Wednesday, 19 December 2007

Customer review: Questrade discount brokerage

It took me at least several months of web research, reading, and website visits before I finally decided on my choice of a discount brokerage for my equity RRSP account. As a starting point of reference for you to get a better picture of what companies serve Canadian customers in this market, you can look at the latest, summer 2007, market comparison of Canadian brokerages by Surviscor. In my own search for the overall good brokerage firm, I considered the following several factors:
  1. Availability of no-fee, low-cost RRSP and stock-trading account services;
  2. A broker’s membership in the Investment Dealers Association of Canada (IDA) and insurance of customer funds and accounts by the Canadian Investment Protection Fund (CIPF);
  3. Lowest transaction fees;
  4. No/low limits on minimum account balances;
  5. Trading in Canadian and US securities;
  6. Easiness of web access to an online trading platform for fast, secure, and dependable equity trading;
  7. Availability of technical support and customer service over the phone, chat, and e-mail.
It looks like a long list, but at least it captures some of the key parameters that I wanted to take into account. My initial plan was to open an RRSP account since I had accumulated a large unused RRSP limit and was planning to use the RRSP tax-deduction benefit to reduce my and my wife’s growing personal income taxes. As the next second step, in a couple of years, I was also planning to open a regular stock trading account. Given my very frugal nature, the key decision parameter for me was obviously zero fees associated with opening and maintaining these accounts. The second very important related concern was to get an account with the lowest per-transaction costs.

At the end, my final choice was Questrade where I opened my RRSP account. I have been currently initiating small stock positions on this account, and we will see if the size of my deposits (and hence the account balance) will increase over time.

What is my opinion about Questrade so far? Well, here is a brief review:

One of the pluses for me was that the company is located in Toronto, very close to where I live. I think it is always better to have a broker who is located nearby rather than using a company which is located abroad or far away.

Their stock trading fee of $4.95 on up to 495 shares is currently unbeatable in Canada (the fees increase by $0.01 per share on excess of 495 shares per trade). There is also an alternative plan with a fixed fee of $9.95 with an unlimited number of traded shares per transaction – this plan may especially appeal to those traders/investors who are into penny stocks. Because my trades are very small at this point, I do not need the $9.95 plan and therefore use a very affordable $4.95 plan.

The nice feature of both price plans is that there is no fee differentiation depending on the balance of your accounts. Most other brokerages set a minimum limit of anything from $25,000-100,000 in account assets as a prerequisite to take advantage of low transaction fees. Questrade has a very low C$1,000 minimum funding requirement; that is, you can start using the account after you deposit C$1,000 or more. I think this is a fairly small limit, especially if you compare it with the minimum funding limits set by the other Canadian brokerages. In addition to low account balance requirements, there are no maintenance fees or account inactivity fees, which certainly appeals to amateur investors who do not trade frequently or regularly.

It is relatively easy and straightforward to open a Questrade trading or RRSP account. I filled out an online application, which can be saved in progress and completed over time. Then I printed out the forms and mailed them, along with making an EFT deposit to fund my account. In a week or so, the account was fully operational.

There are three different online accounts that a customer uses at Questrade: (1) MyQuestrade administrative account with access to general information, account options, and features; (2) an online trading platform of a customer’s choice from several alternatives offered by Questrade; and (3) a pension plan account administered and maintained by the third-party organization. Some people complained about having to use three different accounts and having to remember three different sets of login IDs and passwords. I personally do not have any issues with that and even agree with Questrade that this account separation, if anything, enhances a customer’s security by reducing a chance of online fraud.

There are several different choices of trading platforms, starting with the free Webtrader and QuestraderWeb. These two platforms are very basic, plain trading platforms, which work quite OK for me since I do not trade in real time anyway. The more advanced trading platforms, which are offered by Questrade, are free only if you are an active trader generating a certain monthly minimum of trades. If you do your research in advance and use mostly limit orders, then you will be just fine with the Webtrader platform. I am not sure about the beta version of the second free platform, QuestraderWeb, since I am a bit concerned about its current encryption and web security features; that’s why I use the Webtrader. This platform is easy to navigate, and all of its functions are pretty straightforward. My impression is that execution of trades was very fast with market orders. Limit orders worked just fine as well.

