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Discount Brokerage Weekly Roundup – May 27, 2016

Discount Brokerage News

May 27, 2016

Published May 27, 2016 11:59 PM

Table Of Contents

    Key points

    Even though the week was technically a shortened one for Canadian DIY investors, there were many who felt it was simply a bit too long (TGIF amirite?). Despite the shortened timing, oil managed to make a brief appearance above $50, Trump managed to make an appearance of wanting to debate a democrat but then changed […]

    Source: Twitter

    Even though the week was technically a shortened one for Canadian DIY investors, there were many who felt it was simply a bit too long (TGIF amirite?). Despite the shortened timing, oil managed to make a brief appearance above $50, Trump managed to make an appearance of wanting to debate a democrat but then changed his mind, and unfortunately for Toronto, they won’t be making an appearance in the NBA finals.  For Canadian discount brokerages, however, appearances on social media this past week illustrate just how important the “online” in online brokerage is becoming.

    In this week’s roundup we take a look at two online brokerages who continue to push contest promotions as markets appear to head into the traditionally slower months. From there, we’ll take a look at another online brokerage that suffered a number of technical outages that left clients having more than a few colourful comments to share online. Finally, to cap off the shortened week, we take a look at reactions of DIY investors on social media and investor forums.

    Look at me now…

    If you happened to be in Downtown Toronto this past week you probably couldn’t help but notice that the excitement in the air. All the attention, however, wasn’t on the Raptors. There were a pair of online brokerages that also found a way to drum up some interest by launching a pair of contests involving frozen treats and bank vaults.

    Scotia iTrade kicked things off by celebrating the one-year anniversary of their ‘new’ downtown Toronto investor centre with offers of free gelato. Fortunately, it was plenty warm enough in Toronto for gelato to be a hit.

    The investment centre, as young as it is, has a history of tying in promotions to get people to visit. When the centre first launched there was a massive promotion that offered free trades AND cash back as opposed to having to choose between free trades OR cash back. The catch was that investors had to come down to the investor centre to get the deal.

    Last year, Scotia iTrade also had a ‘selfie’ themed competition in which movie passes were up for grabs to folks who took a ‘selfie’ in the new investor centre. This year, however, in addition to the gelato giveaway, Scotia iTrade also offered up two free movie passes to individuals who made an appointment with one of their investment representatives. Interestingly, the total face value of the two passes ($24.98) is just shy of their standard commission price per trade.

    In addition to these promotions, Scotia iTrade is also running a “shopping spree” themed contest that’s offering up a prize of $10,000 in TSX listed securities. And in case you didn’t see it, Scotia iTrade is also on the BNN ticker for BNN’s beta version of the new website and they’ve been broadcasting their promotions in online ads as well as on Twitter (to which there have been some interesting replies from Twitter followers).

    Like the temperatures in Toronto this past week, Scotia iTrade is turning up the heat on its competitors.  By marketing more aggressively and running promotions across their social media channels, it’s clear that iTrade is looking to get out in front of their competitors during a traditionally slower time in the markets.

    But they weren’t the only ones working hard heading into summer. Not too far down King St W another online brokerage, in this case National Bank Direct Brokerage, also held an interesting competition to attract the attention of local passersby.

    No stranger to contest-driven promotions, National Bank Direct Brokerage was offering up a heftier prize of $5,000 towards an investment account. The catch – individuals had to sign up for a webinar/seminar with National Bank Direct Brokerage.

    In comparing these two discount brokerages’ approach to running promotions, how they each advertised their respective contests on social media was actually quite interesting.

    On the one hand, Scotia iTrade has its own Twitter account – which is independent of the Scotiabank twitter handle.  As a result, there was more specific promotion as well as greater coverage of the current promotion by Scotia iTrade on Twitter than there was for National Bank Direct Brokerage.

    Source: Twitter

    In fact, by comparison, NBDB did not appear to broadcast this event widely on social media, although the National Bank Direct Brokerage LinkedIn page did get more attention, it seems, than the message put forward on Twitter.

    Source: LinkedIn

    Why this is important, not only for brokerages but also for DIY investors is because individuals are increasingly spending more time on different social media channels. In particular, millennial investors – the ones who represent the largest and most important demographic that would take on DIY investing, will increasingly be judging how well (or poorly) brands are using technology platforms as a component to deciding who they wish to park their business with. For “online brokerages” claiming technological supremacy means they not only have to walk the walk, but they also have to talk the talk.

    Technical Foul

    This past week, there was a lot of attention being shone on one of Canada’s largest discount brokerages: TD Direct Investing for a series of outages that clients experienced on the trading platform WebBroker. Often, investors and traders are trying to take advantage of particular moments in the market, so when a platform goes offline, tensions mount.

    Unfortunately for TD Direct Investing this week, those tensions boiled over when numerous clients experienced trading platform outages and then took to social media and forums to voice their discontent (see our tweets of the week for full details).

    What was especially interesting to see was personal finance expert Rob Carrick weigh in on Twitter. As a response to several messages from users, Carrick tweeted to TD Direct Investing asking “Yo, @TD_Canada – Am receiving reader complaints about persistent problems getting access to the TD Direct Investing website. What’s up?”

    Source: Twitter

    While veteran DIY investors of every platform or provider know that outages can and do happen, the resources available to Canada’s major bank-owned brokerages (TD reported a profit of $2B this past fiscal quarter alone) mean that there is very little in the way of sympathy or patience for things to work right.

    After all, if there’s one thing the parents of Canadian bank-owned online brokerages have, it’s money.

    And, with the kinds of resources that kind of funding should buy, it’s a great example to DIY investors, that outages can happen anywhere or to any broker – big or small. The more important question DIY investors need to know the answers to is how effectively online brokerages prepare for and handle the mini-crises that inevitably will arise as trading relies more and more on technology.

    Discount Brokerage Tweets of the Week

    This week the big green (TD Direct Investing) was getting turfed by DIY investors for trading outages. Interestingly, Questrade didn’t miss the opportunity to try and reach out to unhappy TD Direct Investing clients and offer them a friendly (and functioning) alternative. Curiously, TD Direct Investing hasn’t yet responded in kind to the Questrade clients expressing concerns/complaining. Mentioned this week were Questrade, Scotia iTRADE, and TD Direct Investing.

    From the Forums

    Diamonds in the Rough

    While bill payments aren’t a thing (yet) for most Canadian online brokerages, this post, from Canadian Money Forum, appears to reveal that certain account tiers (i.e. diamond level) may have access to this bill payment feature already.

    Making a Fee Statement

    With more regulations on fee disclosure coming into full force, Canadian investors should be getting a clearer picture of what kinds of fees they pay to their financial advisors and fund products. Of course, according to this post from RedFlagDeals.com, not everyone will be interested even if they are paying ‘high fees’.

    Into the close

    That’s a ‘Rap’ for this shortened Canadian trading week. It was an exciting run for the Raptors but alas they too will be heading into the weekend with a lot more time on their hands – time enough to catch up on their Game of Thrones. Whatever the adventures you may get up to, have a wonderful weekend and a quick reminder US markets closed on Monday for Memorial Day so expect lighter than normal trading volumes.

    Online Brokerages Mentioned In This Article

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