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

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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 brokers. The mainstream media have a solid obligation to journalism and make a stark distinction between editorial and promotional content. This article will give you a quick snapshot of the findings from four well established publications: SmartMoney, Barron's, Kiplinger, and J.D. Power.

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. E*Trade
2. Fidelity
3. Charles Schwab
4. Trade King
5. TD Ameritrade

Barron's 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. TradeStation
2. Think Or Swim
3. Interactive Brokers
4. Options Xpress
5. Fidelity

J.D. Power's Investor Satisfaction Survey ( view article )
J.D Power And Associates is a household name for consumer ratings in many different categories including financial services. For their online stock broker investor satisfaction survey, they used the following procedure: "The study finds that overall satisfaction increases as self-directed investors use additional resources and tools provided by their investment firm, such as financial planning services, online stock tools and educational seminars or webcasts. Satisfaction averages 761 on a 1,000-point scale among investors who use just one resource, compared with 699 among investors who don't use any available resources. Satisfaction continues to increase as investors use additional resources, and averages 836 among those investors who use all three types of resources offered by their firm."

The categories J.D. Power ranked the online stock brokers were overall satisfaction, account offerings, information resources, account information, trading charges and fees, and interaction. The following five brokers received top honors in overall satisfaction.

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

Kiplinger's 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.