What are the best online brokers in Canada?

James Rodriguez James Rodriguez  updated on 2022-06-30

In 2020, Canadians opened more than 2.3 million DIY online brokerage accounts compared to only 846,000 new stockbroker accounts in 2019. This influx of new online traders has been attributed to pandemic boredom and younger generations increasingly taking control of their financial future in a study from Sun Life Financial. 

As more and more Canadians flock towards self-investing through online stock brokers it is worth asking: what do we actually know about online brokerages?

This guide explains what online stock brokerages are, how to pick the best online broker for you, a few pros and cons, as well as a rundown of online stock broker accounts. 

What is an online brokerage?

An online brokerage is a type of financial firm or company that allows you to open an online stock account. You can think of the online brokerage firm, or online stockbroker, as the virtual middleman that gives you access to all sorts of investment markets. The actual definition varies, but in its essence, an online stockbroker is an intermediary between a buyer and a seller of a financial instrument.

In the past investing was expensive, difficult and cumbersome because purchases and sales of financial instruments needed a physical financial advisor, who worked at a major bank or investment firm, to execute trades on buyers’ and sellers’ behalf. Enter online stock brokerages.

Similar to how Amazon is replacing many brick and mortar stores, so too have online stock brokerages revolutionized investing. By giving you direct online access to markets using technology, the expensive financial advisor was removed from the process. Now anyone can invest with ease for a fraction of the cost. 

What is an online brokerage account?

An online brokerage account, or online stock account, is a virtual account that you can open from afar through an online brokerage. It is like opening a bank account with a bank without having to visit the bank in person.  

The online stock brokerage account itself is a do-it-yourself, hands-on investment account where you personally invest towards your financial future. Through the account, you can buy and sell shares in specific companies, commodities like gold, silver and wheat, bonds, ETFs, mutual funds and much more. 

It is important to note that by simply opening an account with an online broker and depositing cash, you are not investing. Once your account is open, you have to actively allocate your money to buy shares in funds, commodities, bonds, etc. in order to invest.

How do I open an online brokerage account?

Opening an online brokerage account in Canada has never been easier. All you have to do is pick an online brokerage platform that you trust, navigate to their website and apply for a new account. 

Just like with a normal bank account you will have to provide a few extra details; for example, they may ask for proof of identification, your social insurance number, rough net worth, employment status and future financial goals. 

Just like banks and bank accounts, however, you need to find the right one. Use HelloSafe’s comparison tool now to pick the best online brokerage for you.

What’s Canada’s best online broker?

The best Canadian online brokerage differs depending on what you are after and who you ask. You should, therefore, make sure to do your own research and compare different online brokerage firms before making a decision on who to go with. 

We have listed a few of the most popular Canadian online brokers and major Canadian brokerage banks for you below.

  • BMO Investorline Self-Directed
  • Desjardins
  • Interactive Brokers
  • National Bank Direct Brokerage
  • Scotia iTRADE
  • TD Direct Investing
  • RBC Direct Investing
  • Qtrade
  • Questrade
  • Wealthtrade

What types of accounts do online brokerages offer?

After you have decided on the best online brokerage for you, you need to decide which specific type of online brokerage account will best suit your needs. 

Through Canadian stockbrokers, you will have the option of opening either government-registered accounts which come with financial incentives, or non-registered accounts which are more flexible.  

Registered online brokerage account

Canadian registered online brokerage accounts allow you to grow your savings and investments tax-free, which is a big advantage in the long run. Examples of registered accounts are:

  • Registered retirement savings plan (RRSP)
  • Registered education savings plan (RESP)
  • Registered retirement income funds (RRIF)
  • Registered disability savings plan (RDSP)
  • Tax-free savings account (TFSA)
  • Locked-in retirement account (LIRA)
  • Locked-in retirement income fund (LRIF)
  • Life income fund (LIF)

Each registered account comes with their own specific structures and financial benefits. As such you should use the specific account type that best matches your investment goals. Are you saving for your child's education, or investing money for your retirement?

