Table Of Contents

    Key points

    It’s Christmas Day, and with markets closed there wasn’t a whole lot to do other than enjoy being with loved ones, giving and getting gifts, and for some eager beavers, getting a jump on the upcoming slew of deals and promotions for bigger and better trading monitors. Oh and then there was that beauty pageant […]

    It’s Christmas Day, and with markets closed there wasn’t a whole lot to do other than enjoy being with loved ones, giving and getting gifts, and for some eager beavers, getting a jump on the upcoming slew of deals and promotions for bigger and better trading monitors. Oh and then there was that beauty pageant thing.

    As laughably painful as it was to sit through the ending of the Miss Universe contest, it brought to mind the challenges with crowning a winner in a contest when what’s being measured isn’t entirely clear. For Canadian discount brokerages, even though there may be no tiaras, there’s still the challenge of being crowned number one.

    In keeping with the giving spirit, we decided to put together something special for the loyal readers of the end-of-year roundup. While ‘stats’ may not be high up on anybody’s wish list, for DIY investors looking to compare online brokerages, it turns out that stats may be one gift that keeps on giving. For traders, that’s the sign of a great ROI.

    Of course in keeping with the roundup tradition, we’ve also got some festive discount brokerage tweets and a musical mashup to send us off into 2016.

    Window Dressing

    2015 was a big year for many Canadian discount brokerages. With almost all of Canada’s brokerages now offering historically low commission prices for equity trades, the challenge for each discount brokerage has shifted to becoming ‘more valuable’ than their competitors.

    Value, like beauty, however is in the eye of the beholder.

    It was fitting, therefore, that in 2015 many Canadian discount brokerages opted to start with makeovers to make themselves look brighter and shinier than their former selves and more importantly than other brokerages.

    This past year, there were no fewer than six brokerages that either overhauled or significantly changed their website, in the hopes of capturing the attention of a more demanding online user. The more intriguing story, however, is not so much about the cosmetics of the brokerages, but on the consensus (or lack thereof) when it comes to the judges of the competition. Specifically, the three major online brokerage rankings that are available to Canadian DIY investors.

    As we’ve discussed on a number of occasions, there are several rankings that typically crown a “best online brokerage” in Canada every year. The three most active and influential voices are the Globe and Mail, JD Power & Associates and Surviscor.

    What is important to note is that each of these sources have a different semi-quantitative approach to establish what makes one brokerage better than another. As such, their voices are the ones that many Canadian DIY investors turn to when considering which brokerages to entrust with their investing and trading accounts.

    Given their different approaches, however, there are times where these voices agree and times where they don’t. Fortunately for DIY investors, we’ve pulled together the full set of rankings and ratings to show just where they agreed for 2015, where they didn’t and why it matters for choosing an online brokerage in 2016.

    Setting the Table

    Instead of relying on just one discount brokerage comparison or ranking, below is a table that combines and compares three of the most popular Canadian brokerage rankings for 2015.

    In order to make sense of the three comparisons, there are a couple of important things to take note of.

    First, we took both the average ranking each brokerage received and also calculated the standard deviation. The reason for calculating both is because averages alone only tell only half the story. For example, a brokerage could score 1st on one ranking but 10th on another. Looking only at the average (which would be 5th) wouldn’t necessarily communicate how far apart the opinions/rankings were. Calculating the standard deviation helps to show the degree of consensus or agreement between the different rankings. The degree to which the “experts” agree or disagree is something that is not easy for DIY investors to track down and put into context which is why we have included this here.

    To help make sense of the rankings, the averages and the standard deviations, we’ve also grouped the information into three categories of ‘agreement’: ratings where agreement is high, ratings where agreement is low and ratings where there is some agreement.

    In each of the average and standard deviations, we’ve put in a heat map of the scores with colour showing the scale from best (green) to worst (red).

    Without further ado, here is what the rankings look like.

    Table 1: Combined 2015 Canadian Discount Brokerage Rankings

    Places where the rankings agree

    One of the most interesting observations of the data is the standard deviation column. What this shows is that there are clearly places where these three different rankings agree (lower standard deviations mean high consensus) and places where they disagree substantially.

    Starting first with where they agree the most, it is clear that HSBC InvestDirect is a brokerage that all the rankings felt did not measure up. HSBC InvestDirect came in last, on average, in each of the rankings. Following suit, CIBC Investor’s Edge also seemed to rank consistently lower on each of the major rankings – this despite having one of the lowest commission offerings of brokerages big or small. This is interesting given how much DIY historically have considered pricing and how the rankings may not be factoring this in as heavily going forward.

    In terms of who consistently rated the highest, there are clear standouts albeit with somewhat less consensus.

