Barron’s Best Stock Brokerage Rankings 2018

barrons2018Barron’s has released their 2018 online broker rankings. The considerations include trading experience/technology, usability, mobile trading, range of offerings, research tools, customer service, and cost.

The Barron’s list always comes from the perspective of their subscriber base – high-net-worth active investors – which may or may not describe you. The overall winner this year was Interactive Brokers. Last year’s winner Fidelity Investments was pushed back to #2. Thankfully, Barron’s also supplied separate rankings for novice investors, long-term investors, and those that value in-person service:

Top 5 Brokers for Novice Investors

  1. TD Ameritrade.
  2. Fidelity
  3. Merrill Edge
  4. Charles Schwab
  5. Ally Invest

Top 5 Brokers for Long-Term Investing

  1. TD Ameritrade.
  2. Fidelity
  3. Charles Schwab
  4. Merrill Edge
  5. E-Trade

Top 5 Brokers for In-Person Service

  1. Merrill Edge.
  2. Charles Schwab
  3. Fidelity
  4. TD Ameritrade
  5. E-Trade

Commentary. A few thoughts on the rankings and other overlooked brokers:

Interactive Brokers is hard to argue against for very active traders. Their average account made 476 trades last year! However, they have a minimum commission of $10 a month for accounts under $100,000, or a minimum commission of $20/month under $2,000. You must pay them $120/$240 a year no matter what. That doesn’t work out for me, as some months I don’t trade at all. IB is not for newbies.

TD Ameritrade recently showed a lack of commitment to their commission-free ETF list and went for quantity over quality. The free ETF list is still decent, but that move didn’t scream “long-term” in my book. I think the customer service is solid, and some people may feel better knowing that they merged with Scottrade and their physical branch network. (E*Trade ate OptionsHouse. Schwab ate OptionsXpress. TD Ameritrade ate Scottrade. Ally ate TradeKing, now Ally Invest.)

Vanguard was included this year for the first time in recent memory, and they were promptly knocked to the bottom for being the most expensive broker due to their high trading costs on non-Vanguard ETFs and mutual funds. Vanguard doesn’t court active traders, and active traders probably won’t like it at Vanguard.

Robinhood was ignored again this year, despite the fact they have free trades and recently added a web interface for trading and free options trading. They probably would have also ranked low due to limited feature set.

M1 Finance is another free investing app that just popped on my radar. It lets you pick a customized basket of individual stocks (or ETFs) and then lets you buy them with zero commission. I used to worry that Robinhood was alone, but now there is competition. Maybe Barron’s will notice one day.

I keep most of my long-term assets directly at Vanguard along with a Solo 401k at Fidelity. My (much more modest) individual stock trading is done through Merrill Edge. I’m happy with them so far. If you have $50,000 in assets across Merrill Lynch, Merrill Edge, and Bank of America accounts, you get 30 free trades per month. That’s already more trades than I need, but $100k in combined assets gets you 100 free trades per month.

Comments

  1. paul frampton says:

    Don’t like Fidelity. Can’t remember how many times their platform was down over the last few months. I complain, get a few free trades, and then technology is down again. There are some days, I cannot even put orders in and I am told to place orders via the phone. In 2018, I have to pick up the phone and place orders/trades. Totally awful.

  2. Interesting that they included vanguard for the first time. Do you buy bonds ever in your vanguard account? I’m wondering if their high fees extend to bonds, particularly treasuries. Stock wise I’m happy to stick with vanguard.

  3. Joshua Katt says:

    Does anyone have experience with getting texts sent to a mobile when something is triggered (usually price) by a stock? TD & Ally doesn’t allow you to specify a 3rd decimal place (like 50,001 or 50.009) so I can tell myself why I set an alert (buy or sell price reached). Merrill doesn’t seem to send alerts via Text. Any idea about Interactive Brokers? Thanks

  4. Interactive Brokers is the best for any serious investor. Robinhood is the best for a novice investor. Barron’s 2018 rankings are useless.

  5. Vanguard is great if you want to buy Vanguard ETFs and mutual funds as there is no fee. In the case of Vanguard ETFs, although you have to buy whole shares, dividends can be re-invested as fractional shares.

    I’ve bought some stocks on Robinhood. But haven’t gone whole hog with options and crypto. I don’t do the whole day trading or high-volume trading thing. For basic buying and selling, it’s fine. Just need to do research elsewhere.

    I learned of M1 Finance after the publicity of them eliminating their management fee back in December. I’ve been putting money in my M1 portfolio. I like their pie paradigm for creating a portfolio and the way it balances one’s portfolio.

    I don’t think I’ll be keeping Robinhood or Stash as long-term investments. I do see myself keeping M1 Finance as a long-term investment, in addition to my Vanguard IRA.

  6. If you have 100,000 then it is absolutely the best because you pay no fees outside of $1 per trade.
    If you have less than 100k, it is the best if you make more than 2 trades a month. You will pay only $10.
    If you have bank accounts in multiple countries and need to send money, then IB is amazing and you save a ton of money on foreign exchange fees and tranfers.

    If you only buy fee-free etfs/mutual funds then you are better off with a schwab/vanguard/fidelity…etc.

    • Thanks for your comment on the multiple countries aspect. With $100k, I get 100 free trades a month with Merrill Edge. I don’t need the fancy tools and charts, etc.

  7. Scott Daniels says:

    Does M1 Finance allow reinvesting of dividends?

    • From their site:

      When any security you own pays you a dividend, it will be deposited into your account. If a dividend payment causes your cash balance to exceed your cash control threshold, your cash balance will be automatically invested in your portfolio based on your target allocations.

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