Some people complained about poor customer service at Questrade. So far, I cannot say anything negative about it and hopefully will not have anything like that in the future. A couple of times I was in touch with Questrade’s customer reps over the phone and in chat, I received a pretty good and prompt service. Around busy times (mornings and evenings), phone waiting delays can be substantial but I can perfectly live with that by setting my phone on the speaker while performing my regular activities and waiting for the response at the same time.

One thing that I view as a minus with Questrade is a pretty long processing delay after an EFT deposit transfer. It takes roughly four business days for your online bank deposit to get reflected on your trading account. I think this is unacceptably too long since it is just a direct wire transfer which technically takes seconds to go through the electronic banking system.

Some people who do a lot of trading with U.S. stock complained about the fact that Questrade does not offer wash trades and charges a fairly large 10 bp spread on FX conversions. Because at this point I am more interested in Canadian stocks and do not actively trade U.S. stocks, this issue is not really important for me.

A bottom line: I think Questrade currently delivers the highest value-to-price service ratio in Canada for small investors and traders who have small asset balances and who trade irregularly and infrequently. It is probably true that wealthy investors with large asset holdings may prefer the safety, extra services, and extended customer support of large national or international brokerages rather than keep their portfolios with the budget-oriented Questrade. At this point, I am definitely better off with Questrade, and the future will tell if I stay and continue growing my portfolio balance with them.

In the case you are thinking about opening a low-cost trading or RRSP account, Questrade currently offers a very neat promotion: if you are referred by its customer, you get a $50 credit which is applied towards your cumulative trading fees in three months after you activate your account. This is equivalent to 10 free trades under the $4.95 plan. It sounds pretty good to me. If you are planning to open an account with Questrade, you can use this reference link, with me as a referrer. The Questrade system will automatically recognize you as a referred person and you will get your credit in three months after you activate your account. Just in case, my referrer ID is BEIT.

Also, Questrade currently runs a referral-based associate program where you can become Questrade’s associate and earn commissions from all people who become associates as a result of your reference (you need not be a customer to become a Questrade associate). If you want to register as a Questrade associate and sign up other associates through your blog or website, you can fill out the form on this page. On the application form, do not forget to put my Parent Affiliate ID, BEIT, in order to register as a referred associate.

If you have some questions about my personal experience with the Questrade account, I will be happy to answer them.


Questrade: Open a Questrade Account Online  Start Trading & Investing

9 comments:

4Life said...

Kudos to you for spending the time and doing your homework!

Best Wishes,
Dividends4Life

BEIT said...

Thanks. It was not as time consuming as it sounds.

BTW, I like your blog - very good posts.

Anonymous said...

Questrade Trade’s 30 Free Trades Promotion is a big SCAM!!! Make you you have proof that you enter the promotion code or else they will say that you did not enter the code and not give you the free trades.

BEIT said...

I am not sure if by the 30 Free Trades promotion you refer to the $100 referral credit program covering trading fees over the first three months of trading since activating the account. If that is the case and if you used my referral code (BEIT), please let me know by email - I am sure the issue can be resolved.

For any future referrals, I suggest, if you open and initially fund an account using my referral code, that you send me an email to confirm it, so that later on I can support your claim if a confirmation issue arises or if they delay the reimbursement payment.

I fully understand your frustration though - especially if such promotion was one of the important decisions to open an account with this firm.

Anonymous said...

I agree, the affiliate program doesn't work and they are stealing money away from people who put a lot of time and effort into generating referrals (such as yourself). The fact that it depends on a user entering the referral id is enough. Technology can *easily* auto track clicks but they have chosen not to implement such a solution. Why?

The only reasonable answer is that it is so they can avoid paying referral fees.

BEIT said...

They do send confirmations when a person opens a referral-based account; however, at the later stages it is impossible to track when such account becomes "qualified" for an affiliate referral bonus.

