List Of The Best Online Brokers By Smart Money 2009
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 17th 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 Selected As the Best Overall Online Broker
To absolutely no one’s surprise (certainly not mine), E-trade was chosen as the top discount broker for year 2009 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 the 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 Brokerage
Despite dropping one spot down from its previous 2008 Smart Money ranking, TradeKing remains a consistently solid high performer. 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 2009 Broker Survey (Rated On A Scale Of 5 Stars)
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Compared to the previous year’s 2008 Smart Money rankings, this year’s 2009 broker survey featured top five results that stayed pretty much the same, albeit with a slight shuffling of the deck. In 2008, the top five in ranked order were E-Trade, Fidelity Investments, TradeKing, TD Ameritrade, and Charles Schwab. This year, Charles Schwab, with its new and improved website, hopped up from 5th place to beat out TradeKing and Ameritrade for the coveted 3rd place finish. Etrade and Fidelity, with their robust and huge mix of product offerings and funds remain solidly in 1st and 2nd place respectively. 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.
June 11th, 2009 at 11:48 pm
Strangely, I’ve heard bad things about Etrade’s customer service from some online forums and blogs – go figure. Guess it goes to show that for every top online broker – there is a horde of naysayers and detractors. I challenge you to find a single broker that does not have negative comments posted on various websites.
Fidelity is a top 5 online broker, but what happened to Vanguard? Vanguard Group should be up there at the very least for their awesome index and mutual funds. They’ve got some of the cheapest funds available with some of the lowest expense fees around. Vanguard’s customer service is highly rated too with great customer satisfaction.
Charles Schwab is great too…but is it really a discount online broker? Since when did they become a discount broker? Their fees and charges are not that cheap. They ought to be classified as a semi-premium broker with the likes of Morgan Stanley, and even Wells Fargo’s brokerage arm and Bank of America’s
June 12th, 2009 at 8:13 am
Well I’ve stayed with Ameritrade ever since they bought out my old, old broker Datek (the original deep discount online broker) back in ‘02. The nice days of cheap fees and the new stock ticker! Then they bought out TD Waterhouse again, which I guess has improved their service.
However, I’ve been pondering the need for an integrated online bank and online broker way and Ameritrade doesn’t quite have the features I need any longer. Which cheap brokers also offer good bank functions and features with perhaps retail branches like traditional banks?
On the chart it looks like Etrade, Fidelity, CharlesSchwab, Banc of America, and Wellstrade offer the best bank servies (5 star each). Any recommendations? They all look pretty good after checking them out
June 12th, 2009 at 12:57 pm
If you want a nicely integrated bank and broker company – try the brokerages who are affiliated with major banks like Citibank, Bank of America, and Wells Fargo Bank. ETrade is not affiliated with a major bank but they’re well known for offering decent bank and credit card products. I think their credit cards used to offer very good cash back rewards and low rates, though I’m not sure about now.
Citibank offers brick and mortar banking branches and runs its brokerage firm through Smith Barney (not sure this will be the case if Citibank eventually decides to sell off its Smith Barney investment arm due to its struggling status).
Bank of America’s brokerage arm is thriving based on reports on CNBC
Wells Fargo’s brokerage division is WellsTrade, which SmartMoney Mag has listed up there in the table…but it’s low in the rankings at #12 for some reason
June 13th, 2009 at 12:52 am
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?
June 18th, 2009 at 8:03 am
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
July 1st, 2009 at 10:57 am
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.
July 15th, 2009 at 12:36 pm
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.
July 29th, 2009 at 1:37 pm
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.
August 9th, 2009 at 10:27 am
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,
September 2nd, 2009 at 3:39 pm
How the heck did thinkorswim not make it into this survey? Was it because of the consolidation with TD Ameritrade?
October 6th, 2009 at 9:13 am
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
October 30th, 2009 at 9:01 pm
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.
November 3rd, 2009 at 9:37 pm
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!
November 4th, 2009 at 3:48 pm
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!
November 4th, 2009 at 10:03 pm
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.
November 5th, 2009 at 5:03 pm
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.
