Friday, 19 February 2016

Big 5 Banks in Canada - Brokerage Fees compared





Bank Brokage Regular fee Trade 150+ times quarter
       
Bank of Nova Scotia Itrade $9.99 $4.99
CIBC Investors Edge $6.95  
Royal Bank Direct Investing $9.95 $6.95
TD Bank Direct Investing $9.95 $7.00
Bank of Montreal InvestorLine $9.95  


Discussions with fellow investors raised the question of Brokerage fees.  We all had over own reasons for why we banked / invested with certain institutions.  Examples were some simply opened their self direct accounts with the bank they banked with since they opened their account.  In most cases, the bank they opened their initial bank account with, also held their mortgage.  

Loyalty to one's local branch is what the big 5 banks work on very hard.  They want you to stay with them and do all your banking needs with them.  Which in turns means they make their money with you banking with them.  In the banking industry, this is called retail banking.  It is always an item discussed when quarterly reports are released as retail banking can be a strong or weak area of a bank's earnings.    

There is fierce competition within the banks to maintain or increase their retail banking earnings.  That being said, I would like to compare brokerage fees at the 5 big banks.  Now there are many fees for many different options of products you can buy using your self directed account for.  But for this post, we will compare the plain online equity purchase.  This type of transaction would normally be the main type of transaction most DIY investors would do anyways.  This is also reflected on all the big bank websites fee charts.  It is the 1st item on every chart.

Now my chart above in the first column shows the standard fee without any special considerations.  The 2nd column shows volume discounts, if you trade more than 150 times a quarter.  

To me, the clear winner here is CIBC Investor's Edge.  They will charge for all transactions regardless of volume or how much your portfolio is, $6.95.  Now as a DIY investor myself, I do not trade even close to 150 times a quarter.  Probably not even close to 100 times all time.  So the difference between $9.99 and $6.95 is not noticeable to me.

I personally invest using Scotia Bank's Itrade.  I do not have other experience with other brokerages but can comment on Itrade.  To me, Itrade is easy to use.  I do my daily online banking with Scotia and it is linked directly with Itrade.  I can transfer money from my regular checking account to my brokerage account in seconds.  My mortgage is with Scotia also so that is listed as well.  The interface to me is simple, clean, efficient and is user friendly.  They also have in depth analysis of the stock market and individual stocks.  The rating of individual stocks is what I find useful, it usually has the pros rating whether to buy, sell, or hold a stock.  Now this is not the end all of deciding to buy or not a stock but it gives information to me, as a DIY investor to consider.  Their Itrade mobile app is very clean and clear, I have only used it once and it was flawless.

Here are links to all 5 brokerages.


Final thoughts.

I must disclose that I use Scotia Itrade for everything and am satisfied.  But I am comparing fees so CIBC Investor's edge caught my attention when I scanned the prices of all the big banks.  Now that is something for everyone to think about when they decide where they want to open their brokerage account.

Any thoughts or comments on discount brokerage fees would be help?