If I understand it correctly, the account becomes "qualified" when the account holder funds it and completes 10 trades. I can only guess how long it takes an average person to do ten trades, especially in the current market conditions.

It looks like the referrral fees eventually get paid, but with a substantial delay. I currently have several referrals opened in May-July 2008, however, the related affiliate referral fees have not been paid yet. Well, hopefully, at least they receive their promised referral rebates on time.

Anonymous said...

Yeah, I guess my problem is that *every* other affiliate program out there tracks clicks from links automatically. Questrade does not. The user *has* to enter the code in the promo/id for it to be linked to you. Since this is at the end of an ownerous application process I have to believe that they have set it up this way on purpose. It's great that you are indeed getting some referrals but I would bet that you're likely generating many many more that you're not even seeing.

Zack C. said...

TRADERS BEWARE OF QUESTRADE’S SHADY ACCOUNTING PRACTICES

I have had the single worst experience of my entire life with Questrade over the last few days, as I write this MY ACCOUNT IS MISSING $923.45 or 35% of my entire account balance & life savings after 3 CONSECUTIVE DAYS OF ACCOUNT IMBALANCES. I am actively spreading the word of my ordeal through any medium I can until the problem is fixed I have gotten a letter to the editor posted in the Kingston Whig-Standard and am awaiting publication of my letters to the Toronto Star, Toronto Sun and the Globe and Mail. My uncle is one of the webmasters at Craig’s List so I should have a leg up in informing as many people as possible.

I have personally traded stocks, options and funds for 7 years and ETF’s, FOREX and bonds for 5, so I consider myself informed about the online broker business. I am not a wealthy person but I enjoy investing in a ‘hands on’ fashion. I had an account with E*Trade for 6 years with no problems. A few months ago I left them for Questrade because of the cheaper commissions and their favorable consumer ratings.
Up until the morning of March 5, 2009 I had a very good experience with Questrade, I even got my account set up in only 4 business days, which was very impressive!

*Note all figures include commissions and exchange rates at the time of the transaction. Also, I have a TaxFreeSavings account, which means no margin account, no loans, no borrowing, no overdrafts. I can do transactions up to my current cash balance, any more money and it will reject the order because of insufficient funds. I can prove all claims/ figures through screen shots of history and physical account activity forms mailed to me after every day that I traded. With that in mind……

The night of March 4, 2009 at 4:05PM I bought 23 shares of FAZ (an ETF) @ $79.80 USD=$1,840.44 USD (total after trade commission) x 1.27(the exchange rate at the time)=$2337.36 CAD worth of stock in my account + $54.72 CAD in cash left in my account=$2392.08 CAD is my total account balance.

The morning of March 5, 2009 at 9:33AM I sold the same 23 shares of FAZ I carried over from the day before @ $86.86USD=$1992.81 USD (after trade commission) x 1.2785(the rate at the time)=$2547.81 CAD + $54.72 CAD (cash left in account since night before)=$2602.53 CAD total cash in account now. But there was actually $2232.04 CAD showing in my account balance when I checked it after the trade like I always do. That means my account was $370.49 CAD… just like that.

I’m not going to go in to greater detail but the same thing happened the next two days as well taking $165.04 CAD on the morning of March 6,2009 and then again for $396.96 on the morning of March 9, 2009. I suspended my account at that point and stopped trading. They had taken $923.45 CAD by the end of it, or 35% of my life savings (I am still young and busy paying off student loans). I would’ve suspended it after the first day but they assured me it would be fixed and after the second day I was waiting for this manager to call me back, which he failed to do.

