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Discount Brokerage Weekly Roundup – July 6, 2020

Whether it’s the first or fourth of July, where and how you might have celebrated depends in large part on where you happen to find yourself.

In this edition of the Roundup, we keep things short and sweet, like a great helping of soft-serve ice cream. First, we take a peek at the deals and promotions for July and see how they differ from June. Next, we scroll on over to the launch of an updated mobile app for a leading Canadian online broker. As always, there’s lots to ponder from the investor forums as well as from Twitter.

New Month, Same Deals

With the second half of 2020 now officially underway, there are lots of questions investors and online brokerages are asking as far as what the rest of the year holds for investing online. One of the biggest questions is around volatility and whether the trading volumes that were the norm in the first part of the year will continue to feature prominently into the end of 2020.

As has been covered extensively through the Weekly Roundup since March, volatility in stock markets has also pushed up trading volumes to record-breaking levels. The prevailing theory is that the combination of individuals being forced to shelter in place, the absence of sports betting, and the distribution of government support payments have all converged into a perfect storm of retail investors flooding into the market to try to take advantage of some kind of rally in heavily battered stock prices.

The knock-on effect of all of this, however, has been that interest in opening an online trading account at an online brokerage has been so strong that most Canadian online brokerages have opted to shelve their promotions for the summer. In the most important deal categories to DIY investors (cash-back or commission-free trades), Questrade has become the sole online brokerage with active promotions.

Crossing the threshold into the latter half of the year, it is hard to imagine Canadian online brokerages standing on the sidelines for much longer before jumping back into the promotions race.

First, Questrade represents an increasingly tough competitor for other Canadian discount brokerages to defend against. Whether it is in investor forums, TV commercials, or social media, there’s a good chance that new investors looking for an online brokerage are going to run into mentions or even recommendations for Questrade. By leaving Questrade unchallenged, other online brokerages are enabling this already popular brokerage to build market share and attract investors to a conversation about investing.

Second, should any of the factors that caused the rush of investors looking to set up accounts abate, discount brokerages would almost certainly have to aggressively ramp up their marketing efforts – including adding promotions. To further challenge the financial services space as a whole in Canada, several large Canadian banks have also elected to pause their advertising on Facebook. Unless Facebook remedies their enforcement of curbing hate speech, it will be a challenge for online brokers to find a way to scale up their messaging and advertising during COVID-19.

Finally, the end of the year is typically when the ramp-up to RRSP-contribution season starts. Layer in a year in which there is almost certainly going to be a good portion of tax-loss selling and realizing of capital gains, TFSA maneuvering, and more, and DIY investors will be doing a lot more with their accounts through the end of this year. Of course, in order for online investors to want to stick with their current brokerage, it means the service experience at online brokerages has to be very good, and right now, based on comments from Twitter, there aren’t a lot of good customer service stories for Canadian discount brokerages.

It’s clear that nobody can fully predict the scale and scope of how COVID-19 will unfold in Canada or the US. Tied to that uncertainty is the business need to attract new clients via marketing and incentives. As the rest of the economy in Canada starts to fire up again, and people begin to come out of isolation, so too, hopefully, will the Canadian discount brokerage deals.

Teaching an Old App New Tricks – TD Direct Investing Launches Updated App

When mobile investing apps first arrived, they were heralded as the future for individual investors to gain even more freedom when wanting to trade, whether in line at Starbucks or hanging out poolside with a drink in one hand and a phone in the other. Mobile trading was truly going to be the next “big thing” with DIY investing. Arguably, now that apps and being able to do just about everything on a mobile device have become the norm, that sentiment of trading almost entirely by mobile app is closer to the original vision.

In June, TD Direct Investing unveiled the latest updates to their mobile app, which focused on investor education. TD Direct Investing’s mobile app now provides access to their online learning centre, which is filled with content to help investors get up to speed on a number of topics related to investing.

Among the more interesting capabilities is the ability to cast video lessons directly to TV – something that could offer up that perfect balance of autoplay TV series and educational content.

Of course, TD isn’t the only one that has conducted a refresh or added features to their mobile trading app this year. Virtual Brokers and RBC Direct Investing are the others. Thus, it seems like multiple Canadian discount brokerage who haven’t yet worked on improving their current app design/build will be busy figuring out how to build a mobile app for the current world.

With summer now upon us, it is the perfect opportunity both to learn about investing and investments as well as to be out and about. The latest wave of mobile upgrades at TD Direct Investing enables users to do both.

Discount Brokerage Tweets of the Week

From the Forums

Getting Schooled

A soon-to-be student wonders how to make the best of their savings while minimizing post-university debt in this post.

Oh Brother

In this post, a Redditor who has just purchased a house with his brother wonders how equity stake will accumulate in this split-ownership situation.

Into the Close

That’s a wrap on a shortened-week edition of the Roundup. Markets continue to power higher (for now), which means that there are many DIY investors on the sidelines hoping to still get in on the action. Of course, with professional sports starting to come back online, we’re betting we will start to see fewer “traders” and a restart of the world of financial promotions. Oh, and there’s now Kanye to add into the mix.

 

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