Last week, my Questrade newsletter arrived in my email inbox. Usually, I just delete it but for some reason last week, I clicked on it. Among other things, it had this statement:
Inactivity fee
As of July 10th, 2012, an inactivity fee of $9.95 per month is charged to clients with under $5,000 in combined equity for any month in which the client does not complete one commission-able trade. Clients are exempt from this fee if the account is open for less than 6 months. […]
I was furious! I am building my TFSA account, yes, but having been a student for the last 2 years, I certainly did not have $5000 in combined equity. I also wasn’t planning on adding several thousand dollars in the next two months! Immediately, I fired off a tweet to @Questrade, demanding an explanation. There was no answer. Next I fired off a tweet to @BMO to look into transferring my accounts. BMO, as always, provided me with information on the same day.
Finally today, a curious tweet came through my feed:
@OutlierModel We’ve got an update for you. Read it here: http://ow.ly/aW1mS
My interested was piqued. I followed the link to find myself directed to a post on the Questrade community forum. Here it is, reposted in its entirety:
Thank you everyone for your feedback here in the Exchange. We’ve read each of your comments, which led to a passionate discussion among our staff. Our CEO said it best: the real value of Questrade is our clients. Yes, we have to implement pricing changes to reflect the changing nature of this industry. But we have to do it without compromising our promise to you: provide all Canadians with cost-effective brokerage services.
I’d like to address the changing industry first. The costs of maintaining a brokerage account, active or not, are going up. Until now, and unlike the majority of brokerages, we’ve avoided inactivity or maintenance fees to pass on those costs. But this is no longer prudent. We are at the point where our more active clients will be subsidising inactive clients.
All that said, I want to reiterate my first point: we did read your feedback and are making changes – changes that we hope better reflect your needs of a brokerage.
Here’s a top-level summary of the inactivity fees:
- To remain active, you must make one (1) commission-able trade per quarter.
- Each quarter (3 months) your account is inactive, you will be charged a $19.95 inactivity fee.
- If you trade in the quarter following incurring an inactivity fee, the trades will be commission-free up to $19.95.
- All clients 25 years and younger are exempt no matter their activity levels.
- And finally, clients (and households with the same physical address) with combined assets of $5,000 or greater are exempt.
We will post details on our website soon, and I’ll let you know here in the Exchange when they are live. In order to accommodate these changes, we will postpone the effective date to September 30th, 2012. Note that I put a copy of this in RedFlagDeals.
Thank you again for all your comments.
Lynn Suderman
Director, Communications
I am happy, in general, with Questrade’s decision. Two months was NOT enough time to come up with money to fill my Questrade account. I also didn’t like how the announcement was made, hidden inside a newsletter. Giving customers until September to adjust to the changes is a fair amount of time. I am not sure if I will have over $5000 in my account by September, since it was not something I had budgeted for, but reaching that amount in four months is certainly more realistic than doing it in two.
I also think that the new fee structure is more fair. I definitely do not trade once a month and probably never will! Like many people, I tend to only review my account every few months and adjust if necessary. Sometimes I will make a new purchase. Most of the time, I just let my holdings reinvest in themselves automatically to save on fees. Requiring a transaction every quarter is much more realistic than requiring one every month.
The one thing I disagree with is the assertion that fees must be instated because otherwise “more active clients will be subsidising inactive clients”. What is the actual proportion of active and less active clients? How is it costing them money to maintain my account and process a trade (that I pay for) every few months? I receive no support from Questrade other than the use of their software. The times I’ve called for assistance, I have waited on hold for the better part of an hour only to speak to confused and disorganised customer service representatives. I don’t feel like I am a burden on their servers since I am apparently so “inactive”. In short, I find this explanation a little fuzzy and hand-wavy.
Any thoughts from other Questrade users? When I first read the newsletter announcement, I was ready to switch my account elsewhere. If Questrade was willing to charge me per month for doing nothing, then I was ready to pay more per trade in order to get better service. Now, I am in a wait-and-see mode.
