In its Week of January 28, 2019 edition, Investors Business Daily published its list of Best Online Brokers. You are welcome to click the link and read for yourself, and there is some great information on each company. Spoiler alert: The 3 Best are Schwab, Fidelity, and Interactive Brokers. All are good, and you should be satisfied with an account at any of these. Here is my take on each of these fine companies and why you might decide to have an account there as opposed to the others:
Fidelity
If you want easy access to Fidelity products – their large stable of mutual funds, sector funds, and ETF’s, and you want to have your money in a large, well-established institution, then you should have a Fidelity account. In the IBD survey, Fidelity also scores high marks for its website performance and for its strong customer service. Fidelity provides some financial planning tools free of charge, and provides more hands-on financial planning for a relatively small charge. Commissions are $4.95 per trade for stocks and are less or even $0 for mutual funds, although mutual funds charge a fee. You can invest in any number of asset classes, strategies, and time horizons and still stay within the Fidelity family, and that’s why you would opt for Fidelity.
Schwab
Schwab is less known than Fidelity for its proprietary products. Schwab is thought of more as a pure brokerage than Fidelity. In the IBD survey, Schwab scores highly for its trade execution, and Schwab prides itself on getting the best price for its clients. Opportunities for investor education and research tools are other reasons to go with Schwab. If you work with an independent financial adviser, there is a good chance you will have an account at Schwab because Schwab openly courts independent advisers and their reporting systems work well.
Interactive Brokers
IB is the smallest of the 3, with only about 3% of the number of accounts that Fidelity has. Nevertheless, IB has carved out a niche for more experienced traders with the high quality of its trading platform. IB is going for the “low cost provider” strategy, as their commissions are lower than Fidelity or Schwab for stock trades. IB does not have the level of investor education or portfolio management tools that Fidelity or Schwab. If you are looking to be somewhat hand-held, don’t go with IB. However, if you want to be a part of a cutting-edge trading community and platform and if you can chart your own path, and if you want the lowest commissions and lowest margin interest cost, then IB is your place.
Others
The only other companies IBD considered for this survey were TradeStation, ETrade, and TD Ameritrade. All of these are smaller companies that appeal to different niches of traders. None scored as high on customer service as Fidelity or Schwab. Vanguard was not considered because Vanguard’s actual brokerage capabilities are much more limited than Fidelity or Schwab. Vanguard is more of an asset manager than a brokerage, and its trading platform is not nearly as good as any of the big 3.
IMO
Fidelity, Schwab and Interactive Brokers are all good companies and your satisfaction will be a function of how much work you put into your own portfolio. If you are looking for a great website and high customer service and want in on Fidelity’s proprietary products, then Fidelity is your place. If you want access to a wide array of investment products and desire the best trade execution to go along with good service, then go with Schwab. If you are a self-motivated trader and want the lowest commissions, then open an Interactive Brokers account. If you are still confused, then please contact me and I can work with you at any of these brokerage houses.