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Consumer Reports America’s Best Brokers

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On The Money, the personal finance show on CNBC hosted by Carmen Wong Ulrich, recently had a little web extra spotlighting Consumer Report’s list of best brokers. In their brief piece, they talked about the top three: USAA Brokerage Services, Vanguard, and Edward Jones.

USAA Brokerage Services

Unfortunately, USAA Brokerage Services is available only to USAA members, who are military personnel and their families. I know several people with USAA auto insurance and they absolutely love it (in fact, my car was totaled by someone covered by USAA and they took very good care of me!), so it’s not surprising to see them on this list. The commission on stock trades is $11.95, $5.95 if you some qualifications (25+ trades in 90 days or 16+ trades in 90 and have $50k in assets).

Vanguard

Vanguard, on the other hand, is available to anyone and they’re one of my favorite brokers. With vanguard, you have to select an investment type and you have two options: Vanguard mutual funds or “Stocks, bonds, ETFs, and non-Vanguard mutual funds.” With the Vanguard mutual fund account type, you get access to all their funds and you can trade them freely and for free (with some exceptions). You can’t buy stocks, bonds, ETFs, or non-Vanguard funds in the Vanguard mutual fund account type. With the stocks, bonds, ETFs, and non-Vanguard mutual fund account, you can buy anything you want but the fees are high compared to discount brokers.

Commissions: The standard Vanguard commission rate is $25 a trade, compared to $4.95 for a discount broker like TradeKing. A broker assisted trade is $40-$45, compared to $4.95 at TradeKing. The cheapest commission rate is Voyager Select, which requires $500,000 to $1M deposited, at $12 a trade.

I’m still a huge fan of Vanguard if you want access to their mutual funds, but for other brokerage options I always go with a discount broker.

Edward Jones

I’m familiar Edward Jones but I’ve never done any business with them. I dug around the site trying to find their commission structure but gave up after ten minutes of fruitless searching. I’m sure they have it listed somewhere and unfortunately my incompetence outlasted my patience. :)

Unfortunately I couldn’t find the Consumer Report’s piece (the only one I uncovered was from 2007) or I’d dig up some of the other names to see how they fared. Here’s the On The Money video piece:


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11 Responses to “Consumer Reports America’s Best Brokers”

  1. I used to work as a financial adviser at Edward Jones. I’d be very surprised if the stock trade commission structure was on the site anywhere. In fact, I don’t recall ever seeing it explicitly outlined anywhere while working there.

    Most of their business is done with front-load mutual funds rather than individual stock trades. The sales loads are set by the fund companies rather than by the brokerage firm.

  2. Chewbakka says:

    Interesting…anyone know how Schwab ranks on that list?

  3. I have Schwab and in 2007, they ranked very well on CR’s list. That’s one of the main reasons I decided to give them a try and have liked it since.

    As Jim points out, CR just updated their rankings. The link to the article is here: http://www.consumerreports.org/cro/magazine-archive/may-2009/money/brokerage-services/overview/brokerage-services-ov.htm

  4. OleDrippy says:

    I also had a USAA brokerage account. I absolutely LOVE USAA. I can’t recommend them enough.. Superb customer service, fair prices on products, excellent insurance rates.. Prima!

    P.S. – I said “had” because I’m a broker at another firm and can’t have conflict of interest. If I had my druthers I would be back at USAA..

  5. Patrick says:

    Jim, from what I understand, anyone can have a brokerage account at USAA, it is just their insurance and banking services that are limited to military members and their families.

    I have been a USAA member for about 9 years now, and love their customer service! That said, there are less expensive brokerages, so do your research and use whichever is best for you!

    Regarding Edward Jones, I haven’t had good experiences with two different reps (both tried to sell me high load funds that weren’t in my best interest). That doesn’t mean they are all like that though – just my two experiences.

  6. jason says:

    I have had USAA auto insurance for over 19 years. The first time I was responsible for an accident (a very minor, non-moving violation after more than 17 years of coverage), they raised my rates by 60%. So I would NOT recommend USAA to anybody.

  7. Prophetess 45 says:

    What company has the best credit card and interst rate? Please no fees.

  8. xnlover says:

    I have accounts with Vanguard. In contrast with your statement that they charge $25 per trade, every time I’ve traded stocks through them, it’s cost only $7. As someone else said above, their mutual funds have very low expense ratios, and though some of them are dogs, a number of them have given very good returns over the years. Though I’ve also got accounts with optionsxpress.com and ShareBuilder.com (ING) for some of my smaller holdings and options trades, I recommend Vanguard to practically everyone who’s interested in investing.


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