Some firms are intended for the most advanced traders with years of experience. Other
brokerage companies are designed for beginners, offering various products and services that are designed
to help new investors learn the ropes. Three of these best brokerage firms for beginners are
Firstrade, Ally Invest, and TD Ameritrade. Here’s what they have to offer:
Pricing
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Margin
Rate |
Maintenance
Fee |
Annual IRA
Fee |
|
Ally Invest
|
$0
|
$9.95
|
11.5%
|
$0
|
$0
|
|
Firstrade
|
$0
|
$0
|
12.25%
|
$0
|
$0
|
|
TD Ameritrade
|
$0
|
$49.99 ($0 to sell)
|
13.25%
|
$0
|
$0
|
Services
Promotions
Ally Invest:
$0 commissions + $75 transfer fee credit at Ally Invest.
Firstrade: Get up to $4,000 cash bonus + $200 in ACAT rebate!
TD Ameritrade: $0 commissions + transfer fee reimbursement.
Education
Starting with Firstrade, we find educational materials that are conveniently divided into
categories in the top of the website.
Complete newbies should start with the Education tab. Underneath this tab, there are several selections. Overview is a good place to begin. This hub displays all available educational resources under the Education tab. There are learning materials on the following investment vehicles:
- Stocks
- Options
- ETFs
- Mutual Funds
- Bonds and other fixed-income securities
There is an article on the Education Center that explains how margin works. And what we really like the most on this page is a link to an investment glossary. There are hundreds of terms that new traders probably won’t be familiar with that are defined in simple terms.
At the bottom of the Education Center is a collection of videos and recorded webinars. These cover a variety of topics that beginners will find useful. Examples include:
- Options wizard basics
- Fund an account
- ETF basics
- Placing stock trades
Services
So far, we have covered a lot of territory, and these resources are under just one tab. Moving to
the Service tab on the Firstrade website, we find a treasure trove of resources that beginners
will definitely want to check out.
First up is a Help Center. This page has articles on a variety of topics, such as taxation of brokerage accounts and withdrawing funds. There is a search bar at the top of the site that can be used to scan these articles by keyword.
There is also a Contact Us page underneath the Service tab. This page displays all the available methods to reach a customer service rep. Firstrade has a fax number, phone service during the weekday, and an email form.
One final hub found under the Service tab is the Form Center. This resource has a long list of forms divided into categories. Some are in pdf format, while others have online forms. This is a useful place to visit. On the Form Center, there is also a document upload tool that can be used to upload a form.
The Home tab hosts a variety of resources that new investors will find useful. These include news articles, a list of quick links (such as market holidays and transferring funds), and advertisements of upcoming webinars.
Research
Firstrade has very good security research materials, thanks to a partnership with Morningstar. This third-party analyst is one of the most trusted security analysts in the business, and much of its research is available free of charge at Firstrade.
This information will be found under the Research & Tools tab. Every stock, ETF, and mutual fund has a profile with details from Morningstar. Some of the more popular securities have star ratings and price targets.
Besides in-depth profiles, Firstrade offers screeners to actually search for investments. The Screeners link is under the Research & Tools tab. Mutual funds, exchange-traded funds, and stocks have their own screeners. These are easy to use, so beginners will find them useful. Results can be sorted by a variety of criteria, and it’s easy to get to an asset’s profile (just click on the ticker symbol in the search results).
Last, but certainly not least, is the Analyst Research page. The link for this valuable resource will also be found under the Research & Tools tab. There are many reports in pdf format that are linked on this page. And a search bar makes finding reports for specific funds or stocks easy (just enter a company name or ticker symbol).
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Robo Advisor
One service that new investors can really benefit from that our first top broker for beginners
doesn’t offer is account
management. Ally Invest does offer investment advice, and it is surprisingly inexpensive. Instead
of managing their accounts and making investment decisions on their own, novices at Ally Invest
can hire a professional to carry the burden.
There are two types of investment-advisory services that Ally Invest offers: robo and wealth
management. The former uses a software program to make all trading decisions in an account.
Because it is an automated service, it is the cheaper of the two options.
The robo service has two pricing plans.
One is free with a 30% cash balance in the account,
while the other costs 0.30% per annum with a 2% cash balance. Either plan is low-cost by industry standards.
In either case, a robo account gets a portfolio of exchange-traded funds with low expense ratios. Common fund families include Vanguard and iShares. The broker’s software rebalances portfolios as needed. For example, if some funds go up in price, while others go down, the program will use dividends to buy more shares of the funds that have gone down in price to try to bring the portfolio back in line with original target allocation percentages.
It takes just a few minutes to fill out Ally Invest’s online questionnaire, which will determine the specific ETFs that will be purchased in the account. The questionnaire is filled out before the account is open. Customers who want to modify these asset allocation targets can adjust the investment allocations after the account is open, which is a unique service.
Ally’s robo program does have a $100 minimum starting balance.
Wealth Management
New investors who have much more than $100 can opt for the second investment-advisory service: wealth management. This program requires $100,000 in investable assets, which is very steep. But wealth management clients get a lot more in return.
