Investors began 2018 with a surge of excitement that quickly turned to frustration when their online brokerage firms struggled to keep up with demand to trade stocks.
There were outages for the websites of both TD Direct Investing and RBC Direct Investing in the first few days back from the Christmas break, and complaints continued into this week. TD cited "unprecedented trading volumes" in explaining why investors keen to take advantage of hot markets and sectors, like marijuana, could not log into their accounts or complete trades.
We may well see a further surge in trading by individual investors. Here are nine things you need to know to survive the traffic jams ahead:
1.) It's just plain busy out there: While TD Direct and RBC Direct got a lot of attention as a result of their website issues, other brokers performed sluggishly last week.
2.) Mind the transfer out fees if you bail on your broker: Expect to pay in the area of $135 to move an account to another broker. Ask your new firm to pick up the tab – the bigger the account you're moving, the better chance you have of being reimbursed for the transfer fee.
3.) Watch for deals: Brokers may ramp up their offers to new clients if there's a sense that clients are on the move. In addition to absorbing transfer fees, brokers may offer clients a whack of free trades.
4.) Mind the delay if you bail: It can take weeks to get assets transferred and sometimes longer if there's a detail amiss in the transfer documentation. Expect at least a few days where your money is no longer in your old account, but neither has it arrived in your new one.
5.) Technology matters: Independent firms have an advantage over the big bank-owned brokers in terms of newer, more nimble technology. Bank-owned brokers must contend with what's known as "legacy systems" that are tricky to update and expand. New firms may be better able to handle sudden trading volume spikes.
6.) Consider test driving a new account: Before you transfer an existing account, start a new account at a different firm and make some trades. See if the website stands up to heavy trading (market open and close is a good time to test this) and check other amenities such as research and account performance reporting to see if they're adequate.
7.) Independent brokers are safe: Any reputable firm will be a member of the Canadian Investor Protection Fund, protects client assets against insolvency for up to $1-million. Some brokers offer additional protection on top of what CIPF provides.
8.) Find out which brokers are struggling with traffic: CanadianOutages.com tracks website issues for several brokers (and many other websites) and offers a forum where clients can report their troubles.
9.) Ask for compensation: Can't get into your account to trade? Try asking for some free stock trades. A dozen free trades would let you dollar-cost average your way into an exchange-traded fund over a year.