Consumer Reports just released the results of a survey aimed at identifying the best brokers in America. They surveyed over 9, 000 readers, asking them about their experiences with various brokers between January 2008/January 2009. Topping their list were USAA Brokerage, Vanguard, and Edward Jones.
USAA Brokerage
USAA has received high marks in the past for other financial offerings, including their online banking service and insurance offerings. It therefore comes as no surprise that their online brokerage service ranked so high. Commissions start at $11.95/trade, but come down from there depending on trade volume. Unfortunately, USAA is only available to current and former military personnel and their families. Update: I just received an e-mail from USAA clarifying that certain financial products, including their brokerage, are available to the general public.
Vanguard
CR’s second pick, Vanguard, offers a wide variety of low cost mutual funds as well as a regular brokerage service. I’m a huge fan of Vanguard’s mutual funds, but I’m not crazy about their brokerage service, primarily due to cost — their standard rate is $25/trade. Nonetheless, consumers rated them highly for above average phone service. I can actually vouch for this myself; whenever you call, you’re almost certain to get a competent, helpful phone rep.
Edward Jones
I drive by an Edward Jones office on the way to work every day, but I must admit that I know very little about them. They are a “discount full service brokerage” that competes with the big boys in the investment world, but their online presence sucks (in my opinion). They ranked high for personal service but, based on their website, their commissions appear to be a trade secret, and it’s not even clear if you can trade online.
Best of the rest
Their list of the top ten best brokers was rounded out by:
- Charles Schwab
- Scottrade
- Fidelity
- TD Ameritrade
- T. Rowe Price
- A.G. Edwards
- E-Trade
Closing thoughts
This list is a good start, but if price is an important consideration, then I suggest that you check out my list of the best online brokers. If you’re willing to look around a bit, you can easily push your commissions below $5/trade, and still maintain a good customer service experience. For example, TradeKing offers $4.95 and award winning customer service.
I use USAA for brokerage, insurance, credit cards, and a MM account. Their service really is the best, you can always get a real person who lives in the USA and cares about you to help with anything. They have people who will just discuss your needs, no strings attached. And they answer any question promptly and thoroughly, by phone or web. Their prices are usually good but not always the absolute best. For something like insurance though, their service is legendary and gives you piece of mind if something ever did happen. I just got a car insurance quote from Geico… 10% MORE than USAA.
It looks like the best-rated brokerages are the ones that charge a little extra, but provide great customer service. It’s not that someone like Zecco or Tradeking isn’t a better brokerage — just that the people who use them don’t do it for the customer experience, but for the cost.
How the heck isn’t trade king there? 5 buck trades! Dividend Reinvestment! Options….
I actually used to be a financial adviser with Edward Jones.
To answer your questions:
Yes, their online presence sucks. That’s intentional (seriously). They want you to come in to an office to talk in person.
Stock trade commission structure really is a secret. While working there I never saw it posted anywhere. In short, there’s nothing discount about it.
Nope, can’t trade online.
The company really does think it’s doing the right thing for clients. They encourage diversification, buy & hold, and generally good investing principles.
That said, my own retirement accounts are now with Vanguard.