DIY Investors / Tools

What broker(s) do you deal with?

RobH2 Comments

I hang out a bit on Reddit1 to see what people are talking about. Often times, the post reads something like

“I am new to investing, I have $x to invest, who should I use ?”.

The crux of every 5th question posted to r/PersonalFinanceCanada

Personally, I find this kind of question a bit odd. “Investing” is a noble pursuit but it’s a term that means a lot of things to a lot of people. For me, “investing” is reserved for retirement savings since the timelines are long and I don’t need immediate access to the funds therein. A lot of people who ask this question want very near term access to the money, and to me that’s not investing. It’s saving. Timeline matters. The answer I’d give to a saver2 is a lot different than the answer I’d give to an investor.

I suppose the amount of money involved may influence the decision of platform provider (especially if there are freebies associated with having a balance above a certain amount, a common-enough practice), but it’s not the first thing I’d have in mind. Here are the main things I think about when it comes to choosing a financial provider, either for the first time, or if you’re thinking about making a change.

Does the provider have the account types you want?

Any provider I use has to offer Investment accounts, RESP, TFSA, RRIFs and spousal RRIFs. USD options for Investment accounts and RRIFs would be useful to me as well. Your own circumstances will offer up a different list. But don’t dismiss the RRIF if you’re nearing retirement. You may want one sooner than you think!

Does the provider have the products you want?

My needs here are really simple. I need access to trade a handful of ETFs on the US and Canadian markets, and I need a way to get a good interest rate on cash holdings. My assumption is that every major provider has a way to accomplish this. I don’t need access to bond markets3, options trading, fractional trading, margin trading or crypto. You might.

What fees that matter to you are charged by the provider?

The list of fees for any provider can get pretty long, but I only consider the things that impact me in my normal usage of the platform. The things I look for and expect are:

  • They don’t charge anything for “account maintenance”
  • The don’t charge fees for trading the ETFs I care about4
  • They need to offer a way to access daily interest rates in the neighborhood of the Bank of Canada overnight rates (some do this by paying good rates on any cash lying around your accounts, some do this by offering access to purchase HISAs, and as a last resort, there are ETFs that buy HISAs, too5)
  • They need a “much more generous than the bank”6 way of doing forex7

I’ve used QTrade8 as my main provider for the last 15 years or so. They offer the things I need. But for the first time, I’m seriously considering making a switch to Wealthsimple9. I’m test driving them now with part of my retirement portfolio, but I’ve found at least one show-stopper that make them unsuitable for me — they don’t offer spousal RRIFs10 in their self-directed product offering!

Switching providers can be quite onerous, so it’s not something I take lightly, especially since my holdings are paying my monthly salary! The DIY market is getting more competitive, so it can pay to take a look around. What do you like/dislike about your current provider? Drop me a line at comments@moneyengineer.ca.

  1. Specifically, r/PersonalFinanceCanada mostly ↩︎
  2. Put your money in the highest interest rate savings account you can find, or buy a GIC. ↩︎
  3. Beyond bond ETFs. I don’t need to own individual bonds. ↩︎
  4. Had I written this phrase 5 years ago, I would have said “low fees”. However, in today’s competitive landscape, many brokers charge nothing to buy and/or sell ETFs. If yours does, maybe it’s time to take a look around. ↩︎
  5. e.g. CASH by GlobalX, HISA by Evolve ↩︎
  6. Most banks happily tack on 1.5% to spot rates on currency exchanges, just like most credit cards do ↩︎
  7. Norbert’s gambit would apply here, although it’s somewhat cumbersome. I’ll cover forex in some future post. ↩︎
  8. But I’m also somewhat familiar with BMO Investorline, Interactive Brokers and Wealthsimple. ↩︎
  9. Free ETF trading, good interest rates for cash holdings, just-launched zero fee FX transactions for amounts over $100k, and their currently running promo are all rather attractive features. ↩︎
  10. And, as I write this, I get a friendly email from Wealthsimple support confirming this, with a promise to let the development team know about it. ↩︎

Discover more from The Money Engineer

Subscribe to get the latest posts sent to your email.

2 thoughts on “What broker(s) do you deal with?”

  2. […] Passiv seems to think there’s only two brokers out there, namely Wealthsimple and Questrade2. Given that the Passiv platform supports direct connections to these two brokers, this is somewhat understandable. But make no mistake, there’s plenty of other options out there. And what’s right for your neighbour may not be right for you. What broker to use will depend on a bunch of factors, and I talked about some of them here. […]

    Like

    Reply

Leave a comment