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All Contents © 2020The Kiplinger Washington Editors
By Ryan Ermey, Associate Editor
| August 22, 2019
Illustration by Jon Krause
As investor needs and preferences change, brokerages must adapt. Brokerages’ mobile apps have grown more sophisticated as more clients have demonstrated that they like to do business on the go. And as investors have demanded lower costs, brokerages have trimmed commissions and fees across the board.
But brokerages also need a keen ear for clients’ particular needs. Some clients want to be left alone to do their own thing, while others want their hand held. Some want to pay as little as possible to invest, and others are willing to pony up enough in assets to gain access to their own personal planner
Our 2019 online broker ranking recognizes that no brokerage can hit the bull’s-eye for every type of client, and that the firm with the broadest appeal may not meet your specific needs. But ultimately, we favored firms that could do the most for most investors.
Check out our rankings. We also note special perks each broker offers.
Brokers’ overall score depends on the weight we assigned to seven categories. The weighting: commissions and fees, 10%, investment choices, 20%, mobile app, 25%, tools and research, 12.5% each, and advisory services and user experience 10%.
Overall score: 82.9 (out of 100)
Stock/ETF commissions: $6.95*
Commissions and fees: 6th
Investment choices: 2nd
Mobile app: 3rd
Advisory services: 3rd
User experience: 2nd
Best for: Mutual fund investors. With more than 3,900 mutual funds you can buy with no sales fee or fee to trade, E*Trade also boasts the highest percentage of no-transaction fee funds with three-star ratings or better from Morningstar.
Perks: Are you an income investor? E*Trade helps with a tool that estimates how much income your portfolio (stocks, funds and bonds) will generate each month. Depending on how much you deposit, new account holders at E*Trade can earn from $200 to $2,500 in cash and 500 commission-free stock and option trades. E*Trade also offers banking services, such as checking and savings accounts.
*E*Trade charges $4.95 per trade after the first 30 trades per quarter.
Courtesy Interactive Brokers
Overall score: 82.3 (out of 100)
Stock/ETF commissions: variable, per share
Commissions and fees: 2nd
Investment choices: 4th
Mobile app: 1st
Advisory services: 4th
User experience: 7th
Best for: Margin traders. Investors with $100,000 in an account looking to trade with borrowed money will pay 3.89% on margin loans. The nine other firms in our survey levy between 7.7% and 9.5%.
Interactive Brokers is also a top choice for mutual fund investors, with more than 4,000 mutual funds offered.
Perks: Interactive Brokers customers can chat with Alexa, Amazon’s digital assistant, to access their accounts. If you maintain a balance of at least $10,000 at Interactive Brokers, you can get up to $200 for referring a friend if that friend accrues more than $666.67 in trading commissions. And Interactive Brokers discounts commissions deeply if you trade a lot.
Overall score: 82.2 (out of 100)
Stock/ETF commissions: $4.95
Commissions and fees: 8th
Investment choices: 1st
Mobile app: 2nd
Advisory services: 2nd
User experience: 4th
Best for: Investors who hold cash. Fido offers the highest interest rates among brokers in our survey on “sweep” accounts (the accounts that hold clients’ uninvested cash). The default account, Fidelity Government Money Market (symbol SPAXX), yields 1.82%. Investors can also use Fidelity Treasury Money Market (FZFXX), yielding 1.81%, as their sweep account or a cash account called FCASH, which pays 1.07% in interest.
Also, mutual fund investors, with more than 3,900 mutual funds you can buy with no sales fee or fee to trade.
Perks: Fidelity brokerage customers have access to four mutual funds with no minimum investment and 0% expense ratios, as well as 23 additional funds that have no investment minimum. A rewards card with no annual fee is also available. All purchases with the Fidelity Rewards Visa Signature card comes earn 2% cash back, which can be divided and deposited into up to five Fidelity accounts, whether they’re your accounts or not. Also, ATM fees are waived nationwide for Fidelity debit cardholders.
