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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. marko says:

    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

  2. DatekTrader says:

    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

  3. Jim says:

    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

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