dedicated brokerages vs Banks

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Wallace
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dedicated brokerages vs Banks

Post by Wallace »

I'm thinking about opening an account with a dedicated brokerage like Questrade. Any thoughts on advantages/disadvantages compared to brokerages associated with the banking industry?

I couldn't find a thread already dealing with this, but if there is one, I'd appreciate the moderator adding my query to it.
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Re: dedicated brokerages vs Banks

Post by westcoastfella »

I have my RRSP at Questrade, and my non-reg and TFSA at iTrade.

Your question is a bit broad, what sort of aspects are you focused on? They are different, but in a lot of ways that are largely meaningless to me.
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Re: dedicated brokerages vs Banks

Post by AltaRed »

I don't know anything about the independents but suspect they might not provide the depth of analysis and research that the deep-pocketed discount bank brokerages can (by leaning on their full service organizations to some degree).

Perhaps more importantly, I also question whether independents that have lower fees and commissions than the bank brokerages have the financial resources to support their operation as well. Either the independents are less profitable, or they have to cut corners in other ways to balance the budget.

Still, Questrade seems to do a lot of advertising AND brag about their growth. Is this fact or smoke and mirrors?
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Re: dedicated brokerages vs Banks

Post by kcowan »

I find that the supplied analysis by my discount bank vendor does not add any insight. It is just convenient.

If I valued it, I would decide my bank vendor by comparing all of them first. Based on my level of trading, the trade commission is irrelevant.

When I was a trader, Canaccord was the best full-service vendor. When I stopped trading, I dropped them.
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Re: dedicated brokerages vs Banks

Post by adrian2 »

I would turn around the subject line: brokerages without an affiliate offering banking services vs. brokerages with such an affiliate.

My money is with the latter (but, OTOH, I never could wrap my mind around the "obsession" of British Columbians with credit unions).
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Re: dedicated brokerages vs Banks

Post by ghariton »

A minor point in favour of bank-affiliated brokers: It makes transferring money between various investment accounts, checking/savings accounts and credit cards extremely easy.

As stated above, while there are many differences, they don't matter to me. In particular, I don't use their research reports and alerts.

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Re: dedicated brokerages vs Banks

Post by SQRT »

I like to see all my financial assets on one screen and instantaneously transfer funds between all accounts. Hence bank and invest at one bank. Things are complicated enough without having several service providers.
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Re: dedicated brokerages vs Banks

Post by kcowan »

adrian2 wrote: 04 Apr 2017 09:40 I never could wrap my mind around the "obsession" of British Columbians with credit unions...
I am a Toronto native. I think of our banks as local, especially since BMO and RBC moved. But the banks make no effort to pretend they are local. For example, they will say they have to check with Toronto for anything special, whereas in Toronto they say they have to check with head office.

Also the CUs do a good job of playing their local card. Vancity, North Shore, Coast. And they seem to get more credit for supporting local causes (even though I doubt there is much difference).

(Has anybody compared bank discount brokerage versus full service? Now that they are declaring their fees, do you see any merging?)
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Re: dedicated brokerages vs Banks

Post by adrian2 »

kcowan wrote: 04 Apr 2017 14:22 I am a Toronto native. I think of our banks as local, especially since BMO and RBC moved. But the banks make no effort to pretend they are local. For example, they will say they have to check with Toronto for anything special, whereas in Toronto they say they have to check with head office.

Also the CUs do a good job of playing their local card.
Thanks for answering.

Does Bank of Nova Scotia has a larger proportion of customers from Nova Scotia?
Does Bank of Montreal have more people from Montreal compared to others?
Since I'm from the GTA, by that logic I should have my banking with TD; to a large extent, that's not the case.

All I care is to get good service, including the once in a blue moon special request at the teller's desk, and not to pay service fees. For deposits, of course I care about the interest rate I'm getting. I don't care, to any extent at all, where the head office is located. I don't remember any instance in which they (the bank) had to call their head office to sort out some request, and with today's technology, if they do have to call HO, why would it matter if it's 40 km away or 4000 km.
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Wallace
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Re: dedicated brokerages vs Banks

Post by Wallace »

Do dedicated brokerages have the same rules as banks in the event of insolvency?
With banks, equities and property in a safety deposit box are the property of the customer, but cash in the bank is counted as an asset of the bank. The first $100,000 cash is covered I believe by insurance but if you have anything over and above that, you would have to wait along with other creditors for a payout. Do I have this right?
Is it the same with a stand-alone brokerage? Is cash covered up to $100,000?
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Re: dedicated brokerages vs Banks

Post by Spudd »

Brokerages, whether bank-affiliated or independent, are covered by CIPF, which has a limit of a million dollars.

http://www.cipf.ca/
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Re: dedicated brokerages vs Banks

Post by twa2w »

Wallace wrote: 04 Apr 2017 15:57 Do dedicated brokerages have the same rules as banks in the event of insolvency?
With banks, equities and property in a safety deposit box are the property of the customer, but cash in the bank is counted as an asset of the bank. The first $100,000 cash is covered I believe by insurance but if you have anything over and above that, you would have to wait along with other creditors for a payout. Do I have this right?
Is it the same with a stand-alone brokerage? Is cash covered up to $100,000?
Cash on deposit ( savings accounts, gics etc)at the bank is a liability of the bank, not an asset.
All brokerages are covered by cifp in case of insolvency. If you purchae gics through your broker they are covered up to 100,000 cdic coverage if the issuer is a member of CDIC.
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Re: dedicated brokerages vs Banks

Post by Wallace »

twa2w wrote: 04 Apr 2017 18:57.....Cash on deposit ( savings accounts, gics etc)at the bank is a liability of the bank
Does that include cash in a brokerage account? IOW, you sell $150,000 of shares at 10 am and the brokerage goes bust at 11. Is that cash now a liability of the brokerage firm or is it the property of the client?
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Re: dedicated brokerages vs Banks

Post by twa2w »

Wallace wrote: 04 Apr 2017 19:38
twa2w wrote: 04 Apr 2017 18:57.....Cash on deposit ( savings accounts, gics etc)at the bank is a liability of the bank
Does that include cash in a brokerage account? IOW, you sell $150,000 of shares at 10 am and the brokerage goes bust at 11. Is that cash now a liability of the brokerage firm or is it the property of the client?
It is their liability as they owe it to you. Thus it is also your property.
It is not covered by CDIC but under CIPF. total coverage is a million.


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Re: dedicated brokerages vs Banks

Post by johnsmith1 »

1 million per account?
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Re: dedicated brokerages vs Banks

Post by Peculiar_Investor »

The best source is CIPF themselves, What Are the Coverage Limits| CIPF
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Re: dedicated brokerages vs Banks

Post by johnsmith1 »

It's very hard for RESP account to get close to 1 million.
But the coverage on the other two types is not very assuring. I remember when ameritrade was in Canada, they insured up to 10 million dollars.
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