Courtesy Charles Schwab
Overall score: 79.8 (out of 100)
Commissions and fees: 9th
Investment choices: 5th
Mobile app: 5th
Advisory services: 1st
User experience: 3rd
Best for: Mutual fund investors. Schwab offers more than 3,900 mutual funds you can buy with no sales fee or fee to trade.
Perks: In addition to waiving ATM fees nationwide, Schwab lets its cardholders make purchases abroad without the usual 3% foreign transaction fee. Schwab is running a referral promotion as well – though the $100 cash reward goes to the friend you refer, not to you.
Courtesy Merrill Edge
Overall score: 75.0 (out of 100)
Stock/ETF commissions: $6.95
Commissions and fees: 3rd
Investment choices: 9th
Mobile app: 4th
Advisory services: 6th
User experience: 1st
Best for: Beginning investors. The “story” features on this easy-to-use platform walk investors through investment analysis and decision-making. The “Stock Story” mode leads the investor to questions, for instance, about a company or its shares. The answers are full of digestible analysis and actionable advice.
Also, active traders. Preferred Rewards customers with a combined $100,000 balance at Bank of America and Merrill Edge earn 100 free trades per month at Merrill Edge.
Perks: Merrill Edge is owned by Bank of America, so its perks tend to be tied to the bank’s products. For example, Merrill Edge customers who sign up for Bank of America’s Preferred Rewards program receive a 25%, 50% or 75% boost on the cash-back reward from eligible Bank of America credit cards, depending on the combined assets in your accounts (the 25% level requires $10,000).
Courtesy TD Ameritrade
Overall score: 73.3 (out of 100)
Commissions and fees: 10th
Investment choices: 6th
Mobile app: 7th (tie with WellsTrade)
Advisory services: 5th
User experience: 5th
Best for: Mutual fund investors. TD Ameritrade offers more than 4,000 mutual funds you can buy with no sales fee or fee to trade.
Perks: In addition to using Alexa to check on their account, TD Ameritrade customers can ask questions or even execute a trade through direct messages on Twitter, on Facebook Messenger or through the iPhone Messages app as well. If TD’s computer-generated responses don’t satisfy you, you’ll be automatically connected with a live representative. And since July, TD Ameritrade customers can access broker information in their car through Apple Car Play, Android Auto and Echo Auto.
Overall score: 57.5 (out of 100)
Stock/ETF commissions: $4.95*
Commissions and fees: 4th
Investment choices: 7th
Mobile app: 9th
Advisory services: 7th
User experience: 9th
Perks: Ally, which got its start as an online bank, lets accountholders use over 43,000 Allpoint ATMs for free. Investors who sign up and fund an Ally Invest account with at least $10,000 qualify for up to 90 days of commission-free trades and a cash bonus of up to $3,500.
Overall score: 57.2 (out of 100)
Stock/ETF commissions: $0.00
Commissions and fees: 1st
Investment choices: 3rd
Mobile app: 10th
Advisory services: NA
User experience: 6th
Best for: Exchange-traded fund investors. Firstrade’s industry-leading roster of more than 2,200 commission-free ETFs beats most brokers by a mile. (Vanguard, which declined to participate in our survey, offers some 1,800 such funds.) Investors shopping among Firstrade’s free funds will find every member of the Kiplinger ETF 20 (our favorite ETFs) and thousands more. Firstrade also ranks among the best for active traders, since the firm charges no commissions on stock, ETF or option trading.
Perks: Firstrade will reimburse up to $200 in transfer fees and $25 in wire fees when you transfer money from another firm’s account. You’ll also get a $50 bonus if you refer a friend who opens an account and funds it with $2,000. And, of course, totally free trades are a big deal.
Overall score: 48.5 (out of 100)
Stock/ETF commissions: $5 per trade, or per share*
Commissions and fees: 5th
Investment choices: 8th
Mobile app: 6th
User experience: 10th
Best for: Active traders. TradeStation offers tons of tools geared toward active traders and commissions as low as fractions of a cent per share.
