BMO InvestorLine Review: A Premium Canadian Discount Broker
By my count, Canadian investors can choose from at least a dozen discount brokerages to do their self-directed investing. One of the larger brokerages is BMO InvestorLine, the online broker arm of Bank of Montreal, one of Canada’s Big 6 Banks. In this full review, I’ll let you know what to expect when you invest with BMO InvestorLine, how they stack up against the competition, and the type of client they’re best suited for.
What Is BMO InvestorLine?
BMO InvestorLine gives customers the ability to trade stocks, bonds, ETFs, and more, online. It’s part of BMO Wealth Management, which delivers full-service investing through BMO Nesbitt Burns and private banking services through BMO Private Banking.
InvestorLine Account Types
BMO InvestorLine offers a full range of self-directed accounts. Here is a list of what’s available:
Non-Registered Account Types
- Cash trading account
- Margin and Joint accounts
- non-personal accounts (Corporate, non-profit, charitable organization, estate, partnership, formal trust)
Registered Account Types
- TFSA – Tax-Free Savings Account
- RRSP – Registered Retirement Savings Plan
- Spousal RRSP – Spousal Retirement Savings Plan
- RRIF – Registered Retirement Income Fund
- PRIF – Prescribed Retirement Income Fund
- LIRA – Locked-In Retirement Account
- LRIF – Locked-In Retirement Income Fund
- LIF – Life Income Fund
- RESP – individual and family plans
BMO InvestorLine Trading Fees
InvestorLine customers pay a flat fee of $9.95 on all stock and ETF trades. Option trades are $9.95 plus $1.25 per contract.
A commission schedule applies for orders placed over the telephone with a BMO representative. Options trades are also more expensive when made by telephone. According to InvestorLine, over 9,000 commission-free mutual funds are available on the platform.
BMO InvestorLine Account Fees
The last thing you want is to see a big portion of your returns get eaten away by fees. One of the worst culprits is actively traded mutual funds, with MERs that range as high as 2.5%. Compare that to an ETF at less than .10%, and well, you get the idea.
But MERs aren’t the only type of fee you have to watch out for when it comes to investment fees. Other charges, such as account administration fees, can also hurt your investment performance.
Here’s a list of BMO InvestorLine account fees and how you can avoid them.
Non-Registered Account Fees
Non-registered accounts that don’t maintain a balance of $15,000 will incur a $25 quarterly fee. This is something to be mindful of, as it can eat into a low-balance account’s returns. The fee is waived for clients who also hold a registered account and place at least two or more commissionable trades in 6 months (active account).
Registered Account Fees
There’s no charge for any registered account with a balance of over $25,000. If the balance is below $25,000 on an RESP, there is an annual account fee of $50. For all other registered plans (RRSP, RRIF, TFSA), the cost is $100.
Other Registered Account Fees:
RRSP/RRIF deregistration $50.00
Lifelong Learning Plan $25.00
Home Buyers Plan $25.00
Here is a list of fees charged for special requests:
- $50.00 Security registration
- $40.00/hr investigations, statement search, etc.
- $25.00 Internal transfers (non-registered accounts)
- $150.00 Transfer out
- $50.00 Estate account certificate – handling fee
- $10.00/request Cheque requests
- $50.00/certificate/month Safekeeping securities (exclusions apply)
- $5.00/item Statement replacement
- $2.00/monthly Paper statement
How to Open a BMO InvestorLine Account
You can get started with BMO InvestorLine in 3 easy steps:
- Choose your BMO InvestorLine Self-Directed Account. Choose from several different account types right on the InvestorLine website.
- Collect your documents. Before you apply, make sure you have all of the necessary documents on hand. A Social Insurance Number is required, as is one piece of valid photo ID, i.e., driver’s license or passport, employment, and banking information (void cheque)
- With these items in hand, you’re not ready to complete the online application. According to BMO, the process takes about 20 minutes. Once this is complete, you’ll need to print out the application, sign it, send it to BMO, or drop it off at a local BMO branch. You’ll need to include a copy of your government-issued photo ID.
Note: Except for TFSA and RESP accounts, InvestorLine requires that you fund your account with a minimum of $5000 as soon as the account is approved. This is a definite drawback for new investors or those with smaller account balances.
BMO InvestorLine 5 Star Program
InvestorLines’ 5-Star Program gives frequent traders and high net worth investors access to an elite level of service. 5 Star investors fall into one of 3 tiers – Gold Star, Platinum Star, and Diamond Star. Let’s take a look at the qualifying criteria and benefits of each level.
