Looking for the cheapest way to invest in Canada? Then you must take a look at discount brokers.
However, not all trading platforms are made the same. Some might be better than others, depending on your investing goals and the features and benefits that each platform offers.
Questrade is one of my top picks for the best discount broker in Canada for several reasons. However, Interactive Brokers is also an excellent choice that boasts a longer history than Questrade. So, the question is: which one is better?
This Interactive Brokers vs. Questrade comparison article will discuss the two popular trading platforms available to Canadians and pit them head-to-head on several features.
Interactive Brokers vs. Questrade: A Quick Overview
Independent discount brokers have become very popular in Canada, as they allow Canadians an easier and lower-cost opportunity to invest in stocks, bonds, exchange-traded funds (ETFs), and other securities.
This section of my Interactive Brokers vs. Questrade comparison will give you a quick overview of both Canadian discount brokers and introduce you to these giants in Canada’s discount broker market.
About Interactive Brokers Canada
Interactive Brokers Canada is the Canadian expansion of the U.S.-based brokerage Interactive Brokers, LLC, which was founded in 1978. The platform has a reputation for its competitive trading fees and commissions.
It operates in several countries, including the U.S., Hong Kong, Japan, India, the U.K., Switzerland, Estonia, Russia, China, Liechtenstein, and Canada.
Interactive Brokers launched in Canada in 2000 to provide Canadians with direct and high-speed access to trade markets worldwide. It allows users to capitalize on its proprietary IB SmartRoutingSM technology to search for and get the best market prices from 125 markets across 31 countries.
- Boasts advanced trading features
- Has very low foreign currency conversion fees
- Has multiple regulations across several countries
- Offers a trader education package for professional traders
- Has a complicated process for opening an account
- There may be problems with Canadians having to pay inheritance taxes as the funds are domiciled in the U.S
Questrade is a self-directed investment platform that allows you to build your own portfolio at a low cost. The discount broker boasts over $25 billion in Assets Under Management (AUM).
Questrade has earned the reputation for being the fastest-growing online brokerage firm in Canada, with over 200,000 new accounts opened each year. This is mostly due to its low-fee structure for trading stocks and ETFs.
Founded in 1999, Questrade is a discount broker that has been around for a while. It is known mainly for its online trading platforms that let Canadians buy and sell ETFs, stocks, and other investments to build their own portfolios. The platform has won an award for being one of Canada’s “Best Managed Companies” for nine years.
- Offers free ETF purchases
- Offers a very affordable fee structure for trading stocks, options, and more
- Provides investors with comprehensive research tools powered by Morningstar
- ECN and FX fees may apply to certain trades
- Requires at least $1,000 to begin investing
Ideal User Profiles
Given the distinguishing features of Questrade and Interactive Brokers, let’s categorize the type of users who might find each platform most appealing.
Questrade Ideal Users:
- Beginner Investors: With its user-friendly interface and comprehensive educational resources, Questrade is perfect for those just starting out on their investment journey.
- Cost-Conscious Traders: The platform’s clear fee structure, promotional offers, and no hidden charges appeal to those who prioritize cost efficiency.
- Locally-Focused Investors: Those who primarily focus on the Canadian or U.S. market will find Questrade aligning with their interests.
Interactive Brokers Ideal Users:
- Professional Traders: With advanced trading features and a global reach, Interactive Brokers appeals to seasoned traders looking for a more sophisticated trading environment.
- High-Volume Traders: The tiered pricing system is advantageous for individuals who trade in larger volumes.
- Global Investors: Those who are looking to diversify their portfolio with international assets will find the platform’s global access enticing.
Interactive Brokers vs. Questrade – Features and Benefits
This section of my Interactive Brokers vs. Questrade comparison will discuss important features and benefits for both discount brokers. I will compare the features for both online brokerage platforms so that you can see which one beats the other in each aspect.
Interactive Brokers vs. Questrade – Available Brokerage Investing Account Options
Interactive Brokers and Questrade allow their clients to open several types of accounts using their platforms.
