Barron’s Rates the Online Brokers

By on March 11, 2013

Interactive Brokers PortfolioAnalystThe latest issue of Barron’s Magazine features their annual ratings of online brokers. This year Barron’s reviewed 27 online brokers based on eight factors including usability, range of offerings, portfolio analysis and reports, and cost. Their highest rating goes to Interactive Brokers.

Barron’s top ten includes such well-known names such as Tradestation, TD Ameritrade, and Etrade, along with several lower profile brokers.

SMA Comment: Over the the past 35 years I’ve utilized a variety of discount stock brokers; the number of which was surprising after compiling the list.  They include Bidwell & Co., Datek, Brown & Co., Ameritrade, Etrade, TradeKing, Scottrade, and Vanguard.   Some are no longer around, being merged with competitors.

All the brokers I’ve utilized have been efficient at filling orders and any problems were extremely isolated. As far as user ease, Vanguard has probably been the most challenging, but not really difficult to master. Vanguard has responded to these criticisms and recently re-vamped their user interface which I haven’t used much yet.  

The last several years I’ve been utilizing Interactive Brokers (IB) for my actively managed account. 

IB was rated the top broker by Barrons in their last two annual surveys of online brokers. I would tend to agree with Barron’s assessment.

What attracted me to IB was their extremely low margin rates, because at the time my account was transferred I had a large margin balance.  Switching to IB saved thousands in interest charges while their trading commissions were, and still are, rock bottom.  I normally pay $1 a trade, although there is a $10 minimum per month.  For example, if I make five trades in a month, they will charge an extra $5 to bring it up to the $10 minimum.

The portfolio analyst is something IB made available a couple of years ago which I’ve started to use recently. It provides a detailed view of the portfolio’s performance including a comparison using various measures of risk. The competition amongst brokers is driving them to offer useful tools for the average investor. Barron’s mentions many of them in their article (see source below).

Source: Barron’s Magazine

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