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List Of The Best Online Brokers By Smart Money 2010

Published 6/11/09 (Modified 3/8/11)
By MoneyBlueBook

Review of SmartMoney Magazine's Top Discount Brokerages Below

While I have written about the best online discount brokers in the past - reviewing what I believe to be the top brokerage companies out there for new stock and fund investors - it's always good to check out what the financial experts have to say on the subject. For almost two decades now, the editors at SmartMoney Magazine have been reviewing and releasing their annual list of the best stock brokerage companies, thoroughly researching and comparing the candidates based on a variety of key competitive factors. For customers and broker firms alike, their award wining list is always a popular read.

In this year's 18th annual broker survey, SmartMoney updated its ranked list of the best and worst brokers after conducting a variety of performance based tests and undercover research as well as reviewing the responses to surveys by the online brokerages themselves. As the folks at Smart Money remarked in this year's review - "no detail was too small" - as they poked and prodded the various available trading tools and features, even going so far as to go incognito - calling customer support lines and posing as prospective brokerage customers, while jotting down comments in regards to the quality of the phone service they received. For new and seasoned investors, this list serves as an excellent jumping off point for those on the fence and not sure which investment broker to go with or to switch to. While the exact sequencing order of the rankings is always debatable, the list gives a great overview of who's hot and who's not in terms of touting the complete package in all facets. The table below is self explanatory, but I'll comment on a few names that I feel merit some mentioning.

E-Trade Is Second Best Overall Online Broker

To absolutely no one's surprise (certainly not mine), E-trade was chosen as one of the top discount brokers for year 2010 by SmartMoney. Ranked high in every category, with excellent customer service and an affordably low $9.99 commission structure to boot, the E-Trade brokerage company definitely deserves a top spot. One of the best features of E-Trade is its status as a true one-stop shopping destination for brokerage and online banking services. Along with its highly rated broker conveniences and extremely broad portfolio of mutual funds, stocks, bonds, and ETF's to choose from, ETrade also offers a wide array of FDIC insured products with its highly recommended E-trade banking service, complete with high interest savings accounts and high yield certificates of deposit.

Special Offer: ETrade is currently offering 100 free trades for new customers.

TradeKing Remains A Solid and Legit Top Tier Broker

TradeKing, compared to E-trade, Fidelity, and Charles Schwab - TradeKing offers the lowest commission fee rate by far at only $4.95 per trade. Only Just2Trade, SogoTrade, and Zecco Trading (with its free monthly stock trade deal) offer lower prices, albeit with much lower reputational scores. They only major downside with TradeKing is its lack of a fully developed and integrated online banking system for those who want their banking and brokerages services in one place. But those who simply want a deep discount broker that features a wide selection of extremely user-intuitive trading tools with an impeccable customer service reputation can't go wrong with Trade King.

Results Of Smart Money's 2010 Broker Survey (Rated On A Scale Of 5 Stars)

Rank & Broker Name Cost Per Trade Investment Products Banking Services Trading Tools Research Customer Service
1. Fidelity $7.95 5 stars 5 stars 5 stars 5 stars 5 stars
2. E-Trade
$9.99 4 stars 5 stars 5 stars 4 stars 5 stars
3. TD Ameritrade $9.99 5 stars 3 stars 5 stars 5 stars 5 stars
4. Charles Schwab $8.95 5 stars 5 stars 3 stars 5 stars 4 stars
5. TradeKing $4.95 3 stars 2 stars 5 stars 3 stars 5 stars
6. Scottrade $7.00 4 stars 2 star 4 stars 3 stars 4 stars
7. WallStreet-E $9.99 4 stars 3 stars 3 stars 1 star 5 star
8. Firstrade $6.95 4 stars 3 stars 3 stars 2 stars 3 stars
9. Just2Trade $2.50 2 stars 2 stars 4 stars 1 stars 4 stars
10. Muriel Siebert $14.95 2 stars 3 stars 4 stars 3 stars 4 stars
11. OptionsXpress $9.95 3 stars 1 stars 5 stars 3 stars 1 stars
12. Zecco Trading $0.00 3 stars 2 star 2 stars 2 star 2 stars
13. WellsTrade $19.95 2 stars 5 stars 1 star 3 stars 2 stars
14. Bank of America $14.00 4 stars 3 stars 3 stars 2 stars 1 stars
15. USAA $11.95 2 star 4 star 2 stars 2 star 2 stars
16. ShareBuilder $9.95 2 stars 2 stars 2 star 2 star 1 stars
17. SogoTrade $3.00 1 star 1 star 1 stars 1 star 1 stars

Compared to the previous year's 2009 Smart Money rankings, this year's 2010 broker survey featured top five results that stayed pretty much the same, albeit with a slight shuffling of the deck. In 2009, the top five in ranked order were E-Trade, Fidelity Investments, Charles Schwab, TradeKing, and TD Ameritrade. Etrade and Fidelity, with their robust and huge mix of product offerings and funds remain solidly in the top two spots, simply trading places. As the table above clearly demonstrates, with the top 5 brokers securely entrenched, the up and coming basement-dwelling brokerages still have quite a ways to go.

