HSBC InvestDirect is a discount Canadian brokerage house that allows do-it-yourself investors to access 30 different international markets all from the same source, including exchanges in China and Japan. Investors can use 10 different currencies in their trades and purchase a variety of investment products like stocks, ETFs, mutual funds, options, and fixed income securities. HSBC InvestDirect clients also receive access to premium features like HSBC Premier and HSBC Advance.
While some competitors like Questrade offer lower trading commission, HSBC InvestDirect’s trading fees are fair and the access you receive is well worth paying for. HSBC also provides a demo account for prospective new clients to try out their service free for a limited time. Additionally, new account holders get 60 days of commission-free trading to start their portfolios.
- Canadian investors
- Do-it-yourself traders looking to access global markets
- Active traders looking for discount commissions
- Access 30 different markets from around the world
- Trade in 10 different currencies
- Buy and sell over 4,000 different securities
- Receive discounted rates for active trading
- No commission-free ETFs
- Can’t hold U.S. dollars in registered accounts
- No smartphone app
- Longer than average customer service response times
HSBC stands for The Hongkong and Shanghai Banking Corporation, which was founded by Thomas Sutherland back in 1865 (when Hong Kong was still a British colony). Today, the British firm is a multinational conglomerate offering retail, commercial and investment banking services to clients all over the world. North American, Asia Pacific, and Europe are the largest centers for HSBC operations. HSBC is the 7th largest bank in the world, just behind JPMorgan Chase with $2.52 trillion in assets.
Who’s HSBC InvestDirect For?
HSBC InvestDirect caters to all different kinds of investors. Active traders will enjoy the low commissions and global market access, while buy-and-hold investors have a variety of account options and thousands of ETF and mutual fund choices.
Commissions are low for active traders and HSBC Premier members, but many of the account options require a $25,000 minimum to avoid annual and inactivity fees. New traders might have difficulty meeting these minimums, although the tax-free savings accounts have no minimum, other than what’s set by the mutual fund or guaranteed investment certificate.
U.S. traders are unable to open accounts since U.S. dollars aren’t permitted in registered accounts, but Canadian traders can access markets in North America, Europe and Asia from a single account. And while commissions are fair, HSBC exchange rates can be high.
HSBC InvestDirect's Platform and Tools (4 stars)
HSBC’s platform has features comparable with the best Canadian brokerages, although the layout is plain and the charting tools leave a little to be desired.
HSBC InvestDirect offers both of the main retirement vehicles offered to Canadian citizens:
- Registered Retirement Savings Plan (RRSP): Much like the 401(k) in the U.S., the RRSP allows investors to build a retirement portfolio with tax-free dollars. Taxes are then paid after retirement, allowing maximum savings. Limits are 18% of a worker’s pay or $26,000, minus any benefits provided by a pension.
- Tax Free Savings Account (TFSA): This type of account is similar to the American Roth IRA. Funds contributed to this account have already been taxed, so investments grow completely tax free. Like a Roth IRA, contribution limits are $5,500 per year, but TSFAs offer “contribution room.” Using contribution room, investors can play catch-up if they opened their account after 2017. TFSAs were created in 2009, so investors could potentially bank $52,000 in a single year using contribution room.
Other account types include the Registered Education Savings Plan (RESP) to support a child’s college education and Registered Retirement Income Funds (RRIFs), which are fixed income securities that don’t involve stock market risk. Taxable accounts are available as well, but investors need $10,000 to open one.
Account holders can use several different screeners to search for investments, including a technical analysis screener that looks for certain chart patterns or events. The ETF and mutual fund screeners can weed out high expense products or funds that don’t align with your investment thesis.
HSBC InvestDirect’s Research Offerings (2.5 stars)
HSBC only has official research from 2 different firms: Standard & Poor’s and Morningstar. While we’d like to see more offerings here, HSBC does a good job making sure investors can access reports from these companies by splitting them into customizable categories.
You can search for investment reports based on date, asset class, sector or market. Want to find out how Chinese stocks performed during Brexit? Choose Asia from the dropdown box labeled Region, select Equity commentary, and enter the dates you’d like to pull reports from. Having only S&P and Morningstar reports limits the overall effectiveness of HSBC’s research capabilities, especially when it comes to information on markets in China. But the reports can be easily filtered through a number of different categories and investors will have no trouble finding information about their preferred securities.
