Online Broker Survey – Who Should You Invest With?

The online brokerage business has been growing rapidly within Canada and the United States. The Big Banks are not the only major players as there are many independent Brokerages participating and this has lead to dramatic cost cutting and improved services.

According to the latest Globe and Mail Survey of the online brokers dated October 6, 2007, more and more brokers are now charging under $10 a trade as long as the investors account has a minimum of $50,000 to $100,000; this is a huge reduction in costs to investors who were previously paying $24 to $29 per trade.

This Globe and Mail Survey evaluated the online brokers based on 7 points: Costs and Fees, Customer Satisfaction, Tools and Research, Website Utility, Website Security, Trading Platform, and Investment Selection. The survey results were interesting because the top two brokerages were independents followed by the cash rich banks.

The online brokers surveyed included 14 and ranked as follows:

1. Qtrade Investor

2. E*Trade Canada

3. TD Waterhouse

4. BMO InvestorLine

5. Credential Direct

6. RBC Direct Investing

7. ScotiaMcLeod Direct Investing

8. Questrade

9. TradeFreedom

10. Disnat

11. CIBC Investor’s Edge

12. National Bank Direct Investing

13. HSBC InvestDirect

14. eNorthern

In this ranking, the target audience considered is mainstream investors who have RRSPs, are interested in more than stocks and the focus for the evaluation was online service.

To determine if opening an online direct investment account if right for you answer the following 5 questions:

1. Have I acquired the amount of investment knowledge to invest successfully? If you answered no to any of the above questions then opening an online brokerage account is not the best method for you to invest. Under this scenario an investors is better served by receiving guidance from an investment professional such as an investment advisor. Why face the ‘sink or swim dilemma’ when there is a boat?

2. Do I know where and how to research stocks, bonds, options, futures?

3. Do I know what types of investments are RRSP eligible?

4. Do I have the time to research investments to make informed decisions?

5. Will the cost savings outweigh the time and effort required for me to invest effectively?

Personally, I have toyed with the idea of opening an online brokerage account; however, I feel that I get a lot more out of employing an investment advisor who can provide me with lots of great ideas and opportunities that I otherwise would not encounter; further, I feel spending my time on my career and family is more important than saving $50 a trade.