Barron’s Best Online Broker Rankings 2019

Each year, Barron’s releases their list of top online brokers. I like read and share it, hoping to find deeper insights into industry trends and specific broker features. However, this year their 2019 rankings article is firmly behind a paywall. That is certainly their right, but it also discourages sharing and discussion. (I am a paying subscriber to the NY Times, WSJ, and Bloomberg Businessweek, but not Barron’s.)

However, hidden in a Merill Edge press release, I found that Merrill paid for a full article reprint which lets anyone read the main article for free. I could not find a way to view the their secondary rankings, i.e. “Top 5 for Long-Term Investors” or “Top 5 for Occasional Traders”.

Their rankings only include 14 brokers this year, which means several are being left out. Firstrade and Vanguard were mentioned only to state that they both declined to participate. Robinhood wasn’t ranked, just quickly dismissed with an offhand “they take payment for order flow”, even though many other brokers on their list like E-Trade and TD Ameritrade also take payment for order flow. I mean, TD Ameritrade made $320 million from order flow in 2017 alone! WeBull wasn’t even mentioned.

Commentary. Here is my own list of brokers that I think are worth considering, along with their pros and cons. If a family or friend asked me what I thought were the best online brokers, this would be my reply.

Interactive Brokers

• Pros: Best for active traders. Low average commissions for active traders. Best trading interface for active traders. Proof: Their average account makes ~500 trades a year. Good interest rate on cash sweep.
• Cons: Minimum commission of $10 a month for accounts under $100,000, or a minimum commission of $20/month under $2,000. This means you must pay them $120/$240 a year no matter what. Not set up for newbies.

Fidelity

• Pros: Good all-around broker. Best customer service in my experience. Free ETF list. No more mutual fund minimums. Good index fund selection.
• Cons: $4.95/trade for stocks and ETFs not on their list. Average cash sweep options.

Vanguard

• Pros: The classic broker for low-cost index fund lovers. $0 trades on all ETFs, both Vanguard and non-Vanguard (iShares, Schwab, etc). Free trades on Vanguard index and active mutual funds. Excellent index fund selection. Excellent cash sweep options. No direct profit motive.
• Cons: Not good for active traders. They’ve had some struggles with customer service due to their huge growth.

Merrill Edge

• Pros: Best for those with a Bank of America checking account. 30+ free trades/month when you move over $50,000+ in assets across Bank of America and Merrill (Preferred Rewards program), even if just moving over a bunch of low-cost ETFs. Good customer service.
• Cons: Below-average cash sweep options. $6.95 trades without Preferred Rewards relationship.

M1 Finance

• Pros: My favorite amongst the new crowd of app-centric brokers and robo-advisors. Free stock and ETF trades. Fractional share ownership means full investment of any dollar amount. You can fully customize an asset allocation “pie” using stocks or ETFs, and it will automatically rebalance for free with no management fees. Basically a free robo-advisor that is fully-customizable.
• Cons: Newer startup. If you really want to add banking features, that will cost extra. (I’d just skip it.)

Disclosure: I am now an affiliate of M1 Finance and TD Ameritrade, and may be compensated if you click through my referral link and open a new account. I am not an affiliate of Interactive Brokers, Fidelity, Merrill Edge, or Vanguard.