Archive for September, 2007

RBC Direct Investing and BMO InvestorLine Lower Commissions

September 30, 2007


It didn’t take long for two other major discount brokers to match TD Waterhouse’s move in lowering commissions for clients with more than $100,000 in assets. RBC Direct Investing and BMO InvestorLine will also be charging $9.95 per trade effective December 22, 2007 and November 1, 2007 respectively. E*Trade has long been offering $9.99 trades for clients with at least $50,000 in combined assets. [Update: Thanks to our knowledgeable commenters for pointing out that both RBC and BMO haven’t exactly matched TD Waterhouse. RBC’s low pricing is applicable for clients, not households, with $100,000 across accounts and BMO’s low commissions are based on control.]

The lower commissions are great news for Canadians intent on reducing their investing costs. For the Sleepy Portfolio, assuming one buy or sell for each security every year, brokerage commissions would drop to $70 or a minuscule 0.05%. But the brokers are hoping that the lower commissions would encourage investors to trade more, writes James Daw in The Toronto Star. It is unfortunate that the major brokers are not offering low commissions for everyone because it would allow clients with smaller portfolios to build passive portfolios using mostly ETFs.

This and That

September 27, 2007

  1. Whether the government is blue or red, the surpluses keep piling up. The Globe and Mail reports that federal surpluses topped $14 billion last year or roughly $700 per taxpayer.
  2. Ellen Roseman warns about an audacious credit card scam.
  3. Rob Carrick writes that investors flock to high-fee funds because it isn’t easy to figure out how much they cost. I am not so sure. I think the vast majority of investors just aren’t aware of the importance of keeping investing costs as low as possible.
  4. As our currency stays strong, Jon Chevreau continues to stress the importance of going global.
  5. Larry MacDonald wonders if the Derek Foster story is too good to be true.
  6. Thanks to Red Flag Deals, our first major direct sponsor.

Giving up on Questrade

September 25, 2007


Few months back, I moved our investment accounts to Questrade, attracted primarily by their ultra-low commissions and good word-of-mouth recommendations. Everything went smoothly for a while – my account was transferred out without a hitch and trades were executed perfectly – until last week. I logged in to my account and discovered that an interest charge was deducted on our USD account. The interest charge was puzzling because I never trade on margin or short stocks. I thought it was no big deal; mistakes happen and it has happened once before at my previous big bank broker and it took a mere phone call to have the charge reversed.

It turned out that at Questrade it is a big deal. I’ve been contacting them for four straight days asking for an explanation and reversing the interest charge but it’s always one excuse after another. The first day the agent said it is taking time to check my account and he would resolve the matter by the end of the day. The next day, a different agent claimed that “the servers are down” and I would be contacted for sure shortly with an explanation. On the third day, I got the same agent again claiming they were still working on resolving the matter. Today, another agent claimed that someone would have to review my records for each trading day to verify my claim that there was no margin balance (though it took me a four minutes to check; not four days). And on and on it went …

Finally, I had to send an e-mail to Emil Vojkollari, Client Acquisitions Supervisor at Questrade requesting his intervention in this simple matter. Sure enough, within a very short time, a Questrade agent finally contacts me with the information that the interest charge was an error and would be taken care of shortly. Well, why did it take so long?

As a client, my bottom line is very simple: if Questrade made a mistake, it is a simple matter of acknowledging it and reversing the charge immediately; not giving me the run around. Perhaps for $4.95 per trade, you do get what you pay for.