Look at fees on trades and shares
People invest online for two reasons: to take control of their investing and to save money. So if you're going to pay big bucks to trade, then what’s the point of using a discount brokerage? (Discount is the key word.) Fees are all over the map depending on how often you trade and which site you use.
Most of the bank-owned sites charge per trade; some of the independent sites charge per share. Scotia iTrade has removed commissions on 46 ETFs, while others charge. So investigate how much you'll end up paying in fees before you go it alone.
Review the quality of their research
A lot of people like discount brokerage firms because they get access to analyst reports, detailed stock information and other useful research tools. Not only can this stuff be fun to read, but it can help you make better choices investing.
However, each firm offers something different. Some use research from Morningstar, a respected mutual fund and stock analysis firm; others use in-house materials. Some use both. It all comes down to what you want, but look into it so you’re not stuck with research you don’t like.
To bank or not to bank
You have two choices: either sign on with a bank-owned brokerage, or use an independent firm. Some of the non-bank firms are cheaper; on the other hand, if you use a bank brokerage, transferring money from a bank account to an investment account is a cinch. If you have everything with one institution, like a mortgage and bank account, you may have more leveraging power if something goes wrong.
Customer service
Do-it-yourself investors won't get advice on investing over the phone, but you may need help navigating the discount brokerage's site, and you’ll want to talk to someone if there's a technical glitch. When you’re investing, every second counts, so it’s imperative that the firm's customer service is top notch. Imagine waiting on the phone with a technical question and the stock you want to buy jumps $10 while you're on hold. That would be a sign to switch brokerages. Call the customer service numbers of various brokerages to see how long you'll have to wait to talk to someone.
These are the main things to consider when looking for a discount brokerage firm, but you might want more from a firm than what we’ve listed here. A good place to start is the Globe and Mail's annual ranking of online brokerages. The paper rates each firm from best to worst and explains why someone might want to consider using it -- or not.
Page 1 of 1
