I asked long-time reader Phil if he would be willing to share his thoughts on BMO InvestorLine, a brokerage with which Phil is familiar and I am not. Phil wrote back with the following review (Thanks Phil!):
Let’s start with everything positive I can say about BMO…
Apparently they have won accolades for having the best web interface in the business. And I would agree that compared to the other brokers that I’ve sampled, whether as a customer or a demo account or at a trade show booth, I do think BMO Investorline’s user interface is the most intuitive and easy to use that I’ve tried. Their interface for program trading like limit orders and stop losses are very easy to understand for novices. Competitors that I’ve seen include TD Waterhouse, E*Trade, Interactive Brokers and now Questrade.
I’ve always found their customer service people to be prompt, friendly and they’ve always had the authority and technical know-how to fix any problems I’ve ever had. So, I would rate their customer service as being extremely high as well. If your total portfolio balance (total of RSP & Cash accounts) is over $250K, you get 5-star service which includes priority customer service, Level 2 trading view access, and reports and newsletters by various so-called industry “experts” like economists, Ranga Chand, and others.
Now for the downside…
Obviously the fees are a big one. $29.99 minimum per trade for the first 1000 shares, then something like 3 cents a share after that… It’s an absolutely brutal amount of money when you’re trading penny stocks. I’ve paid about $100 commission on some $1000 orders, so right off the bat I’m down 10% on my investment. If you have a total portfolio balance of over $500K or make over 30 trades per quarter, then you qualify for their $ 9.99 flat trading fee. Of course, you’d have to qualify first, so you would have to make 30 trades at their usual $29.99 + $0.03 / share commission first before you can qualify.
Although they like to promote the benefit of having one-stop shopping for all of your banking needs… The reality is that BMO Investorline is a separate division and they don’t talk to the retail banking division. So, although you can transfer money back and forth, in reality it’s still more like dealing with two separate companies. My personal banking representative at BMO can’t do anything for me on my Investorline account and vice-versa.
They have a very limited selection available in their fixed income selections. They offer whatever Nesbitt Burns has in their inventory, but Nesbitt Burns isn’t a big player in the bond space in the first place and then what they offer on Investorline is even more limited than that… You can [buy] the usual Government of Canada and the Provincials and some agency bonds. Beyond that, in the corporate sector, there are very slim pickings. BCE, Ford, GMAC, TRP, Ontario & Quebec Hydro and a few others make up the majority of their inventory.
And the fixed income trading fees are really high! As with all of the brokers, they don’t disclose their fees - they bury it into the price of the bond offerings. However, when I compare it to TD Waterhouse, they are charging enough fees to reduce the yield on the bonds by as much as 0.5% below the exact same bond offered by TD Waterhouse! And who knows how much TD Waterhouse charges for their bonds!
Anyways, this is all just one man’s opinion, but the drawbacks don’t outweigh the benefits so I’m switching my future trading over to Questrade. Questrade unfortunately doesn’t offer anything in fixed income or mutual funds, so they can’t meet all of my needs. But they are definitely the ticket for penny stocks and also for regular equity trading and options trading. So, in those areas all my future trading will be with Questrade and my BMO Investorline account (which I plan to retain) will only just hold my existing equities (which I don’t plan to sell - it doesn’t cost me anything to hold them) plus all of my fixed income securities (for both the present and whatever potential future investments I make in fixed income securities).
Reviews of the competition: Questrade, CIBC Investors Edge, Interactive Brokers,
Credential Direct, Qtrade, Questrade, RBC Direct, Scotia Direct and TD Waterhouse.
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12 responses so far ↓
1 FourPillars // Aug 6, 2007 at 11:08 pm
Great review Phil!
I didn’t realize that Questrade doesn’t handle mutual funds. I was planning to move my LSIFs funds there from TD in order to save on the $50/yr TD charges me. Oh well.
Mike
2 Sol Veritas // Aug 6, 2007 at 11:37 pm
Hey CC, can you please have a separate category for Online Brokers, like you do for Book Reviews? I think it would be absolutely fantastic to find a place where we can quickly and easily compare online brokers like we do books. Thanks!
3 Dan // Aug 7, 2007 at 12:52 am
Last year I was looking around for a new Online Broker, and for me the best choice was Credential Direct. $19.95 for trades/ $9.95 for active traders (25 trades per quarter). No charge for mutual funds, no yearly administration fees with a balance over $15k. Also free level 2 quotes, stock and mutual fund screener. You can transfer money too and from any bank or credit union account. For me it was an easy choice. I also have a TD Waterhouse account and I would say that Credential Direct is way better. Have a look.
Cheers
4 MillionDollarJourney.com // Aug 7, 2007 at 7:50 am
Just a small correction, Questrade does offer mutual funds, they just have to be ordered over the phone.
5 FourPillars // Aug 7, 2007 at 9:02 am
Thanks MDJ - I’ll be doing a T2033 transfer-in for the LSIFs so maybe I’ll give them a call and see what needs to be done.
Mike
6 Phil S // Aug 7, 2007 at 10:00 am
Interesting. Questrade’s website makes absolutely no mention of mutual funds. Let me know if they charge a fee for mutual fund service - I’m guessing it might if it involves human interaction.
I did set up my Questrade account for Options, though, which I didn’t do on my BMO Investorline account. Does anyone have experience with Options? I’m thinking about doing an Options straddle on the overall TSX index (say through an ETF of the index), basically buying both a call and a put. In that way, it doesn’t matter which direction the index moves, I’ll be making money on volatility and the market has certainly been full of THAT lately!!!
7 Canadian Capitalist // Aug 7, 2007 at 10:18 am
Sol: Absolutely. I’ll set up a category later today. Thanks!
FT: Thanks for the correction. My account at Questrade just became active, so I’ll let you know how it went. Thanks for the referral.
Phil: I have no experience whatsoever with options. I believe you can also make money on volatility by buying options on the VIX index. Larry MacDonald made a couple of posts on this topic.
8 moneygardener // Aug 7, 2007 at 10:42 am
To clarify, the commission for a market order is $25.
9 Chris RedGun // Jan 17, 2008 at 10:55 am
Hello my name is chris, I recently spoke to a friend , he advised me to look into penny stocks with bmo. now my question is how and where would one begin to invest in this type of investing? how much cash is the start up and how much would it be to maintain?
thanks in advance
chris
10 MillionDollarJourney // Feb 11, 2008 at 1:54 pm
Another heads up about BMO investorline, they offer $9.95 trades for household assets above $100k. Basically the same deal as TD Waterhouse.
11 gerydee // May 3, 2008 at 2:12 pm
Chris, if you’re new to investing, STAY AWAY FROM PENNY STOCKS or you WILL lose your shirt. You need experience to trade them as they are very volatile and have a level of risk reserved for seasoned investors with the knowledge of short selling etc…
12 Steve Stavros // Jun 2, 2008 at 3:16 pm
BMO I would not give them my trust to invest my money since their advisers don’t know anything about investments they just follow orders. As well, you need to read the fine print and don’t trust a word they say. Their hidden fees and early withdraw fees are very high compared to the other major banks (about 10% of your investment for paybacks). Anyway as a simply trading house their ok, but their are cheaper alternitives like etrade.
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