Discount Brokerage Weekly Roundup – January 24, 2014

Online brokerage marketing departments are madly working away this JanuaryThe temperatures are down. The loonie is down. The markets are down.  And while it seems like the “polar vortex” was busy cooling things off this past week, the action at the marketing departments of Canadian discount brokers was heating up.

In this week’s roundup, we cover the reaction from several online brokerages to RBC Direct Investing’s big price drop as well as where the new battleground for brokers appears to be emerging. In addition, we’ll also take a look at what was buzzing in the investor forums.

Price vs Value

The major announcement by RBC Direct Investing regarding their change in commission pricing has been making waves across the industry and with self-directed investors.   Now that a major Canadian financial institution has decided to lower (and simplify) their pricing structure, both the independent brokerages and the bank-owned brokerages will have to decide how best to respond.   For some, it will be with lower prices whereas other online brokerages will try to demonstrate the value of their customer service, new features or trading platforms.

Look at Me Now

Take for example, the announcement from Questrade. Even though earlier this month they had already reduced their minimum trading commissions for their active trader plan from $0.95 down to $0.01 (to match Virtual Brokers’ announcement last year), they nonetheless put out a press/marketing release reaffirming their traditional position as a low-cost online trading option.   Similarly, BMO InvestorLine also took to the news/marketing release to inform Canadians that a large portion of investors use technology to improve their lives and that they consume investing information online.  In addition to mentioning the technological strength of BMO InvestorLine, that same release also highlighted the AdviceDirect service they offer.

What does the Client Rep Say?

Another interesting angle to this story is the timing of all of these announcements.  Earlier in January, Dalbar Canada released their discount brokerage service award results (click here for a review of the 2013 Dalbar award).  As it happens, RBC Direct Investing narrowly edged out HSBC InvestDirect to take top spot for this year’s award.   This past week, however, another brokerage ranking from financial research firm Surviscor painted a less flattering picture of email response time from RBC Direct Investing.  According to Surviscor’s customer email responsiveness assessment, Qtrade ended up having the highest ranking for customer email responsiveness among Canadian online brokerages, whereas RBC Direct Investing was ranked 12th.  As with other rankings and assessments, it is interesting to see firms that rank highly in one assessment underperform in another – something that can generate confusion amongst consumers (see the following link for a fuller explanation of ranking of Canadian online brokerages).

Ultimately, what all discount brokerages understand is that it is what clients say to other clients about their experience with a brand that truly matters.  To that end, many brokerages may start paying more attention to what customers are saying in order to improve the services offered.

From the Forums

The Financial Webring forum has undergone a brand refresh and is now known as the “Financial Wisdom Forum”.   According to the homepage announcement, the change in the layout was done to help users on mobile devices have a better experience navigating from the homepage to forums and their financial wiki or “finiki” as they call it. The forum still exists and can be accessed via the menu at the top of the homepage.

Baby, It’s Cold Inside

Of course, before wrapping up this week’s roundup, there was a thread on Canadian Money Forum regarding TFSAs and commission fees for trades.  A new user to the forum, wanted some clarification on where the fees for commissions came from when trading in the TFSA.  The group not only offered an answer but also a look at how things work (and used to work) with RRSP accounts too.

That does it for this week’s roundup.  On another note, today also happens to be the 30th anniversary of the launch of the Apple Macintosh.  Going into to the weekend it’s amazing to think how so much has changed in so little time including the share price as laid out in the (now dated) infographic below.   To see Apple’s birthday tribute, click here.

Apple Stock History

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