For many investors, 2023 came with a sigh of relief after the carnage they experienced last year in both the stock and bond markets. If there was a year when investors needed their brokers to be at the top of their game, it was 2022.
So, how did your broker stack up? IBD's 2023 Best Online Brokers report can help you evaluate that question. Did your broker help you thrive, or just survive, last year's treacherous waters? And, does your broker have all the traits and investment tools you need to be your best possible investing partner?
Investor's Business Daily's annual survey, conducted with polling partner TechnoMetrica, asks investors to rank their primary brokerage on key attributes. This year it polled 18 attributes that investors said were important to them. Included in that list were trade execution and speed, website security, equity trading platform, site performance, customer service, portfolio analysis and reports, and much more.
Based on the overall scores of the seven brokerages that qualified for the survey analysis, IBD is naming its Best Online Brokers for 2023. Charles Schwab came in No. 1. In second place is Fidelity, which held the top spot in 2022's report. And rounding out the three Best Online Brokers overall is TD Ameritrade (now owned by Schwab).
But let's dig deeper and see what contributed to their results.
Best Online Brokers Go Digital, Go Live, Go Social
As major indexes plummeted to their lowest levels since 2008 and volatility spiked, investors looked to their brokers for market guidance. Soaring inflation and interest rates, the war in Ukraine and a hawkish Federal Reserve all heightened investor fears.
If there was an underlying trend for 2022, it was brokers wholeheartedly embracing the digital age to guide nervous investors. They also focused on streamlining trade execution, reinforcing website security and enhancing their trading platforms.
IBD's Best Online Brokers offer a plethora of options for investors to access information. Tedious printed reports are passe. Now, online brokers offer live video streams, dedicated financial TV, podcasts, live and taped webinars, online workshops and expanded social media commentary.
For example, Schwab provides daily video content from market experts at Schwab Live Daily. "To ensure clients stay on top of the latest news, we offer live TV streaming of such sources as CNBC within the StreetSmart Edge, our platform for active traders," Barry Metzger, head of trading and education at Charles Schwab, told IBD.
Fidelity launched a presence on Discord, an app where people can gather around a community or subject group. It also expanded its presence on Reddit via Reddit Talk, giving access to Fidelity's Trading Strategy Desk where investors can ask a coach with trading experience questions.
Clyde Fish, 66, from Vero Beach, Fla., has been a Fidelity customer for 28 years. During 2022, he used a variety of investment tools on the Fidelity platform.
"There were webinars on market conditions, and the trading platform provides chart patterns, relative strength, momentum RSI, etc., (as well as) strength predictions from Recognia and Trading Central," said Fish.
Both Recognia and Trading Central are third-party tools available to users of the Fidelity Active Trader Pro trading platform.
TD Ameritrade broadcasts streaming financial news via its TD Ameritrade Network. And it livestreams daily webcasts on a wide range of topics. Plus, it streams nearly 35 webcasts weekly on its two YouTube channels.
Best Online Broker Charles Schwab Reigns Again
Schwab is back on top of the overall standings this year, after ceding the podium to Fidelity for the past three years. It ranked No. 1 in seven of the 18 performance attributes, and it was in the top three in 12 metrics. Charles Schwab is the only broker to stand among the top three in overall customer experience in all 11 years of IBD's survey.
Investors value Schwab's customer service. It scored No. 1 in that coveted survey attribute. Its clients have access to an investment pro by phone or chat 24/7.
Mark Doherty of Portland, Ore., transferred his 401(k) plan over to Schwab over 25 years ago. A retired controller/CFO of small businesses, he trades his own account.
"I love the ease of using their platform," he said. "Great trader tools, access to everything I need, clear and precise information, great customer service when I need it."
Schwab Adds More Tools
The company introduced some sophisticated investment tools in 2022, such as Schwab Personalized Indexing and thematic stock lists. The direct indexing provides customizable, tax-efficient, professionally managed capabilities for retail investors and investment advisors. The minimum investment is $100,000 and fees start at 0.40%.
"Schwab believes investors of all asset levels get the most value out of direct indexing with the help of an advisor or financial consultant," said Metzger.
Launched last March, thematic stock lists help self-directed investors invest in a way that aligns with their personal interests and values. The service is free.
"Clients can easily view potential investments from a list of 45 thematic categories and approximately 900 total companies, representing a range of trends including data advancement, medical breakthroughs and environmental innovation," Metzger said.
Schwab also offers incentives to attract customers. New investors as well as those referred by existing customers can earn awards.
Fidelity: Strong In Investment Research, Education
Fidelity, which secured the No. 2 spot this year (down from No. 1 the prior year), showcases strength in several metrics. The company ranked within the top three online brokers in 12 out of 18 attributes.
It came in second in trade execution/speed/price, educational resources, investment research, research tools, availability of account types and up-to-the-minute data on inflation and other market influences.
