Who Are the Best Small Online Brokers?
Small online brokers like Robinhood have shaken up the market for the bigger players. How do they actually stack up?
![woman looking at brokerage account on smartphone while drinking a latte](https://cdn.mos.cms.futurecdn.net/n7D8c9KtuSVgjPbtMFJcNJ-415-80.jpg)
Brokerage start-ups such as Robinhood, M1 Finance and SoFi are tiny compared with the trillions of dollars in brokerage assets at the likes of Schwab and Fidelity. But they've already made a big dent in the way things work: These small online brokers pioneered commission-free stock trading and fractional-share purchases, and now those services are standard fare at the bigger firms.
And that's one of the reasons we keep an eye on smaller brokerage firms – because they're shaking up the industry. If not for Robinhood, for instance, we might still be paying commissions on stock and ETF trades.
The smaller firms don't qualify for our annual review of online brokers because they don't offer mutual fund or bond trading. In this year's separate review of small online brokers, we looked at Betterment, M1 Finance, Robinhood, SoFi and tastyworks. All are digital-only, with no brick-and-mortar branches. Two of them have amassed billions in assets already (the others wouldn't say). We homed in on investment offerings, mobile apps and tools. Here's how they stack up in each category.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Best small online brokers for investment choices
Overall, SoFi and Robinhood stood out in this category, but it was a close race. None of these firms offer mutual funds or bonds, but most allow you to buy fractional shares of stocks and exchange-traded funds (ETFs). Betterment is an outlier: It's a robo advisor, and it doesn't offer the option to buy individual stocks or ETFs.
All five firms offer cryptocurrency trading, but SoFi provides access to more than 20 digital currencies, including Bitcoin and Avalanche, and Robinhood has 15 on its roster.
The pickings at tastyworks (eight) and M1 Finance (six) were slimmer. (A handful of the big brokerage firms in the main survey offer access to cryptocurrency, but we didn't give this much weight in the investment choices category.) Only one firm, Robinhood, offers a sweep account for uninvested cash to earn interest (as much as 4.65% for premium Gold customers; 1.5% for non-Gold customers).
Best smartphone apps from small online brokers
Robinhood and tastyworks sparkled in this category, in part because of their apps' bells and whistles, such as education on investing and trading strategies, as well as the ability to download account statements.
If you are looking for investing functionality, however, M1 Finance and tastyworks win. Both apps offer screeners for ETFs and stocks (Robinhood's app has a stock screener but no ETF screener). At Betterment, you can't trade stocks or ETFs.
Best small online brokers for tools
You won't find the panoply of tools that bigger brokerage firms have, but certain firms stood out in small ways.
At M1 Finance, there's a mock portfolio tool that allows you to see past performance. Robinhood and SoFi offer lists of stocks in certain thematic investment categories, which investors can use as a starting point for more research. And M1 Finance, Robinhood and tastyworks have a questionnaire that can help investors pin down their tolerance for risk.
Performance in this category was a mixed bag. Tastyworks won, Robinhood and M1 Finance were tied, and Betterment was the laggard. Its only tools are a retirement "How am I doing" tool and a risk-tolerance questionnaire.
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Why Your Investments Must Change as You Age — and How to Do It
As you age, how you invest your retirement portfolio should change, balancing growth and income.
By Simon Constable Published
-
Five Stocks With Solid Growth History and a Promising Outlook
Five reasonably priced stocks with solid growth history and a good chance of delivering earnings even if the economy softens.
By Kim Clark Published
-
Why You Should Invest in Commodities
These portfolio diversifiers are in a long-term uptrend and show why you should invest in commodities
By Anne Kates Smith Published
-
Now's a Great Time to Build a Bond Ladder
Navigating how to proceed with new or rollover money can be daunting. Here are some of the best ways to guarantee a high yield to maturity and full recovery of principal.
By Jeffrey R. Kosnett Published
-
Insurance Stocks Do Just Fine Amid Harsh Weather
Strange as it sounds, heat waves and car accidents might be good for your portfolio.
By James K. Glassman Published
-
The Top-Performing Actively Managed Funds of the Last Decade
These are the actively managed funds that have performed best over the last decade.
By Nellie S. Huang Published
-
6 Bellwether Stocks to Watch
These bellwether stocks are like weathervanes for their industries or the economy and are worth watching as indicators.
By Kim Clark Published
-
How This JPMorgan Factor Fund Keeps Up With the Broad Market
The JPMorgan U.S. Quality Factor ETF picks stocks based on profitability criteria and boasts a similar return as the S&P 500 but with less volatility.
By Nellie S. Huang Published