HSBC InvestDirect's Commission and Fees (3 stars)
Brokerage fees tend to be higher in Canada compared to the U.S. While most American brokerages have no annual fees and commissions as low as $5, that’s not the case with most Canadian forex brokers and self-directed stock brokerages. With HSBC InvestDirect, you’ll pay $6.88 per trade on all securities (plus $1.25 per contract if trading options). If you make more than 150 trades per quarter, the commission rate is reduced to $4.88 per trade. On the Hong Kong Stock Exchange, commission is a flat HK$288. HSBC Premier and Advance chequing account holders can receive extra discounts on international trades (up to 20%).
Additional commissions may apply depending on which stock exchange you trade on. For example, trading on the Shanghai Stock Exchange (SSE) costs an extra 1.20% commission for all trades under $5,000, plus 0.28% in levies. Trades placed on European exchanges will be subject to an extra 0.50% if under 25,000 EUR. Make sure you know the transactions costs of trading on each exchange before filling your portfolio with securities.
Then there’s the administration fees! Non-registered (i.e., taxable) accounts will be charged a $25 inactivity fee if no trades are made in any specific quarter (this can be waived by maintaining a $10,000 account balance). For registered accounts like the RRSP, you’ll be hit with a $100 administrative fee every year. The RESP has a $50 annual admin fee and all registered accounts are permitted one free withdrawal; each additional withdrawal costs $50. Here are a few additional administrative costs you may run into as an HSBC InvestDirect account holder:
HSBC InvestDirect's Security (5 stars)
In light of recent data breaches, online banking security has never been more important. HSBC protects client accounts and private information with several different levels of protection, including a global security network that monitors for suspicious account activity. If any unusual transactions are made from one of your accounts, HSBC representatives halt the transactions and contact you for confirmation
Additional security features include:
- Network firewalls
- Data masking and secure web browsing
- Digital certificates
- Advanced encryption technology
HSBC also provides clients with a security device. This device can be downloaded right to your smartphone, or HSBC can physically send you a handheld security device that resembles a calculator. The security device uses your biometric information (fingerprints and face scanning) to prove your identity before sending a code to access your account. With the security device, you can access your HSBC accounts anywhere with peace of mind.
HSBC InvestDirect's Customer Support (3 stars)
HSBC has a litany of contact phone numbers listed on their website regarding specific issues, but response times have been slow. According to MoneySense Canada, it took HSBC 75 hours to respond to a non-urgent service request. Only 2 of the 8 brokerages reviewed had longer wait times for service requests.
To reach InvestDirect, call 1-800-760-1180. Telephones are open 24 hours a day from Monday to Thursday, and from 12 a.m. to 8 p.m. EST on Fridays.
HSBC recently added a chat feature to help improve response times. The Live Chat button appears on every page of HSBC’s website, so clients are never more than a click away from assistance. Representatives are fluent in English, French, Mandarin and Cantonese. You can email by sending requests to email@example.com.
HSBC InvestDirect's Tradable Asset Classes (5 stars)
Giving investors access to multiple markets is where InvestDirect really shines. We’ve already discussed the 30 available stock exchanges and 10 different supported currencies, but within each market lies plenty of different tradable securities.
Here’s a list of InvestDirect’s tradable securities:
- Mutual Funds
- Canadian and U.S. options
- Guaranteed Investment Certificates (GICs)
- Initial Public Offerings (IPOs)
Most Canadian, American and European exchanges are available to trade online. However, Japanese, Australian, and some European and Chinese exchanges can only be reached through phone trading.
HSBC InvestDirect’s Ease of Use (4 stars)
The layout of HSBC InvestDirect’s platform is simple and appealing to even novice investors. Switching between your account balances, stock screeners and trade execution screens is a seamless transition. And while the research options are lacking, locating reports from specific sectors or countries requires only a few clicks.
InvestDirect has account options for both the frugal saver and the free-wheeling trader. If you want to play it safe with GICs or load up on tech stocks, InvestDirect will let you build your portfolio however you choose. HSBC also provides educational tools for specific life situations like retirement planning or building a portfolio for college expenses.
Is HSBC InvestDirect for You? Overall: 3.5 stars
HSBC InvestDirect is your prototypical “jack of all trades, master of none” brokerage firm. The platform has plenty of investment offerings, multiple account types and accessible markets from all over the globe. Commissions are fair, you can find cheaper transactions costs at competitors.
Customer service responses can be delayed, other platforms have better charting tools and the trade executions aren’t as quick as they could be. HSBC InvestDirect is a great brokerage for large accounts and investors who don’t need extra bells and whistles, but the most active traders might prefer a more technologically advanced platform and a few volume discounts.