Trade execution/speed/price was ranked most important of all the attributes in IBD's latest survey. This broker performance trait is essential in good markets and bad.
Mark Rockower, 61, of Port Charlotte, Fla., likes the ease of use and quick trade turnarounds at Fidelity.
"The trade protection software is excellent at pricing," he told IBD. "And I found that the trading platform was helpful in setting stop losses at places below support."
Fidelity: Speedy Trades, Price Improvement
Fidelity prides itself on execution quality and speed. The company said it delivered about $1.2 billion in price improvement for equity and options trades in 2022. Its price improvement for a 1,000-share equity order is $17.46, according to company reports.
Plus, investors appreciate Fidelity's research tools.
- Review our list of the top brokerages in 18 key attributes.
- 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?
"(Fidelity provides) very good research for mutual funds and ETFs," said Rockower, who retired from being a Series 7 advisor with a regional brokerage. "Fidelity's charts are good; however, I use IBD's MarketSmith now."
He added: "I also utilize Fidelity's bond platform, which is convenient and easy to use. They carry a decent selection as well."
Fidelity also introduced its Trading Dashboard in April 2022. It provides a web-based, consolidated view for active investors who do not want or cannot download the trading software Active Trader Pro onto their PC or Mac.
And the Active Trader Pro software saw several notable updates in 2022. Those include a 64-bit version on PCs and Macs to improve performance.
Fidelity also added a volume-weighted average price indicator and premarket and after-hours filters. These are investment tools to identify most actives, top dollar gainers/losers and top percentage gainers/losers. Traders can use a quote tool to track short activity.
TD Ameritrade: Tops 6 Attributes, Rich In Streaming
TD Ameritrade snagged the third Best Online Brokers spot in IBD's 2023 research. Schwab completed its acquisition of TD Ameritrade in October 2020. In 2022, TD Ameritrade still maintained its individual identity, including its well-known trading platform Thinkorswim. Schwab, however, has announced a timeline for bringing TD Ameritrade into the fold.
TD secured six top spots among the 18 attributes. It took the No. 1 position in the four attributes investors ranked as most important to them: trade execution/speed/price, website security, equity trading platform and site performance, as well as No. 1 in educational resources and options trading.
In 2o22, TD Ameritrade added more depth to its popular Thinkorswim desktop app. It includes 11 new charting studies, an advanced code editor, predictive text and a drawing tool. Other enhancements include a Portfolio Digest overview page.
Many of these enhancements will also be made available in early 2023 to retail clients on Schwab's website and mobile app.
Mark Bevacqua, 66, of Downingtown, Pa., is a Thinkorswim fan: "It helped me see market events quickly and respond if appropriate. I started using Thinkorswim more diligently in 2022."
TD Ameritrade's Live Commentary And Rich Video Library
TD Ameritrade's Network broadcasts streaming news and timely market updates — "without any filler, noise or political bias," Metzger said. "From live and on-demand content to commentary from industry pros, this programming doesn't just bring you the news but interprets it so you understand how to confidently apply what's going on in the markets to your (investing) strategies."
In April, the network also started broadcasting select programming live from the floor of the New York Stock Exchange. Its general programming is accessible 24/7 by anyone for free not only on its website, but also on Amazon's news apps and Fire TV streaming devices, Roku and Apple's iOS operating system.
And TD livestreams webcasts on two YouTube channels. It provides over 300 educational videos via its library.
Plus, each week the brokerage holds in-person and online workshops for investors. And it offers immersive online courses on specific trading topics.
TD Ameritrade Excels At Speedy, Cost-Efficient Trading
As to the pricing and speed of trade execution? TD uses advanced routing technology, which results in "the vast majority (98% as of September 2022) of market orders executed receiving a price better than the nationally published quote," said Metzger.
The price improvement amounts to $1.32 per 100 shares.
"I like Ameritrade because the entire site is easy to use," said Bob Bundy, 68, of Lenoir City, Tenn. And "the platform was good for seeing what I needed during heavy volatility in 2022. I like seeing chart action and trading volume in each individual position."
Best Online Brokers: E-Trade Hosts Market Outlook Events
E-Trade, which was a newcomer to the top three award winners last year, slipped to No. 4 in overall customer experience for 2023. But the company retains strong ratings in several areas, such as research tools, where it was ranked No. 1.
When Morgan Stanley acquired E-Trade in October 2020 it expanded the platform's depth and reach. And E-Trade now provides access to portfolio manager commentary and research from the Morgan Stanley.
In 2022, E-Trade began hosting market outlook events via live videos. Investors can also access daily podcasts and free education resources via its Knowledge Center.
"We launched a new hub dedicated to financial literacy across life events," said Chris Larkin, E-Trade's managing director of trading. "The Your Life and Your Money page offers content from Morgan Stanley on Etrade.com to help investors plan for key goals and milestones that may come up throughout life, including investing for education, family finances, retirement and elder care."
