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Third Party Online Stock Broker Rankings
posted on: 2009-10-28 09:10:48 by Soo-Young
tags: articles, stock brokers



Introduction
Reading online stock broker reviews from the mainstream media is a great way to get well rounded and unbiased information about a whole range of online stock brokers. The mainstream media have a solid obligation to journalism and make a stark distinction between editorial and promotional content which is why their recommendations are important to consider. This article will give you a quick snapshot of the findings from three well established financial publications: SmartMoney, Barron's, and Kiplinger.

Kiplinger's 2011 Best of the Online Brokers( view article )
Kiplinger surveyed 14 different online stock brokers in their article, ranking them in various categories: "Each of the brokers we surveyed excels in certain areas and flops in others. That means the weighting we assigned to each area considered in the rankings -- from commissions to customer service to whether customers can purchase stocks overseas -- is of supreme importance in determining who ends up on top."

Here is a quick look at the top five brokers from this particular survey:

1. Fidelity
2. TD Ameritrade
3. ETrade
4. Vanguard
5. Charles Schwab

SmartMoney's 2010 Broker Survey ( view article )
Next we have SmartMoney's 2010 broker survey. Here is a summary of their methodology: "For our 18th annual ranking of brokers—itself top-ranked by the Web site ConsumerSearch—we scrutinized a wide range of factors, from trading commissions and account fees to the cost of certain banking services and margin rates. In addition to parsing survey responses from the brokerages, we consulted with research firms and put brokers through our usual litany of customer-service tests."

SmartMoney's rankings tend to be biased towards people who need a full range of services, with a lesser emphasis on pricing. Here are the top five from their survey:

1. Fidelity
2. ETrade
3. TD Ameritrade
4. Charles Schwab
5. Trade King

SmartMoney's 2009 Broker Survey ( view article )
We'll start off with SmartMoney's 2009 Broker Survey. This is SmartMoney's 17th broker survey which is a good indication of their experience in this area. What follows is a description of their review and ranking procedure: "For our 16th annual survey, we ditched previous groupings of discount and premium brokers and assembled one list of the best and worst online brokers. But since investors have specific needs, we came up with winners and losers in six categories, too. We didn't change our usual rigorous analysis, using a combination of outside research and our own. That includes our usual paces: opening accounts, noting how long it took to find certain information, and evaluating Web sites for their research, navigation and trading tools."

SmartMoney named the best and worst brokers in the following categories: commissions & fees, research, trading tools, mutual funds and investment products, banking services, and customer service. Below are the top five overall brokers from SmartMoney's broker survey:

1. ETrade
2. Fidelity
3. Charles Schwab
4. Trade King
5. TD Ameritrade

Barron's 2008 Annual Ranking Of the Best Online Brokers ( view article )
In Barron's 2008 annual ranking of the best online brokers, they reviewed and ranked 23 online stock brokers. Here is a quick run down of how they conducted their rankings: "We've pored over the offerings, operations and pricing of 23 firms to hone in on the best ones ... We name one best overall broker and the leaders in four other categories. You can even use our tabulations to come up with your own five-star broker based on personal preferences."

Barron's graded each broker for trade experience, trading technology, usability, range of offerings, research amenities, portfolio analysis & reports, customer service & access, and costs. Barron's ranking criteria is definitely geared more towards active traders than long term investors. The top five overall brokers from Barron's annual rankings are listed below.

1. Trade Station
2. Think Or Swim
3. Interactive Brokers
4. Options Xpress
5. Fidelity

Kiplinger's 2008 Best of the Online Brokers ( view article )
Kiplinger's rankings were not as well structured as the others, and they didn't offer any charts to quickly compare brokers in each category. Here is a quick excerpt from the article describing how they measured up each online stock broker: "To put the brokers to the test, we opened accounts at all the firms surveyed, pestered customer-service representatives with questions and e-mails, and used many of each Web site's tools. We scored everything from how easy it is to calculate an account's cost basis to interest earned on cash to how market orders are handled. We judged Web sites on their design, and reviewed the fines and settlements brokers paid to regulators and customers."

They ranked brokers in what they charge, special features, how they help, investment menu, and user-friendly sites. For their overall ranking, they only named the top three brokers:

1. Fidelity
2. Charles Schwab
3. Siebert Net

Conclusion
The rankings all differ from one another a little bit, but each do a good job of letting investors know what's out there. Each publication had its own results based on their own ranking criteria. It's nice to get a quick snapshot of their findings, but to see if the rankings are suitable for your specific investing needs, it's important to read the reviews yourself and do your own due diligence. Each article splits the brokers up by category which makes it easier to make a decision so definitely check those out before making a final decision.
 

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