Now you would think that in the face of this irrefutable evidence, and the fact that they admit a computer glitch took money through faulty a exchange of currency from a bunch of other people’s Tax Free Savings Accounts over these same days, that they would admit the error. Boy was I wrong, the real fight had just begun as I spent 2 hours and 06 mins. that day (have long distance phone bill to prove it) on the phone to 3 different people at customer service, trading desk, etc. They just tried to explain it away going down a checklist of things; didn’t add in trade commissions (even though the totals I used from webtrader history have them added in), exchange rate (which I took from the forex website), my miscalculations, etc. Each person would say they would “send a report to the back office and someone would follow up with me in the next few days. Guess what, not one of them did, I called again on Friday March 6, 2009 and asked to speak with a manger that didn’t call me back for 4 business days and when he did he brushed me off, even though they admitted “some money was taken from my account and put back”, $181.82 CAD on March 5, 2009. He refused to understand that I sold stock for this price and then my account balance said I had much less then what I sold the stock for, even though this is very simple concept. Robert Chandler is the name of the “manager” I spoke with. He at one point 30 mins. into the conversation said hold on for 5 mins. and pretended to have an audit done on my account, even though another manager told me audits take at least 3-5 business days. Apparently Rob is a superhuman adding computer… either that or a bald faced liar. I called him on the amazingly quick audit he was able to do and he hung up (I have a witness who was also listening to the call), after 45 mins. of denials. I spoke with him a few days later and said he couldn’t bully me into submission, that I wanted a real audit of my account. He told me a real audit is $75 an hour charged to my account. I asked if Questrade was found to be at fault, would the audit be free? He said no the audit would be around $500.00 in total and would not be refunded even if they found that Questrade took money from my account.

I then attempted to go higher then Rob by using a good comment blog post and contacting Emil Vojkollari and Nicholas Roussos, both in middle management, who seem to help people on the blog I saw solve problems with Questrade, and guess what? I have left 2 messages for Emil seeking assistance in the matter and 4 for Nicholas asking him for help as well and both HAVE YET TO RETURN ANY OF MY 6 MESSAGES. That is not client support, that is an abomination and I intend to make it my hobby for the next few months until every cent of my $923.45 CAD is returned to me with an apology of mass proportions. The ironic thing is that after my forensic auditor finishes his assessment I can take them to small claims court where if found guilty of taking money from me they would be on the hook for $1000’s to pay for my legal counsel (my dad, who charges $300/an hour) and $1000’s for their own legal counsel plus have to explain the verdict to the IIROC Canadian securities regulatory body and risk losing their retail broker license.

Sorry it took so long to read, but PLEASE, ANYONE WHO DOESN’T ALREADY HAVE AN ACCOUNT WITH QUESTRADE…DON’T, ANYONE THAT HAS AN ACCOUNT ALREADY…CLOSE IT. THIS AGGRAVATION HAS GIVEN MY WIFE AND I WEEKS OF SLEEPLESS NIGHTS AND UNTOLD STRESS. This recession has been hard enough on everyone let alone being taken for 35% of my families entire savings. Questrade are at best a terrible company with horrendous customer service and complaint response, and at worst criminal with gross misconduct on the part of ROBERT CHANDLER. You don’t hang up on someone or lie and say you are doing an “audit” that was magically finished in 10 mins. instead of the standard 3-5 days. The fact that neither Emil nor Nicholas has bothered to return my calls proves that the upper management is also not taking customer’s complaints seriously. It’s sad what this world is coming to sometimes, I hope between the huge ad on Craig’s list and the letter in the Whig-Standard, the letters hopefully in the Tor. Star, Tor. Sun and Globe & Mail: people will recognize the absolutely vile way they have handled me. I was only trying to get my family ahead using a discount broker to save fees, I didn’t deserve this, my wife didn’t deserve this and my 5 month old daughter certainly didn’t deserve this. Shame on you Questrade.

Zack C.
jackets@persona.ca

Eric said...

Questrade is terrible. I am fighting with those guys to recover $1000 for a stock split that their system "missed" as ususal. Here's how it works: You have a 100 shares at $10 each for $1000. The stock splits 2 for one. QUestrade won't give you 200 shares at $5... INstead, the following day you are down $500... as you now have 100 shares at $5... I sent about 13 e-mails over the last 3 months and talked to 3-4 guys... they all seem to understand but they don't change the number. In my case, the numbers are a bit different but I am down $1000 on the WY ticker. I am e-mailing the CEO this Friday if I have no action... ANyway, I am out as soon as this is resolved. If I leave now before it is corrected, they will pocket the $1000 on my behalf... I am stuck for now...

Mediocrity spells: Q U E S T R A D E