Canadian discount brokerages trail U.S. in satisfaction

Investor satisfaction with Canadian discount brokerage firms has increased, from 679 (on a 1,000-point scale) last year to 700 this year, finds a study by J.D. Power and Associates.

However, Canadian brokerages continue to trail behind their U.S. counterparts, where investor satisfaction averages 768.

Read: Besting online sites, discount brokerages

The study finds the largest gaps in satisfaction between brokerage firms in Canada and the U.S. are with problem resolution (568 vs. 648, respectively); trading charges and fees (622 vs. 697, respectively); and interaction (752 vs. 817, respectively).

“In the U.S., competition has driven trade commissions much lower, forcing high-performing firms to compete in the value they provide their investors in terms of tools and resources,” says Lubo Li, senior director and financial services practice leader at J.D. Power and Associates in Canada.

Li adds, “At this point, the Canadian investor experience falls short, compared with what U.S.-based investors are getting.”

Read: Why it’s smart to discount

The perceived gap in value has a long-lasting effect. Only 19% of Canadian investors say they “strongly agree” they feel loyal to their primary investment firm, compared with 28% of U.S. investors. Also, 23% of Canadian investors say they “definitely will” recommend their primary investment firm, compared with 36% of U.S. investors.

The firms Canadians are most satisfied with are: Disnat (rated 768); BMO InvestorLine (720); National Bank Direct Brokerage (719); and TD Waterhouse Discount Brokerage (707).

If your clients use discount brokerages for their play money — to invest in stocks that are too risky for the portfolios they’ve entrusted to you — provide them with these tips:

• Consider the full range of services beyond the per-trade commission. In typical transactions, a $5 to $10 difference in commission is a very small percentage of the overall trade value;

• Read the fine print regarding the fees you will be assessed. Often, fees vary by the size of your account, as well as the frequency of your transactions.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.