Million Dollar Journey has written a series of posts reviewing discount brokers and I thought it would be useful to complement his reviews with brokers I am familiar with but he is not planning to cover. I’ll kick off this two post series with a review of RBC Direct Investing and conclude by reviewing TD Waterhouse next week.
I have been a customer of RBC Direct Investing, which used to be called Action Direct for more than 6 years now. I still have our taxable accounts with them (thinking of switching to Questrade) but have moved our RRSP accounts to TD Waterhouse for reasons outlined in this post.
Fees and Commissions
RBC Direct charges a commission of $28.95 (inclusive of all fees) on trades of up to 1000 shares for market and limit orders. Self-directed RRSPs are charged an annual administration fee of $75 if the value of the account is less than $25,000.A quarterly fee of $15 is charged on investment accounts with a market value of less than $5,000. You can refer to the full fee schedule here.
Mutual Funds, GICs and Money Market Funds
RBC Direct offers a wide selection of in-house and third party mutual funds and GICs. You can park cash temporarily in Royal Bank’s money market fund (Fund code: RBF 271) without paying any penalties for early withdrawal.
Foreign Exchange Rates
RBC does not explicitly reveal the spread on foreign exchange transactions. However, last week I converted 1 USD into CAD and vice-versa and found that USD were converted into CAD at a rate of $1.0368 and CAD was converted into USD at a rate of $1.0568, which would suggest that the spread is roughly 1% on each conversion.
RBC Direct’s offers a very basic web-based trading platform with real-time quotes for all the major exchanges but does not offer real-time charts. I am not a trader and hardly make 10 transactions in an average year, so this is hardly an issue for me.
Even though RBC has made some improvements of late by offering stock research from Standard & Poor’s and cutting the trailer fees on in-house mutual funds for DIY investors, there is no compelling reason to choose RBC Direct Investing over its competition. Questrade is the market leader in low commissions and TD Waterhouse offers innovative features like wash trades on US equities within RRSP accounts and access to the TD’s low-cost index funds.