Gold Star: To qualify, invest $250,000 or make 15-74 trades per quarter
- Access to BMO Market Pro-Lite Trading Platform, with real-time quotes
- Transfer fee reimbursement of up to $200 (transfers-in from another institution)
- No account administration fees
- 5 Star customer support
- No account administration fees
Platinum Star: Invest $2,000,000+ or make 75-179 trades per quarter
- Access to BMO Market Pro with real-time and level II quotes
- Priority 5 Star Support
- Access to educational events
- Access to BMO Capital Markets TSX 60 research
- BMO Private Banking benefits
- Discounted pricing
Diamond Star: Invest $5,000,000+ or make 180+ trades per quarter
- Exclusive IPO Allocation
- Maximum pricing discounts
For investors looking for control over their investments but who also want some advice, BMO offers adviceDirect. AdviceDirect will monitor your portfolio 24/7 and keep you informed anytime it needs rebalancing. You’ll receive customized buy and sell recommendations, and you can reach out to a licensed advisor with questions anytime.
Of course, there’s a price for this added level of service. For portfolios between $50,000 and $100,000, there is a flat annual fee of $750. Between $100,000 and $500,000, the cost is .75% of the overall portfolio balance. And for amounts over $500,000, you’ll pay the maximum fee of $3,750. The higher your balance, the more value you get.
BMO Smartfolio is like a robo-advisor, but with investment experts on hand to handle your questions. Clients benefit from the simplicity of a hands-off digital investing experience at a low cost. Invest in ETFs with fees that range between .40%-.70%. Eligible account types include TFSAs, RRSPs, RESPs, and RRIFs.
The Pros and Cons of BMO InvestorLine
As with any online brokerage, BMO InvestorLine has many advantages, as well as a few drawbacks. Here’s my list of pros and cons:
While they’re not the cheapest online broker out there (more on that in a moment), I like that InvestorLine’s standard pricing is simple and easy to understand. Stock and ETF trades have a flat fee of $9.95, which is relatively standard for a bank brokerage. There is no minimum balance regardless of account types and no account fees if you maintain a balance of $15,000 in your account.
Advanced Tools for Active Traders:
As should be expected of any big bank brokerage, BMO InvestorLine offers plenty of advanced support for its best customers, including a dedicated customer support line, real-time quotes, Capital Markets TSX 60 Research, and access to Exclusive IPO Allocation Options. An active trader is considered anyone who makes more than 75 trades per quarter.
With BMO Investorline, you can speak with a customer support representative between 8 AM and 8 PM, Monday to Friday. Not all discount brokerages offer this level of service.
High Minimum Balance Requirement:
Except for TFSA and RESP accounts, you need a minimum of $5000 to open a BMO InvestorLine account. For this reason, new investors are better off looking elsewhere.
High Standard Trading Fees:
Relative to the other bank brokerages, BMO’s trading fees are reasonable, but at $9.95 per trade, there are far cheaper options out there, including Questrade and Wealthsimple Trade. While fees aren’t the be-all and end-all when investing online, it is an important consideration.
BMO InvestorLine vs. Questrade
For the past few years, our top-rated discount broker has been Questrade, so regular readers may be wondering how BMO InvestorLine compares. If you ask me, InvestorLine and Questrade were designed with different clients in mind.
If you’re looking for the lowest-cost investing option, Questrade wins hands down. Their standard trading fees are lower, including no commissions on ETF purchases. They also don’t charge annual administration fees on their accounts.
BMO InvestorLine caters to high net worth investors and active traders who are willing to pay a premium for the most advanced tools and personalized service. Both the account minimums and the fees are evidence of this. It all comes down to what you value more.
Who Is BMO InvestorLine Best Suited For?
There you have it, my BMO InvestorLine review. I consider BMO InvestorLine to be a premium discount brokerage. In other words, it features a top-notch trading platform, with advanced market & research tools for its most active traders, an intuitive mobile app, reliable customer support, and the security of dealing with a major financial institution.
For this reason, I think BMO InvestorLine is well-suited to existing Bank of Montreal customers who want the convenience of managing their money all in one place. I also think they are an excellent option for any sophisticated, high net worth investor who can make use of their advanced market and research tools.
On the other hand, if your main objective is low fees and you’re not concerned about all of the bells and whistles, you’re likely better off with a low-cost platform, like Questrade or Wealthsimple Trade.