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The Best Online Brokers, 2021

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Illustration by Kotryna Zukauskaite

Online brokers are enjoying explosive growth as investors beat a path to their virtual doors. In fact, 2020 was a record year: More than 10 million new brokerage accounts were opened, many by first-time investors, according to market research firm J.D. Power, driven by the seemingly unstoppable bull market, commission-free trades and the pandemic lockdown all helped to break down investing barriers, both financial and emotional. And then there was the meme-stock frenzy (Game Stop, AMC Entertainment Holdings) that enticed hordes of eager investors to get in on the game.

The influx of new investors has put a spotlight on finding a good brokerage firm. In this year’s annual online broker survey, we review nine. Five are large brokers that offer something for almost every kind of investor: Charles Schwab, E*Trade, Fidelity, Merrill Edge and TD Ameritrade. (Schwab’s 2020 acquisition of TD Ameritrade has not resulted in changes to most of the services the firms offer, and it may not for at least another year.) The remaining four—Ally Invest, Firstrade, Interactive Brokers and J.P. Morgan Self-Directed Investing—are contenders in this area, but to some extent they target particular customers.

Read on to see our rankings—and, at the end, more about our methodology, including our new approach to commissions and fees in an environment where fewer brokers levy those. Plus, a look at Robin Hood, Tastyworks and some other newer players.

Pick Fidelity for: Advice (especially if you're a newbie)

Being a giant helps Fidelity deliver a wide range of advisory services and win this category. Access to extensive advisory services with a variety of different outside firms is a hallmark. And an army of certified financial planners is just a phone call away—or available in the local branch office for face-to-face consulting. Brand-new investors can fund a Fidelity Go robo-advisory account for just $10. And if they have a balance of less than $10,000, they’ll pay nothing in annual fees or expenses.

Also: Fidelity's municipal bond offerings exceeded those of its peers. And Fidelity customers offered the most access to initial public stock offerings between the start of 2020 and June 2021 of any firm. Fidelity offers more than 30 savings, tax and retirement calculators and also excels in screening tools. Its stock screens include 162 different criteria, and its website offers nearly as many data points for each of its fund and ETF screening tools.

Pick Schwab for: Research

In some areas, Schwab doesn’t have the most research. Third-place finisher Fidelity, for instance, offers research from 35 different firms—more than any other brokerage we surveyed—while Schwab’s roster of research firms numbers just under 20. But Schwab’s research resources cover more ground, including market insights and analysis, bond market reports, and audio webcasts. In addition, Schwab offers a bounty of recommended fund and stock lists, which can be a rich trove of ideas. The numerous stock lists include large-company and small-company stocks, as well as favored stocks in each sector, among others. Schwab says it “uses an objective and disciplined approach” to select stocks that are most likely to outperform the market.

Also: Yes, Schwab will help the savvy investor dig deep, but new or small-dollar investors are welcome as well. Schwab’s Intelligent Portfolios service doesn’t charge a management fee at all, and it’s one of just two digital adviser services to offer tax-loss harvesting, the practice of selling some investments at a loss to offset gains realized by selling others at a profit (the other is E*Trade).

Pick E*Trade for: Mobile app

Fittingly for a firm that (well, decades ago now) was a pioneer of online trading, E*Trade came out ahead with its mobile app, a category we gave the most weight to (20%) in our rankings, because phones are where more and more people are trading these days. But it was a tight finish, won by a tiny margin, thanks in part to E*Trade's slightly more robust charting capabilities. Top scores here were gained by offering depth of information (being able to measure your portfolio’s performance against a benchmark, tax-basis info), as well as the more subjective qualities of look and feel. It has a nifty “dark” view that we found easy on the eyes.

Also: A slick interface isn't much without good info behind it, but E*Trade came in a solid second in research, with similar attributes to Schwab. Morgan Stanley completed its acquisition of E*Trade last year, so customers now have unfettered access to this blue-chip investment bank’s research on stocks and markets.

Pick Merrill Edge for: Commissions, customer service

With account fees and many trade commissions disappearing, it's getting harder to figure out what firm offers the best value. This year, our research extended to execution prices on stock trades (see more detail in our methodology slide at the end). Merrill........

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