The Best Online Brokers

As many of you know, I was the designer, builder, and the first CEO of Qtrade Investor, which became Canada’s top-rated online securities trading broker almost from inception and for about nine consecutive years was selected #1 by the rating agencies. That company was subsequently acquired by Desjardins Group and is still highly rated. For the past 14 years, however, I have been a U.S. registered financial advisor and portfolio manager who uses only Interactive Brokers (IBKR), which Barron’s continually ranks as #1. I require all my clients to hold an IBKR brokerage account, which assigns the trading responsibilities to me. I am the IBKR booster club #1.

Recently Barron’s published their annual review of online brokers, and I decided to re-publish their remarks on IBKR. I also wanted you to see what Barron’s thinks of Robinhood. Spoiler alert: not much!

 

 1. Interactive Brokers / 5 stars

In 2020, Interactive Brokers established the benchmark for what a full-service, self-directed brokerage can do. For years, their active trader’s platform, Trader Workstation, has excelled. That hasn’t changed, and this past year, it again improved its advanced charting tools.

Equally impressive is just how good the company’s website is, adroitly demonstrating what’s possible in a clean, well-laid-out presentation. The company’s IBKR Lite, launched in October 2019, is a payment and marketing plan designed for the less active trader, but those users can easily benefit just as well from what Interactive Brokers has to offer.

Impact Dashboard is perhaps the broker’s most notable new offering over the past year. This tool allows investors to log preferences in terms of environmental, social, and corporate governance, or ESG, factors. The feature calculates how well each company in a portfolio aligns with investor values.

A companion feature enables specific ESG scores, ratings, and rankings, and it has beefed up ESG research, as well. This feature helped propel Interactive Brokers to the top of our information category. The lone downside is that some of its premium research isn’t free. The firm also came in first for active traders and international traders.

  1. Fidelity / 5 stars
  2. TD Ameritrade / 4.5 stars
  3. E*Trade / 4 stars
  4. Charles Schwab/ 4 stars
  5. tastyworks / 3.5 stars
  6. Merrill Edge / 3.5 stars
  7. SogoTrade / 2.5 stars
  8. TradeStation /2.5 stars
  9. Ally Invest / 2.5 stars
  10. TradingBlock / 2.5 stars

 

Robinhood

We gave Robinhood the same scrutiny as the brokerages in our survey. We sent the firm our questions, and we did a thorough analysis of its platform. Here are our takeaways:

Robinhood makes it very easy to trade. Just swipe and you’re done. The Robinhood app emphasizes fractional-shares trading and highlights dollar amounts, enabling investments for as little as $1. The default is a market order. While it’s possible to trade in shares and at limit or stop orders, that takes some poking around.

Robinhood excels in presentation. Its app is clean, well lit, and orderly, as is its lesser-known website. But minimalist architecture has drawbacks. We believe that nowadays, self-directed investors need tools and information necessary to make informed decisions. Robinhood lacks that firepower. Research is extremely limited, although the brokerage offers better ordered and slightly more thorough analysis with a $5-a-month gold membership. Its education platform, Robinhood Learn, starts with the basics—“What is an investment?” or “What is the stock market?”—but doesn’t get much deeper than that. Its Robinhood Snacks daily podcasts and newsfeed are entertaining, but not very insightful for even slightly experienced traders. Advanced trading tools? Not really.

Our conclusion? If you’re serious about investing, Robinhood isn’t for you. If you want something that resembles sports betting and you have some cash to burn, that’s another story.


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