about choosing an online brokerage. This post, from the Financial Wisdom Forum, offers a fascinating look at how experienced and knowledgeable DIY investors undertake the process of moving brokerages. There’s actually so much information in this post that it is well worth the time to read. It’s especially informative to see that even long-time service providers can fumble the ball to the point that a client wants to try something different.

Into the Close

So, with all that’s going on in the news and markets now trying to price in a number of different, challenging scenarios, Friday really couldn’t come fast enough. That said, there’s really no rhyme or reason for the Trump media train to stop or slow down. It is already turning into another incendiary weekend so don’t forget to ignore the doom and gloom and try to enjoy the weekend. Spring is here after all.

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  Online Brokerage Weekly Roundup – April 20, 2022

  Discount Brokerage News

  April 20, 2022

  In this Roundup, we take a look at the interesting information emerging around one bank-owned online brokerage that has remained remarkably quiet about what they’re working on. Also, we share information about an upcoming webinar on getting started with online investing.

  Read More >

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  Online Brokerage Weekly Roundup – April 10, 2022

  Discount Brokerage News

  April 10, 2022

  This edition of the Roundup looks at unusual behaviour in the deals and promotions section, zeroing in on one bank-owned online brokerage’s uncharacteristic decision to pause an already live offer. Also we highlight the new website launch of a previously household name to see what a chance at a new start could offer in terms of opportunities to connect with new audiences.

  Read More >