Investor's Business Daily and TechnoMetrica Market Intelligence collaborated for the eleventh year in a row on our annual study measuring investor sentiment toward brokers' performance in a number of critical service areas.
Since 2012, IBD has surveyed investors and asked them to rate their main online broker based on the most important and desirable broker attributes. Using ratings given to each of the attributes, we calculate an overall customer experience index score for each broker. This score is the basis for the Best Online Brokers rankings.
This year's study follows the two-phase methodology employed in previous years. Both phases use online surveys to collect data.
Online Broker Comparison: Phase 1 Survey
We started the research with testing a total of 29 attributes. The objective of Phase 1 was to determine which features and services offered by online brokers investors consider most important.
From Aug. 19, 2022, to Sept. 8, 2022, we conducted an online survey of 538 visitors to IBD's Investors.com website.
We used the Maxdiff trade-off technique in Phase 1. The Phase 1 survey presented each respondent with 10 sets of attributes. Each set included five randomly chosen characteristics from the potential pool of 29. Respondents identified the most and least important features in each group.
We reduced the 29 attributes to 18 based on the results of the Phase 1 survey. Phase 1 also helped us assign the weights for the 18 metrics that would be used to calculate the Overall Customer Experience Index for each broker.
The top-six attributes together account for 51% of the importance. Trade execution/speed/price, website security, equity trading platform, site performance, customer service and investment research emerged as the top six attributes to investors from Phase 1.
The middle-six attributes together account for 29% of the importance. Research tools, mobile trading platforms/apps, portfolio analysis & reports, timely information on market shifts, coverage of premarket and after-hours trading, and incentives/discounts/pricing form the second tier.
The bottom-six attributes account for 20% of the importance. Options trading platform, trade ideas, educational resources, up-to-the-minute data on inflation and other market-influencing statistics, availability of account types and trade ideas for a down market make up the third tier.
Phase 2: Measuring Investors' Satisfaction With Their Online Brokers
Next, Phase 2 of the study measured consumers' experience and satisfaction with their primary online broker. From Sept. 9, 2022, to Nov. 19, 2022, 3,446 investors participated in the Phase 2 survey. Of those survey respondents, 1,468 were IBD website visitors, and 1,978 came from TechnoMetrica's consumer panel partners.
- Review our list of the top brokerages in 18 key attributes.
- Learn about this year's battle for top broker.
- Read our story on equity trading platforms and trade execution/speed/price.
- How much can you earn from brokerage incentives?
- What are the latest features in portfolio analysis, and how did brokerages help investors with trade ideas in last year's bear market?
To qualify for ranking in our Best Online Broker list at least 125 customers of a broker must have completed our Phase 2 survey. Seven top brokers met this threshold: Charles Schwab (which is the top broker for 2023), Fidelity Investments (the No. 2 finisher this year), TD Ameritrade (part of Schwab and on the podium as the No. 3 broker in 2023), E-Trade Financial (part of Morgan Stanley), Vanguard, Robinhood and Interactive Brokers.
In Phase 2 of the survey, we developed a Customer Experience Index for each of the 18 broker attributes using the following question: Based on your experience with your primary online broker during the past six months, how would you rate your primary online broker? Investors rated their primary broker on the 18 attributes using a five-point scale (excellent, very good, good, fair and poor).
Thus, the Customer Experience Index denotes the difference between the percentage of respondents giving ratings of Excellent and Very Good and the percentage who gave ratings of Fair and Poor. IBD identifies the three Best Online Brokers in each of the 18 categories based on these Customer Experience Index ratings.
We computed the Overall Customer Experience Index for each broker using the weights developed in Phase 1 for the 18 attributes. The three firms with the highest Overall Customer Experience Index ratings are IBD's Best Online Brokers overall.
Raghavan Mayur is president of TechnoMetrica Market Intelligence.
