SmartMoney 2011 Broker Survey

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InvestWhen I first started investing, I put a lot of stock into these broker rankings because I didn’t have any of my own experiences to draw upon. I didn’t know how I would use a broker, what features were important to me, and whether or not a deficiency really matter. Price was the number one factor, as is the case for a lot of investors.

Then, as I started to invest more and more, I realized that price wasn’t everything because I didn’t make a lot of trades. While it seems silly to pay $20 a trade when there are brokers offering trades for less than $5, it may make sense if the broker offers other features that you value. Nowadays, the differences in prices is much lower anyway and so the “other” factors, like customer service, fund offerings, and banking services become more important to me.

You have to review these rankings through your own rubric. There isn’t really a #1 broker for everyone, but there will be a #1 for you.

As we have done in years past (2010 and 2009), we take a look and recap this year’s SmartMoney Broker Survey. I’m a fan of this survey because they really delve deep into a variety of categories, which is more than what other surveys do. Some are like the Who’s Who books, a way to sell advertising, but SmartMoney really does put in the work to get you accurate results. For example, when they are rating Customer Service, they actually call up the brokers and time how long things take. That’s accuracy.

Instead of just having one “winner,” SmartMoney lists the best and worst on several categories along with an overall ranking:

  • Commissions & Fees: Best goes to ShareBuilder, worst to OptionsXpress
  • Customer Service: Best goes to TradeKing, worst to ShareBuilder
  • Research: Best goes to E-Trade, worst to Sharebuilder
  • Trading Tools: Best goes to Fidelity, worst to Vanguard
  • Mutual Funds & Investment Products: Best goes to Fidelity, worst to Sharebuilder
  • Banking Services: Best to Fidelity, worst to Vanguard

As for the overall ranking:

  1. Fidelity
  2. TD Ameritrade
  3. Scottrade
  4. TradeKing
  5. Charles Schwab
  6. E-Trade
  7. Vanguard
  8. Merrill Edge
  9. OptionsXpress
  10. ShareBuilder

I’ve used several of the brokerages in the list and so I have first hand experience with them. For example, I have to agree that the Banking services at Vanguard are practically non-existent. Funds that aren’t in a fund just sit in a boring money market account that earns almost nothing. I do get check-writing privileges, which you have to sign up for, but I can only write checks greater than $250. It’d be kind of nice to have more banking services but it’s a mutual fund company, not a bank. There’s something to be said about doing one thing very well and they do.

The other agreement I have is with the customer service at TradeKing, which was lauded for a second time. I’ve used the online chat functionality at TradeKing more often than at any other company’s site and it works. The best part about the chat functionality (besides great knowledgeable reps) is that you can have the transcript emailed to you, which serves as documentation of the conversation. No more scribbling down a name and hints at what they promised – there’s documented evidence easily emailed to you. I like that a lot.

Finally, I have had limited experience with ShareBuilder but they seemed to get lambasted by the SmartMoney team (and others). They won on Commissions and Fees but were worst on three more categories – Customer Service, Research, and Mutual Funds & Investment Products. Sharebuilder is good for what it is, especially when it was created, but it seems as though innovation has left them in the dust a little. $4 scheduled trades were awesome fifteen years ago, when quotes were 20 minutes delayed and trades were $20 a piece, but it’s hard to raise that up as an advantage when TradeKing charges you $4.95 for a real time trade.

Remember, the best way to view this survey is to read the notes and ignore the leaderboard. You have to realize what features are important to you and then decide which broker will satisfy those needs.

(Photo: wonderwebby)

{ 4 comments, please add your thoughts now! }

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4 Responses to “SmartMoney 2011 Broker Survey”

  1. BrianC says:

    Anyone have any positive or negative experience with Wellstrade?

    • govenar says:

      I’ve used Wellstrade for a few years. The 100 free trades per year are definitely nice (assuming that you have at least $25,000 balance; note the brokerage balance counts towards that, unlike others like BofA that require a big balance in a non-brokerage account). Though, the free trades don’t apply to options. Their website is kinda annoying to navigate, and making a trade might require a few more clicks than other sites, but it’s not a big deal unless you’ve making a huge number of trades. They don’t have trailing stop orders or pre-/after-market trading. They let you select tax lots to sell.

  2. Vic says:

    Scottrade only gets love on the overall rankings go figure. I have had nothing but good dealings with them. True, the research tools could be better but everything else has been solid.

    Glad to hear that they are finally coming out with an Android app. That was my main rub for a long time and its finally being addressed.

  3. skylog says:

    maybe i am missing something, but was t rowe price not rated?

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