For a couple of years now I’ve been talking about and reviewing a variety of online brokerages. We’ve talked about the features of each and I gave my opinions about which I felt were the best available out there for beginning and intermediate investors like myself.
While I have a moderate amount of knowledge about the subject, it always pays to get an outside look at what online brokerages are ranking well and which ones are getting the top marks in different categories.
For that reason today I thought I’d take a look at the 2013 Best Online Brokerage Rankings from Barron’s magazine that were released earlier this month.
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Barron’s Best Online Broker Award For 2013
Barron’s has been doing their annual review of brokers for 18 years now. So what are they finding?
As part of our 18th annual ranking of the Best Online Brokers, we’ve had a chance to review many innovations: tradeMonster’s liveAction scanning tool, a remarkably flexible way to seek trading opportunities in real time; TradeStation’s empowerment of investors by offering the means to place a trade without losing sight of a chart; and advances in risk and margin-balance management from E*Trade, optionsXpress, and Lightspeed.
Those who return to online investing feeling a little rusty will find ample opportunity to hone their skills. Educational programs have vastly improved, whether they’re conducted in person, via live Webinars, or from archived recordings. Scottrade says it held an average of 300 seminars per week at its branch offices last year, double the number offered in 2011. Lightspeed produced an engaging series of Webinars informing traders about lesser-known platform features. And OptionsHouse targeted specific types of investors to arm them with the right strategies.
In general Barron’s finds that the experience at online brokerages is improving all the time with a growing number of companies offering real time quotes, easier to use websites and better mobile trading options. So what criteria are they using in ranking the brokers?
Our evaluation criteria focus on the needs of wealthy, active traders. We looked at eight categories of service, examining what can be traded online, how the tools work together across platforms, the design and capabilities of mobile platforms, educational offerings and customer service, as well as the nuts and bolts of placing and executing a trade. We closely scrutinized the various tools available for finding appropriate trades, including scanners and charts. When examining costs, we considered stock and options commissions as well as platform or maintenance fees, margin debt, and charges for transferring an account out.
They’re focusing mainly on the needs of wealthy, active traders, but that doesn’t mean that their results can’t transfer to other less active users. They’re looking at a variety of criteria to rank brokers.
So who came out with the honors of being the top online brokerage for 2013? Interactive Brokers
Interactive Brokers (interactivebrokers.com), takes top honors again in 2013. It offers superb trading technology, improved portfolio analysis, and enhanced educational offerings. The firm’s mobile application, Trading Assistant, alerts you to market opportunities around the world, in real time. It allows you to trade almost every asset class possible using its downloadable computer-based platform, Trader Workstation, which continues to evolve as an excellent tool for staying on top of global trading. You can also view a portfolio analysis report that you designed on your desktop from a mobile device.
So Interactive Brokers comes out with the top honors, same as in 2012. Let’s go on to take a look at the best of the best in 6 more categories.
Top 5 Brokers for Long-Term Investing
Top 5 Brokers for Long-Term Investing- TD Ameritrade
- Fidelity
- Charles Schwab
- Merrill Edge
- E-Trade
Top 5 Brokers for Novice Investors
- TD Ameritrade
- Fidelity
- E-Trade
- Charles Schwab
- Capital One 360 Sharebuilder
Best For Options Traders
- tradeMONSTER
- TD Ameritrade
- OptionsHouse
- optionsXpress
- Interactive Brokers
- TradeKing
Best For Frequent Traders
Best For Frequent Traders- TradeStation
- Interactive Brokers
- Lightspeed Trading
- TD Ameritrade
- Place Trade
Top 5 Brokers for In-Person Service
- Scottrade
- Merrill Edge
- Charles Schwab
- Fidelity
- TD Ameritrade
Best For International Traders
- Interactive Brokers
- TradeStation
- Fidelity
- E-Trade
- Charles Schwab
Conclusion
So for novice investors and for those who want to do long term investing, TD Ameritrade comes out on top. From what I’ve heard from others, and on the comments on the TD Ameritrade review on this site, people really do seem to like the trading and investing experience with TD Ameritrade. I’m also not surprised to see some others on top of the lists including the top for in person service, Scottrade. They have locations all over the country and are always getting rave reviews if you want someone to talk to in person.
So what are your thoughts? Do you use any of these services? Who would you put at the top in your estimation?
Interesting results. I have heard nothing but good things about IB and while I have not used them, yet, I think what they have to offer is great. Having worked in this industry a number of years, I’ll just say that I am not a fan of TDA. I know they offer some very good tools, but the company as a whole is just not very good. That said, I do use a number of the other ones or have in the past. We’re with Scottrade & OH now. We do our more long term stuff with ST, but they lack a lot of the options capability that I am looking for, so I do that with OH.
I’m going to have to voice my vote for Optionshouse. It’s not the fanciest platform, but it’s cheap and gets the job done. Scottrade does some good things too and has the offices scattered throughout the country for meetings in person.