I’m back and suspending my political rage to be the true altruist you all know (probably not) and love (a stretch).
I’ve found that an ignorant proceeding in the financial industry is a prevailing focus on the what rather than any guidance towards the where. Investors are inundated with information on what stocks to buy or sell, but for us beginners, it seems a basic inquiry to ask where one carries out all these buying/selling shenanigans?
Disclaimer: Circling back to my first article, if you have elementary math skills, you are aware of what’s in my savings account and my author credibility is shot, so, as per, understand this is just the accumulation of tedious research carried out by yours truly (underlined for emphasis as an excuse for my manager as to why this article was handed in late).
Say you want to buy a new pair of Nike’s. The first step is considering what store to buy them from.
Do you go to Gravity Pope for the clout of buying from a trendy boutique?
Foot Locker for painful practicality and a remembrance of things past?
The Nike store itself to be visually assaulted by people in bike shorts and cropped hoodies (my mothers most powerful proverb: leggings are not pants)?
Is the metaphor clear yet?
You need to choose which platform to buy your stocks from prior to deciding which investments to purchase.
A broker is “any person that acts as an intermediary between an investor and a securities exchange”, however, when it comes to trading platforms, computers are persons too (liberating for the novice investor, alarming for all other aspects of life). Unless you have a license to make trades with any security exchange, you need a broker to buy stocks.
For the traditionalist (with $): Full Service Broker
Go old school and talk to a real person (groundbreaking)! The rose of dealing with another human is, well, that you’re dealing with another human. You can address the whole of your financial life, including how to buy that exposed brick loft on Main Street (I am a walking cliché) or diagnose your own financial management struggles (view disclaimer). Most banks provide the option to use their financial advisors for your investments but you can also explore options of advisors who work at brokerage firms or independently. Naturally, this handholding approach is more expensive than the successive alternatives, charging annually a median 1% of your assets (however this number can range higher for small accounts and lower for big ones). This choice is typically recommended for people with a high net worth and/or complicated tax situations.
For the novice millennial/Gen Z’er: Robo-Advisor
The full service broker’s more affordable cousin that’s part human, part computer. A robo-advisor is an automated investment service that carries out the job of investment advisors by using algorithms that help you pick stocks and create a portfolio based on your goals and risk tolerance. Robo-advisors have lower fees since they tend to offer commission-free trading. You can manage your portfolio entirely online. This choice is typically recommended for the entry-level investor due to its ease.
Top 3 (from tedious research):
- Wealthsimple: I have a crush on this one. It’s simple (ha), and they have a socially responsible investment approach that focuses on clean tech and low carbon. Their modus operandi is to set it and forget it, leaving all the work to the algorithms and all the peace of mind knowing that you are being fiscally responsible to the investor.
- BMO SmartFolio: if the computer/lack of human element of the robo finds you uneasy, this option takes a more hands-on approach with a team of advisors helping you choose your portfolio and actively making adjustments where needed.
- Questwealth Portfolios: this one bleeds into our consequent overachiever type. This is the best for investors who want to use a robo for their core holdings while also playing Warren Buffet and trying their luck at individual stock picking.
For the overachiever: Discount Broker
A DIY moment featuring investor autonomy. These discount brokerages, also known as online brokers, allow investors to pick, buy and trade assets such as stocks, bonds and ETF’s (for another article, in due time), all on their lonesome. This option cuts out the middleman, saving money on commission and only spending the base trading fees (why they are called discount brokers. See? Full circle).
Top 3 (more tedious research)
- Qtrade Investor: A Hannah Montana best of both worlds situation, with thorough market analysis and progressive online user experience. If my reputation was not utterly tanked by my previous articles and their referencing, it now is.
- Questrade: eclipsing other discount brokerages in terms of customer service and a supposedly unparalleled mobile experience. This one seems to be for the modern investor who wants to click a few buttons on their phone during their lunch break. Again, absolutely not I, and probably no one reading this article. (Thus far, don’t worry, we’ll get there my mini Buffett’s).
- TD Direct Investing: the largest discount brokerage firm in Canada and ideal for the “good student”. This brokerage has impressive depth and availability of market data including technical analysis, quotes, market notifications and a myriad of other things that would currently mean nothing to me.
I’ve separated these into distinctive categories, however, as is with every company wanting to do it all and not fall behind, many traditional banks have robo options and robo options offer discount brokerage options and so on and so forth, leaving a convoluted but accessible space to invest. Happy money-making.
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