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Watch out for higher discount broker fees

November 12th, 2008 ·

With the sharp fall in the stock market, Rob Carrick points out that investors with a discount brokerage account should watch out for higher fees.

  1. Administration fees: The discount broker arms of the big banks typically charge an administration fee on self-directed registered accounts if the value is less than a certain threshold. TD Waterhouse, for instance, charges an administration fee of $100 plus GST for RRSP accounts that are less than $25,000. Check the small print in the fee schedule for details on when the fee waiver eligibility is determined.
  2. Higher trading commissions: TD Waterhouse, RBC Direct and BMO InvestorLine charge lower trading commissions for household accounts larger than $100,000. If the value of your accounts falls lower than that threshold, you would be charged the higher trading commissions.

There may not be much you can do about these fees apart from topping up your account.

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15 responses so far ↓

  • 1 » Watch out for higher discount broker fees // Nov 12, 2008 at 9:07 am

    [...] Administration fees: The discount broker arms of the big banks typically charge an administration fee on self-directed registered accounts if the value is less than a certain th… More [...]

  • 2 Coldcall // Nov 12, 2008 at 9:51 am

    Well i trade from a UK TD Waterhouse account as I live in London at the moment. They charge here more per trade £12.50, but thankfully now that the Canadian dollar is stronger vs the GBP, im paying about $20 CAD per trade..though still more expensive than Canada/US.

    But i would have thought that all the discount brokerages have been doing increased business since the end of September. Even TD Waterhouse in UK admitted they got so busy lately they had to hire more Customer Services staff, and frankly the service is v slow these days.

    They dont need to put up their prices….there is little excuse to do so. In fact they will just scare away more investors…who are badly needed in the markets in order for a recovery to occur.

  • 3 Dividend Growth Investor // Nov 12, 2008 at 10:32 am

    Watching out for hidden fees is important. Some brokerage houses that sell mutual funds charge you $10/trade while others charge you $20/year if you elect to receive paper statements rather than e-statements.

  • 4 2op mike // Nov 12, 2008 at 11:24 am

    With revenues falling at discount brokers it is worth a call to suggest they waive the fee for one year so as not to be seen as fee vultures in a crashing market. If you are still below the line in year 2 then the fee may be warranted. I have found them reasonable to this type of approach (phone request) for other nuisance fees.

  • 5 Jon202 // Nov 12, 2008 at 12:16 pm

    Also trading fees have and are going up. Scotiabank’s SMDI bumped up it’s trade commission earlier this year, and BMO: InvestorLine jumps on Jan-1, 2009:

    http://cdndrips.googlepages.com/canadiandiscountbrokers

    CIBC Investor’s Edge will be the only bank broker with a Sub-$29 commission.

  • 6 Canadian Capitalist // Nov 12, 2008 at 12:27 pm

    mike: My past experience has been that discount brokers are loathe to waive fees. I had the exact same problem in the previous bear market. When the account fell below the threshold, administration fees were charged. I did ask for a waiver but no luck. Still, it wouldn’t hurt to ask and depending on the size of your business, at worst, they can say no.

  • 7 Michael James // Nov 12, 2008 at 12:58 pm

    Paying higher fees is no fun, but I see a parallel with alcohol. If rising alcohol prices are a big problem, maybe you drink too much, and if higher trading commissions are a big problem, maybe you trade too much. Of course, paying less is always better, even if you only trade infrequently.

  • 8 2op mike // Nov 12, 2008 at 3:30 pm

    MJ, you are right if the issue was a hyper active trader, but rebalancing and tax loss trading are prudent approaches that still call for a number of trades.
    C.C. I agree that you need to leverage all your business and your history with the firm. Somtimes it may also be in their best interests to waive the fee just to make me go away..That tends to happen if you get elevated to somebody in senior management and force a dialogue.
    With TD-W it obviously would not be “comfortable” to pay the fee !

  • 9 Cory // Nov 12, 2008 at 7:24 pm

    fyi…TD Waterhouse will only charge you $25/yr for a basic registered account that you will only be allowed to buy and sell mutual funds, not trade stocks. I use one for mutual funds that I will switch over to a full account once it’s over $25k.

  • 10 sentimental // Nov 13, 2008 at 6:58 pm

    http://www.interactivebrokers.ca, friends :)

  • 11 Forone // Nov 13, 2008 at 8:58 pm

    What in heck is going on with Etrade and the U$ ETFs that have switched to the NYSE Arca platform? All of a sudden they can’t be traded on Etrade Canada (they can on Scotia’s platform.) This affects GLD, DIA, and a lot of other major ETFs.

  • 12 Canadian Personal Finance Blog » Blog Archive » Thoughts: Financial Extinction Week // Nov 14, 2008 at 2:02 am

    [...] Canadian Capitalist mentioned about Discount Brokerage Fees especially with TD Canada Trust. I have noticed this one myself, and Nerd Money has also been [...]

  • 13 Phil S // Nov 15, 2008 at 3:24 pm

    This is precisely the dilemna that I was telling you that I ran into a few weeks ago. Two of my brokerage accounts got pummeled so far that I no longer qualify for the lower commissions in either of them! It will take me a couple of years to re-capitalize those accounts to the point where I can trade for the lower commissions.

  • 14 John Richardson // Nov 26, 2008 at 5:59 pm

    I have looked at these 6 banks.

    Scotia Bank, HSBC, TD Waterhouse, CIBC Investors Edge, RBC Direct Investing, and BMO Investor Line.

    Not sure of what Scotia Bank and HSBC offer.

    - TD Waterhouse offers $100,000 investment and $9.99
    trades and 3 months free commission up to $1500 value=
    150 free trades. Account must have $100,000 on the 4th
    business day of each month to avoid fees.

    - RBC Direct Investing offers $100,000 investment and
    $9.99 trades. Account must have $100,000 at the end of
    each month to avoid fees. Until Friday Nov 28th RBC Direct Investing is offering 1% back= $250.00 paid after 6 months on a $25,000 switch and will cover your transfer fee as well.

    - BMO Investor Line offers $100,000 investment and $9.99
    trades and $300 credit in cash into your account after 6
    months. Account must have $100,000 to avoid fees.

    - CIBC Investors Edge on $10,000 investment offers a
    package that contains 50 trades that cost $395 during the
    calendar year which is $7.90 per trade and after 50 trades
    $6.90 per trade. Account must have $10,000 value during
    August and September to avoid annual fees. Rest of year you
    can zero in the account.

    Based on these comparisons I feel that CIBC Investors Edge offers me the best deal and the least hassle.

    What do you all think? Please give me your input. I want your opinion and feedback. If you know of better deals or if I have made any errors please let me know.

    Thank you

  • 15 Comment on Watch out for higher discount broker fees by Watch out … | Looking for FOREX? // May 14, 2009 at 5:06 pm

    [...] the original post here:  Comment on Watch out for higher discount broker fees by Watch out … Written by Jo Sal in: discount broker | Tags: discount broker, freight-loads, original, [...]

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