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Which Broker Is Best For You?

No broker can hit the bull’s-eye for every type of client. Use our results to find the best one for you.

Ryan Ermey

When it comes to satisfying their clients, brokerages are aiming at a moving target. And considering that different investors may have wildly different needs, maybe its fairer to say that brokerages must hit several moving targets. 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. // This year’s winner: E*Trade, with Interactive Brokers and Fidelity close behind. The results show, however, that many firms have excellent services to offer. In the seven categories we used to rate the brokerages, six different firms won the top ranking. // 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 handheld. 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.

Ally Invest president Lule Demmissie, for instance, says her firm’s clients value simplicity, and a major focus of the firm’s continuing platform overhaul is to make it easier for clients to understand Ally’s products. The buzzword often heard in a recent meeting with Ally representatives: de-jargoning. By contrast, the average TradeStation client is an experienced trader in search of sophisticated tools that will help him or her gain an edge in active trading. The box on page 26 will help you narrow your choices.

Nearly every broker says mobile investing has become essential, and mobile functionality received slightly more weight in our ranking calculation this year, as did tools and research, which are valuable no matter what kind of investor you are.

To be included in our survey, firms had to clear a few hurdles, such as offering a mobile app and allowing clients to trade stocks, mutual funds, exchange-traded funds and bonds. Firms that didn’t qualify may still be worth considering (see the box on page 25). Among firms that declined to participate in our survey: eOption, T. Rowe Price, Vanguard and You Invest by J.P. Morgan. Read on to see how firms performed in seven categories.

COMMISSIONS AND FEES

Thanks to ongoing price wars, the cost of investing these days is lower than ever. So how does a broker separate itself from the pack when even the pricier shops charge the price of a side salad to trade stocks and ETFs? By offering free trading.

At some brokerages, what you’ll pay in commissions may vary depending on the size of your account and how often you trade. At Firstrade, the calculus is simpler: Customers pay no commissions to trade stocks, ETFs, mutual funds and options, making it a runaway winner in the category.

A few other brokers offer a fixed price for stock and ETF trading, regardless of the assets in your account or how many shares you trade. Of those, TD Ameritrade is the most expensive ($6.95 per trade), followed by Fidelity and Schwab (both $4.95).

E*Trade lowers its $6.95 standard commission to $4.95 for investors who make 30 trades per quarter. If you trade that frequently at Ally Invest (or hold at least a $100,000 daily balance in your account), you’ll get $1 off the standard $4.95 commission.

WellsTrade and Merrill Edge might slash your fees based on your relationship with their affiliated banks. WellsTrade customers who link their account to a Portfolio by Wells Fargo checking account see their commission knocked down $3 from the standard rate, to $2.95. Customers enrolled in the Bank of America (Merrill’s parent) Preferred Rewards program with a minimum of $20,000 in combined assets qualify for at least 10 free trades per month, avoiding the standard $6.95 rate. The firm lowered the qualifying asset threshold earlier this year from $50,000. As a result, according to Merrill, more than 80% of trades on its platform are commission-free.

Interactive Brokers and TradeStation offer excellent deals for frequent traders. Customers at both firms can pay as little as a fraction of a cent per share, depending on the pricing plan they choose and the quantity of shares traded. Costs can add up if you don’t trade much, however. Interactive Brokers customers with less than $100,000 in their account who fall short of $10 in commissions per month pay the brokerage the difference. TradeStation investors paying by the share are subject to steep inactivity and low-balance fees.

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October 2019