J.D. Power and Associates survey, ratings, and rankings of best brokerage firms in 2019



JD Power Best Discount Brokers


Similar to Barron’s annual list of top brokers, JD Power also publishes its rankings of top brokers every year, along with its analysis of highlights and trends within the broader industry. For this year’s study, JD Power spoke with more than 5,000 investors over several months from a variety of demographic backgrounds to get the inside scoop on the brokers they are using and their unbiased opinions on them. This article will go over the biggest trends uncovered by JD Power’s analysis and offer a brief overview of their “top brokers”.


2019 Industry Trends


The biggest observation uncovered by JD Power that arguably is shaping the direction of the brokerage industry is differences in how millennials are investing when compared to their baby boomer parents. They highlight that millennials are largely less satisfied, loyal and trusting than their elders, and are also more goal-oriented and more interested in passive investing. Another shift they note is where the biggest focus is no longer on the specific investment products offered by a broker as much as it is about the broker’s specific platform features and capabilities.


Millennial Trends


Many millennials graduated from college during the years surrounding the financial crisis and the recession that followed, which has showed a higher rate of unemployment or underemployment in this age group. Knowing this, it’s not too surprising that as investors, millennials are less loyal and trusting than their parents. When your employment is anything but guaranteed, trading costs become an even more important consideration in your portfolio, and switching to a broker with lower fees could be a no-brainer. JD Power also notes that millennials are also investing much differently than their parents, choosing passive ETFs at a much larger scale.


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Platform Features and Capabilities


There was a time where the investment products a broker offered was the most important consideration when choosing where to open your portfolio. This fared well for Vanguard’s low-fee mutual funds that it has historically presented as core investments, but with cost pressures rising across the industry other brokers are narrowing in on Fidelity’s cost-advantage by offering similar low-fee products. That said, the race for brokers to differentiate themselves has once again shifted focus, now towards the broker’s platforms.

With the ever-growing need to constantly be connected to our portfolios, investors (and especially millennial investors) are increasingly looking for brokers that are leading with tech savvy features. Being able to trade from your smartphone no longer counts as tech savvy. Brokers like Ameritrade are now offering even more innovative investing abilities, such as placing a trade via your Amazon Alexa device.


JD Power and Associates Top Brokers


So, who were the winners? JD Power’s 2019 winning brokers were Fidelity, Schwab, Vanguard, and TD Ameritrade. These brokers were analyzed and ranked among their peers based on how their platforms and services adapted to accommodate these industry trends. We’ll offer a brief overview of these four brokers and their highlights next.


Fidelity


Fidelity offers a relatively low-cost trading model with a solid selection of securities to trade that include more than just stocks and bonds (including ~200 commission-free ETFs). Fidelity offers some really neat and robust tools to help you construct your portfolio too. In addition to ETF and mutual fund screeners, Fidelity offers an ETF analyzer where you can compare up to five different ETFs side by side based on criteria such as expense ratios and historical performance. Fidelity also offers a wide range of portfolio advisory services for an additional fee, ranging from access to a robo-advisor to a dedicated Fidelity representative who will manage your portfolio for you.


Charles Schwab


Another winner in the eyes of JD Power, Charles Schwab is a leading broker offering both self-directed and managed accounts. Schwab offers thousands of mutual funds and ETFs (many are commission-free) to choose from, and helpful screening tools to narrow down your search. Charles Schwab is also a popular broker in the retirement account area because of some of the many planning tools they offer on their platform to help you determine how much you should be saving to reach your retirement goals.


Vanguard


Vanguard is another popular broker, especially for retirement planning, and so it’s easy to see why it made JD Power’s top four. Vanguard is the founder of the first index funds, and prides itself on offering some of the lowest fee products and pricing schedules in the industry. Most Vanguard mutual funds charge expense ratios in the 0.05% to 0.10% range, which is even lower than many ETFs. They also offer commission-free trading of Vanguard ETFs and mutual funds, making them a top broker for cost-sensitive investors.


TD Ameritrade


Last but not least in JD Power’s top brokers list is TD Ameritrade. This brokers shines in a lot of areas, including its trading platform, investing options, and top-notch customer service. Their Thinkorswim platform is a favorite among millions of traders as it offers some really neat and advanced tools, such as technical chart studies, an options builder tool, and the ability to place a trade from a chart. Ameritrade supports trading in stocks, bonds, ETFs (some ETFs can also be traded 24 hours a day!), mutual funds, options, futures, currencies and more. TD Ameritrade also offers some of the highest quality customer service we’ve seen, with almost no wait times when we called. Learn more...


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Updated on 6/19/2019.