How does Questrade make money?

  • Questrade is a Canadian wealth management and online brokerage platform that was founded in 1999 by Edward Kholodenko and three unidentified business partners.
  • Questrade has a revenue generation strategy typical of a fintech company. Most revenue is derived from trading fees since, under Canadian law, the company is banned from collecting payment for order flow.
  • Questrade also collects portfolio management fees, subscription fees for advanced trading features, and a host of ancillary administration fees.

Background

Questrade is a Canadian wealth management and online brokerage platform that was founded in 1999 by Edward Kholodenko and three unidentified business partners.

Kholodenko, a Ukrainian who emigrated to Canada at the age of 5, launched Questrade at a time when online trading was in its infancy. At the peak of the dot-com boom, Kholodenko was brokering trades for customers in a small Toronto office as most Canadian households could not afford a fast internet connection.

After the dot-com crash and the September 11 terrorist attacks, the Questrade team suffered a lost in investor interest and was subsequently forced to raise capital to stay afloat. Questrade then successfully endured the 2008 GFC and an instance in 2012 where the company that handled its clearing declared bankruptcy.

In 2014, Questrade entered the robo-advisor market with several low-fee investment portfolio products for newbie investors or those who are less inclined to set up their own. There are also now products more suited to those who desire more control over their investments.

Today, Questrade has over $30 billion in assets under administration and adds around 250,000 new customers annually.

Questrade revenue generation

Questrade has a revenue generation strategy typical of a fintech company, earning money from trading fees, subscription fees, management fees, and administration fees.

Trading fees

Most company revenue comes from trading fees which are charged to customers whenever they buy or sell securities. 

Fees vary according to the type of security:

  • Stocks – as low as 1 cent per share with a minimum fee of $4.95 and a maximum fee of $9.95.
  • ETFs – consumers can purchase exchange-traded funds (ETFs) for free, but selling will also attract a 1 cent per share fee up to a maximum of $9.95.
  • Options – these can be traded for $9.95 with an additional fee of $1 per contract.

Fees are also applicable for CFDs, FX, mutual funds, international equities, precious metals, and in some cases GICs. Note that Questrade tends to charge more fees than its U.S. counterparts because collecting payment for order flow is banned in Canada.

Management fees

For managed investment accounts there are also fees applicable:

  • For balances of $1,000 to $99,999, the fee is 0.25%.
  • For balances above $100,000, the fee is 0.20%.

Subscriptions

Subscription fees are charged to customers who desire extra features to enhance their trading experience. Market level data from various stock exchanges is one example that can be accessed with a monthly fee.

Prices range from $19.95/month to $89.95/month depending on the package chosen.

Administrative fees

Lastly, Questrade charges a number of administration fees under numerous circumstances.

A few examples of these fees are provided below:

  • Accounts – fees are charged for the deregistration of education and retirement-focused accounts, for example. These range from $25 to $100.
  • Transfers and withdrawals – wire transfers in Canadian dollars attract a $20 fee whilst those made in U.S. dollars attract a $40 fee.
  • Certificates and documents – various fees are also charged for verification procedures, certificate registrations, and copies of trade confirmations and account statements.

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