The broker’s traditional managed account service comes with actual human financial advisors, which is a huge fringe benefit for beginners. Each account is assigned one human advisor as a point of contact.
Each wealth management account also gets a detailed financial plan with recommendations on more than just investing. These areas include ideas on retirement, mortgages, and auto loans.
Plus, the company’s wealth management program will provide advice on investments held outside of Ally Invest, which is a great service. There is no additional cost for this.
Speaking of cost, Ally’s old-school investment advice is surprisingly inexpensive. The annual fee
is on a tiered schedule. Here it is:
| Account Balance | Investment Advice Fee |
|---|
| First $250,000 | 0.85% |
| $250,000 | to $1 million 0.80% |
| $1 million+ | 0.75% |
So everything is under 1%, which is a great value for traditional management. In return for the low fee, Ally Invest wealth management customers must communicate with the broker’s financial advisors through phone and email. There are no branch locations, so it’s not exactly an old-school program.
On the upside, Ally Invest is open 24/7, so robo and wealth management customers can call up any time of the day or night for general questions or assistance with their accounts. The broker’s website also has a human chat service that will be found on the LIVE platform (launched from the top of the website).
Self Directed Account
The most common way new customers invest at Ally is with a regular brokerage account (also known as
self directed account).
With this account, they can practice using the company’s trading tools. These include charts
and trade tickets. And the Ally Invest site has some learning materials that novices will benefit from. They will be found under the Education and Quotes & Research tabs. These include resources on securities like bonds, options, and mutual funds. Due to Ally Invest’s relationship with Ally Bank, there are also articles on personal finance topics, like taxes and estate planning.
Multiple brokerage accounts can be opened at Ally Invest, so after investment-advisory clients have gone through an adequate amount of self-education, they can always open self-directed accounts to supplement their managed accounts.
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Ally Invest Promotion
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Branches
Although TD Ameritrade doesn’t have robo or wealth management accounts, it does offer something
that the other two brokerage firms in this survey don’t have: branch locations and extensive customer service resources.
During our investigation, we found over 100 brick-and-mortar offices located throughout the United States. Most states have at least one branch location. Even small states like New Hampshire, Vermont, and Delaware have offices. These physical locations can provide a lot of the same services on accounts that phone representatives typically provide, so the locations are very useful.
Customer Service
During the hours these offices aren’t open, novice investors at TD Ameritrade have a lot of other customer service routes to use to obtain help. First up is phone service. The company’s phone agents are available all hours of the day and night, including weekends. The broker has dedicated phone lines for TTY service and customers located outside the United States.
TD Ameritrade has associates who speak Chinese and Spanish, although these services may not be available around the clock.
New customers who can’t find the help they need over the phone have many more resources with this
best brokerage firm for beginners. TD Ameritrade offers assistance through Facebook Messenger and Twitter Direct Message. And then there’s TD Ameritrade’s own website. This has an Artificial Intelligence named Ted. This robo chat service will be found under the Client Services tab on the website (look for the Contact Us link).
On Ted’s profile, there are groups of commonly-asked questions. Trending questions on the day we did our research include:
- What is a margin call and what should I do if I receive one?
- Why was I charged a mandatory reorganization fee?
- What is a good faith violation?
The chat window sits on top of the website and can be moved around. Ted has the ability to change the web page, which is really useful when typing a page-related question like, “How do I change my mailing address?” Ted will automatically load the necessary page.
Human agents are always in the background. Typing the word “human” will bring one of them on board.
New investors who don’t need real-time chat can send TD Ameritrade an internal message. This is a really convenient service that is also found under the Client Services tab (look for Message Center). The tool can be used to both send and receive messages, which is not always the case at all brokerage firms nowadays. Moreover, TD Ameritrade’s messaging widget can attach files in a variety of formats, including jpeg and pdf.
The Client Services tab has a lot of other features that beginning traders will want to take advantage of. For example, there is a Help Center that has lots of FAQs under a variety of categories. And then there’s a link that discusses all the different account types available at TD Ameritrade. Look for the Account Types link.
Education
Obviously, TD Ameritrade does an outstanding job in the customer service category, which will
definitely benefit novices. But the brokerage firm goes one more step with its very good
educational library. This will be found under the Education tab on the website.
There are articles, videos, on-demand webcasts, and self-guided courses on a variety of topics. Here’s a sample:
- Investing Basics: Forex
- Futures for Beginners
- How to Build a Portfolio with ETFs
- Stock Order Types: Limit Orders, Market Orders, and Stop Orders
- What Are Index Funds?
- How to Place a Single-Leg Options Trade on TDAmeritrade.com
Besides these self-guided materials, TD Ameritrade also hosts branch seminars and online workshops that cover a variety of topics. Upcoming classes can be found under the Event link, which itself can be found under the Education tab.
The Ticker Tape®is TD Ameritrade’s publication for beginners. It covers a lot of ground from retirement planning to market news to Fed tapering. It’s a treasure trove of information and can be accessed anytime at tickertape.tdameritrade.com.
Besides the website, some customer service resources and educational materials (although not all)
can be found on TD Ameritrade’s mobile app.
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TD Ameritrade Promotion
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Updated on 6/4/2022.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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