SmartMoney just released their annual broker survey for 2012. Compared to last year’s survey, quite a few changes in rankings occurred. I discuss my thoughts and make some comments below.
Vanguard is not on the list this year. Similar to the Barron’s survey, I suspect they opted out of the SmartMoney survey. Last year Vanguard did not rank very well. From my experience, Vanguard is great for buying their ETFs and mutual funds, but poor for any other investment product outside of Vanguard’s funds. I suggest getting a Vanguard account for only Vanguard funds.
For the third year in a row, Fidelity ranked #1 with SmartMoney. I completely agree with their review. We have most of our assets with Fidelity, and I believe they have the best mix of investment options. From the beginner index only investor to the active trader, Fidelity should suit most of your needs.
Best Discount Brokers of 2012
A much more detailed table is available in their article. Click on the link for our reviews of the listed brokers.
|Rank||Stock Broker Review|
|3.||TD Ameritrade||Sign Up|
|5.||Charles Schwab||Sign Up|
|8.||Merrill Edge||Sign Up|
Note: As of today Zecco has been merged with TradeKing.
Commissions and Fees
It is interesting to note they found from 2011 trading fees are down to $7.96, from $8.27 last year. While this is good for the consumer, the brokers are getting much more obtuse with their fees and commissions. Be aware many charge an exit fee when closing your account with them. Fortunately, some brokers will reimburse this exit fee. For example, TradeKing will pay up to $150 to cover this fee.
Like last year, TradeKing remains the best broker in customer service. From my direct experience with TradeKing, it is still my favorite broker to use for my WTF fund. Their prices are reasonably low, and I had a great experience every time I contacted customer service.
Fidelity has a large amount of free research available online. This includes rudimentary Morningstar information. While I do use Fidelity’s screeners from time to time, I still prefer to do most of my research with Morningstar.
Fidelity wins the category this year, with E-Trade and TD Ameritrade very close behind. Remember, speed of trading execution is important! While I’m not suggesting you become a day trader, the time you place to order till the actual execution can be a few minutes. This, of course, depends upon the exchange the equity is traded on and various other technical details I won’t discuss in this article. Though realize just because a broker has cheap trades, it can still cost money in the time broker takes to execute your trade. This is another “hidden” fee with your broker.
Fidelity was the fastest brokerage at trade execution, clocking in at less than four seconds per trade. The two slowest brokers of the bunch — WellsTrade (14.5 seconds) and Merrill Edge (16 seconds) — took almost twice as long as the industry average. Merrill Edge says some recent technical upgrades are improving trading speed; Wells Fargo says security measures might add extra seconds to its trading time.
Mutual Funds and Investment Products
This is the same results from last year. In my opinion, this survey is accurate. Fidelity shines in this area, and ShareBuilder definitely does not. Fidelity has a wide array of investment products. Interactive Brokers is better, but it is more geared towards investment professionals and not retail clients. ShareBuilder, on the other hand, is better at stocks than mutual funds.
Many discount brokers offer no trading fees for specific mutual funds or ETFs. This makes firms like Fidelity and TradeKing much cheaper than ShareBuilder.
Best: Merrill Edge, Fidelity (Tie)
Fidelity recently introduced their iPhone/iPad app for deposits through your phone. A very neat feature and eliminates the amount of times I must visit their branch office. Fidelity also offers branded credit cards. A Visa with decent cash back terms, and American Express card that gets 2% cash back. It is no surprise Zecco is in last place since it’s not the target audience they want to acquire.
Best Full-Service Brokers
Not to be left out, SmartMoney also released their best full service broker list for 2012 as well. Except for UBS, I do not have any direct experience with the brokers and suspect I won’t in the future. I’m not saying they are bad per se, but based upon the ability to manage our own money. Full service brokers definitely have their place in the investing universe, but not in the Investor Junkie household.
- Edward Jones
- Raymond James
- Merrill Lynch
- Wells Fargo Advisors
- Morgan Stanley Smith Barney