Non-registered online brokerage account

A non-registered online stock brokerage account is simply an account that is not registered with the Canadian government and does not come with the same tax-free advantages. However, they are much more flexible as they don’t come with the same restrictions and are commonly used by active investors. 

Two main types of non-registered accounts are:

  • Cash accounts
  • Margin accounts

Most online stock brokerage firms in Canada provide both registered and non-registered accounts and will include the minimum account balances needed to open an account as well as any associated costs.

What to consider when comparing Canada’s best online brokers? 

All Canadian online brokerages offer something different in order to entice you into opening an account with them. You, therefore, need to look past the marketing and branding to discover the real differences that will affect your investing experience. 

Here’s a list of things you want to consider when looking for the right stockbroker:

Does the online broker offer the types of accounts I need? 

In Canada, there are two important account types to be aware of: registered accounts such as TFSA, RRSPs and LIRAs, and non-registered cash and margin accounts. Before choosing a broker you need to make sure that they offer the specific account type you need. 

What are the costs and fees associated with an online brokerage? 

Every online brokerage comes with its own associated cost. Compared to their major bank counterparts, discount online brokers are generally cheaper, but still, come with costs. You want to compare any annual fees, trading commissions or inactivity fees applicable to your account type, as well as identify if the broker has any minimum account balances that you need to take into account. 

Some brokerages like Qtrade Direct Investing and Wealthsimple Trade offer minimum deposits of $0 while Interactive Brokers Canada requires $1,000 to get started. On the other hand, others offer free transaction fees while another brokerage might charge $7.99 or more per trade. You can compare the estimated annual fees for top brokerages at the top of this page.

Does the online broker offer a good user experience? 

If you want and need immediate access to your investment account you may prefer a platform that offers a mobile application like Desjardins Online Brokerage and CIBC Investor’s Edge. For others, desktop access may be enough. Online trading platforms can be very complex so you should make sure your chosen platform is suitable to your needs as a beginner investor or an expert trader. 

Will you have sufficient access to investing tools and information? 

Will you be an active trader or someone who invests and forgets? Either way, you want to know that your online broker will provide you with the best research and analytical tools that can help you make the right investment decisions. 

For example, Questrade online brokerage provides users with insights, market data and research to help them make informed investment decisions based on fundamental and technical analysis. Specifically, their trading platforms Questrade Edge Web and Questrade Edge Desktop provide information on trending stocks, analyst ratings and Smart scores which are helpful to beginner and expert traders alike. 

Comparatively, SOFI online broker provides few analytical tools for users as they place more focus on customer experience. 

How is their online broker customer support? 

It doesn’t matter if you are a beginner investor or a skilled trader, you want the best online broker customer service possible. You will undoubtedly come across trading questions or tech problems so chose a platform with customer support that you can rely on.

How much does an online broker cost?

As with any service, there will always be cost and this is no different when using an online brokerage. How much the online broker costs depend on the service they provide. The price will vary depending on the sophistication of the platform and the plan level you choose. 

The most common costs that you will face are account maintenance fees, trading commissions or spread fees, and, sometimes, inactivity fees. 

BrokerageAnnual account maintenance feesTrading commissionsInactivity fee
Qtrade online brokerage$100*$8.75 per trade for equities Options and ETFs$0
National Bank Direct Brokerage$100*$0 on most financial instruments. Options carry a $1.25 commission per contract (min. $6.25)$0
Questrade online brokerage$01¢/share(min. $4.95 to max. $9.95)1¢/ETFs when selling (min. $4.95 to max. $9.95)Options $9.95+ $1/contract$24.95/quarter*
TD Direct investing$0$9.99/trade (+ $1.25/contract for Options)$0
CIBC Investor’s Edge$100*$6.95 (+$1.25/trade for Options)$0
Robinhood$0$0.00013/share $0.00218/option contract$0
Desjardins Online Brokerage$0$1.25/contract for Options$30/quarter*
Fidelity$0$0$0
Sofi$0$0$0
Wealthsimple Trade0.5% account balance <$100,000.001.5% US stocks and ETFs, 0% Canadian stocks$0
Price comparison of online brokerages

How much are account maintenance fees?