December 1st, 2009 at 5:16 pm
I opened-up an account with Trade King 1 month ago. I was disappointed that the process to fund my account was rather difficult. I had to either wire, send in personal check, send in cashiers check, etc. This process would take too long and cost money to wire my fund.
Last week, I opened an account with Etrade and found out that I had to wait for a day or two so they can verify all my information to open an account. I spoke to a rep from Etrade yesterday who told me it would probably just take a few hours.
This morning @ 10:00 am I called Etrade and was informed I would have to wait perhaps a day more or several more hours. I logged into my Etrade account @2:45 pm today and was prompted to contact a rep to activate my account.
I called and the rep told me I had to send in a picture ID like a drivers license. I informed her why it was so difficult to open an account with them. I told her, Ameritrade and Tradeking are much easier to open my account.
She asked that I wait so she can see if she can have my account approved. She came back and told me she would have to ask me to talk to another rep who would have to confirm my identity. I spoke to the rep who pulled my credit report and started asking me questions. He asked 5 questions. I answered all of them. He said my address was incorrect. I asked him to use my mailing address instead of my physical address. He did and he said it was confirmed.
I was transferred to the original rep (a gal) who said it was all confirmed. She asked I call them back tonight or tomorrow so they can activate my account. I told her, did you know this would be my 4th phone call to Etrade. As good as your products are- brokerage and banking; I value customer service and ease of use more.
I told my wife, it was too much of a hassle just to open an account. I will just go with Ameritrade since their service was exceptional and funding my account was done with my fingertip. I can add an external bank to my account and transfer funds between my bank account and Ameritrade. Free of charge!!!
I opened-up the Ameritrade account after I was held back by Etrade the same day I open the Etrade Account. They will take several days to just open my account. If they don’t want my business. I will give it to Ameritrade. Too bad, my initial investment was quite substantial. Good customer service and ease of use was the overwriting factor for my decision. Thank you Ameritrade!!!
December 23rd, 2009 at 9:26 am
has anyone got some tips on muriel siebert?.charless scwhabb seems to be okay too?.is anyone with them.
December 26th, 2009 at 2:12 pm
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.
January 9th, 2010 at 2:30 am
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.
January 16th, 2010 at 4:54 pm
Etrade is awesome. It may take a few days to open an account due to the verificaton process but what’s the hurry? If you are that impatient you shouldn’t be trading in the first place. Be glad they are diligent to detail and security. There are dishonest people out there and Etrade, as well as the other online brokers, are only trying to protect you and your sensitive information. I have accounts at Sharebuilder and Etrade. Etrade does have a superior format and research tools. I’ve only had to call them a few times to place OTC trades but they have always been very professional and responsive over the phone.
January 22nd, 2010 at 5:01 pm
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.
January 27th, 2010 at 8:10 am
I haven’t used all the brokers but I’ve been using scottrade and I’ve I’m happy with their service. The $7 dollar per trade fee is lower than most competitors. They also have more branches if you’re looking for a broker that you can meet face to face. One last thing I’ll say is that they offer 3 free trades when opening an account with a referral code. For 3 free trades when you open an account at Scottrade you can use the code
February 16th, 2010 at 1:02 pm
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???
February 19th, 2010 at 4:11 pm
To Susan: Please read any book by Peter Lynch, Charles Schwab or any other reputable investment guru. Gain your own knowledge and make your own decisions. It’s not that hard to pick great companies to invest in. Read a few books, gain some experience, and you will become your own expert. Watch Jim Cramer’s MAD MONEY on CNBC and read his books. Soon you will be able to glance at a company’s fundamentals and see if they are even worthy of further research. It’s really fun and easy. Never depend solely on advice and recommendations from ANYONE! Always check Earnings and Growth Rate Data, cash flow, debt, etc. Books by Suze Orman are also great reads. I’ve taken in a lot of info and developed my own investment style, rules, and strategy which keeps evolving as I gain more experience. In time you will get a feel for the market and soon people will be coming to YOU for advice. Please read a few books and save alot of money, time, and heart-ache. I think any of these top ten brokerage firms are good as long as they are keeping up with their research data base.