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Finding a good broker is a difficult task. To help, we've collected a wealth of information and provided quantitative comparisons of a variety of Canadian discount brokerages. However, the qualitative aspects of the broker-client relationship should not be discounted. Factors other than cost should be considered when choosing a good broker.
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Broker News
| Beware of fees | ||
| "Insult is about to be added to the injury done to your investment portfolios in the past year. With the value of your account falling, you may find yourself paying higher commissions to trade stocks, as well as miscellaneous fees from which you were previously exempt. Not convinced on the merits of putting money into the markets right now, with share prices knocked way off their peaks of last summer? Now you have the additional motivation of being able to avoid parasitic fees by reinflating your depleted account." [11/12/08] | ||
| Qtrade retains crown | ||
| "Now to the question of which brokers are best. Qtrade Investor, a small firm out of Vancouver, has taken top spot for the third straight year, while BMO InvestorLine, E*Trade Canada and TD Waterhouse also scored well. Qtrade is an example of a broker that does almost everything well. Whether it's keeping costs low, providing tools that help investors make smart decisions or offering a sturdy trading platform, Qtrade has it covered." [10/25/08] | ||
| Financial advisers vs. academia | ||
| "Do investors need financial advisers? Not according to some university professors and other researchers. Financial advisers say they have the expertise to guide investors to better results and can keep them from making mistakes such as under-diversifying, chasing hot funds/stocks, and selling out at the bottom of a bear market. However, empirical studies carried out by academics find otherwise. Let's take a look at three." [08/29/08] | ||
| Scotiabank to buy E*TRADE Canada | ||
| "Scotiabank will purchase E(*)TRADE Canada for USD$442 million (approximately C$444 million), subject to regulatory approvals. The completion of today's announcement will double Scotiabank's footprint in the Canadian online investing market." [There goes another independent broker.] [07/14/08] | ||
| London 'cityboy' unmasks world of analysts | ||
| "As a utilities analyst at Dresdner Kleinwort, Geraint Anderson was advising clients how to invest. At the same time, through an anonymous London newspaper column, he was telling readers how analysts wrote 'utter gibberish.'" [06/20/08] | ||
| Fee-only must mean just that | ||
| "Canadian financial planners should eliminate the ambiguity by scrapping the phrase "fee-only" when charging fees computed as a percentage of client assets. Instead, they should use the term "asset-based," which is far less confusing for clients." [04/29/08] | ||
| Find the right broker for you | ||
| "Your next stop is the Stingy Investor website. (Go to www.ndir.com and search for Canadian discount brokers). It's run by Norm Rothery, chief investment strategist at Dan Hallett & Associates Inc. Here you can find up-to-date comparisons of the fees and commissions charged by 15 Canadian online brokerages (as well as phone numbers and email addresses). What you pay usually depends on how many trades you make per quarter or year, how many shares you buy at a time and how many dollars you have in assets at the firm." [04/14/08] | ||
| Beware: A 'safety net' full of holes | ||
| "Regardless of what they're called or the advantages they claim to offer, these products have two things in common: very high commissions for your adviser and, thanks to fees averaging about 2% to 3% a year, very low returns for you. And you often have to pay a surrender charge, or exit fee, of 6% or more if you want to withdraw the money in the first six to eight years. Another feature you'll commonly find with these safety nets is confounding complexity. I've had plenty of clients who signed disclosure forms stating that they had read and understood the 473-page policy, yet they still had no idea what they were buying." [04/02/08] | ||
| Do-it-yourself broker | ||
| "Individual investors continue to flock to online investing as a low-cost alternative to full-service brokerage accounts. As of December, 2007, Canadians had $179-billion invested in online or discount brokerage accounts, according to Investor Economics Inc. That's no trivial amount, although it's still dwarfed by the $720-billion stashed in full-service accounts, says senior consultant Guy Armstrong. "We're still predominantly an advice-oriented society."" [03/28/08] | ||
