Online Broker Review and Comparison

April 28, 2009

Online broker reviews differ from site to site because every investor has different things they look for in an online brokerage.  Comparing brokers is actually the easy part, choosing the right brokerage site for you is the tricky part.  So today we have a comparison of online brokers from someone with considerable experience in the financial industry.

Online Broker Review

I was recently asked to compare online brokers and it could not have come at a better time. Recently I ended an eleven year career in the financial services industry and knew I needed to move my 401K from my former employer. I felt that I had enough experience to manage my own funds, and besides, it would be difficult to find a financial advisor to take on my relatively small retirement nest egg.

So as I started off on this path of discovery, I chose to stick with names I knew:

  • Scottrade
  • Charles Schwab
  • TD Ameritrade
  • Fidelity
  • E*Trade

Fee Structures and Commissions

Market & Limit Orders Options Broker Assisted Trades Real Time Dow Jones News
Scottrade $7/Unlimited Shares $7+$1.25/ contract $27/Unlimited Shares Complimentary
Charles Schwab $12.95+$.015/share over 1,000 shares $8.95+$.75/ contract $25.00+online Commission Complimentary for active traders
TD Ameritrade $9.99/Unlimited Shares $9.99+$.75/ contract $44.99 $29.99/month
E*Trade $12.99+$.015/share over 2,000 shares $12.99+$.75/ contract $45.00+online commission $29.95/Month
Fidelity $19.95+$.015/share over 1,000 shares $19.95+$.75/ contract $55.00+$.14/ share over 100 shares Not Available

Quarterly/ Annual Acct. Maintenance Fees Minimum Initial Deposit No-Transaction Fee Mutual Funds Available Account Closing & Transfer Fees
Scottrade $0/$0 $500 1,150+ $0
Charles Schwab $0/$0 $1000 2,000+ $50
TD Ameritrade $0/$0 $2,000($1,000 for IRAs) 1,300+ $75
E*Trade $40/$160 $1000 1,000+ $60
Fidelity $0/$0 $2,500 1,400+ $0 ($50 for IRAs)

If that was all the data needed to make the decision, I’d be all set. In the fast paced world of investing, that’s not the case though. What about research? Tools? Customer Service? These are all a bit more subjective.

According to J.D. Power, customers rank research ahead of all categories when determining overall satisfaction. Again, these things can be subjective. I went to three reputable publications and their 2008 annual surveys to see how they rated each of my five in research, as well as a few other subjects:

Research

Smart Money Barron’s JD Power
First TD Ameritrade Charles Schwab Charles Schwab
Second E*Trade E*Trade E*Trade
Third Fidelity Fidelity Scottrade
Fourth Charles Schwab TD Ameritrade Fidelity
Fifth Scottrade Scottrade TD Ameritrade

Customer Service

Smart Money Barron’s JD Power
First Charles Schwab Fidelity Charles Schwab
Second Fidelity Charles Schwab Scottrade
Third Scottrade E*Trade Fidelity
Fourth TD Ameritrade Scottrade TD Ameritrade
Fifth E*Trade TD Ameritrade E*Trade

Trading Tools

Smart Money Barron’s JD Power
First TD Ameritrade Fidelity Charles Schwab
Second E*Trade E*Trade E*Trade
Third Charles Schwab TD Ameritrade Scottrade
Fourth Fidelity Charles Schwab Fidelity
Fifth Scottrade Scottrade TD Ameritrade

Overall Experience

Smart Money Barron’s JD Power
First Charles Schwab Fidelity Scottrade
Second Fidelity Scottrade Charles Schwab
Third Scottrade Charles Schwab TD Ameritrade
Fourth TD Ameritrade TD Ameritrade Fidelity
Fifth E*Trade E*Trade E*Trade

You can spend your whole life doing research, but eventually you actually need to DO something. Choosing an online broker is different for every individual. For one person it will be all about the fees. For others, it might be the research. Yet other people will get their research from other avenues and care most about whether the company takes care of them.

Whether it’s one of these five, or any of the other online brokers out there, make sure you are choosing one for the right reasons and not because your golf buddy or the lady in the church choir uses a particular company. Just like any other investment, it has to be right for you.

Contributed by Victor Alfieri

Ben

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Ben

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn’t like the other kids… His addiction to personal finance has paid off for his family and now he’s helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.


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