Some of the Accounts Offered by Interactive Brokers
- Tax-Free Savings Account (TFSA)
- Retirement Savings Plan (RRSP)
- Individual Account – Owned and used by one individual
- Joint Account – Owned and used by two individuals
- Trust – Account held by a Trustee as a separate legal entity for a client’s benefit
- Individual Retirement Account – IRA is only available to U.S. clients
- Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UGMA/UTMA) – Account for minors only available to U.S. clients
- Friends and Family Account – An account for a client group of up to 15 people
- Family Office Account – Account for an individual who is a Family Office Manager
- Small Business Account – Account for small corporations and businesses
- Advisor Account – Account for individuals who manage the client’s wealth and money
- Money Manager Account – Account for individuals hired to manage the client’s money
Some of the Accounts Offered by Questrade
- Tax-Free Savings Account (TFSA)
- Registered Retirement Savings Plan (RRSP)
- Individual Margin Account
- Registered Education Savings Plan (RESP)
- Spousal RRSP
- Locked-In Retirement Account (LIRA)
- Locked-In RRSP
- Registered Retirement Income Fund (RIF)
- Family RESP
- Life Income Fund (LIF)
- Trust Account
Interactive Brokers is a more internationally focused platform than Questrade and offers a wider variety of accounts that you can open with. As a Canadian investor though, you might prefer Questrade due to the variety it offers in terms of registered accounts.
Our Verdict for Accounts: Interactive Brokers features the most popular registered accounts like the TFSA and RRSP. However, unlike Interactive Brokers, Questrade also offers the RESP, LIRA, and RRIF. This gives Questrade a decisive edge over Interactive Brokers for Canadians.
Interactive Brokers vs. Questrade – Research Tools
This section of my Interactive Brokers vs. Questrade comparison will discuss the research tools offered by both discount brokers.
Research Tools Offered by Interactive Brokers
Interactive Brokers is a useful brokerage for more professional traders. It offers the IBKR Pro plan along with the Trader Workstation (TWS) platform to support the trading of any equity you can imagine, including global assets.
TWS is a sophisticated desktop trading platform that is not easy to use. It could easily go over the head of casual investors. However, it offers a wealth of valuable tools, like back-testing and scanning, for professional investors and traders committed to learning how it works.
The platform highlights several screeners to give you comprehensive back-testing functionality and portfolio analysis tools. At a monthly fee, traders who want to perform specific research can use the services of the third-party providers that Interactive Brokers works with.
Research Tools Offered by Questrade
Questrade offers three excellent research tools through its platform:
- Questrade Market Intelligence
- Questrade Intraday Trader
- Questrade IPO Centre
Market Intelligence is a research tool powered by Morningstar and is available at no additional cost.
The third-party researcher serves as the fundamental market research tool for Questrade. It offers analysis for stocks and ETFs along with mutual funds. It also offers quick and accurate stock information and in-depth market analysis.
On the other hand, Intraday Trader was designed with technical traders in mind. You can use this tool to monitor your target markets and set up chart patterns to visualize the data you are analyzing in the way you prefer. It also allows you to set up a target trade and sends you notifications with charts and a description of what happened when the target trade is triggered.
For its part, the IPO Centre offers you the chance to tap into the exciting world of Initial Public Offerings (IPOs). It lets you make more well-informed decisions about investing in IPOs by serving as a comprehensive analysis tool designed for IPOs.
Interactive Brokers may have more robust and professional-level research tools, but the platform charges additional fees for third-party research tools integrated with TWS. Meanwhile, Questrade offers research tools that are easier to use and are available at no additional cost.
Our Verdict for Research Tools: Seasoned investors who know how to operate TWS and have higher account balances might prefer Interactive Brokers for its more comprehensive research tools. However, Questrade offers a platform and research tools that appeal to every type of investor. It also features the additional benefit of the IPO Centre – a feature not many other platforms can boast.
Interactive Brokers vs. Questrade – Customer Service
The influx of Canadian investors into the investing world has led to the increasing importance of excellent customer service.
Interactive Brokers has a multilingual support desk operating from various offices worldwide. Most of these are available with over 15 different phone lines for clients across different countries to get support from the broker’s representatives.
Interactive Brokers also offers Ask iBot for addressing straightforward concerns that might not require a human representative’s help.
Unfortunately, many customers have complained about horrible customer support from the platform. It comes as no surprise considering that Interactive Brokers is better suited to professional traders. Casual or beginner-level traders might find it challenging to adjust to the platform, and its customer support is known for not answering for days.
On the other hand, Questrade’s top-notch customer service is an important reason why it is my favourite discount broker. Its customer service representatives have always been available through online chat, email, or phone. The staff is courteous and helpful, and in fact, Questrade has won the 2019 DALBAR Seal for Service Excellence.
However, there has been a significant downpour of negative feedback regarding its customer service in recent months. It could be attributed to an overwhelming number of new users and its team being unable to scale properly to meet the demand. But this is a problem that the discount broker needs to address to ensure a better user experience.
