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Smart Money Best Brokers 2012

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Every year, Smart Money puts out their list of the best and worst brokers. We’ve taken a look at that each of the last four years (2008, 2009, 2010, 2011) and this year the list doesn’t look that much different from the ones in year’s past.

Smart Money 2012 Best Brokers

Here is the list of the top ten, along with the remarks (here’s the chart):

  1. Fidelity – Top spot for third year running. Offers the biggest selection of funds and the most comprehensive website.
  2. Scottrade – Doesn’t have the cheapest stock trades but compensates for that with few fees on nearly everything else.
  3. TD Ameritrade – Want to trade? its website and mobile apps are top-notch, but slow e-mail and phone response times hurt.
  4. E-Trade – Its 27-7 online chat feature is a nice touch, but its fees are above those at rival firms.
  5. Charles Schwab – Offers a wide assortment of investment and banking options. Its fees on some services aren’t cheap.
  6. TradeKing – Has strong customer service, but customers can’t get stocks listed on foreign exchanges.
  7. Zecco – Doesn’t have risk-assessment or automated asset-allocation tools. Lacks many banking services.
  8. Merrill Edge – It can be your bank and broker, but high fees and slow-to-execute trades keep it from ranking higher.
  9. ShareBuilder – Offers low fees, but its customers can’t buy individual corporate or government bonds.
  10. WellsTrade – Online traders were slow to execute. Got low marks for its website, trading tools and research offersing.

It’s important to note that the list was released in May of this year, so we’re a little slow in getting to it, and a few things may have changed. For example, TradeKing acquired Zecco so we won’t be seeing Zecco appear on any future lists.

One thing worth noting, everyone on the list offered stock trades for less than $10 a piece.

Best & Worst by Category

Smart Money went even deeper and listed the best and worst in some categories:

  • Commissions & Fees – Best was Scottrade, Worst was WellsTrade
  • Customer Service – Best was TradeKing, Worst was WellsTrade
  • Research – Best was Fidelity, Worst was WellsTrade
  • Trading Tools – Best was Fidelity, Worst was WellsTrade
  • Mutual Funds and Investments – Best was Fidelity, Worst was ShareBuilder
  • Banking – Best was Merrill Edge and Fidelity, Worst was Zecco

Poor WellsTrade… listed worst in a variety of things and got only four stars in the Banking Services category, which makes sense since they’re associated with Wells Fargo.

I’m curious by Vanguard wasn’t included, especially when other mutual fund companies like Fidelity and Charles Schwab were included. I’m thinking it might be the fee structure? It’s $7 for the first 25 trades each year, $20 for subsequent trades, if your balance is below $50,000. Or perhaps they don’t consider them a broker? I’d be interested to see where they stacked up considering I’ve been a big fan of Vanguard for many years.

{ 4 comments, please add your thoughts now! }

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4 Responses to “Smart Money Best Brokers 2012”

  1. Ray says:

    I don’t think its a great idea to generalize brokerages like this. If you have $1,000 to invest you should choose a different brokerage than if you have $100,000 to invest.

    To be honest, I can’t wait until I have enough assets to open a PMA account with WellsTrade. They give you 100 trades annually (+100 for an IRA), so up to 200 free trades if you can maintain a 50k balance.

  2. govenar says:

    I use WellsTrade for the free trades. Their interface is kinda bad and they don’t support things like trailing stop orders, but for a few simple trades it’s ok.

  3. Tony says:

    Too bad – my broker (IB) isn’t on there. But quite honestly, I find most of them to be similar (maybe a 3% difference) – I started using IB when i started investing, and I’m just so familiar with its format that changing would be difficult.

  4. John says:

    Yes, the Bank’s brokers (Wells Fargo WellsTrade, BankofAmerica MerrillEdge, and Capital One Sharebuilder) are not the greatest. None of these made the list: TradeMonster, OptionsHouse, TradeStation, LightSpeed, FirsTrade, Just2Trade, Betterment, Motifs, InteractiveBrokers, or other firms from the CME group.


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