Table Of Contents

    Key points

    It looks like 2016 is not about to go quietly. With new all-time high for the Dow and markets generally buoyant after the US election, bulls are still driving the bus. Good thing for them they’ve got snow tires. Also not slowing down heading into the end of the year: some Canadian discount brokerages who […]

    It looks like 2016 is not about to go quietly. With new all-time high for the Dow and markets generally buoyant after the US election, bulls are still driving the bus. Good thing for them they’ve got snow tires. Also not slowing down heading into the end of the year: some Canadian discount brokerages who are hoping to hit the ground running (as it were) in January.

    This week’s roundup features the latest big launch from one of Canada’s non-bank-owned brokerages as they double down on investor education. Next, we look back at Q1 of 2016 for the first in the series of reviews on 2016. As usual, we also have the latest investor chatter from Twitter and close out with conversations on investing forums to bring a little more colour into the mix.

    Virtual Brokers Bets on Learning

    Despite the finish line to 2016 being only a few weeks away, at least one Canadian online brokerage wanted to end the year on a high note with the launch of a new investor education section. Virtual Brokers, a non-bank owned online broker, launched a new investor education section on their website earlier this week.

    The new investor education section contains a selection of videos and articles on a variety of topics relevant to DIY investors, such as options trading, registered accounts, different types of investing products and more.

    One of the first things that stands out about the investor section is that it has a very different layout and experience than the rest of the Virtual Brokers website. The navigation of the education section is definitely built around being in the education section, something that Virtual Brokers believed to be important to creating a more content-focused experience for visitors to this section of the website.

    As the investor education section has just launched, the content that is currently there will grow and it will likely evolve over time, according to Dennis Kim, a marketing specialist at Virtual Brokers who was directly involved in the development of this section. For the moment, however, the categories focus on a mixture of specific topics, such as account types, or life stages/personas, such as students, families or those who are working or retired.

    The content itself is a mixture of internally produced and authored material, as well as content authored by investment firm AGF, which was republished by Virtual Brokers.

    One of the key themes of the investor education section, according to Virtual Brokers, was to make information entertaining and ‘fun’.  Admittedly, finding information is a bit of an adventure as the layout may be challenging to navigate for specific information. Nonetheless, the content is freely available to website visitors without having to register or provide personal information – which is a big plus to those who would like to get information without having to provide their own contact details to access it.

    Investor education provided by online brokerages has traditionally been something that DIY investors have met with some trepidation. On the one hand, there is clearly a benefit on the part of online brokerages to promote trading and investing, as that directly leads to more commissions being generated. Conversely, investors, especially those seeking to enter the markets for the first time or who are investing on their own, benefit from having tools, knowledge and confidence to navigate the markets.

    So, while it seems like the ultimate win-win, investor education from most Canadian discount brokerages has historically fallen short of providing well structured, comprehensive investor education.  The reason is probably simple: discount brokerages are not in the primary business of education. To be fair, however, most brokerages have gotten around this by offering investor education via partners who are professionals.

    From a strategic point of view, the latest move by Virtual Brokers to build out their educational offering is an interesting one.

    At a time when the industry as a whole is facing challenges to contain costs, doing investor education well and in a timely manner means that it won’t be cheap. And, with pressures on margins, adding a line item like content creation means there is going to have to be an associated return (i.e. more clients or clients trading more) that can justify the spend.  Further, with other sites such as from the OSC and InvestRight from the BCSC also actively marketing themselves as sources for trustworthy information on ‘the basics’ of investing/trading, attracting an audience and differentiating the product to the DIY investor will also take time, effort and ultimately resources.

    For DIY investors, the upshot is that in order to effectively compete against one another, Canadian discount brokerages will have to adding features and services that are relevant and useful in order to stand apart from one another. Virtual Brokers’ latest move into investor education signals that they are not standing still in a landscape that is becoming increasingly competitive. With robo-advisors now nipping at their heels and other online brokerages doubling down on technology, now more than ever, the brokerages who aren’t moving, aren’t improving – and that will be a tough lesson for any brokerage to learn the hard way.

