National Bank Direct is among the leading online brokers in Canada, and when you look into their approach, it is clear to see why. Over the past couple of years, National Bank Direct have made major improvements, which has allowed them to compete alongside Canada’s other top brokerages. While it can’t be said that National Bank Direct are the perfect product overall, it is clear that they have their sights set on making a big impact in the coming years. There is still work to be done in order for National Bank Direct to be considered the best online broker in Canada, however, it is now impossible to argue with the fact that they do have some of the most competitive pricing in the business.
A previous criticism in relation to National Bank Direct was that they were unable to adequately respond to their customer service requests, but as revenues decrease, it is predicted that more resources will be assigned to the support network for new customers, which should make a major difference. While their suite of products are perhaps below the level of their competitors, they do offer research tools to those customers who make more than fifteen trades per month.
When it comes to the aforementioned major improvements made by National Bank Direct, there is a lot to be impressed by. Firstly, just like other big discount brokerage companies in Canada, they currently offer a wide variety of different accounts, including but not limited to TFSA, RRSP/RSIF, Individual Pension Plans, Estate Accounts, In Trust Accounts and Investment Club Accounts. Furthermore, they also offer accounts for corporate entities.
The improvement made by National Bank Direct that made the biggest headlines, however, was the fact that in August 2021, they became the first big bank online broker to offer $0 trading fees in Canada. By removing trading on its direct investing platform, National Bank Direct were able to offer a complete line of North American Stocks, and ETF products and services with no limitations to the Canadian public. Overnight, this landmark announcement from National Bank Direct completely changed the landscape of Canadian stock trading and brokerage firms. It is incredibly important to stand out from the crowd in business, and this was a sure fire way to do just that.
By becoming the first Canadian bank to offer zero commission trading, National Bank Direct sent a message to their competitors as well as to the general public. While the market in the United States of America is super competitive, this announcement has made other major Canadian banks sit up and take note. It came as a surprise that a major bank was the one to lead the in this development in Canada, as opposed to a smaller company trying to make their way in the market. While zero commission trades are now considered standard in the United States, it is revolutionary within Canada. It shows that there is a lot Canada can learn from their neighbours, and this is perhaps the first sign that they will.
Staying with the Canadian market, let’s take a look at a what a selection of National Bank Direct’s main competitors fees are. While we can say that the majority of their competitors offer relatively low fees, no one can claim to be in the same boat as National Bank Direct. For example, while BMO Investorline have distinguished themselves from other major banks in Canada by offering commission free ETF transactions, you will still be charged a flat $9.95 fee for each individual trade made. While this fee is promoted as a surprise free option, it is quite high for the Canadian market. For example, when it comes to trading fees, this puts BMO Investorline at a disadvantage when it comes to other discount brokerages such as Questrade and Qtrade.
The trading fees for both Questrade and Qtrade can also be discussed both in terms of ETF fees and trading fees. It is free to both buy and sell over one hundred ETFs with Qtrade, whereas, when it is free to buy ETFs with Questrade, they do charge their standard trade fee if you sell ETFs. When it comes to trading fees, Qtrade remain very competitive with their pricing, charging $6.95 per trade for Investor Plus Program members, $7.75 per trade for investors aged 18-30, and $8.75 per trade for everyone else. In comparison, Questrade charges an incredibly low $4.95 when trading up to 500 shares, up to a maximum of $9.95 after that. While there is little to separate the two overall, Questrade’s trading fee is the obvious winner here.
Additionally, there are no ECN fees with Qtrade, but you are often charged small amounts with Questrade. Furthermore, Mutual Fund Purchases are free of charge with Qtrade, but fees do apply with Questrade. Both charge $25 per quarter as their account fee, but do waive this under certain circumstances. With Qtrade, this fee is waived if one of the following three conditions are met. Firstly, if you hold $25,000 in your account, secondly, if you make 2 trades per quarter or have made 8 in the last year, or, thirdly, if you add over $100 automatically as part of a recurring monthly contribution. Questrade waive this fee if you hold more than $5,000 in your account, make atleast one trade per quarter, or if are younger than the age of 25.
As demonstrated in this article, the Canadian discount brokerage market is competitive. As usual, when there is competition, each service provider will do all they can to offer something that their competitors cannot. This is clearly the aim of National Bank Direct, which has made a big statement by switching to zero trading fees as of August 2021.
While this offer has grabbed big headlines, there are of course many other factors to consider when choosing which discount broker is best for you. Other factors to take into account are customer service, user friendly experience – or whether or not they have a mobile app at all – safety rating, and ease of sign up. Moreover, certain offers will be better suited to certain traders, and it is important to research a number of discount brokers before signing up. As is highlighted in the comparison between Qtrade and Questrade when it comes to their $25 account fee, there are even circumstances where fees can be waived or avoided by fulfilling certain criteria. And again, a discount broker might tick the main boxes for you, but if you plan on doing the majority of your trading via your smartphone and they do not have a suitable mobile app, you will want to rethink your options.
What we can say for sure is that National Bank Direct made history by becoming the first big bank online broker to offer $0 trading fees in Canada, and it is a decision that is guaranteed to have lasting effects within the Canadian market.
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