IBD, Pollster Dig Into What Investors Want

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INVESTOR'S BUSINESS DAILY IBD SPECIAL REPORT: BEST ONLINE BROKERS MONDAY, JANUARY 28, 2013 A17 IBD, Pollster Selecting an online broker is like Dig Into What making a friend. It pays to choose wisely. IBD asked thousands of Investors Want investors to rate their online broker METHODOLOGY on 12 critical factors. The five brokers that made our Top Overall Customer BY RAGHAVAN MAYUR FOR INVESTOR'S BUSINESS DAILY Experience list all ranked highly in a nvestor’s Business Daily and TechnoMetrica partnered to number of categories, but their I conduct the study of online specific strengths varied. Familiarize brokers on which this special report is based. yourself with their strengths and Our goal was to measure the customer experience and satisfaction review the best-broker lists for all 12 of investors with their primary online brokers. We divided the re- categories to find the best fit for you. search into two phases. In Phase I, we identified and ranked the broker characteristics most important to investors. The editors of IBD and TechnoMetrica Top Overall Customer Experience identified 20 potential attributes of online brokers to evaluate. Broker Strengths Last August, 1,400 visitors to IBD’s Investors.com participated USAA Brokerage Low commission/fees, portfolio analysis/reports, investment research, tax preparation in the Phase I survey. tools, trade reliability, customer service, mobile platform/trading The survey tested 20 potential attributes using the MaxDiff meth- Charles Schwab Research tools, ETF choices, portfolio analysis/reports, investment research, od,which helps determine therela- educational resources, tax preparation tools, trade reliability, equity trading tools, tiveimportance of attributes. Inves- customer service, mobile platform/trading torswere presented withcombina- tions of the attributes and asked to Thinkorswim Options trading, research tools, ETF choices, portfolio analysis/reports, educational identify which attributes were resources, tax preparation tools, equity trading tools, customer service, mobile most and least important to them. platform/trading Based on Phase I data, Techno- Metrica narrowed the 20 at- Fidelity Research tools, ETF choices, portfolio analysis/reports, investment research, tributes to 12. We also developed educational resources, tax preparation tools, customer service the weights that should be as- signed to each of the 12 attributes TradeStation Options trading, ETF choices, trade reliability, equity trading tools to compute an Overall Customer Experience Index for each broker. In Phase II — from September to November — 10,250 visitors to the IBD website took part in the sur- Low Commissions & Fees Options Trading Platform Research Tools vey. Online brokers compete fiercely on Options are different from most Do you like to dig up your own Of the 34 online brokers explicit- ly listed in the questionnaire, 16 price. Low-cost — and even free — investments. They are more ideas? Look for the broker that lets had at least 100 respondents. trades are available depending on complicated than stocks. Education you easily screen for stocks that Our analysis inthis report is limit- your account balance, typical trans- is crucial. The brokers that investors match the technical and edto the16 brokers.Surveyrespon- action size and trading frequency. rated highly in this area offer fundamental characteristics you’re dents rated theirpast six-month ex- Still, you might pay more for other sophisticated, high-tech trading seeking. Also look at its tools for periences with their primary bro- services, like a cash management platforms and an emphasis on researching mutual funds, ETFs, ker using a five-point scale (Excel- account or margin trades. educating customers. bonds and other investments. lent, Very Good, Good, Fair and Poor) for the 12 attributes. Interactive Brokers Thinkorswim Charles Schwab For each broker attribute, we developed a Customer Experience OptionsHouse OptionsXpress Fidelity Index using the question: Based on yourexperience with yourprimary Vanguard Brokerage OptionsHouse TD Ameritrade online broker during the past six months, how would you rate your primary online broker? TradeKing TradeStation Thinkorswim We measured the Customer Ex- perienceIndex asthe difference be- USAA Brokerage Interactive Brokers OptionsXpress tween the percentage of respondents giving ratings of Excellent and Very Good and the percentage ETF Choices Portfolio Analysis & Reports Investment Research who gave ratings of Fair and Poor. For example, if 30% of respon- ETF providers are partnering with Investors want information to help Brokers are endlessly improving dents rated customer service of a online brokers to offer free trading them manage their money. How is their research offerings to win and broker as Excellent, 26% Very of their funds. But watch the details. their asset allocation changing as one retain customers. You can get stock Good, 20% Good, 13% Fair and 11% Brokers offer free trading on a investment advances? How are they reports, financial forecasts, Wall Poor, we calculated the Customer limited number of funds, have doing this year vs. the broad market? Street buy and sell ratings, and Experience Index to be 32% (56% different account requirements and Are they overexposed to an industry? more, including research on mutual less 24%). may charge fees for frequent or The top brokers help customers stay funds, ETFs, options and other This report presents the five bro- short-term trading. on top of their portfolios. investments. kers with thehighest Customer Ex- perience Indexfor each ofthe 12 at- Thinkorswim USAA Brokerage Fidelity tributes. To arrive at our Overall Custom- er Experience Index, we combined Interactive Brokers Fidelity Charles Schwab the subindexes for all 12 attributes using the weights we developed in Fidelity Charles Schwab USAA Brokerage Phase I. The five online brokers with the highest ratings in this Charles Schwab Thinkorswim TD Ameritrade index make up our Top Overall Customer Experience list. TradeStation TD Ameritrade E-Trade Mayur is president of TechnoMet- rica Market Intelligence. Educational Resources Tax Preparation Tools Trade Reliability Online brokers now let you pick and Tax season used to be the worst time Whether you’re an investment pro Introducing the choose among a dizzying array of of year for traders. But improved or just learning to invest, you need educational resources. These tools make it much easier to confidence your trade will go Newest Book resources can include Web tools, download trades into tax software. through quickly and at a price close downloadable software, online Tax resources help you decipher new to what you expect. The reliability of in the How to videos and even one-on-one cost-basis rules and wash sales. online brokers has grown markedly Make Money in consultations with advisers for Some brokers can hook up clients over the years, and top brokers Stocks Series qualified customers. with tax strategy consultants. know excellent execution is critical. Thinkorswim USAA Brokerage USAA Brokerage Charles Schwab Vanguard Brokerage TradeStation OptionsXpress Fidelity Interactive Brokers Fidelity Charles Schwab Vanguard Brokerage TD Ameritrade Thinkorswim Charles Schwab

Equity Trading Tools Customer Service Mobile Platform/Trading Learn how regular Your trading platform is your At an online broker, good customer Smartphones and tablets can people became connection to the stock market. You service means not just provide access on the go to real-time have to decide: Does a particular telephone-based support and short quotes and news, streaming charts, successful investors interface work for you? For example, hold times, but also the ability to stock research reports and technical in Amy Smith’s new are you clearly shown how much chat live online with a customer analysis. The best mobile platforms book, “How to Make you’ve invested and how much is on service representative. You also want are so capable that some investors Money in Stocks margin? Buy-and-sell entries? It's a firm whose representatives are prefer to trade on them even when all a matter of what works for you. responsive and knowledgeable. they’re sitting at a PC. Success Stories” TradeStation USAA Brokerage Thinkorswim Learn More or Get a Copy Now at: Thinkorswim Charles Schwab USAA Brokerage Investors.com/ Charles Schwab Vanguard Brokerage I Interactive Brokers stocksuccessbook Interactive Brokers Fidelity Charles Schwab TD Ameritrade Thinkorswim E-Trade