Perks: Open an account at TradeStation before August 31, and the firm will give you commission-free trading until the end of the year, provided you make six or more trades per month.
* TradeStation offers a $5 per-trade plan or a per share plan for frequent traders; pricing starts at one cent per share.
Overall score: 47.0 (out of 100)
Stock/ETF commissions: $5.95
Commissions and fees: 7th
Investment choices: 10th
Mobile app: 7th (tie with TD Ameritrade)
Advisory services: NA*
User experience: 8th
*WellsTrade declined to compete in this category.
Not every broker provides all of the amenities that the firms in our rankings offer. To qualify, a firm had to allow clients to trade stocks, bonds, mutual funds and exchange-traded funds; deliver at least a modicum of investment advice; and offer an array of investment tools and research resources.
The firms below don’t cover all of those bases, but each serves a niche.
You won’t find everything at Robinhood, for instance, but you will find a handsome, easy-to-use platform that offers stock, ETF and option trading commission-free. Investors can trade stocks and ETFs for free at TradeZero America as well, provided they trade for at least $1 per share.
Investors just starting out may favor investing apps such as Stash or Acorns. Stash users fill out a short questionnaire to determine their goals, investing preferences and risk profile, then Stash recommends ETFs and individual stocks (allowing investors to purchase fractional shares) that will help investors achieve their goals. Both apps can round up purchases on a linked spending account and automatically invest the “spare change” in an investing account. At Acorns, you’ll be placed into one of five diversified ETF portfolios based on your time horizon and tolerance for risk.
At the other end of the spectrum, investors with proverbial PhDs in trading might prefer a platform built for active traders. Lightspeed Trading clients have to trade a ton to qualify for the lowest commissions, but they can get access to the type of automated, algorithmic trading favored by hedge fund managers. Frequent traders of stock options and futures may opt for Tastyworks, which offers bargain prices to buy and sell them.
It’s hard to go wrong choosing an online brokerage these days. Just about all of the firms in our recent broker ranking allow investors to trade stocks, bonds, mutual funds and exchange-traded funds online, and all provide ample research and tools to help users make educated financial decisions. With so many brokers offering similar services (and at reasonable prices), your choice may depend on one or two features. Read on to see all the perks our top 10 choices offer.
Dividend-paying firms typically disburse cash every three months. If you invest for income, you may have a diverse portfolio of stocks, but if many of them pay out on the same schedule, you may find yourself going through long spells with little cash flowing in. Four brokers – E*Trade, Interactive Brokers, Merrill Edge and TD Ameritrade – have income estimator tools that can help you keep on top of future payments. Each tool uses recent payout data to project the value and timing of your portfolio’s dividend payments over the next 12 months. TD’s tool shows dividends from stocks, mutual funds and ETFs only, while E*Trade, Interactive Brokers and Merrill Edge factor in income from bonds and as well.
Fidelity brokerage customers have access to four mutual funds with no minimum investment and 0% expense ratios: Fidelity Zero Total Market Index (FZROX), which tracks the U.S. stock market, Fidelity Zero Large Cap Index (FNILX), which tracks large-company U.S. stocks, Fidelity Zero Extended Market Index (FZIPX) which tracks small- and midsize company stocks, and Fidelity Zero International Index (FZILX), which tracks foreign stocks. To avoid paying licensing fees to index makers such as Standard & Poor’s, Fidelity’s funds track indexes assembled in-house. That means the funds may outrun or lag ETFs that track traditional indexes. Still, it’s easy to see the benefits of free funds with no investment minimum, especially when the savings are compounded over a lifetime of investing. Including the four funds above, Fidelity offers 27 funds that have no investment minimum.
