Investing

is there a reason to have a bank brokerage account instead of keeping all investments with discount brokers?

  • Last Updated:
  • Dec 21st, 2020 9:22 am
[OP]
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Apr 20, 2009
153 posts
101 upvotes
Ottawa

is there a reason to have a bank brokerage account instead of keeping all investments with discount brokers?

we have been using discount / online broker for many years. Not really trading but investing regularly.

I am wondering should we transfer some / all of our "static investment" (stocks, etfs) which we likely never sell to one of the big 5 banks' inhouse brokerage. We are thinking safety (real or perceived) with a brick and mortar institution. We are also contemplating on long term accessibility issues, as we get older in 20-30 years maybe a local, human access point would be beneficial instead of having all online.

so, what do you think? are we having a point here regarding safety? costs? inconvenience having yet again another brokerage account??
I guess this is parallel discussion with daily banking with an online vs big5 bank
6 replies
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Dec 31, 2018
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I am kinda the opposite. Why would I want to hold static investments for the next 20-30 years in some institution that may not be here the next day?

After I pay the trading fee, I’m not paying additional fees the big banks as someone who holds etfs. Of course there are fund management fees but those apply if you purchase via an online broker as well. Since I don’t trade, paying less than $100 per year for around 10 purchases is not a huge deal.
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May 11, 2014
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Iqaluit, NU
The notion that big bank brokerages are expensive isnt universally true. From a pure commission based standpoint, that more or less may be true, but again it depends what you do.

I use Virtual Brokers and CIBC IE. VB I was graduated on the penny a share commission. This cannot be beat on many aspects. However if I were to buy small value shares, this no longer is cheap (caps at $9.99). And while CIBC is much more expensive per trade, my margin rate is much cheaper. Additionally, CIBC allows for a much heavier borrow rate should I need it. So while VB from a basic commission standpoint is cheaper, for my needs, CIBC is become cheaper and with lower opportunity costs on my trading. VB does offer free ETF purchases.
CIBC also gives free banking and credit card with $100k in IE which is also another plus.

Questrade for most people the free ETF purchases are great, however the ECN fee can add up. If you start buying in significant chunks Of cash, this can be substantial. A physician friend who buys ETFs for his corporate account noticed that the amounts he buys might be cheaper with the Big 5 bank brokerages who often will give free trades as a bonus since he is a physician.

My advice is we should look at what every place offers and choose accordingly. Banks are not necessarily the most expensive and may actually be suited better for the investor.
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Deal Addict
Mar 10, 2011
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First would like to cover off the terminology. The big banks also have discount brokerage arms or subsidiaries in addition to wealth management services. Example, Royal Bank has RBC Direct Investing (discount brokerage) and also RBC Wealth management which is a full service broker.

Since you are not trading frequently and you would feel more comfortable with a big bank, you could go with a big bank discount brokerage. Unless you are a day trader, the trading fees are pretty cheap anyway at 9.99 per trade or less. And since you don’t trade, that shouldn’t even make a difference to you anyway and you would sleep better at night.
[OP]
Jr. Member
User avatar
Apr 20, 2009
153 posts
101 upvotes
Ottawa
xgbsSS wrote: The notion that big bank brokerages are expensive isnt universally true. From a pure commission based standpoint, that more or less may be true, but again it depends what you do.

I use Virtual Brokers and CIBC IE. VB I was graduated on the penny a share commission. This cannot be beat on many aspects. However if I were to buy small value shares, this no longer is cheap (caps at $9.99). And while CIBC is much more expensive per trade, my margin rate is much cheaper. Additionally, CIBC allows for a much heavier borrow rate should I need it. So while VB from a basic commission standpoint is cheaper, for my needs, CIBC is become cheaper and with lower opportunity costs on my trading. VB does offer free ETF purchases.
CIBC also gives free banking and credit card with $100k in IE which is also another plus.

Questrade for most people the free ETF purchases are great, however the ECN fee can add up. If you start buying in significant chunks Of cash, this can be substantial. A physician friend who buys ETFs for his corporate account noticed that the amounts he buys might be cheaper with the Big 5 bank brokerages who often will give free trades as a bonus since he is a physician.

My advice is we should look at what every place offers and choose accordingly. Banks are not necessarily the most expensive and may actually be suited better for the investor.
any thoughts about safety/security/long term accessibility? is this figures into where you actually long term park your shares / etfs?
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May 11, 2014
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111222 wrote: any thoughts about safety/security/long term accessibility? is this figures into where you actually long term park your shares / etfs?
ZERO.

Virtual Brokers is owned by CI Investments.
Questrade is one of the largest brokerages in Canada.
Wealthsimple is backed, majority owned by Power Financial/IG (or however their share structure happens to be since it is already complicated).
All reputable brokerages have CIPF insuring upto $1million per account.

Even in the event of a bankruptcy, brokerages don't own your shares. They are in trust generally, may be lent out, but the shares themselves are still yours. Unless brokerages are doing crazy outlandish trades, very difficult to see this being an issue. As for access, if immediate access was required, you could always wire rather than EFT. Questrade and VB where EFT limits are I believe a few ten thousand per day, hasn't been an issue, for me anyway. Besides for such large purchases (eg. house), I'd get it prepared over a few months anyway.

I now use 3 active brokerage accounts utilizing them for their strengths and for different purposes.
And also to just try them out!
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Dec 26, 2012
283 posts
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TORONTO
i was thinking of using a couple active brokerages as well to play into the strengths. I use WS Trade to purchase my ETFs and Canadian stocks (and some US based ones). I was thinking of opening a Questrade account to focus solely on US stocks as the fees are better than WS Trade

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