Brokerage

A brokerage is the company that provides you with an account to buy and sell investments. When you purchase an ETF or a stock, you’re doing it through a brokerage. In Canada, common examples include Wealthsimple, Questrade, and the self-directed investing platforms offered by the big banks (like TD Direct Investing or RBC Direct Investing).

Types of brokerages

Full-service brokerages pair you with an advisor who manages your investments and gives you personalized recommendations. They charge higher fees for this, often a percentage of your total assets each year.

Discount (or online) brokerages give you the tools to invest on your own. You pick your own investments and make your own trades. Fees are much lower, and many Canadian discount brokerages now offer commission-free trading on stocks and ETFs.

Robo-advisors sit somewhere in the middle. You answer questions about your goals and risk tolerance, and the platform builds and manages a portfolio for you automatically, usually for a smaller annual fee than a full-service advisor.

Why it matters

Your choice of brokerage affects what you pay in trading commissions, what account types are available (TFSA, RRSP, FHSA, RESP), and how easy it is to manage your investments day to day. If you’re comparing options, our brokerage comparison guide breaks down the differences.

Example

Say you invest $500 per month into ETFs. At a discount brokerage with commission-free ETF purchases, you pay $0 per trade. At a traditional bank brokerage charging $9.99 per trade, that’s roughly $120 per year in commissions. Over 20 years, those commissions alone add up to $2,400. Factor in the lost growth on that money, and the difference could be over $4,000. The brokerage you choose is one of the first decisions that affects your long-term returns.