Switching to Questrade, is it worth it?

Every January and February, Questrade blasts its ads everywhere. You’ve probably heard them on the radio or seen them on television. To be honest, the ads are quite effective since they always show how people are getting ahead by lowering their fees. Some of the scenarios may be over the top, but there’s no denying that lower fees can put more money in your pocket.

When people see and hear these ads, it can quickly get their attention. Switch to Questrade and they can instantly have more savings that could pay for a home down payment or increase their retirement fund. It seems like a no brainer, right? Yes and no. Switching to Questrade can be worth it, but you need to have a strategy in place and what you’re getting yourself into. Here’s what you need to know about Questrade and if the hype is worth it.

Is Questrade really cheaper?

If you watched the ads linked above, you will see that Questrade’s messaging really targets their low fees. But, is Questrade really cheaper?

Here’s the thing. Self-directed investing, in general, will be cheaper than both robo advisors and mutual funds. Why? Because you are doing the work yourself. You are knocking out either the human financial advisor or the use of the algorithm. By not having to pay for those ‘privileges’, often charged as management fees, you can reduce your rates significantly.

Now, robo advisors do have management fees. But they are still significantly cheaper than mutual funds because robos don’t have the same overhead costs. They don’t have the brick-and-mortar buildings to pay for and they don’t have the same required human touch that a financial advisor offers. As such, robo advisors can decrease your fees significantly.

I’ll discuss both Questrade direct investing and Questwealth Portfolios, which is their robo advisor, as well as their respective fees in more detail below.

What is Questrade?

Questrade Canada is a multi-award winning company and Canada’s fastest growing brokerage with more than 200,000 new accounts opened every year. Established in 1999, Questrade currently has $20 billion in assets under its management and is considered to be one of the most trustworthy investment firms in the country.

Questrade is a self-directed online brokerage that allows you to build your own portfolio to save on fees. You can invest in products such as stocks, ETFs, Options, Bonds, GICs, precious metals, and more. Account options include RESP, RRSP, TFSA, margin, entity, Forex & CFDs.

The self-directed investment approach allows you, the investor, to save money by cutting fees. Now, that’s not to say that investing with Questrade is without fees, however, by doing the work yourself you can save quite a bit of money by not having to pay things like management fees. When it comes to Questrade fees, you can expect to pay $4.95-$9.95 per trade to buy stocks and $0 per trade to buy ETFs.

Questrade has no annual fees for the basic account, however, if you do want to upgrade there are two paid options.

 The Enhanced account: $19.95/month

• level 1 live streaming data
• live streaming for Intraday Trader
• additional perks
• If you spend more than $48.95 in trading commissions, you will be automatically rebated $19.95

Advanced Account: $89.95 per month

• Active trader pricing unlocked
• Advanced Canadian level 1 & level 2 live streaming data
• Select US level 1 live streaming date
• Individual data add-ons are available
• If you spend more than $48.95 in trading commissions, you will be automatically rebated $19.95
• If you spend more than $399.95 in trading commissions, the monthly fee will be rebated

Questrade is undoubtedly the lowest-cost option for investing, however, self-direct investing does mean you have to do everything on your own.

What is Questwealth Portfolios?

If the idea of self-direct investing sounds too intimidating for you, then consider Questwealth portfolios. Questwealth portfolios is Questrade’s robo advisor service and offers easy investing for beginners (or those who just don’t want to do the work).

Now, keep in mind that as a robo advisor, you will pay more in fees with Questwealth Portfolios than you will with Questrade. There is a management fee (0.20-0.25%) as well as the MERs associated with the ETFs you’re invested in (typically 0.17-0.22). However, it is still significantly cheaper than mutual funds, which typically cost around 2.5%, due to the fact that, as a robo advisor, Questwealth Portfolio doesn’t have the same overhead costs.

For those looking to open an account with Questwealth Portfolios, you’ll have a choice of several account types including TFSA, RRSP, RESP, LIRA, RIF, LIF, and cash. Questwealth Portfolios also offers free tax-loss harvesting if required and socially responsible investing options (SRIs).

Questwealth Portfolios, as a robo advisor, will be more expensive than the self-directed investing offered by Questrade. However, if you don’t feel comfortable doing the work and trading on your own, then this is a great investment option that will still cost you significantly less than mutual funds.

Are there other options?

There are plenty of other options when it comes to both self-directed trading and robo advisors in Canada. The key is to choose which route is best for you (self-direct or robo) and then compare from there.

As I said above, Questrade is considered to be the best in Canada for self-directed trading. The platform is simple and clear to use, customer service has fantastic reviews, and the fees are about as low as you can get.

When it comes to robos, Questwealth Portfolios does have the lowest fees as well. However, there are plenty of options out there and several other factors to consider. It’s worth taking a look at a few other robos such as Wealthsimple, CI Direct Investing, Justwealth, and Nest Wealth.

Another option to look at is Tangerine funds. While more expensive than robo advisors (and subsequentially more expensive than self-direct investing), many people already use Tangerine for their online banking, so they can be a convenient choice.

Is it worth switching to Questrade?

So, is it worth switching to Questrade? Well, are you paying higher fees elsewhere? If yes, then it might be worth the switch. Again, Questrade is considered to be the best self-directed investment company in Canada right now so unless you are incredibly happy with whomever you are investing with now, it might be worth considering a switch. There’s a reason why Questrade has won so many awards over the years- maybe it’s time for you to see why.

The amount you save in fees could be worth tens, if not, hundreds of thousands of dollars over your investing years. If you’re looking to switch your RESP, your child could end up with a few thousand dollars extra compared to mutual funds. Fees really do make a significant difference.

How to switch to Questrade or another financial institution

If you decide you do want to switch to a different financial institution you can, but you want to make sure you do it properly to avoid any potential penalties. For example, you can’t just withdraw money from your TFSA, put it in your bank account, and then do an online transfer to another institution. That will count as a withdrawal and you will lose the contribution room until next year.

Instead, you need to create a new account with the new financial institution you wish to move to and ask them to transfer the funds for you. This way, there is no actual ‘withdrawal’ from your TFSA. To learn more on how to do this, read my article on how to transfer your TFSA.

There is a similar process to follow for RRSPs. If you are planning on doing a Questrade RRSP transfer (or to another financial institution) you can take a look at how to do that in my guide for transferring your RRSP.