SmartMoney Online Broker Ratings
When it comes to finding the best brokers for your needs, you can consult a well respected publication like SmartMoney. SmartMoney is a premier personal finance publication that is a joint venture of the Dow Jones & Company and Hearst Corporation. Launched in 1992, SmartMoney has made it their business to get to the nitty gritty of personal finance and investments, and to provide consumers with the information they need to manage their money. Following are top brokers that have been rated by SmartMoney, but be aware that ratings change over time.
TradeKing
- Trading is the name of the game with TradeKing and they do it well. SmartMoney has recognized TradeKing’s commitment to online trading with top honors: a five star rating.
- Customer service is as important to TradeKing as it is to their investors. TradeKing has placed emphasis on good customer service and has received a five star rating for their efforts.
- TradeKing offers a more narrow range of investment offerings than some of the other brokers today. This is why they have received three stars in this category.
- TradeKing does not offer a wide range of banking opportunities for its investors and has been given two stars in this category.
- When it comes to independent research, TradeKing offerings are adequate, yet not stellar. For this category, they have received three stars.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Broker Assisted | Fund Trades |
| $4.95 | $4.95 | $0.65 | $0.00 | $4.95 | $14.95 (no load) |
Scottrade
- Scottrade has also done well to offer a wide range of relevant investment vehicles to its customers and has been recognized by SmartMoney with four stars.
- Scottrade is a more traditional brokerage which is new to offering banking products. So far, they've received a two star rating in the banking category. They are improving their features in this area.
- The overall trading experience with Scottrade is considered superior, as evidenced by the four star rating it has received in this category.
- When it comes to available research, Scottrade falls in the middle of the pack and receives a three star rating from SmartMoney.
- Scottrade is no slouch when it comes to providing its investors with quality customer service. SmartMoney has recognized their efforts by giving them four stars.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Broker Assisted | Fund Trades |
| $7.00 | $7.00 | $1.25 | $500.00 | $27.00 | $0.00 - $17.00 |
E*Trade
- E*Trade receives four stars out of five for its mutual funds and other investment product offerings, indicating that they offer a wide variety of investment vehicles.
- The 2010 five star rating for banking services means that E*Trade has a robust set of banking product offerings.
- E*Trade has also received a five star rating in 2010 for the trading category, indicating that the trading platform is easy to use and is cost effective.
- The four star rating for research means that E*Trade has placed emphasis on providing up to date and relevant independent research to their customers.
- E*Trade’s commitment to customer service is also evident in their five star SmartMoney rating.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Broker Assisted | Fund Trades |
| $7.99 - $9.99 | $7.99 - $9.99 | $0.75 | $500.00 | $45.00 | $0.00 - $19.99 |
Zecco
- Having received a three star rating from SmartMoney for their mutual fund offerings, Zecco finds itself in the middle of the pack in terms of offerings.
- While Zecco does offer some basic banking products and services, their two star SmartMoney rating indicates that this is an area that can be improved.
- Zecco receives a two star rating for their trading experience. This rating includes everything from their platform to their pricing.
- Zecco receives a two star rating in the research category, which indicates that there could be improvements made in the area of independent research and analysis.
- A two star rating in customer service indicates that Zecco requires its investors to be more self sufficient when it comes to trading.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Broker Assisted | Fund Trades |
| $4.50 | $4.50 | $0.50 | $0.00 | $19.99 | $10.00 |
OptionsXpress
- While OptionsXpress offers a range of investment products, their specialty is with options. For this reason, SmartMoney have given them three stars in this category.
- OptionsXpress does not offer many traditional banking products which is evidenced by the one star rating in this category.
- XpressMethod and the OptionsXpress trading platform are recognized to be the best in the online options and investment trading industry, and was given a five star rating by SmartMoney.
- OptionsXpress is at par with other brokers when it comes to independent research, as evidenced by their three star rating.
- OptionsXpress does not place a huge amount of emphasis on customer service and was rated one star in this category.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Broker Assisted | Fund Trades |
| $9.95 | $0.00 | $1.50 | $0.00 | $9.95 | $9.95 + LOAD FEE |
ShareBuilder
- Sharebuilder, the investment arm of ING, offers most popular investment options, but doesn’t stray far from those, earning it a two star rating in investment products.
- Although ING is a recognized name in the online banking world, Sharebuilder itself does not offer a wide range of online banking products, earning them a two star rating in this category as well.
- The ShareBuilder platform is not known for its ease of use nor is Sharebuilder considered one of the cheaper brokers to use, which has garnered them a two star rating in this category.
- Independent research is available, but somewhat lacking, which has earned them another two star rating in this category.
- ShareBuilder does not hold customer service in high regard, which is evidenced by their one star rating in this category.
| Stock Trades | Options Base | Options Contract | Minimum Deposit | Fund Trades |
| $9.95 | $9.95 | $1.25 | $0.00 | $0.00 - $19.95 |
How SmartMoney Developed Its Online Broker Ratings
SmartMoney magazine is a Wall Street Journal publication that offers personal finance advice to the American public. Regular topics include professional ideas for saving money, investing money, and smart spending strategies. SmartMoney routinely rates online brokers and stacks them up against each other in an effort to provide investors with an accurate picture of which broker is best.
SmartMoney takes its review to the grassroots level. They want to give readers a real-world view of what they can expect when they open a trading account with one of the reviewed brokers. For instance, during the last SmartMoney broker review, the publication actually opened and used trading accounts with 14 different brokers and made actual transactions, in order to measure the broker on a more personal level. For consistency’s sake, the accounts are opened in an effort to mimic an average investor: a buy and hold investor with an account balance of $50,000 who diversifies his or her portfolio by investing in a number of products including stocks, bonds and mutual funds, and who exercises some carefully constructed covered calls. Of course, this approach may not be suitable for day traders or for someone who chooses to specialize in options trading; however, it provides a good baseline evaluation of some of the better known brokers for the Average Joe investor.
While SmartMoney has not divulged its actual scoring system or evaluation criteria, they did give a quick overview of some of the things they review when scoring brokers. The analysts opened trading accounts and bought and sold a variety of stocks, both large and small, along with corporate bonds. They also executed a few covered calls. They made calls and wrote emails to customer service and evaluated how quickly and accurately their questions were answered. They evaluated what a broker offered for their commissions and dug to locate which brokers had hidden fees, such as those charged for buying or selling "out of network" mutual funds. They spent time looking over 1099 forms, making sure that the forms provided everything that the investor would need at tax time. They evaluated reports and statements for readability. Online trading interfaces were evaluated for ease of use, navigation, and uptime.
And then the results were extrapolated into an easy to review, easy to use format that allows you, the investor, to see how brokers stack up against each other in each of the categories that were analyzed, in order to help you decide which broker is right for you.
What’s nice about SmartMoney is its format. SmartMoney makes it easy to compare brokers because they make peer group comparisons. For example, a discount online broker is compared to other discount online brokers and not to full service brokers. This allows you to compare apples to apples.
So, the next time you find yourself looking for a broker, take a look at SmartMoney and find out how your choice stacks up against the competition.
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