My Beef With Canadian Brokerages

As a financial consultant, I work with clients using a variety of discount brokerage services. And if I can be so brash—they’re awful. Simply awful.

Discount brokerage accounts fail the average investor because they don’t answer the simplest of questions:

1. What have I deposited into this account?

2. How much money have I made or lost?

3. What’s my percentage of return relative to some kind of benchmark?

What on earth am I missing here? What’s so hard about this?

I’ve used the following brokerages in Canada: CIBC Investors Edge, RBC’s Action Direct, TD Waterhouse and Q-Trade.

The first three are brutal. Investors using them are completely in the dark with respect to how they’re performing unless they can track their performances with alternative software, but who wants to do that?

It’s a pain in the rear to make a purchase through a discount brokerage, wait until the next day to see what price you paid, see the confirmation of the purchase on that following day, and then enter your trade into software that will track your performance.

The most impressive brokerage by far is Qtrade

They answer all of the above questions—and so they should.

For Americans, Vanguard is fabulous, (I definitely enjoy using it) but I think Canada’s Q-Trade even has Vanguard’s brokerage beat. QTrade will reveal your monthly performance, quarterly performance, and annual performance—while comparing each of these to a major benchmark.

As for the other big Canadian brokerages, they fail investors.

The closest they get to showing performance is with their comparative “book value” and “market value” information. You might think that an investment’s book value represents an amount that was deposited into the account, and that the market value is what the current value is.

Unfortunately, this is a terrible measurement of performance. Dividends or bond index interest, for example, get added to “Book value” so an investor can actually have a strong gain over a ten year period, but the brokerage might not show a difference between their book value and market value.

Why do the investors who use RBC’s Action Direct, CIBC’s Investor’s Edge and TD Waterhouse put up with this?

Can we pressure the big Canadian banks to show investors’ performances?

Investors deserve that.