The stock market is at or near all-time highs, which means that brokerage firms should be seeing a lot more interest (for better or worse). Weekly business newspaper Barron’s just released their 2013 annual broker survey rankings. Here’s a snippet about their criteria:
We looked at eight categories of service, examining what can be traded online, how the tools work together across platforms, the design and capabilities of mobile platforms, educational offerings and customer service, as well as the nuts and bolts of placing and executing a trade. We closely scrutinized the various tools available for finding appropriate trades, including scanners and charts. When examining costs, we considered stock and options commissions as well as platform or maintenance fees, margin debt, and charges for transferring an account out.
Barron’s notes that overall, the online experience is improving with a growing number of brokers offering their clients real-time quotes, easier-to-use websites, and a better mobile trading experience. They also admit that their overall rankings are based on the needs of their subscribers – namely “wealthy, active traders”. As such, their overall winner was again Interactive Brokers, a broker designed for highly-active traders with an extensive feature set and low commissions. However, IB also has a minimum opening balance of $10,000, a minimum monthly fee of $10 even if you don’t trade at all, and customer service that does not cater to casual investors.
I am not an active trader, but I still like having real-time quotes, a nice user interface, and friendly service when I need it. Thankfully, Barron’s also ranked the brokers for the rest of us:
Top 5 Brokers for Novice Investors
- TD Ameritrade. Performed well in customer service & education, research tools, and mobile offerings. Free real-time quotes from NYSE, AMEX, and NASDAQ Level 1 and 2. When placing an order, the trigger price is automatically set at the midpoint between bid and ask.
- Charles Schwab
- Capital One 360 Sharebuilder
Top 5 Brokers for Long-Term Investing
Top 5 Brokers for In-Person Service
- Scottrade. Scottrade has over 500 physical branches across US, so that when you call you reach a human in that local branch. Free in-person educational seminars are offered as well.
- Merrill Edge
- Charles Schwab
- TD Ameritrade
Compared to the 2012 rankings, the top 5 for novice investors and in-person service remain the same. TD Ameritrade managed to bump Fidelity off the #1 spot for long-term investors, yet the article again chooses not to mention TDA’s 100 commission-free ETF list while mentioning Firstrade’s lesser 10 free ETF list? TradeKing is replaced by Merrill Edge in the Top 5, even though I think they improved since the Zecco merger. Vanguard’s brokerage declined to participate and thus was not eligible for the rankings.
Other notables? Capital One Sharebuilder lowered their real-time commissions to $6.95 per trade. Merrill Edge (Bank of America) has altered their commission structure with a program called Platinum Privileges that includes 30 free trades per month. To qualify, you must have an active Bank of America personal checking account and maintain at least $50,000 as a combined balance in your Bank of America deposit accounts and/or your Merrill Edge brokerage accounts. Previously, to get free trades you needed $25,000 exclusively in idle cash.