OptionsXpress - Excellent Online Tools, But Only Average Customer Service

As the Smart Money review noted, OptionsXpress rated well and received high marks for its online trading tools. However, the online brokerage retailer was docked points for providing only limited hours for phone based customer support. The editors also remarked of at least one instance where testers were put on hold for a longer than desired period of time when they called in for assistance. While OptionsExpress offers a large array of powerful investment analyzers and online technologies for stocks, futures, mutual funds, and bond trades that cater to savvy statistic-loving investors, its customer service offerings can still use some work

ShareBuilder (ING Direct) - Great Bank, But Brokerage Needs Improvement

Previously stuck at the bottom of the pile, ING Direct's ShareBuilder discount brokerage firm has jumped up three spots after finally adding a large selection of mutual funds into its investment product lineup. However, its requirement of extra fees for access to premium research that other broker alternatives offer for free keeps it from advancing further in terms of ranking. Currently, one of ShareBuilder's biggest selling points is its unique automatic investment feature, which allows online customers to buy stocks, mutual funds, and exchange traded funds (ETFs) on a regular basis so they can take advantage of dollar cost averaging as stock prices change and fluctuate over time. For now at least, ShareBuilder seems content in its marketing approach of appealing primarily to hands-off type investors looking for a low cost, almost automated brokerage solution without all of the added cost of having extra bells and whistles attached.

Zecco Trading - Free Trades Cater Only To Individual Stock and ETF Traders

Smack near the back of the bus is Zecco. You might won't find Zecco at the top of any best brokerage list. In fact, the company is almost dead last on the list due to its lack of sophisticated fund selections or premium research material for investors - despite its unique reputation as a super deep discount commission fee provider. For now, the company seems all too comfortable nestled in its niche as a purveyor of free commission trades to those who who primarily dabble in individual stocks and ETF's with little need for extraneous research material. While Zecco used to shine and dominate the deep discount brokerage market with its unlimited free stock trades, this deal now requires a minimum $25,000 balance to qualify for - and only for a recurring 10 free trades per month. Customer service has improved with faster response time, but I don't think Zecco is going to be leapfrogging E-Trade, Fidelity, Charles Schwab, or TradeKing anytime soon.

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23 Responses to “List Of The Best Online Brokers By Smart Money 2010” 

  1. Susan says:

    Zecco is NOT a top online broker by any means. Its service is crappy and its website is filled with useless eye candy. Zecco girls or Zecco sirens as the broker calls them - is nothing but alluring content without substance. Are people here to invest or to ogle at girls anyhow?

  2. Stefanie Springer says:

    I am in the process of picking a discount broker, my question after reading the replies regarding brokerage service along with banking, what about USAA. Why are they not mentioned?
    Thank you,
    Stefanie

  3. Kyle Roth says:

    I tried opening an account with Ameritrade and was in the midst of asking some questions when the new account(s) representative hung up in my face. I considered that it was a dropped call but then waited for the representative to call me back at my contact number (listed in their records) and she didn't. That confirmed to me that I was "hung up on." This happened again with someone else at Ameritrade. I have concluded that they are trained to simply end the call and hang up when the questions become too challenging for them to answer.
    I have used E Trade and think the customer service, comparatively, is acceptable, but I never lose sight that they, just like the others, try to find ways to make money at the customer's expense. E Trade is sneaky so you have to be careful with them. Pay close attention to their fees (that they don't initially tell you about). Stay informed when trading with these online brokerage firms; it is the key to avoid getting ripped off.

  4. WiilWaal says:

    Hi

    I hope someone can point me out to the best online discount brokerage firms to start with for a beginner who is in short both capital and experience beside what this article has already explained very well.

  5. Moe says:

    Of the more well known online borkers (Ameritrade, Etrade, etc.), scottrade is the best for first time investors. They have good research tools, $7 trades (far less than the 9+ you'll pay with the other guys), no inactivity fees and you can get 3 free trades using promotion code: SNEG9782. Again, it's only $7 per trade no matter the quantity of shares purchased. Also, there are plenty of podcasts that show you the various tools available on the scottrade site.

  6. Herb says:

    As for a new trader, first determine what you will be trading,futures,options,currenceies, and or stocks etc. . You will eventually may want to use someone's software in order to help in your trading selections,auto or manual as there some very good ones out there. the problem is they most often require a certain trading platforms such as ninja or met trader 4 etc. . Do your homework first , it's not all about finding the cheapest broker it's what the broker has to offer. If I was a new trader I would want to find a broker who does not have inactivity fees and has demo account for sure. Hope this helps as knowing what you want to do first hand can save you time and maybe money also.
    Good luck,

  7. Michael Comeau says:

    How the heck did thinkorswim not make it into this survey? Was it because of the consolidation with TD Ameritrade?