Our verdict for customer service: Between Interactive Brokers Canada and Questrade, Questrade is still the better platform for its customer service.
Interactive Brokers vs. Questrade – What Do They Cost?
Fees are always a significant factor to consider when choosing which trading platform to work with to achieve your financial goals.
Interactive Brokers and Questrade are lower-cost alternatives to traditional financial institutions and robo-advisor products. However, the cost of using each platform is different.
Interactive Brokers Fees
Interactive Brokers Canada has a straightforward pricing system with two pricing structures that you can go for:
- Tiered pricing
- Fixed pricing
The tiered pricing structure is the low broker commission that the platform charges you. Interactive Brokers reduces the commission based on volume and exchange, regulatory, and clearing fees. In case there is a rebate from the currency exchange, Interactive Brokers passes some or all of the savings back to you.
Trade volume per month is tiered to make trade commissions substantially lower for high-volume trades:
- Up to 300,000 shares per month = US$0.006 per share
- 300,001 – 3,000,000 shares per month = US$0.004 per share
- 3,000,001 – 20,000,000 shares per month = US$0.003 per share
- 20,000,001 – 100,000,000 shares per month = US$0.002 per share
- More than 100,000,000 shares per month = US$0.002 per share
The higher the number of shares you trade per month, the lower your fee becomes per share.
The platform’s fixed charges have a fixed low commission per share or a fixed percentage of the total trade amount. The fixed-rate includes all exchange and regulatory fees. For U.S. stocks, ETFs, and warrants, the transaction fees all pass through stock sales.
The broker charges C$0.01 per share with a minimum of C$1 per order or 0.5% of the trade value.
Questrade has low costs when compared to most other trading platforms in Canada. It has zero account fees.
There is also a foreign exchange fee for converting your Canadian dollars into whichever currency is necessary to facilitate foreign stock trades.
Besides the account fees, here is a quick look at the trading fees you can expect to pay with the platform:
- Stocks: $.0.01 per share with a minimum of $4.95 to a maximum of $9.95 per trade
- ETFs: Free to buy, but you have to pay $0.01 per share per sale, costing a minimum of $4.95 to a maximum of $9.95 per trade
- Options: $9.95 and $1 per contract
- Mutual Funds: $9.95 per trade
- Bonds: Free with at least $5,000 purchase
- GICs: Free with a minimum of $5,000 purchase
- International Equities: 1% of the trade value, with a minimum of $195.00 and applicable exchange or stamp fees, charged in the currency of the account in which the trade is placed
- IPOs and New Issues: Free but requires a minimum of $5,000 purchase
- Product Precious Metals: US$19.95 per trade
Questrade offers very competitive pricing, and offers several discounts and promos. It has an excellent promo offer of $50 in free trades that you can get right now.
Our verdict for fees Interactive Brokers has cheaper fees if you are trading at high volume. But for most investors, Questrade will likely work out to be cheaper as most people aren’t heavy traders.
Questrade’s robo-advisor product is called Questwealth, and you can use it to automate your investing decisions and balance your portfolio to align with your risk tolerance and investing goals.
It boasts the lowest management fees for a robo-advisor in Canada, as well as active management of the account.
You can learn more in my full Questwealth review here.
Our verdict for robo-advisors feature: Interactive Brokers doesn’t have a robo-advisor in Canada, so Questrade is the clear winner here.
Interactive Brokers vs. Questrade – The Verdict
Comparing different features, benefits, and fees between the two discount brokers might make Questrade the better platform to consider. However, I will discuss for whom both discount brokers would be ideal.
Use Interactive Brokers if:
- You are a seasoned professional trader looking to access high-quality research tools.
- You understand the sophisticated platform or are willing to learn it.
- You are looking for a more affordable choice for options trading.
You can check out my detailed Interactive Brokers Canada review to learn more about the discount broker.
Use Questrade if:
- You are an index investor interested in purchasing a lot of ETFs. It offers a wider number of ETFs that you can purchase for free.
- You aren’t a high-volume trader
- You value excellent customer service
You can check out my detailed Questrade review to learn more about the discount broker.
Interactive Brokers Canada is part of a well-established and long-standing brokerage firm with an excellent international reputation, but Questrade is the clear winner for Canadian investors.
Questrade offers a more straightforward user experience, lower trading fees, and zero annual fees. You get to control your investments and practice as a self-directed investor, but with support from substantial data to help you make better financial decisions.
After you pick out your robo-advisor, learn how to start investing in Canada.