Targeting investor types pays off for online brokers: survey

BMO InvestorLine maintains top overall ranking in Gómez Canada scorecard

By: IE Staff
May 26, 2003 May 26, 2003
13:20

BMO InvestorLine retained its top ranking overall for the second consecutive Internet Broker Scorecard in Gómez Canada’s recently completed analysis of online brokerage firms. The results were released on Monday.

DisnatDirect, a division of Desjardins Securities, and E-Trade Canada were among the top online brokers for the active trader and serious investor segments respectively.

BMO InvestorLine took top honors for the Life Goal Planner segment, while E-Trade Canada at the top of the One Stop Shopper group.

Nine of the 12 online brokers evaluated in the biannual scorecard showed an absolute improvement in their rankings.

“In particular, significant work was accomplished by almost every on-line broker since our last Scorecard” said Sam Cukierman, managing director of Gómez Canada in a news release. “Online brokers have been implementing changes to improve navigation, provide more sophisticated trading tools, and have made a quantum leap on educating the investor with an emphasis on financial planning engines and programs that inform, teach, calculate, compare, provide alerts, watch lists and other educational content.”

Some bank-owned online brokers also made inroads into integrating their banking and online brokerage platforms, allowing customers more timely, convenient accessibility to their investment, bank account, credit card and wealth management information.

Also noteworthy is the continued focus on retaining the loyalty of the active trader, a segment that is a continued source of fees and commissions generated.

While retaining its tried and true methodology, some of the Gómez Canada weightings for the 2003 online broker rankings were adjusted to meet the market realities firms are placing on focusing on individual investor segments. Specifically, increased emphasis was placed on providing weightings to categories that reflected a more relevant overall cost that took into account price and volume rather than simply measuring minimum commission levels.

“As online brokers continue to use price and value added services to differentiate themselves, Gómez Canada responded by focusing on more than just best price available on market and limit orders for small equity transactions” Cukierman noted.

DisnatDirect leapt to top position in the overall cost ranking, followed by Qtrade, Credential Direct, and E-Trade. DisnatDirect recently launched its direct-access brokerage service in April of this year, becoming the first Canadian financial institution to offer investors a direct, no-intermediary link to the market at attractive pricing. CIBC Investor’s Edge ranked fifth in overall cost, but ahead of the other major chartered banks’ on-line brokerage arms.

The overall rankings for 2003 (2002 rankings in parentheses) were as follows: