Years of market volatility have continued to take their psychological toll on Canadian investors.
According to TMX Group data, the number of trades made on the TSX and TSX-Venture exchanges fell 17% in 2012 compared with 2011.
And the volume of shares traded on Canada's key stock exchanges also fell 25% last year to less than 125.6 billion versus 168.1 billion traded a year earlier.
Canada's providers of online discount brokerage services have taken note of that reduced trading activity.
Business in Vancouver spoke with BMO InvestorLine president Viki Lazaris about the latest trends in Canada's growing discount brokerage market during her recent visit to Vancouver.
Q: How has the stock market’s performance affected online investors?
A: Trading volumes are lower than in the past, which is consistent with the market we’re seeing. But the sector is growing. We have more assets coming in to our business. The asset mix is what’s changing. Year over year, cash balances have seen double-digit growth and exchange-traded funds (ETFs) are growing at a faster rate than equities.
Q: Where has the growth been coming from?
A: In the past, the average online investor profile was someone who was middle-aged in the middle to upper income [brackets]. But we’re seeing growth in the market from new entrants who are younger investors looking to benefit from the service offerings of an online investing service. They usually start with an RRSP account or a TFSA [tax-free savings account], which allows them to learn more about investing by having access to research available to them.
Q: What online investing trends are you tapping?
A: What we’ve seen evolve in online investing services is the expansion of research and tools. Investors want to be more sophisticated in making decisions.
Last September, we launched AdviceDirect [a new, separate service], which is what’s next in online investing. An InvestorLine study found that more than two-thirds of Canadians believe that advice is important in making their online decisions, which is one of the messages that supported our decision to introduce advice for online investors.
Another trend is expanding the product offerings available for investors. A Leger Marketing survey found that 50% are looking for a wider range of investments, from ETFs [exchange traded funds] to a broader fixed-income inventory that can provide better yield.
Clients are also looking for strong customer support. This business is time-sensitive, so if there are any issues, you need to have someone available to help make a trade or move money between accounts.
Q: Has there been any change in online trading costs?
A: We’ve seen some stabilization in Canada on fees in the past few years. You do see online investing clients looking for more value in the offering; therefore, if you look at what online investing services are promoting, it’s some sort of cash-back opportunity for clients, or free trades, or it’s about expanding research and education tools. There are a number of things that can bring additional value to the proposition.
Q: Will the market continue to grow in Canada?
A: My belief is that online investing is open to all investors. It’s something I think more Canadians will want to be doing.•
