Published by Blain Reinkensmeyer
Wednesday, September 28th, 2016
It is not surprising that the largest, most publicly known online brokers excel and all vie for the top spot for research. With larger client bases and higher commission costs, high-quality research is expected.
In fact, our top five picks this year yielded scores painstakingly close to one another. Out of the 51 total variables we assessed during our research, our No. 1 pick, Charles Schwab, had 99% of them. Fidelity, ETRADE, and Merrill Edge also had 97%, and TD Ameritrade had 96%.
Comparing apples with apples, all five brokers are nearly identical. They all use Morningstar as their primary provider for ETF and mutual fund research, all of them offer a slew of data and graphs for researching stocks, all offer fixed-income research, etc. Slight differences only begin to show when assessing specifics such as total third-party research reports available for equities, for example Apple (AAPL). In that category, the title goes to Fidelity with 13 total reports offered, followed by TD Ameritrade with seven, and Charles Schwab with six.
While any of these brokers will more than satisfy most investors’ appetites, deciding on a winner and the Top 10 overall, based on checklists alone, is not enough. Quality and design matter just as much as quantity, not to mention the fact that many brokers will go “above and beyond” to differentiate themselves.
Charles Schwab, which earned our No. 1 spot again this year, offers clients its own proprietary A – F ratings, called Schwab Equity Ratings, for some 3,000 US stocks. Even more impressive, Schwab boasts a full lineup of 26 in-house experts who provide numerous articles on a variety of market topics throughout each week. Some experts, such as Chief Investment Strategist Liz Ann Sonders, can often be seen on TV discussing the market.
Fidelity Investments, on the other hand, stands out for its 13 total equity research reports and fantastic stock comparisons, allowing clients to compare up to five stocks at once with 21 different metrics. Fidelity also distributes high-quality market analysis and personal finance education through its Fidelity Viewpoints weekly distribution. What excites us most about Fidelity is the brand-new, fully responsive, research area launched in 2015. Content flow and personalization are at the heart of the redesign, and given more time to evolve, we can see this new experience propelling Fidelity to the top spot in the industry.
Not to be outdone, TD Ameritrade allows clients to create custom PDF research reports using 24 different modules. The reports can be saved for later use and even downloaded. In 2015, TD Ameritrade revealed its new Social Signals analysis for individual equities. Using proprietary algorithms, the Sentiment Score shows what percent of tweets are positive. Also in the social realm, TD Ameritrade analyzes data from its six million retail clients to create what it calls the Investor Movement Index (IMX). Launched in 2012, the index displays and analyzes the sentiment of its retail investors’ portfolios.
All in all, when it comes to researching stocks, ETFs, mutual funds, and fixed income, any top five broker is going to provide an excellent experience for investors. With such similar offerings, it’s the unique features and functionality that differentiates the brokers.
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