    TD Direct Investing Launches a Big Deal

    Is it a coincidence that TD Direct Investing launches a major commission-free trading deal just before the official colour 2017 was announced to be a shade of green? We think not.

    For DIY investors heading into the Christmas break (and who are surfing around for an online brokerage to choose), TD Direct Investing seems to have a knack for timing by launching a new offer that provides up to 200 trades commission free. Of course, being the ever savvy marketers, the ‘pitch’ to investors is that of getting up to $2,000 cash back, something that investors would definitely tune in to. But, all is fair in love and advertising.

    This offer looks to take aim at clients that most bank-owned brokerages would be interested in, namely individuals with at least $25,000 in assets. TD Direct Investing’s latest promotion is tiered meaning the more an individual deposits the higher the number of trades they can get commission-free. The minimum deposit is $25,000 which nets 50 commission-free trades; the next tier starts at $50,000 which can get DIY investors up to 100 commission-free trades and finally those depositing at least $100,000 are in line to receive up to 200 trades.

    Of course, now that TD Direct Investing has stepped into the deals pool, it will force a pre-Christmas scramble across the board for other brokerages to step in or risk being eclipsed by one of Canada’s most popular online brokerages heading into 2017.

    Roundup of Roundups Q1

    Now that 2016 is almost over, it’s a great moment to look back on the year that was and reflect on what some of the biggest stories were over the year. With so many great stories to consider, we’ve decided to break down the biggest stories by quarter, starting first with Q1 of 2016.

    The year kicked off on a somewhat panicked note for many investors. With the price of oil in a tailspin and investors worried, the savvy investors that braved the bad news were handsomely rewarded. On the discount brokerage front, one of the biggest stories from Q1 came from Virtual Brokers, when they announced their new commission-free trading offer and also reconfigured their commission pricing structure. And that was just January.

    Not to be outdone by fee changes, National Bank Direct Brokerage pulled the trigger on removing commission fees altogether on Canadian ETFs. After a couple of promotions in which this same offer was made, the official shift to commission-free ETFs, at least for Canadian ETFs, meant that their bank-owned brokerage peers now had to pony up some serious counter offers to compete. While Scotia iTRADE, the only other Canadian bank-owned brokerage to offer a selection of 50 commission-free ETFs, National Bank Direct Brokerage’s offer made over 500 ETFs available. With the shift in the Canadian dollar, this made the offer all the more attractive for NBDB. As the year went on, however, there wasn’t as much hype or advertising around this feature, nor from NBDB in general – a surprise given the contest to gain ground against more visible and established online brokerages can really only be won at this point by a boost in awareness (i.e. marketing).

    Lastly, the trend towards improving user experience via website improvements saw RBC Direct Investing announce a major upgrade to their previous website. As a very recognizable brand, RBC Direct Investing later found out very quickly that newer doesn’t necessarily mean better – something that should ring true while technology budgets are increasing across the board in financial services. While generally receiving positive feedback, there were still many users who had grown accustomed to the previous layouts and where to find things that mattered to them.  Nonetheless, the shift in digital direction spoke to a larger trend across the online brokerage space where technology and digital strategy became a huge talking point for 2016.

    Discount Brokerage Tweets of the Week

    This past week there was lots of green and red on users screens, not just from upticks and downticks. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Qtrade Investor, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

    From the Forums

    Easy Come

    In this post from the reddit Personal Finance Canada thread, one user recounts the process involved in opening an online brokerage account with TD Direct Investing along with questions on some of the thornier parts of getting started.

    Easy Go

    In contrast to the post above, this post, also from the reddit Personal Finance Canada thread, was about the experience of switching out of TD to Questrade.

    Into the Close

    That does it for this week’s roundup. For those of you who managed to conquer the snowpocaplypse in Vancouver, congratulations! Of course just know that the rest of Canada is looking westward and thinking it still seems like a dusting. Whether you’re digging out from under a pile of snow or digging around in a mall for a last minute Christmas gift, have a great weekend!