    Both Questrade and TD Direct Investing were consistently referenced as strong choices in all three rankings. Thus, even though BMO InvestorLine performed the best amongst all of the 2015 brokerage ratings in terms of average ranking, there is more disagreement about them than the solid 2nd or 3rd place offering that Questrade or TD Direct Investing seem to offer.

    In fact, here is an example where the comparison of brokerage rankings using the standard deviations becomes particularly interesting.

    Both Qtrade Investor and TD Direct Investing had the same ‘average’ ranking when all the ratings were combined, however they each have very different degrees of agreement between rankings. Qtrade Investor had a rating as high as 2 (out of 12) with the Globe and Mail and as low as 8 (out of 10) with the JD Power Investor Satisfaction ranking. Conversely, TD Direct Investing’s ratings ranged between 3 (out of 10) and 6 (out of 12).

    To be clear, this doesn’t mean that TD Direct Investing is necessarily “better” than Qtrade Investor, per se, but it does mean that DIY investors likely have to do more homework to find out more about Qtrade Investor than TD Direct Investing.

    Another interesting area where the brokerage rankings agreed for 2015 was with RBC Direct Investing. There was a very high level of agreement that RBC Direct Investing provided an “average” experience when it came to DIY investing.

    Places where the rankings disagree

    As shown in red in the table, two firms that had the highest level of disagreement between rankings were National Bank Direct Brokerage and Virtual Brokers.

    In the case of National Bank Direct Brokerage, they performed the best in terms of “investor satisfaction” on the JD Power survey (1st out of 10) but fared poorly according to both Surviscor and the Globe and Mail ratings. This extreme disagreement is interesting because it highlights the importance of knowing what each ranking is measuring and how they go about trying to measure it. It also makes the average ranking score a less reliable way to find out how NBDB stacks up to the rest of the field.

    Looking at Virtual Brokers, there is an equally strong level of uncertainty in the rankings pool as to whether they are “the best” as claimed by the Globe and Mail’s Rob Carrick or near the bottom of the pack as ranked by Surviscor. With only two rankings to rely on, however, there is clearly room for confusion and uncertainty on the part of shoppers looking to choose this brokerage.

    As was the case above, this disagreement with NBDB and Virtual Brokers means that more homework is required when considering either as an online brokerage. For DIY investors, it is therefore critical to know what about an online brokerage experience matters or is most important as this will determine whether or not a ranking, positive or negative, is actually relevant.

    Qtrade Investor and Scotia iTRADE were also firms that had a high level of disagreement when looking at the combined set of discount brokerage rankings for 2015. In this respect, Qtrade Investor edged out Scotia iTrade, receiving both a stronger average ranking and stronger consensus.

    Places where the rankings somewhat agree

    In terms of this year’s rankings, this next group falls into the ‘grey area’ when it comes to agreement despite having very different average ranking scores.

    Even though BMO InvestorLine had the best overall average score across the three major ratings, the relatively low Globe and Mail review pulled the consensus factor down. To clarify, the Globe and Mail ranking was more of a ‘neutral’ rating however numerically this introduced some uncertainty into the mix.

    On the other hand, Desjardins Online Brokerage’s ‘average’ rating in investor satisfaction offset the lower scores from Surviscor and the Globe and Mail.

    Finally, for Credential Direct, there were only rankings in the Surviscor and Globe and Mail ratings so investors would again need to probably do more homework to find out what other investors may think.

    What does it all Mean?

    As comparison shopping for products and services, including online brokerages, becomes more the norm, it’s now possible to use data to better inform those decisions and narrow down the field of choices.

    What this series of analyses show, however, is that taking even the average of what the experts are saying doesn’t exactly tell the whole story. Consumers should take the title of “the best online brokerage” with a grain of salt as there is likely another source that disagrees with the claim.

    According to the combined average rankings and consensus analysis, multiple rankings saw BMO InvestorLine, Questrade and TD Direct Investing as consistently strong choices in 2015 while HSBC InvestDirect and CIBC Investor’s Edge consistently scored low. Falling consistently in the middle of the pack was RBC Direct Investing.

    For the rest of the Canadian discount brokerages, there is less clarity when it comes to rankings which means that more research is required or that these brokerages may need to offer more innovative or value-added incentives to get DIY investors to pay attention.

    Ultimately, the good news for most DIY investors is that it is harder to make a poor choice than a good one when choosing an online brokerage. Ratings and pricing aside, it is now up to Canadian brokerages to offer better

    Discount Brokerage Tweets of the Week

    Into the Close

    That’s a wrap on the final roundup of 2015. From everyone here at, have a safe and enjoyable holiday season. Here’s musical recap to take you back through 2015 and to get your groove on heading into 2016.