Wednesday, January 19, 2011

Here's help choosing an online broker in Canada


The best online brokerages -- and the worst


Globe and Mail Update

Here's an expanded look at the criteria used in this ranking. This is not an exhaustive list, but rather a summary of important factors.

Scroll down the page to see a table of the results.

1) Cost (25/100)

  • Stock trading commissions, including the account asset thresholds at which charges are discounted
  • Applicability of ECN (electronic communication network) fees
  • Mutual fund trading commissions, including buy, sell and early redemption fees
  • Bond trading commissions, including the availability of discount bond pricing
  • Inactivity and low account balance fees
  • Annual administration fees for registered accounts, including account size needed to avoid fees

2) Trading (25/100)

  • The variety of orders that can be placed online, including trailing stops and short sales
  • Access to global stock markets
  • Availability of real-time updates of cash levels and buying power
  • Availability of U.S.-dollar RRSPs
  • Selection of investments available online, including GICs, high-yield bonds and guided portfolios.

3) Tools (20/100)

  • Breadth and utility of equity, fund and ETF research
  • Screening tools
  • Financial planning tools
  • Availability of an ETF centre
  • Features for newcomers to online investing, notably demo videos and practice accounts

4.) Account Information (15/100)

  • Availability of personalized, long-term data on account rates of return
  • Asset allocation analysis
  • Intra-day account updating
  • Availability of online account statements, trade confirmation slips

5.) Customer Satisfaction (10/100)

  • Our GlobeInvestor team handled this by distributing a short questionnaire to readers by e-mail. We ended up with 1,279 responses. Respondents were asked to identify the broker they used most often, then rank how happy they were and indicate whether they would recommend the firm.

6.) Website (5/100)

  • Is a security guarantee offered?
  • Utility of site for updating clients on new features

For more rankings, see:

Breaking down the brokers

RankBrokerCosts (/25)Trading (/25)Tools (/20)Account Info (/15)Customer Satisfaction (/10)Website (/5)2010 Score2009 Score
1Qtrade Investor20.5201413.59.63.581.177.4
2RBC Direct Investing171617148.3375.370.8
3BMO InvestorLine141613158.5470.574.1
4TD Waterhouse15171789.1470.170
5Credential Direct18.51411.513.58.547074.8
6Scotia iTrade22168.5784.56671.6
8CIBC Investor's Edge1914.5114.56.8358.860.3
9Disnat (Classic)13.514127.59.2258.266.1
10National Bank Direct Brokerage10118118.3452.362.7
11ScotiaMcLeod Direct Investing11.5101258248.558.6
12HSBC InvestDirect131372.56.534556.2
13Virtual Brokers211155n/a3.5Incompleten/a