Discount Brokers

Questrade Review

August 13, 2007

214 comments

I recently switched our investment accounts to Questrade (thanks to Million Dollar Journey’s referral and review) and thought I would add my two cents on my experience so far. To be honest, I was attracted to Questrade by their ultra-low commissions. Questrade has two commission plans: you can either opt for the flat $9.95 plan or if you usually transact less than 1000 shares, you could opt for the cheaper $4.95 plan. As I only buy stocks like VTI (trading at around $145), VEA (trading around $48) and some of the Canadian blue chip companies, I would typically be paying only $4.95 for making a trade.

Pros:

  1. Low commissions. $4.95 per trade is very attractive considering that I was paying $29 at the big bank brokerage.
  2. Opening an account was straightforward and intuitive. Transferring securities and cash in-kind was smooth.
  3. Questrade offers live help via chat that is very useful if you work with computers in a cubicle. You can get your queries answered while working instead of waiting on the phone for a customer rep. I have been able to get help whenever I needed it and almost always the issues have been resolved.

Okays:

  1. The 1% fee charged on foreign exchange transactions is comparable to major competitors.

Cons:

  1. As the broker’s target audience seem to be traders and not investors, there is a learning curve involved in using the trading platform.
  2. Questrade does not offer EFT transfer for US dollar funds. To move US dollar funds you have to write a cheque that takes as long as 20 days to clear or request a cheque and then make a visit to your bank to deposit it. It is a mystery why Questrade cannot offer EFT transfers when E*Trade does.
  3. When you open an account with Questrade, you will have to remember three passwords: one each for MyQuestrade (for adding, withdrawing, exchanging funds, requesting help etc.), WebTrader (the trading platform) and Penson Financial (for accessing account history etc.).

If you are willing to put up with some quirks, Questrade’s low commissions might make a switch worthwhile if you are paying $29 at your current broker. You may also want to check out the reviews of other discount brokers: BMO InvestorLine, Credential Direct, Qtrade, RBC Direct, Scotia Direct and TD Waterhouse.

[Update: Frustrated with Questrade’s customer service representatives, who couldn’t promptly fix an error on their part, I moved out of Questrade in a few months.]

BMO InvestorLine Review

August 6, 2007

38 comments

I recently opened a BMO InvestorLine account after many years as a TD Direct Investing client. I am a couch potato investor who trades very little and I was looking for a broker that offers (a) US Dollar RRSP and (b) easy Norbert Gambitting. My choices narrowed down to RBC Direct Investing and BMO InvestorLine. I decided on the latter because BMO often offers a small bribe ($250) for those switching from another broker with at least $100,000 in assets. I can’t yet recommend BMO InvestorLine whole-heartedly but if you do decide to switch to BMO after reading this post, please contact us for a referral. Not only will BMO pay me a referral fee, you will also receive an extra bonus of $50 (if your invest $50,000) or $100 (if you invest $100,000).

I’ll be updating this post shortly, but meanwhile here is a report by long-time reader and contributor 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.

Ameritrade Canada Update

April 6, 2006

5 comments

As I suspected, TD Waterhouse Canada is absorbing Ameritrade Canada accounts. I received the “Welcome Package” in the mail yesterday and instead of the $10.99 commissions for U.S. equities, I will start paying a minimum of $29 per trade. I only have two stocks in my Ameritrade account, so here are my options:

  1. I can sell the two stocks and withdraw the entire cash in my account. I really don’t want to do this as I am sitting on huge unrealized gains on one of the equities. Cost: Thousands in capital gains.
  2. I can fully transfer my account to Action Direct. Cost: $100.
  3. I can do a partial transfer of the two stocks. Cost: $50.
  4. I can keep the TD Waterhouse account, but I would rather consolidate all the accounts in one place.

Ironically, I have done just three trades in my Ameritrade account in more than two years and I have saved $60 compared to Action Direct. Now, I will be coughing up most of it to transfer the assets back!