Investors looking for a great online broker have plenty of choices to wade through, thanks to fierce competition and innovation in the industry. But results from IBD's annual Best Online Brokers survey can speed the process of finding the broker that best fits your needs.
The survey for 2019, which polled thousands of broker customers, ranks the best brokers overall and in 14 key attributes. Thus you can quickly drill down to the traits most important to you, whether it's low commissions, stock trading tools or options platforms.
Our seventh annual Best Online Brokers survey finds Charles Schwab (SCHW) returning to the top of the heap for the second time in six years. The latest results broke Boston-based Fidelity's four-year grip on the top spot.
And the difference between No. 1 online broker and No. 2 this year? Thinner than skin.
Looking solely at the Customer Experience Index for overall performance, created by IBD's longtime polling partner TechnoMetrica Market Intelligence, Charles Schwab finished on top with a score of 70.2. That's just a fraction above Fidelity's 69.8. TechnoMetrica President Raghavan Mayur details the online broker survey methodology in a separate article.
Interactive Brokers (IBKR) hopped up two places to rank as the third broker honored in the Best Online Brokers overall.
The 2019 survey analyzed six large brokers. To qualify, at least 200 of each online stock broker's customers had to complete surveys. TradeStation and TD Ameritrade (AMTD) are honored among the three best brokers in one or more of the key 14 attributes. E-Trade (ETFC) also was included in the analysis.
The survey stands out from other online broker rankings because it's based on objective ratings from the brokers' own customers, not on subjective reviews by editors.
Online Broker Fees
The rivalry between Charles Schwab and Fidelity is nothing new. Since 2014 Schwab and Fidelity have grabbed the No. 1 and No. 2 spots in the best brokers survey every year.
Do you remember back in 2017, when Schwab drew first blood in a war over fees? Every time Schwab cut its trading commission, Fidelity reacted almost in milliseconds with the same price match. In 2018, both firms stayed put with a $4.95 commission on virtually all manner of stock trades.
Charles Schwab and Fidelity, along with TD Ameritrade, also have pioneered low costs or no cost to buy and sell exchange traded funds, a multitrillion-dollar industry. Schwab offers zero fees on online trading in its branded ETFs as well as more than 250 other ETF products offered through its Schwab ETF OneSource service.
Best Brokers In 14 Most Important Categories
Also impressive this year? The fact that San Francisco-based Charles Schwab and Fidelity both ranked among the three best brokers in 13 of the 14 categories that determined the overall score. The categories were determined in the initial stage of survey research when online stock broker customers rated the importance of various broker characteristics.
These 14 categories, all of which can be seen in detail in our list of all the Best Online Brokers winners, included Customer Service, Low-Cost/Free ETF Trading and Trade Reliability. Survey participants again ranked Low Commissions & Fees as the most important online stock broker attribute.
A new online broker category that ranked as the third most important attribute among survey takers: Website Security. Charles Schwab, which finished among the three best brokers in this category, makes it crystal clear how it treats the issue.
"At the end of the day, it's all about trust," Schwab writes on its website. "To give our clients peace of mind, we provide the Schwab Security Guarantee, which states: Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity."
Interactive Brokers and Fidelity also ranked in the three best online stock brokers in Website Security.
Another new category was Range Of Products Available. Interactive Brokers, Schwab and Fidelity claimed Best Online Brokers honors in the category.
Rounding Out 3 Best Brokers Overall
Interactive Brokers made its own history in the IBD survey with its best overall ranking ever. It comes as billionaire founder Thomas Peterffy prepares to hand the CEO reins to President Milan Galik in the third quarter. Peterffy will stay on as board chairman. While retaining its top spot in Low Commissions & Fees in the survey, the online broker is working hard to enhance its reputation beyond being an innovator in trading costs.
Last year Interactive Brokers added new courses to the IBKR Traders' Academy, including "Introduction to Charts," "IBKR Mobile for Android" and an introduction to trading on margin. Last March, the company launched a blog to serve professionals in the field of quantitative investing. The blog addresses topics such as deep learning, AI and other technologies that are reshaping trading in securities.
On its Twitter page, Interactive Brokers recently encouraged its users to check out its "Portfolio Analyst" program and "Probability Lab" to conduct research on how to make options trades that show a higher success rate for making money.
Online Stock Broker TD Ameritrade
Last year was transformative for Omaha-based TD Ameritrade. The longtime giant in the field converted 4 million accounts from online broker Scottrade to its own systems. TD Ameritrade CEO Tim Hockey noted that teams from both companies worked nights, weekends and through holidays to transfer data and information and address technology gaps.
As a result of the Scottrade acquisition in 2017, Ameritrade did cut its trading commissions. But it's also refused to match its top rivals in this area. Participants in IBD's survey ranked the firm at the bottom for Low Commissions & Fees.
Ameritrade, however, believes ongoing investments in investor education, a media and news portal and technology will continue to raise the quality of service for its customers.
Online Broker Resources For Investors
TD Ameritrade's "Content Intelligence Platform" serves up personalized education recommendations based on a client's portfolios, trading behavior and past education consumption. This comes on top of the company's nine hours of live market news and information presented each day on its own broadcast network. Hockey says this contributed to a 60% jump in monthly education consumption last year.
"Engagement and overall satisfaction among converted Scottrade clients continues to improve as they increase adoption of our platforms, education, tools (and) products," Hockey told IBD in an email exchange. The integration "reinforced our belief that the client experience should be paramount to all that we do, and with the conversion now behind us, we are making sure it stays top of mind by making it our No. 1 priority across the firm."
Such views and efforts could give a boost to TD Ameritrade's ranking in Educational Resources next year and beyond. Customers of Fidelity, Charles Schwab and TradeStation gave those online stock brokers the highest ratings for Educational Resources in the latest Best Online Brokers survey.
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