SmartMoney’s Best and Worst Brokers
Not that long ago, I put together a list of the best online discount brokers based on reader feedback. Today I’m going to provide slightly different perspective by previewing the results of SmartMoney’s 2008 Broker Survey.
Commissions & Fees
Surprisingly, the best of breed in this category was Interactive Brokers. The reason I’m surprised is that they actually charge fees, whereas brokers like Zecco are commission-free. TradeKing was also lauded for their low commissions on broker-executed trades. The worst of breed was WellsTrade, who got slammed for high commissions plus additional fees.
Research
Interestingly, research firm J.D. Power claims that customers rank solid research tools above all else when evaluating brokers. Personally, I primarily look at cost and trade execution, as there are tons of freely available options for investment research. Regardless, TD Ameritrade took top honors in terms of research tools, with Zecco and SoGo Trade bringing up the rear. That being said, both firms are expected to bring out more features in this area within the next year.
Trading Tools
E*Trade and TD Ameritrade took top honors in this category, due in part to things such as the ability to trade using a smartphone and personalized stock tickers. Their trading interfaces were also considered to be amongst the most efficient. TradeKing’s social networking area, which includes a weblog where “trading coaches” dissect trades made by members, also received a favorable review. ShareBuilder was amongst the worst, offering little more than a dividend reinvestment program.
Published on May 28th, 2008 - 4 Comments
Filed under: Saving & Investing
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I’ve heard rave reviews of Interactive Brokers, but mostly from short-term traders. Whereas long-term investors really only care about comissions, traders place much more emphasis on quality of execution. When just a few seconds can make a big difference, it’s unwise to quibble over a few dollars on the comission when speed of execution is what really matters.
Comment by Kyle — May 28th 2008 @ 11:00 amInteresting perspective, Kyle. Personally, I don’t know why Zecco didn’t win the Commission and Fees category. I know their IRA fees aren’t great, but there are no annual fees for a regular taxable account and of course they offer free trades with a fairly low minimum. For me, that is the key and that is why I use Zecco.
Comment by Lo. Price — May 28th 2008 @ 6:28 pmI am actually looking at using Zecco. I would like the free trades and I don’t do more than 10 a month. I currently use sharebuilder and even though the Tuesday purchase is $4, it is $4 more than I want to spend.
Comment by Ed — May 28th 2008 @ 11:20 pmI have accounts at both E*Trade and Zecco. Zecco not only charges IRA fees but also a pretty high (~$20) commission for mutual-fund transactions, which are a pain even so. All of my (taxable) individual-stock buying goes through Zecco, but my IRAs, which I fill up with E*Trade’s incredibly low-cost index funds, are staying at E*Trade.
Comment by Christopher Smith — May 29th 2008 @ 12:24 pm