| Online brokers: Sizing up your RRSP options | ||
| "Investors of all types can benefit from an online broker, be they conservative types who prefer bonds and GICs, aggressive stock traders or middle-of-the road types who want stocks, bonds and mutual funds. The challenge is to find the broker that best fits your needs. To that end, Portfolio Strategy has evaluated 13 online brokers to find the best choices in six areas relevant to RRSP investing." [02/05/08] | ||
| Online upstart stands out | ||
| "An upstart online brokerage has bested the bank-owned competition in addressing one of the biggest complaints investors have about stock trading. Questrade Inc. will announce on Monday that clients can hold U.S. dollars in their registered retirement accounts. The industry norm is to allow only Canadian dollars in registered accounts, which means costly currency conversion charges are often unavoidable for investors who buy and sell shares listed on U.S. exchanges." [01/10/08] | ||
| Qtrade wins again | ||
| "Investors have the online brokerage business right where they want it. To start with, stock-trading commissions are plunging. After years of being stuck in the $24-to-$29 range, more and more brokers are charging just under $10 as long as your accounts have at least $50,000 to $100,000 in total assets. At the same time, these firms are giving clients more for their money with better tools for finding investments and managing their accounts." [10/07/07] | ||
| TD Ameritrade suffers database breach | ||
| "TD Ameritrade Holding Corp. said Friday one of its databases was hacked and contact information for more than 6.3 million customers was stolen. A spokeswoman for the Omaha-based brokerage firm said more sensitive information in the same database, including Social Security numbers and account data, does not appear to have been taken." [09/14/07] | ||
| The high price of free insurance | ||
| "Typically, those who sell policies receive about 20% to 30% of the death benefit. For a $1 million policy belonging to someone with a life expectancy of seven years, a purchaser might pay $250,000, says Adam Balinsky, a partner at Baker & McKenzie in Toronto. But after paying various fees to middlemen that buy policies, the seller would be likely to take home only about $150,000, he calculates. From those proceeds, the seller would have to repay the loan plus various lender fees and interest of 12% to 18%. In the end, the insured might only net about $42,000, Balinsky figures." [04/23/07] | ||
| A buyer's guide to online brokers | ||
| "This year's Globe and Mail survey of online brokers for RRSP investing includes 15 firms and it focuses strictly on services delivered over the Internet. All the usual players are here, from BMO InvestorLine to TD Waterhouse, but there are three newcomers as well. DisnatDirect, Questrade and TradeFreedom mainly target aggressive stock traders, but they're increasingly reaching out to more mainstream investors who focus on stocks." [02/10/07] | ||
| Saving Mom from annuity pitches | ||
| "Have you ever heard the expression "to a man with a hammer everything looks like a nail"? Well, some financial advisers who make a good part of their living selling annuities see variable annuities as the answer to virtually every client's financial needs. Looking for tax-sheltered returns? A variable annuity will do the trick! Retirement investment? Can't beat a variable annuity! Looking for safety and guarantees? I've got just what you need - a variable annuity!" [12/08/06] | ||
| E*Trade raises the stakes with high-rate offering | ||
| "E*Trade is fighting the dominant, bank-owned discount brokers for market share in Canada and it already slashed the cost of trading stocks to as low as $9.99, compared to as much as $29 elsewhere. Now, it's offering a solution to a quandary faced by virtually all investors: How do you squeeze a decent return from the cash in your brokerage account in a low interest rate environment? E*Trade will announce a new offering today called the Cash Optimizer Investment Account, which carries a rate of 4.15 per cent for Canadian-dollar balances and 4.75 for U.S. dollars. There are no fees of any kind or any minimum deposit." [11/22/06] |
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A Dan Hallett and Associates Inc. publication. Norm Rothery, Ph.D., CFA, is the Chief Investment Strategist at Dan Hallett and Associates Inc. (DH&A) and the founder of StingyInvestor.com. DH&A is registered as Investment Counsel in the province of Ontario. Norm, DH&A, or related-parties may have an interest in the securities mentioned. More...