Online brokers need a steady flow of new clients to build their businesses, but not everyone is exactly welcomed.
Young investors and others just starting out are subtly discouraged from opening accounts with annual maintenance or administration fees of $100 a year, and there can also be minimum account-size requirements.
The independent online broker Questrade recently lowered its minimum to $250 from $1,000 for most registered and non-registered accounts. First home savings accounts and youth accounts for people under 25 were already set at $250.
Another broker with a $1,000 account minimum is Desjardins Online Brokerage, a notable choice because it has no commission for trading stocks or exchange-traded funds. While most other brokers don’t have account minimums, their account maintenance or admin fees are just as much a deterrent to new clients. If you start with $1,000, a $100 admin fee eats up 10 per cent of your capital.
Questrade, Wealthsimple and the TD Easy Trade app have no maintenance fees, and the latter two have no account minimums. Each offers a way to get into investing without losing money to admin fees.
Trading is a different matter. Wealthsimple offers commission-free trades, while TD Easy Trade offers 50 free stock trades a year and unlimited free trading of TD-brand exchange-traded funds. Questrade has a minimum commission of $4.95 for stock trades, which is half what most of the big banks charge. Questrade also offers commission-free purchases of ETFs, but you pay the usual commission when you sell.
If you plan to buy U.S. stocks in a registered account, watch out for yet another set of costs. All brokers offer U.S. dollar versions of registered accounts, where you can receive U.S. dollar dividends and proceeds from the sale of U.S. stocks without a costly automatic conversion back to Canadian dollars. A few brokers charge a quarterly fee of US$15 for this, including Qtrade Direct Investing and CI Direct Trading.
Wealthsimple charges a $10-a-month subscription fee for a service where you get access to U.S. dollar accounts. Clients with $100,000 or more in assets get U.S. dollar accounts at no cost.
Though they don’t publicize it much, a few brokers have low-cost programs for young investors. For example, Qtrade offers a somewhat reduced $7.75 commission with no admin fees for investors ages 18 to 30 who set up a pre-authorized plan to add $50 or more per month to their account. CIBC Investor’s Edge has special pricing for clients with a youth banking package, while Scotia iTrade waives admin and maintenance fees for clients aged 26 and under.