No other brokerage can touch Firstrade when it comes to commissions. The firm offers free online trading for stocks, ETFs, options and mutual funds. Fidelity ($4.95), Schwab ($4.95) and TD Ameritrade ($6.95) all charge a fixed rate for trading, but some other firms charge lower commissions for frequent traders or those with high balances. E*Trade’s $6.95 commission drops to $4.95 for clients who make 30 or more trades per quarter, and Ally Invest’s fee drops a dollar, to $3.95, if you trade 30 times per quarter or have a daily balance of $100,000 or more. WellsTrade shaves $3 off its standard $5.95 charge if you link a Portfolio by Wells checking account. Merrill Edge customers with a minimum of $20,000 in combined assets at Merrill Edge, Merrill Lynch and parent company Bank of America qualify for at least 10 free stock and ETF trades per month if they sign up for the bank’s Preferred Reward program. A note for ultra-active traders: customers at Interactive Brokers and TradeStation can trade for as little as a fraction of a penny per share depending on how frequently they trade.
Investors increasingly want to do brokerage business on the go. In response, all of the brokers in our survey offer mobile apps that you can use to do just about anything you could do on your desktop, such as trading stocks, accessing research, paying bills and transferring funds.
But tech-savvy investors will be pleased to know that some brokers’ platforms extend beyond websites and mobile apps. Investors can interact with their Fidelity, Interactive Brokers, Schwab and TD accounts by chatting with Alexa, Amazon’s digital assistant. Schwab users, for instance, can ask their Alexa for market information, stock quotes and updates on personalized watch lists.
TD Ameritrade customers can ask questions or even execute a trade through direct messages on Twitter, on Facebook Messenger or through the iPhone Messages app as well. If TD’s computer-generated responses don’t satisfy you, you’ll be automatically connected with a live representative. And since July, TD Ameritrade customers can access broker information in their car through Apple Car Play, Android Auto and Echo Auto.
Nearly every brokerage tries to entice investors to open new accounts or add substantial sums to existing accounts by offering free trades or cash bonuses. Promotions come and go among the firms; here are some recent offers.
Firstrade will reimburse up to $200 in transfer fees and $25 in wire fees when you transfer money from another firm’s account. You’ll also get a $50 bonus if you refer a friend who opens an account and funds it with $2,000.
If you maintain a balance of at least $10,000 at Interactive Brokers, you can get up to $200 for referring a friend if that friend accrues more than $666.67 in trading commissions. Schwab is running a referral promotion as well – though the $100 cash reward goes to the friend you refer, not to you. Fidelity customers who deposit at least $50,000 in new or eligible existing accounts receive 300 to 500 commission-free trades over the next two years.
Merrill Edge will give you a $600 bonus when you open and fund a new investment account or IRA. TD will give you up to $600 when you open a new account as well, depending on how much you deposit, along with 60 days of free stock, ETF and option trading.
Depending on how much you deposit, new account holders at E*Trade can earn from $200 up to $2,500 in cash and 500 commission-free stock and option trades. Customers who sign up at Ally can earn from $50 to $3,500 to go along with 90 days of commission-free trades. Open an account at TradeStation before August 31, and the firm will give you commission-free trading until the end of the year, provided you make six or more trades per month.
Whether you set up a cash-management account or just take out a debit card linked to the cash balances in your brokerage account, several brokerages will reimburse your fees when you withdraw cash at any ATM. Fidelity and TD Ameritrade will reimburse ATM fees nationwide. Schwab does that too, as well as waiving the 3% foreign transaction fee most debit issuers charge to make purchases abroad. E*Trade and Ally offer more-traditional banking services, such as checking and savings accounts. Ally accountholders can use over 43,000 Allpoint ATMs for free, and the bank will reimburse up to $10 in ATM fees each statement cycle. E*Trade’s Max Rate Checking Account comes with unlimited ATM reimbursements on charges that other financial institutions levy (though you may be subject to charges from the owner/operator of the ATM). Merrill Edge investors who have $50,000 in assets (combined at Merrill Edge, Merrill Lynch and Bank of America) and who have joined the Preferred Rewards program can get 12 ATM-fee reimbursements per year at non-Bank of America ATMs in the U.S. (Bank of America ATMs are free).