Online brokers by their nature have low maintenance fees because they have removed the physical financial advisor and you take care of your account and investments yourself. The maintenance fee varies depending on the stock brokerage and can range from $0 to $100 per account per year. 

It is also possible that the maintenance fee will be a percentage of your overall account value, but in those instances, it may have a maximum and minimum amount which keeps costs steady. 

What are trading commissions and spread fees?

The trading commission is the cost charged by the online brokerage when you execute a trade on their platform. It is usually a set fee and varies between the type of financial instrument you trade, but can also be a percentage cost. 

Spread fees is a term used by some online stock brokers that don’t charge a specific trading commission. The spread fee is instead built into the buy and sell prices of the financial instrument you are trading.

What are inactivity fees?

Online brokers mainly make money through commissions when you actively trade on their platform and if an account holder does not make any trades the online brokerage won’t make money. As a result, many online stock brokers have an inactivity fee which is a cost charged to your account when you don’t meet the minimum buying or selling activity during a specific period of time. 

What are the advantages of using an online brokerage?

As online trading continues to grow in popularity people have started asking specifically why they should use an online brokerage as opposed to enlisting the help of a traditional brokerage firm. 

The quick and easy answer is cost. Online discount brokerages are commonly cheaper than high street banks and investment firms. However, they also come with various pros and cons. 

Pros of online brokerage

  • Discount online brokerages are often cheaper than traditional brokerage firms
  • Self-directed investing gives you sole control over investment decisions
  • Flexibility
  • Avoid brokerage and financial advisor bias
  • Access to trading tools, technical and fundamental analysis
  • Real-time access

Cons of using an online brokerage

  • Steep learning curve
  • Investing comes with risk
  • It is easy to dive in too fast
  • Can be addictive
  • You have to keep track of taxes with non-registered accounts,
  • Online brokerages may only offer limited accounts and trading options

Are online stock brokers safe?

In order for online brokerages in Canada to offer their services to Canadian residents, they have to be licensed and registered with the Investment Industry Regulatory Organisation of Canada (IIROC). This authority sets and enforces rules for the financial conduct of investment firms. This makes any regulated brokerage inherently safe. 

Some online brokers that are registered with IIROC include :

  • Desjardins Securities - Desjardins Online Brokerage (Disnat)
  • Canadian ShareOwner Inc. - WealthSimple Trade
  • CIBC Investor Services Inc. - CIBC Investor’s Edge
  • TD Waterhouse Canada Inc. - TD Direct Investing

Canadian online brokerages can also choose to be members of the Canadian Investor Protection Fund (CIPF). This is a not-for-profit insurance program that protects your money should your brokerage firm go bankrupt. It gives an extra added blanket of security. 

What are the alternatives to online brokerages?

Opening an investment account with an online brokerage doesn’t suit everybody. It can take time, a fair amount of financial awareness and requires the investor to have an active interest in their financial future. Many who find that it doesn’t suit them may want to turn elsewhere to get the help they need. 

Robo-advisors and tranditional financial advisors are compelling alternatives to online brokerages.

Robo-advisors are nice for beginners as they automatically manage your money and investments by making investment decisions based on data that you provide when creating an account. They are a software system powered by algorithms and the automated process requires minimum input from the online broker and yourself. As your investments are taken care of on your behalf, robo-advisors do come with management fees; however, these fees are usually quite low. 

Financial advisors are great if you want a human touch. You'll get a personal coach to guide you in financial matters. Traditional financial advisors are always more expensive than discount online brokers or robo-advisors as they include a human counterpart. The annual charges of a traditional brokerage firm are usually higher than management fees of online brokerage firms, and sometimes they can charge commissions on trades that they execute on your behalf. 

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