Choose your own adviser

Opinion

A common downside about being a Canadian consumer is a lack of choice.

Be it cell phones, cable and internet or even banking, it can feel the fight for our dollars is performative, opposed to being a matter of survival of the fittest among providers of goods and services.

Surprisingly, that’s less so when it comes to our investments.

We have tens of thousands of advisers, more than a dozen robo-advisers and a similar amount of do-it-yourself (DIY) online discount brokerages to choose from.

So much choice can be a challenge unto itself.

Fortunately, if you are trying to pick an investment lane or just curious about what’s out there beyond your own adviser, you can lean on a few annual studies to provide clarity.

Among them is the J.D. Power Canada Investor Satisfaction Study, which rates full service brokerages — investment advisers — and discount brokerages, online trading platforms catering to do-it-yourself (DIY) investors.

Among its notable findings is, “contrary to popular belief, younger investors are even more interested in advice than older ones,” says Kapil Vora, senior director of wealth intelligence at J.D. Power. (Which makes sense given younger adults just starting out generally have less knowledge about investments.)

Of course, the most notable facet of the study are the offerings that ranked first this year: National Bank Financial for full service brokerages; Wealthsimple Trade for the discount brokerages.

National Bank comes out ahead because it’s not too small. It’s the sixth Big Bank, after all, with all the benefits, such as a wide shelf of products and services.

Yet it’s also not so big clients feel like numbers, Vora adds.

Wealthsimple is prized by its users for innovation. It was among the first robo-advisers in Canada — offering automated portfolios of low-cost exchange-traded funds (ETFs) to suit investors’ risk appetite and goals, all in a mobile app format.

Then, Wealthsimple Trade launched in 2019 — a DIY platform that brought the widely successful no-commission trade trend in the U.S. to Canada.

The platform is also a leader in making investing feel seamlessly easy. That said, most discount brokerages are pretty good at that, Vora says.

“You don’t need a lot of money; you just need an app” is the credo of Wealthsimple and many other online trading platforms, including Questrade — which also now offers no-commission trading, he adds.

Questrade ranks first among discount brokerages in another annual study. Ratehub.ca published a report earlier this year, evaluating online brokerages based on metrics such as desktop quality, mobile app functionality, fees and overall service.

Questrade would have scored even higher, says Natasha Macmillan, business director of everyday banking at Ratehub.ca. But the discount brokerage announced no-commission trading about a month after the Ratehub study was published.

The Big Banks did well, too, in the report, with TD Direct Investing ranking best among them. “It scored well because TD has a lot of learn-to-invest videos and in-depth analysis information,” Macmillan notes.

As for robo-advisers, another study, this one by MoneySense, ranked Questwealth Portfolios (offered by Questrade) as the leader in the Canadian market.

Notably, all studies found no full-service brokerage, online discount brokerage or robo-adviser is a terrible choice.

All have strengths and weaknesses, and if you have a good investment strategy that is diversified, low-cost and well-suited to your goals, you are likely to make out OK, no matter your choice.

Still, a few basic rules can help find the right fit.

First off, do you want to invest on your own?

If not, a full service brokerage — an adviser-guided experience — is a better match, says Marko Bilandzija, spokesperson for Manitoba Financial Services Agency. “A financial adviser is a great fit for … people who don’t have time or the interest to manage their investments.”

Discount brokerages are for individuals with an interest in investing. “You don’t need to be an expert, but you have to be willing to do research,” Bilandzija says.

Not everyone wants to do that, he adds.

That said, you can always test drive the DIY experience. Many online brokerages offer practice accounts. The investment performance data is real, but the capital invested is not.

Online resources also offer help in making a choice.

That includes the Ontario Securities Commission’s Getsmarteraboutmoney.ca.

“We recommend using the investor personality quiz because it helps you understand just what kind of investor you are,” says Theresa Ebden, vice-president of the OSC investor office in Toronto.

Of course, whenever choosing an adviser or brokerage, make sure the individual and organization are registered with regulators. This is easy to do; just web search ‘Check before you invest’ or ‘Are they registered?’ Both take you to the Canadian Securities Administrators search database where you can find all licensed/registered brokerages and investment advisers in Canada.

Not all advisers — like fee-only financial planners — may show up in searches, “so if you’re unsure, contact your local securities commission,” Ebden says.

What’s important above all else when making a decision is not to rush, she adds.

“Even though our world emphasizes speed, with investing, it’s often best to slow things down.”

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com