With online trades becoming cheaper and easier to execute, more educational and research resources available, and financial-planning tools added weekly, discount brokers have come a long way since first setting up shop in Canada in the mid-1980s. The standard features for discount brokers include a range of stocks, bonds, and funds to trade online or by telephone, basic research and education tools. Aside from this uniformity, improvements vary by industry. While some have focused on customer services, others have focused on creating a better online experience and educational tools and resources. So, which one is the best for a retail investor, and how do you choose a discount broker?

To put things into perspective, an individual who is just starting to save has relatively little money to invest. Therefore, a tax-free savings account and an RRSP are likely the kind of accounts he or she will open. To avoid costly trading commissions, she searches for a discount broker with a reasonable selection of mutual funds and possibly some commission-free exchange-traded funds.

There are a few things to keep in mind. Most discount brokers have no minimum account size but discourage small accounts by charging fees. Some brokers even charge account inactivity fees. While this fee of usually around $50- $100 seems small, it will pike up and take a hit on your returns.

RBC Direct Investing is a top choice for an investor of modest means. RBC’s minimum RRSP account size is $15,000 in total assets. They also offer an extensive selection of Series D mutual funds, which are designed for self-directed investors and have relatively low management expense ratios.

Qtrade is also a good option for those who have less than $15,000 in total investment. The RRSP maintenance fee is only $50 annually, and Qtrade’s mutual fund selection includes strong performing, low-fee funds from a variety of investment firms.

Additionally, BMO recently took home the title for Best Online Brokerage at the 2013 Morning Awards. BMO’s fund line-up includes low-fee mutual funds from Mawer, Leith Wheeler and Steadyhand. BMO’s InvestorLine adviceDirect is a fee-based option that provides exceptionally personalized advice. Inexperienced investors, therefore, would find this service particularly useful.

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