DIY trading goes mobile: What brokerage is the best?

From now on, whenever you’re driving, pay special attention to your rear view mirror. The next rear-ender heading your way could be a day trader.

Competition for mobile devices is heating up among online investment brokers. Serviscor, a company that analyses and ranks Canadian brokerages, says discount brokers are jockeying to become leaders in mobile information delivery, social media, email responsiveness, website access and even investment screening tools.

BMO InvestorLine has become the first brokerage to introduce a self-directed advice tool for customers considering a shift in portfolio strategy while skydiving or walking the dog.

The price of convenience

Serviscor says Canadian discount brokers still lag their American cousins in terms of service and efficiency, but you have to wonder if convenience is really what the average investor needs. The truth is: a well-managed, diversified investment portfolio doesn’t require a flurry of spur-of-the-moment, lightning trades.

When you take into account that 95 per cent of the costs generated from online brokerage accounts are trading commissions it’s not hard to understand the push to provide better service to impulsive traders. According to Serviscor, costs breakdown like so:

• 70 per cent of costs come from stock trades

• 10 per cent are from exchange traded funds (ETFs)

• 10 per cent are from options trades

• 5 per cent are commissions on mutual funds

• 5 per cent of costs are account fees

The deep discounts being offered for bulk trades takes the temptation for investors with itchy trigger fingers up a notch. Discount brokerages affiliated with the big banks generally charge between $25 and $30 a trade for accounts under $50,000 but go as low as $10 if a client makes several trades each quarter – in some cases, at least 50 trades.

Discount brokers like to play on the myth of the hotshot day trader behind a wall of computer screens, executing precision trades in the blink of an eye. In reality, serious investors who manage their own accounts would rarely make 50 trades in a quarter. Market timing is for the pros and most of the time heavy trading merely eats into returns. As a specific example, fifty trades each quarter at $10 a trade will result in a guaranteed loss of at least $2,000 a year.

$30 a trade for less frequent traders is a hefty fee but ten trades a year, made after timely analysis, reflection, consultation and more reflection, will only cost you $300 a year.

And the winner is …

The Serviscor review ranked Scotia iTrade number one for the second consecutive review. The brokerages were judged in seven main categories and 32 sub categories including general usability, administration, online resources and fees.

BMO InvestorLine took second place – moving above the third spot for the first time in four years.

TD Direct Investing (formerly TD Waterhouse) has been steadily declining from top spot since the survey began seven years ago. Serviscor attributes the decline to its “failure to keep up with other firms in terms of website development.”

Here’s the list:

1. Scotia iTrade

2. BMO InvestorLine

3. Qtrade Investor

4. Credential Direct

5. TD Direct Investing

6. RBC Direct Investing

7. Virtual Brokers

8. National Bank Direct Brokerage

9. Disnat Classic

10. CIBC Investor’s Edge

11. Questrade

12. HSBC InvestDirect

13. Jitney Trade

14. Laurentian Bank Direct Brokerage