Dale Jackson

Personal Finance Columnist, Payback Time

Follow|Archive

Everyone knows money talks, but the old adage really rang true this week when RBC and TD bank’s online discount brokerages fizzled out. A firestorm of protest erupted on social media over a series of outages caused by what the banks term “unprecedented trading volume.”

Both banks were slow to respond and eventually vowed to beef up their platforms. However, as of Friday afternoon it wasn’t entirely clear the problem had been resolved for either bank. 

Not surprising, service on institutional trading platforms was smooth as silk. That’s because the big brokerages, who make big trades, generate big commissions, and get the best platforms. 

There’s a lesson in this for all retail investors from pot-stock basement day traders to casual users managing their own retirement savings: you’re on the lower tier.

The dollar amounts might be lower but the stakes can be staggering for individual investors plotting the course of their lives. At the end of the day, big institutions trade other people’s money, and risk comes down to commissions and bonuses. As workplace pensions shift from the security of defined benefit pensions to market-exposed defined contribution pension more Canadians will need reliable trading platforms.  

TD and RBC will no doubt take measures to compensate customers in some way, but the banks may find it difficult to rebuild the broken bond of trust.

Fortunately, competition in the online brokerage market has come a long way in Canada with the rise of independent services like QTrade and Questrade.  Those online traders outranked the big banks in areas including reliability and costs in a recent review by Surviscor.

It’s now up to investors to demand more. In 2018 there is no reason retail investors shouldn’t expect the same level of service as the big guys.