Among online brokers that offer a full range of financial services and are geared toward long-term investors, Fidelity is top-ranked most often. One of those sources, Kiplinger.com, praises Fidelity's range of investment options, stock research and access to international exchanges. SmartMoney magazine ranks Fidelity No. 1 for the second year in a row in its 2012 survey, where it earns top marks for banking services, mutual funds and investment products, and trading tools. Barron's also names Fidelity the best online broker for long-term investors. In other categories of the Barron's survey, Fidelity doesn't do quite as well, but it still finishes in the top five for international traders and for in-person service.
Reviewers routinely praise Fidelity's user-friendly website, which was updated recently. Barron's review notes that in addition to its other resources "the Fidelity Website received a fixed-income research and education update as well as access to Recognia's technical analysis tools." The site offers other amenities, including tools for retirement planning, asset allocation and investment selection. Fidelity's customer service is rated among the best as well, and users give it great ratings at Epinions.com.
Fidelity eliminated its tiered commission structure in 2010 and charges $7.95 per online trade, with no account inactivity, handling or maintenance fees. Although a $2,500 minimum is required to open an account -- with a $250 minimum for additional investments -- customers are not penalized for dropping below that minimum. Trades can be made on the website or via Fidelity's downloadable trading platform, Active Trader Pro. Fidelity also offers before- and after-hours trading and free apps for the iPhone and iPad.
Charles Schwab is also ranked near the top in some current ratings of online brokers. Reviewers point to Schwab's wide range of investment products, in particular its large offering of no-load, no-transaction-fee funds. Investors pay $8.95 per online equity trade, regardless of the balance in their accounts, how often they trade or how many shares they trade. There is still a required $1,000 minimum deposit to open an online brokerage account, which may be waived if you open a linked checking account or establish a minimum monthly direct deposit of at least $100. Investors who want advice from a professional may contact someone via the website free of charge or visit one of Charles Schwab's many branch locations (more than 500 as of April 2012) in person.
Charles Schwab edges out the competition in the J.D. Power and Associates 2012 Self-Directed Investor Satisfaction Study, scoring particularly well in the areas of account information, account offerings and information resources. Kiplinger.com says Schwab offers "the broadest list of funds with no loads or transaction fees" of the 14 online brokers included in its 2011 review.
SmartMoney magazine's 2012 broker survey praises Schwab for its range of financial product offerings and its educational seminars, but it notes that "fees on some services aren't cheap." Meanwhile, Barron's recommends Charles Schwab for buy-and-hold investors and for novices. Schwab's web-based trading platform is a little dated, editors say, though they note that the firm is adding a streaming platform. ConsumerReports.org also includes Schwab in its 2011 survey of subscribers, though the ratings are only available to subscribers.
TD Ameritrade has continued to move up in most reviewers' rankings since its 2009 acquisition of ThinkOrSwim, a former ConsumerSearch Best Reviewed pick. Although ThinkOrSwim still exists, the brokerage now functions as a subunit of TD Ameritrade. Both sites offer clients identical features, tools and services, and review sites generally treat both brokerages as one and the same.
Kiplinger.com's 2011 review has Ameritrade tied with Fidelity for the No. 1 spot and singles the firm out for its range of investments, noting in particular that it "is now the clear leader for no-fee ETFs." SmartMoney magazine ranks TD Ameritrade third overall out of 10 brokers surveyed in 2012, down one spot from last year. The website and mobile site earn raves, but slow response times via e-mail and phone don't. The brokerage isn't as highly rated in Barron's survey, but editors praise the firm for free research tools that "you would pay extra for at other firms."
Commissions at TD Ameritrade are a flat $9.99, no matter how many shares are traded, and there is no minimum investment to start. On the down side, reviewers say its banking services are minimal, and its commissions and fees are still on the high side. Customers place TD Ameritrade among the top tier of brokers in a 2012 survey by J.D. Power and Associates, and it's included in the reader survey done by ConsumerReports.org.
Though it doesn't place at the top of any rankings, E*Trade gets good ratings in some areas from experts. Barron's 2012 rankings, for example, put E*Trade in 10th place out of 27 online brokers, but the review lists it as one of the five best brokers for both novices and buy-and-hold investors. Similarly, SmartMoney magazine's 2012 online broker survey ranks E*Trade fourth of 10 brokers, giving it top marks for trading tools and research.
Editors at Kiplinger.com are less positive, noting that "E*Trade lags behind our top picks only because it doesn't offer quite as broad a range of investment choices." E*Trade has improved its customer service ratings over the past year, but it earns only an average customer satisfaction rating in a 2012 survey by J.D. Power and Associates. Costs are on the high side: Stock and options trades are $9.99 unless you make more than 150 per quarter. A minimum of $500 is required to open an account.
OptionsXpress was acquired by Charles Schwab in 2011, though the two firms operate separately. The firm gets good marks from reviewers for its research and education resources, including a virtual trading tool that lets you simulate trades and see the results. Barron's names optionsXpress one of the best brokers for options traders and notes that its trade commissions have been lowered to match Charles Schwab's. Stock trades are $8.95; there are tiered commission structures for options and futures trading beginning at $1.25 and $6.99 per contract, respectively.
Mutual fund pioneer Vanguard ranked second in the J.D. Power and Associates 2012 Self-Directed Investor Satisfaction Study. Vanguard is known for its proprietary mutual funds with low expense ratios, but the cost to trade individual stocks via its site is relatively high (*Est. $20) if you make more than 25 trades per year. In fact, most experts don't include Vanguard in their reviews because its online brokerage mainly supports its fund business.
Kiplinger.com does note that Vanguard has among the fewest hidden fees, however, and says that Vanguard's customer service is impressive. According to reviews like these, the Vanguard trading platform works best for fund investors who want to buy a few blue-chip stocks to supplement their Vanguard funds. Fees are $7 per trade for the first 25 trades in a calendar year, but those with substantial holdings in Vanguard's mutual funds or exchange-traded funds qualify for reduced commissions or commission-free trading.
Another broker with few expert reviews is USAA, perhaps because the company is known primarily for its insurance products, which are available only to members of the military and their families. However, USAA's investment products and brokerage service are available to everyone, and USAA Brokerage Services (*Est. $8.95 per trade for most traders) gets great customer satisfaction scores. USAA comes in first in overall satisfaction in the 2011 J.D. Power and Associates Self-Directed Investor Satisfaction Study, and it gets top marks in every area in which brokers are rated except trading charges and fees, where it falls to a score of 4 out of 5. It is not included in the 2012 version of that survey.
Reviewers generally agree that USAA lacks sophisticated tools for trading or research on its website, though it does offer banking services. Costs are a little on the high side: Commissions are $8.95 per trade except for those with at least $50,000 invested or who make 25 or more trades in a rolling 90-day period, in which case the commission drops to $5.95 per trade. There is also a charge of a penny per share over 1,000 shares ($0.005 for those who qualify for the lower commission). There is no account minimum.