  8. ROBERT L MEARS says:

    TRADE KING is the best overall broker. with 4.95 trades and a host of trading tools it beats out some of the best. rated high in every survey taken. check it out

  9. Jen says:

    There are usually codes online to get you a couple of free trades with scottrade. If you choose to open an account with them, you can get three free online trades (worth $21). Enter the code XEPG6413 in the box after selecting "referred by friend/received a promo code" on the application page.

  10. Frank says:

    Obviously smart money does not take into consideration the fees that E-Trade hides from their customers. Like $40 a quarter for inactivity! I guess they have to get their money from somewhere to pay for their commercials and paying people like smart money to rank them #1. E-trades customer service is nowhere near getting five stars. They are rude, inconsiderate and uneducated. Stay away!

  11. Scott says:

    I've tried quite a few discount brokerages and continue to have Izone via (TD)Ameritrade. I have also kept Choicetrade which has been rock solid for me. I looked into TradeKing and fail to see the benefit of this brokerage, if I happened to buy a stock below $1 the cost is $4.95 plus $.01 for every share!

  12. Robert L Mears says:

    You are WRONG about Trade King. You need to ck out the ENTIRE list of tools. They have more than anyone else. There is not .01 per share either. I have been trading for over a month with them. the execution is blazing fast. the resolutions are the next day. Margin on $3 stocks. and also trail stops. trades are $4.95 PERIOD. i have used many brokerages over 15 years . and they are tops.

  13. Scott says:

    Your wrong simply send an email to TK and ask about the extra charge for stocks under $1 and others. Choicetrade is $5 a trade period and has prompt after hours trading, Zecco is alright except to my knoweledge they don't have extended after market trading. Choicetrade must be the best kept secret in the brokerage market.

  14. ruan says:

    has anyone got some tips on muriel siebert?.charless scwhabb seems to be okay too?.is anyone with them.

  15. Delaware says:

    This article of top online brokers appears to be limited to web-based platforms. An annual Barron's review put's thinkorswim, MB trading, tradestation in the top three with tradeking #7, and etrade at #10. I wonder if software based platforms are really any better than web-based ones.

  16. Tom says:

    SmartMoney is right about Just2Trade. Be VERY careful. I used them for about a month, and then closed my account. I do my own record keeping to shadow the transactions I make in my account. Kept finding small discrepancies (10 cents, 20 cents, 90 cents, etc...) with no explanation as to where the money went. Also ran into a few strange computer glitches where my shares were suddenly worth -$60.00 a piece, causing errors in my margin buying power... Like I said, be real careful. Their computer system is buggy.

  17. sk says:

    I am think about opening an account with an online broker? I am contemplating between Scottrade or Trade King? I am surprised Interactive Brokers did not make it on the list when Zecco and Sogo makes the list? I guess may be IB is geared towards pro-traders and financialists, whereas Zecco and Sogo is for the Average Joe.

    Between Scottrade and TK, I am leaning towards TK.

  18. Susan Smith says:

    Please help. I am looking for an online brokerage agency. I do want to speak with someone for recommendations of equities (stocks) and other investment options. I currently have an account with Scottrade and they do not offer that. Fidelity only offers mutual fund recommendations. The online research would be ok, however, I would like to speak to someone knowledgeable. So, do I have to use an expensive brokerage firm???

  19. Jeremy says:

    I think SogoTrade is pretty good. It only cost $3 to make a trade (unlimited shares). They have good online and phone support, quick execution and a good inventory of shares that you can short! Oh and you only need $500 to open your account. You also get 100 free trades when you open your account. You can also buy/sell options for 5$ + 0.65 per contract. Can't beat that.

  20. Julixx says:

    SogoTrade - very bad broker...

    I have been with them for one month and I have nothing good to say about them:

    1) trading center is intuitive but is slow and a bit buggy;
    2) quotes are delayed on the fast moving market;
    3) no level2;
    4) charting is poor;
    5) extended hours trading is available from 8 a.m. till 6 p.m. only;
    6) live-chat support is not always available from 8 a.m. as it should be;
    7) one time there was a system issue that made placing orders impossible for an hour or two;
    8) they charge additional 0.5$/100 shares on extended hours - even for adding liquidity orders, which is beyond my understanding.
    9) great borrows became the history;
    10) finally, THE WORST - they make money on arbitraging their own customers' orders!!! Once I sent a sell order with the limit price of 168.00 and they filled it exactly at this price, although the best bid was at 168.58.

    The positives are: opening new acount is very fast (one business day), customer service is friendly and reliable - I never had to wait for an email reply more than one business day, although contacted them many times. Low commision. But... is this enough big reason for being with them?...

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